    Disaster Assistance: Information on FEMA's Post 9/11 Public
    Assistance to the New York City Area (29-AUG-03, GAO-03-926).

    The terrorist attacks on New York City created the most costly
    disaster in U.S. history. In response, the President pledged at
    least $20 billion in aid to the city. Approximately $7.4 billion
    of this aid is being provided through the Federal Emergency
    Management Agency's (FEMA) public assistance program, which
    provides grants to state and local governments to respond to and
    recover from disasters. The Senate Committee on the Environment
    and Public Works requested that GAO determine (1) what activities
    FEMA supported in the New York City area through its public
    assistance program after the terrorist attacks; (2) how the
    federal government's response to this terrorist event differed
    from FEMA's traditional approach to providing public assistance
    in past disasters; and (3) what implications FEMA's public
    assistance approach in the New York City area may have on the
    delivery of public assistance should other major terrorist
    attacks occur in the future.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-03-926
        ACCNO:   A08269
      TITLE:     Disaster Assistance: Information on FEMA's Post 9/11
    Public Assistance to the New York City Area
         DATE:   08/29/2003
      SUBJECT:   Federal funds
    	     Financial management
    	     Funds management
    	     Strategic planning
    	     Terrorism
    	     Comparative analysis
    	     Disaster relief aid
    	     World Trade Center (NY)
    	     New York (NY)

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    GAO-03-926

    Report to the Committee on Environment and Public Works, U. S. Senate

    United States General Accounting Office

    GAO

    August 2003 DISASTER ASSISTANCE

    Information on FEMA*s Post 9/ 11 Public Assistance to the New York City
    Area

    GAO- 03- 926

    FEMA has supported many activities through its $7.4 billion in public
    assistance- related funding to the New York City area. Activities funded
    include grants to state and local governments for emergency response, such
    as debris removal, and permanent work, such as the repair of
    disasterdamaged public facilities. FEMA also provided public assistance-
    related funding specifically directed by Congress that would not otherwise
    have been eligible for assistance (e. g. reimbursing costs of
    instructional time for students who lost school time after the terrorist
    attacks). The major uses for this funding are as follows:

    $1.7 billion for debris removal operations and insurance.

    $2.8 billion to repair and upgrade the transportation infrastructure of
    Lower Manhattan.

    $0.6 billion to the New York City Police and Fire Departments for such
    purposes as emergency efforts and replacing destroyed vehicles.

    $0.3 billion to miscellaneous city agencies for a wide range of activities
    (e. g., instructional time for students and building cleaning).

    $0.7 billion for non- New York City agencies for many purposes (e. g.
    office relocations and repair of damaged buildings).

    $1.2 billion available on June 30, 2003, for public assistance- related
    reimbursements to New York City and state (work to be decided).

    The provision of public assistance to the New York City area differed in
    three significant ways from FEMA*s traditional approach.

    Differences in This Public Assistance Approach FEMA and New York City
    officials agreed that FEMA*s public assistance approach in the New York
    City area creates uncertainties regarding the delivery of public
    assistance in the event of another major terrorist event. They differed on
    the effectiveness of using the public assistance program as currently
    authorized as the vehicle for federal disaster response to a future

    major terrorist event. Key New York City officials said that the program
    needed major revisions, while FEMA officials said it worked well along
    with the congressional prerogative to provide additional assistance.
    Nevertheless, FEMA has begun to consider ways to redesign the program to
    make it better able to address all types and sizes of disasters, including
    terrorist attacks. The terrorist attacks on New York City created the most
    costly disaster in U. S. history. In response, the President pledged at
    least $20 billion in aid to the city. Approximately $7. 4 billion of this

    aid is being provided through the Federal Emergency Management Agency*s
    (FEMA) public assistance program, which provides grants to

    state and local governments to respond to and recover from disasters. The
    Senate Committee on the Environment and Public Works requested that GAO
    determine (1) what activities FEMA supported in the New York City

    area through its public assistance program after the terrorist attacks;
    (2) how the federal government*s response to this terrorist event differed
    from FEMA*s traditional approach to providing public assistance in past
    disasters; and (3)

    what implications FEMA*s public assistance approach in the New York City
    area may have on the delivery of public assistance should

    other major terrorist attacks occur in the future. www. gao. gov/ cgi-
    bin/ getrpt? GAO- 03- 926. To view the full product, including the scope

    and methodology, click on the link above. For more information, contact
    JayEtta Z. Hecker at (202) 512- 2834 or heckerj@ gao. gov. Highlights of
    GAO- 03 -926, a report to the

    Committee on Environment and Public Works, U. S. Senate

    August 2003

    DISASTER ASSISTANCE

    Information on FEMA*s Post 9/ 11 Public Assistance to the New York City
    Area

    Page i GAO- 03- 926 Disaster Assistance Letter 1 Results in Brief 4
    Background 7 $7.4 Billion in Public Assistance- Related Funding Provided
    for

    Broad Range of Activities 11 Debris Removal Operations and Insurance 12
    Interagency Agreement for Lower Manhattan Transportation System
    Reconstruction 16 NYC Police and Fire Department Reimbursements 18
    Reimbursements to Other NYC Government Agencies 19 Reimbursements to Non-
    NYC Government Agencies 21 Reimbursements for Public Assistance- Related
    Work Authorized

    by Congress 23 Public Assistance to NYC Differed from the Traditional FEMA
    Response in Several Areas 24 No Sharing of Public Assistance Costs by
    State or Local Governments 24 Different Processes for Selecting Projects
    and Closing Out the Disaster Based on Capped Funding Amounts 26 Size and
    Type of Work Was Different Than Work in Other Major Disasters 27 Response
    to NYC Area Creates Uncertainties about How Assistance Would be Delivered
    in a Future Catastrophic Terrorist Event 32 Conclusions 35 Agency Comments
    36 Appendix I Scope and Methodology 37

    Appendix II Comments from the Federal Emergency Management Agency 40

    Appendix III GAO Contacts and Staff Acknowledgments 42 GAO Contacts 42
    Acknowledgments 42 Contents

    Page ii GAO- 03- 926 Disaster Assistance Table

    Table 1: Ten Projects We Reviewed and Applicant Organizations Interviewed
    for Each of Them 38 Figures

    Figure 1: Distribution of $7.4 Billion in Public Assistance and Public
    Assistance- Related Funding 4 Figure 2: Public Assistance Funding Provides
    the Largest Federal

    Contribution to the NYC Area*s Recovery 10 Figure 3: Public Assistance-
    Funded Debris Removal Operations 14 Figure 4: Debris Screening and
    Inspection Operations 15 Figure 5: Interagency Agreement Will Fund
    Construction of a Permanent New Station to Replace the Extensively Damaged
    PATH Station Beneath the World Trade Center Towers 18 Figure 6: Public
    Assistance Funded Police and Firefighter Overtime

    and Replaced Emergency Vehicles That Were Destroyed in the Terrorist
    Attacks 19 Figure 7: NYC Agencies Received Public Assistance Funding for a

    Range of Work Including Cleaning Dust from Buildings 21 Figure 8: Port
    Authority Received Public Assistance Funding to Restore Tunnels That Were
    Flooded in the Terrorist Attacks 22

    Page iii GAO- 03- 926 Disaster Assistance Abbreviations DHS Department of
    Homeland Security

    DOT Department of Transportation EPA Environmental Protection Agency FEMA
    Federal Emergency Management Agency FTA Federal Transit Agency NEMIS
    National Emergency Management Information System NYC New York City OMB
    Office of Management and Budget PATH Port Authority of New York and New
    Jersey

    This is a work of the U. S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    Page 1 GAO- 03- 926 Disaster Assistance

    August 29, 2003 The Honorable James M. Inhofe Chairman The Honorable James
    M. Jeffords Ranking Minority Member Committee on Environment and Public
    Works United States Senate

    The Honorable George V. Voinovich The Honorable Hillary Rodham Clinton
    United States Senate The September 11, 2001, terrorist acts were the most
    destructive and costly terrorist events* in terms of lives lost, physical
    damage, emotional trauma, and economic hardship* that this country has
    ever experienced.

    In New York City (NYC), the attacks killed almost 3,000 people, injured
    thousands more, and leveled 16 acres of Lower Manhattan, including the
    World Trade Center Towers and other buildings on or around the World Trade
    Center site. The attacks also disabled major electrical and communications
    facilities and the transportation infrastructure in the Lower Manhattan
    area and left many residents temporarily homeless and thousands
    unemployed. To help NYC respond to and recover physically, emotionally,
    and

    economically from the damages it incurred, the President pledged and
    Congress appropriated over $20 billion in federal assistance. Today, less
    than 2 years after the terrorist attacks, the rubble that was the World
    Trade Center is gone and rebuilding efforts have started. The Federal
    Emergency Management Agency (FEMA) led the federal response. 1 Total FEMA
    funding for several programs it administered to help NYC area

    accounts for about $8.8 billion of the $20 billion in federal assistance,
    making this the largest disaster response in the agency*s history. In only

    1 In March 2003, FEMA and its approximately 2, 500 staff became part of
    the Department of Homeland Security (DHS). Most of FEMA* including its
    disaster assistance efforts* is now part of the Department*s Emergency
    Preparedness and Response Directorate; however, it has retained its name
    and individual identity within the department. We therefore refer to FEMA
    in this report.

    United States General Accounting Office Washington, DC 20548

    Page 2 GAO- 03- 926 Disaster Assistance

    six other disasters had FEMA provided more than $1 billion in assistance,
    the largest of them being the Northridge earthquake in California in 1994.
    2 FEMA*s public assistance program was the largest federal disaster effort

    to the NYC area, totaling $7.4 billion. 3 This program is designed to
    provide federal disaster grants to eligible state and local government
    agencies and specific types of private nonprofit organizations. It funds
    eligible

    *emergency work,* such as responses by local emergency personnel and
    debris removal, and *permanent work,* such as the repair, replacement, or
    restoration of disaster- damaged facilities, as authorized by the Robert
    T. Stafford Disaster Relief and Emergency Assistance Act. 4 FEMA is
    expected to provide about $7.4 billion to the NYC area through the public
    assistance

    program and public assistance- related spending directed by Congress,
    making FEMA*s public assistance funding the largest single federal
    disaster aid effort to the NYC area. 5 You asked us to review several
    aspects of the federal government*s

    response and recovery efforts. Since FEMA*s public assistance program was
    the largest federal assistance program to help the New York City area, we
    agreed to identify what activities were funded and the possible
    implications of this public assistance response to any major terrorist
    events that may occur in the future. Specifically, we agreed to provide
    information on (1) what activities FEMA supported in the NYC area with its
    public assistance program after the terrorist attacks, (2) how the

    2 The six other disasters for which FEMA spent more than $1 billion were
    caused by earthquakes, hurricanes, or floods. These six disasters are: $6.
    99 billion for the Northridge Earthquake, Calif. (1994); $2. 25 billion
    for Hurricane Georges, Ala., Fla., La., Miss., P. R., V. I. (1998); $1.84
    billion for Hurricane Andrew, Fla., La. (1992); $1. 13 billion for
    Hurricane Hugo, N. C., S. C., P. R., V. I. (1989); $1. 14 billion for
    Midwest Floods, 9 Midwestern states

    (1993); and $1.08 billion for Hurricane Floyd, 13 Eastern Seaboard states
    (1999). 3 The term *public assistance* is also used for unrelated
    government programs administered by other agencies. For example, in the
    Department of Health and Human Services, public assistance refers to
    benefits for low- income individuals. For this report, public assistance
    refers to the FEMA program.

    4 Pub. L. No. 93- 288, 88 Stat. 143 (1974), as amended. The Stafford Act
    authorized the public assistance program that gives FEMA authority to
    provide assistance, defines basic program criteria and eligibility, and
    authorizes FEMA to publish regulations.

    5 In the Consolidated Appropriations Resolution for fiscal year 2003,
    Congress authorized the state and NYC to use funds appropriated to FEMA
    for disaster relief for costs associated with the World Trade Center
    attacks that are not reimbursable under the Stafford Act. We refer to
    these funds as public assistance- related because they are used for
    projects in the public domain that are not related to hazard mitigation.

    Page 3 GAO- 03- 926 Disaster Assistance

    federal government*s response to this terrorist event differed from FEMA*s
    traditional approach to funding public assistance in past disasters, and
    (3) what implications FEMA*s public assistance approach in the NYC area
    may have on the delivery of public assistance should other major terrorist
    attacks occur in the future. We also agreed to provide a separate report
    on the overall federal disaster assistance given to help the NYC respond
    to

    and recover from the terrorist attacks. That report will be provided to
    you later this year.

    To address our objectives, we reviewed disaster- related project
    documentation, and we analyzed management information system data on the
    public assistance FEMA provided and its cost. We reviewed approaches FEMA
    traditionally used to fund major natural disasters and the staffing and
    coordination processes it used to deliver the assistance and compared them
    to approaches used in the aftermath of the World Trade Center attacks.
    Using a structured data collection and interview instrument, we reviewed
    decisions FEMA made on funding applications for 10 projects that were
    nontraditional when compared to the types of work funded in the aftermath
    of previous major natural disasters. We also interviewed FEMA, NYC, and
    nonprofit organization officials about the assistance provided and the
    challenges FEMA faced in delivering public assistance. We asked these
    officials their views on whether differences in the approach to delivery
    of public assistance in the NYC area demonstrated a need for a new
    approach to providing public assistance

    should another major terrorist event occur in the future. Our scope and
    methodology are discussed in greater detail in appendix I.

    Page 4 GAO- 03- 926 Disaster Assistance

    FEMA supported a wide range of activities for the NYC area with its public
    assistance program. The approximately $7.4 billion in funding was
    distributed to major categories of recipients. (See fig. 1.)

    Figure 1: Distribution of $7.4 Billion in Public Assistance and Public
    AssistanceRelated Funding

    Note: $0.08 million in grant administration costs are not reflected in the
    graph but are part of the total public assistance- related spending.
    Percentages do not total 100 percent because these costs are not included
    and due to rounding. a Includes the NYC Departments of Sanitation and
    Design and Construction, and the U. S. Army

    Corps of Engineers. b Excludes the NYC Departments of Police, Fire,
    Sanitation, and Design and Construction.

    Reimbursements to these four departments are shown under Debris Removal
    Operations & Insurance and NYC Police and Fire Departments. c Includes New
    York state agencies, nonprofit organizations, and the Port Authority of
    New York and

    New Jersey.

    Debris removal operations (costing about $0.7 billion) involved removing,
    screening, and disposing of 1.6 million tons of debris. The establishment
    of an insurance company to cover possible claims resulting from debris
    removal operations is projected to cost about $1 billion. The largest
    Results in Brief

    8.1% 37.9%

    16.3% 23.0%

    9.5%

    Source: GAO analysis of FEMA data. Interagency agreement for

    transportation system reconstruction ($ 2.8 billion)

    NYC Police & Fire Departments ($ 0.6 billion) Debris removal operations
    and insurance a

    ($ 1.7 billion)

    4.1%

    NYC government agencies b ($ 0.3 billion) Non- NYC government agencies c
    ($ 0.7 billion) Public assistance- related work authorized after 6/ 03 ($
    1.2 billion)

    Page 5 GAO- 03- 926 Disaster Assistance

    individual amount of FEMA*s public assistance funds*$ 2.8 billion or 38
    percent* will be used jointly with additional funds from the U. S.
    Department of Transportation to repair and upgrade the transportation
    infrastructure* including streets, subway systems, and commuter railways*
    damaged in the disaster. Reimbursements for NYC Police and Fire
    Departments* emergency efforts, pensions, and vehicle and equipment

    losses amounted to $0.6 billion. The $0.3 billion in reimbursements to NYC
    agencies other than the Departments of Design and Construction,
    Sanitation, Police and Fire were for various activities such as exterior
    building cleaning, rescheduling elections, and DNA testing to identify
    victims. Another $0.7 billion provided to non- NYC government agencies*
    such as New York state agencies, nonprofit organizations, and the Port
    Authority of New York and New Jersey* was to reimburse these agencies for,
    among other things, relocating offices and supporting some

    transportation projects that were not covered in transportation efforts
    listed above. Lastly, $1.2 billion was made available in June 2003 as a
    result of FEMA*s early close out of its traditional public assistance
    program to NYC and state for congressionally authorized costs associated
    with the terrorist attacks. Most of these costs would not have been
    eligible for reimbursement under FEMA*s traditional public assistance
    program. To receive the $1.2 billion reimbursement for public assistance-
    related costs, FEMA officials reported that NYC and state officials must
    prepare traditional grant applications to document that disaster- related
    costs have been incurred, however Congress authorized a much wider scope
    of costs

    that could be reimbursed than are authorized under the Stafford Act. As we
    concluded our review, the list of projects to be funded had not been
    determined, but NYC and state had requested reimbursements for heightened
    security in the aftermath of the terrorist attacks and cost- ofliving
    adjustments to pensions of the survivors of fire fighters and police
    officers killed in the line of duty in the terrorist attacks. A
    reimbursement had been made for a public awareness campaign called *I Love
    New York,* which was designed to attract visitors back to the city after
    the terrorist attacks.

    While FEMA followed traditional processes for considering most
    applications, public assistance provided to the NYC area after the
    terrorist attacks differed significantly in three major ways from FEMA*s
    traditional approach. First, FEMA did not require state or local
    governments to provide a share of federally provided disaster response and
    recovery costs. Typically, FEMA*s public assistance program shares
    disaster costs burdens, with FEMA providing 75 percent of the costs* the
    minimum provided for under the Stafford Act* and affected state and local
    governments paying the remaining share. At the direction of the President,

    Page 6 GAO- 03- 926 Disaster Assistance

    FEMA provided 100 percent of all public assistance costs in the NYC area.
    This was the first time an entire FEMA public assistance operation was 100
    percent federally funded. The second distinct aspect of FEMA*s public
    assistance to New York was that there was a funding target that became a
    cap on the level of the assistance. As a result, the public assistance
    program did not follow customary project selection and close out
    processes. Consistent with the President*s and Congress* commitment of
    approximately $20 billion in disaster assistance to New York, FEMA
    operated with a set spending level appropriated by Congress that it did
    not exceed for all public assistance- related work for the NYC area. In
    contrast, in prior disasters all applications for public assistance that
    FEMA determined to be eligible under the provisions of the Stafford Act
    were funded. Also, FEMA closed out public assistance funding for the World
    Trade Center disaster in June 2003, releasing money that had not been
    spent to NYC and state officials to use at their discretion for
    disasterrelated expenditures. A FEMA official said that no prior disaster
    had been closed out in this manner before work had been completed. Third,
    the size and type of work funded was quite different from the public
    assistance provided after prior major natural disasters. FEMA determined
    some nontraditional work was eligible for its public assistance program
    using flexible interpretations of the Stafford Act. For example, public
    assistance has traditionally been limited to coverage of disaster- related
    losses and damages* restoring, but not improving, existing infrastructure.
    However, FEMA officials said that they broadly interpreted the Stafford
    Act to allow funding that will not only to rebuild transportation systems
    that were damaged from the terrorist attacks, but may also improve the
    overall transportation system in Lower Manhattan. For example, within the
    FEMA/ Department of Transportation interagency agreement, work has been
    proposed to construct a new transit station to replace the existing but
    undamaged Fulton Street station to improve the overall flow of commuter
    traffic. Congress also authorized FEMA to fund other disasterrelated work,
    some of which would not have been eligible for assistance under the
    Stafford Act. As a result of the June 2003 close out of the public
    assistance program, $1.2 billion in funds that had not been spent for
    traditional public assistance work was made available to the city and
    state of New York for broader purposes authorized by Congress. For
    example, NYC plans to use FEMA funds to cover some of the costs of
    heightened security after the attacks. These distinct aspects of FEMA*s
    public assistance response in the NYC

    area compared to public assistance responses delivered after previous
    major disasters create uncertainties about the delivery of public
    assistance should there be another catastrophic terrorist attack in the
    future. FEMA

    Page 7 GAO- 03- 926 Disaster Assistance

    and NYC officials who managed the disaster recovery efforts agreed that
    the decisions made in New York would likely be considered if terrorists
    struck again, and that it is uncertain whether an approach similar to the
    one that evolved in NYC would be followed. Furthermore, NYC and FEMA
    officials differed on how well the public assistance program, as
    authorized by the Stafford Act, serves as the federal government*s vehicle
    for delivering this type of assistance. The NYC officials we interviewed
    did not think that the current program fully addressed the needs of the
    city. They said it should not be used to respond to major terrorist events
    unless it is significantly amended to address what they believe are unique
    challenges in aligning disaster assistance with the consequences of a
    terrorist

    incident; these concerns include long- term environmental liabilities and
    the need for heightened security efforts in the immediate aftermath of a
    terrorist attack. In contrast, FEMA officials said that they were
    generally satisfied that the Stafford Act provides the necessary
    flexibility for

    responding to terrorist attacks since Congress may authorize additional
    assistance to disaster- affected areas to address specific and unique
    needs, as it did for the NYC area. As we were completing our audit work,
    FEMA established a working group to look at ways to redesign the public
    assistance program to meet community needs for all types and sizes of
    disasters in the future, including those resulting from terrorist events.
    This group expects to provide an initial concept for revising the program
    by September 30, 2003.

    In commenting on a draft of this report, the Acting Director of FEMA*s
    Recovery Division said that FEMA officials are proud of the agency*s
    response in delivering public assistance programs to NYC and state, and
    that they are satisfied that FEMA*s authority was adequate and flexible
    enough in most circumstances to meet the response and recovery needs of
    New York. FEMA*s comments are reprinted in appendix II. FEMA also

    provided technical comments on our draft, which we incorporated into the
    report where appropriate.

    Under the Stafford Act, when a major natural catastrophe, fire, flood, or
    explosion occurs that is beyond the capabilities of a state and local
    government response, the President may declare that a major disaster
    exists. This declaration activates the federal response plan for the
    delivery of federal disaster assistance. The response plan is an agreement
    signed by 27 federal departments and agencies, including the American Red
    Cross.

    Under the Stafford Act, FEMA is responsible for coordinating both the
    federal and private response efforts. President Jimmy Carter established
    FEMA in 1978 to consolidate and coordinate emergency management Background

    Page 8 GAO- 03- 926 Disaster Assistance

    functions in one location, addressing concerns about the lack of a
    coordinated federal approach to disaster relief. FEMA most recently
    redesigned its public assistance program in 1998. The federal assistance

    coordinated by FEMA is designed to supplement the efforts and available
    resources of state and local governments and voluntary relief
    organizations. 6 While FEMA had the lead in coordinating the federal
    response to the

    attacks on NYC, other federal agencies, including the Department of
    Transportation (DOT), the Small Business Administration (SBA), the U. S.
    Army Corps of Engineers, and the Environmental Protection Agency (EPA)
    also provided significant assistance. The disaster declaration from

    the President triggers not only a role for FEMA as coordinator of the
    federal emergency response plan, but also a role in delivering assistance
    through several programs it administers. These programs include individual
    assistance to victims affected by a disaster and hazard mitigation funds
    to state and local governments to take steps to prevent future disasters.
    However, FEMA*s public assistance program is typically its largest
    disaster assistance effort. It is designed to provide grants to

    eligible state and local government agencies and specific types of private
    nonprofit organizations that provide services of a governmental nature,
    such as utilities, fire departments, emergency and medical facilities, and
    educational institutions, to help cover costs of emergency response
    efforts and work associated with recovering from the disaster. According
    to FEMA regulations, work eligible for public assistance must be

     to repair damage that occurred as a result of a declared event,
    located within an area declared by the President as a disaster area, and
    the legal responsibility of an eligible applicant.

    The Stafford Act sets the federal share for the public assistance program
    at no less than 75 percent of eligible costs of a disaster with state and
    local governments paying for the remaining portion. The assistance is to
    be provided to repair, restore, reconstruct, or replace eligible
    facilities. The

    6 In a December 2002 report, we discussed charitable organizations*
    contribution to the disaster relief efforts in the NYC area and the need
    for a greater FEMA role in facilitating collaboration among these
    organizations. U. S. General Accounting Office, September 11: More
    Effective Collaboration Could Enhance Charitable Organizations*
    Contributions in Disasters, GAO- 03- 259 (Washington, D. C.: Dec. 19,
    2002).

    Page 9 GAO- 03- 926 Disaster Assistance

    amount of public assistance provided is reduced by, among other
    considerations, insurance proceeds and salvage value. Because the
    assistance provided by the program is limited by these factors, as well as
    certain eligibility criteria, the amount of public assistance funds FEMA
    provides in a disaster does not equal the total financial impact of a
    disaster on an affected community or area.

    The Stafford Act has been amended several times since its enactment in
    1974, and FEMA has taken steps over the years to redesign its public
    assistance program with internal policy changes to make eligibility
    criteria for public assistance clearer, and more consistent and accurate.
    The

    Senate report on the Disaster Mitigation Act of 1999 noted that the
    congressional interest in reducing the federal cost of disaster assistance
    would be achieved by, among other things, reducing the types of facilities
    and activities that may receive assistance in the event of a disaster. 7
    In August 2001, we reported that in a period of about 2 years since FEMA
    had completed a 1998 redesign of the public assistance program, it had
    developed or revised public assistance program policies in 35 areas or
    topics in part to make clearer eligibility criteria and improve the
    consistency and accuracy of eligibility determinations for individual
    projects. 8 FEMA*s public assistance program is the largest portion of the
    federal

    assistance provided to New York in the aftermath of the World Trade Center
    attacks. Of a total of over $20 billion in federal assistance approved for
    this disaster, either in the form of direct assistance or in the form of
    tax benefits, about $7.4 billion was funded through FEMA*s public
    assistance program or through public assistance- related spending
    authorized by Congress through appropriations to FEMA. Figure 2 shows that
    FEMA*s public assistance program is providing the largest single portion
    of the federal contribution to the NYC area*s disaster recovery effort.

    7 Senate Report 106- 295. 8 U. S. General Accounting Office, Disaster
    Assistance: Improvement Needed in Disaster Declaration Criteria and
    Eligibility Assurance Procedures, GAO- 01- 837 (Washington, D. C.: Aug.
    31, 2001).

    Page 10 GAO- 03- 926 Disaster Assistance

    Figure 2: Public Assistance Funding Provides the Largest Federal
    Contribution to the NYC Area*s Recovery

    Note: Percentages do not total 100 percent due to rounding. a Includes the
    Department of Health and Human Services, Department of Labor, and SBA.

    b DOT funds are to assist in rebuilding and improving the transportation
    infrastructure. c HUD funds are to be used for a variety of purposes,
    including assistance to businesses and individuals, infrastructure
    restoration, and economic recovery. d Estimate by the Joint Congressional
    Committee on Taxation in March 2002 of the cost of the Liberty

    Zone tax package to the federal government. The cost of the tax package in
    lost revenues to the federal government will not be precisely determined
    because data is not available. The package contains provisions designed to
    spur economic revitalization in Lower Manhattan.

    FEMA may assign work or enter into agreements with other federal agencies
    and the American Red Cross to handle aspects of public assistance within
    their areas of expertise. These agreements are called mission assignments
    and interagency agreements. Mission assignments

    were widely used in the first few months after the World Trade Center
    disaster to provide assistance for short- term projects. Interagency
    agreements* used for long- term projects* are similar to mission
    assignments in that they are funding agreements between agencies to
    provide goods and services on a reimbursable basis.

    FEMA public assistance- related funding ($ 7.4 billion)

    24.5% 11.8%

    17.2% Housing and Urban Development (HUD) funding c ($ 3.5 billion)

    Liberty zone tax package d ($ 5.0 billion)

    6.4%

    FEMA individual and nonpublic assistance- related funding ($ 1.3 billion)

    DOT funding b ($ 2.4 billion)

    3.9%

    Other federal agency a funding ($ 0.8 billion) Source: GAO analysis of
    FEMA and Congressional Budget Office data.

    36.3%

    Page 11 GAO- 03- 926 Disaster Assistance

    In March 2003, FEMA and its responsibilities were placed entirely into DHS
    in the largest reorganization of the federal government since the
    formation of the Department of Defense. The Emergency Preparedness and
    Response Directorate within DHS has responsibility for the public
    assistance program and continues to be referred to as FEMA, which we do in
    this report. 9 The approximately $7.4 billion of public assistance and
    public assistancerelated

    work funded through FEMA is providing a broad range of aid to the NYC
    area. For example, public assistance- related funding was, or will be,
    provided to reimburse NYC authorities for immediate response and recovery
    actions* such as debris removal operations and emergency efforts by the
    NYC Departments of Design and Construction, Sanitation, Fire, and Police*
    and for long- term actions to repair and upgrade damaged facilities and
    transportation systems. Because of the unique nature of the NYC disaster,
    existing FEMA data system categories for tracking and reporting public
    assistance do not provide for some of the large public assistance- related
    efforts. 10 Based on our analysis, we categorize the public assistance and
    related funding for NYC into six general areas:

    9 FEMA*s Office of National Preparedness, which is responsible for
    terrorism preparedness and response, was placed in the Border and
    Transportation Security Directorate. This placement was designed to
    achieve a measure of consolidation with preparedness functions from other
    agencies. However, as we reported in our Performance and Accountability
    Series in January, 2003, other disaster preparedness and response efforts

    will be in the Emergency Preparedness and Response Directorate and close
    coordination will be needed among these groups to ensure that problems of
    duplication, overlap, and confusion that occurred in the past are not
    replicated. U. S. General Accounting Office,

    Major Management Challenges and Program Risks: Federal Emergency
    Management Agency, GAO- 03- 113 (Washington, D. C.: January 2003).

    10 FEMA*s categories for public assistance work are (1) debris removal,
    (2) emergency protective measures, (3) road and bridge systems, (4) water
    control facilities, (5) public buildings and equipment, (6) public
    utilities, and (7) recreation and other. However, some large public
    assistance efforts funded in NYC did not fit well within the standard
    categories. For example, a $64.6 million application to cover increased
    NYC contributions

    to the retirement system due to the line- of- duty deaths of police and
    fire fighters in the terrorist attacks was classified as an emergency
    protective measure, and a FEMA official noted that the *recreation and
    other* category was used to classify reimbursements that did not fit in
    other categories. For example, funding to provide additional school time
    for students who lost instructional time as a result of the terrorist
    attacks was classified as

    *recreational or other.* For this reason, we did not use the FEMA
    categories for our analysis. $7.4 Billion in Public

    Assistance- Related Funding Provided for Broad Range of Activities

    Page 12 GAO- 03- 926 Disaster Assistance

     debris removal operations and insurance;  reconstruction of the Lower
    Manhattan transportation infrastructure

    under an interagency agreement with DOT;  reimbursement of police and
    fire department costs;  reimbursement of expenses incurred by NYC
    agencies other than the

    Departments of Design and Construction, Sanitation, Police and Fire for
    such activities as DNA and forensic testing to identify victims and
    exterior building cleaning;

     reimbursement of expenses to agencies that are not part of the NYC
    government (i. e., New York state agencies, the Port Authority, and
    private non profits) for disaster- related costs such as transportation
    work not covered under the interagency agreement discussed above; and

     reimbursement of public assistance- related expenses authorized by
    Congress that would not otherwise have been eligible for assistance (i. e.
    heightened security after the terrorist attacks) from funds made available
    after the June 30, 2003, close out of the traditional public assistance
    program.

    Refer to figure 1 on page 4 for a graphic illustration of how public
    assistance funding to the NYC area was or will be distributed within these
    six categories.

    Each category of public assistance funding and some of the major efforts
    funded in each of them, are described in the following sections.

    FEMA funded about $1.7 billion in work related to debris removal
    operations and to reimburse the NYC Departments of Design and Construction
    and Sanitation for debris removal expenses. The most significant and
    costly activities in this category were removing and disposing of the
    destroyed World Trade Center buildings, screening debris for victims*
    remains and personal effects, and establishing an insurance

    company for possible claims resulting from debris removal operations.
    Workers spent an estimated 3.1 million hours over 9 months to remove about
    1.6 million tons of debris from the World Trade Center site. Debris from
    the collapse of the World Trade Center towers extended 7 stories into the
    earth and more than 11 stories high at Ground Zero. Thick dust Debris
    Removal

    Operations and Insurance

    Page 13 GAO- 03- 926 Disaster Assistance

    covered streets, buildings, and vehicles for blocks around the site. FEMA
    provided $620.9 million for removing the debris from the World Trade
    Center site and barging it to a landfill in Staten Island, N. Y., for
    screening, sorting, and disposal. Original estimates projected that the
    recovery effort and cleanup would take 2 years and $7 billion. Figure 3
    shows debris removal and barging operations.

    Page 14 GAO- 03- 926 Disaster Assistance

    Figure 3: Public Assistance- Funded Debris Removal Operations

    The need to sort and screen the debris to recover the remains and personal
    effects of victims and criminal evidence made the debris removal operation
    even more difficult. FEMA provided $72 million to the U. S. Army

    Source: FEMA Photo Library. Debris removal contractors survey the piles of
    debris, estimated at 1.6 million tons, at the site where the World Trade
    Center towers once stood.

    Source: FEMA Photo Library. FEMA- funded debris removal efforts are in
    progress at the World Trade Center about a month after the terrorist
    attacks.

    Source: FEMA Photo Library. Two 500- ton floating cranes continue debris
    removal operations, loading wreckage onto barges to be towed to a city
    landfill in Staten Island, N. Y., for screening, inspection, and disposal.

    Page 15 GAO- 03- 926 Disaster Assistance

    Corps of Engineers to manage the debris inspection at the landfill. The
    sorting activities were an intense, meticulous effort to recover remains
    and personal belongings of victims to return them to their families and to
    gather criminal evidence related to the terrorist attacks. The Corps of
    Engineers provided labor, heavy equipment, conveyer belts, and screening
    equipment. The Corps also provided temporary buildings for storage and to
    shelter workers, worker decontamination facilities, and food service
    facilities. Figure 4 shows debris screening and inspection operations at
    the landfill.

    Figure 4: Debris Screening and Inspection Operations In addition to the
    costs of debris removal and disposal, FEMA set aside $1 billion to
    establish a debris removal insurance company to cover contractors and NYC
    for liability claims resulting from debris removal operations. 11
    According to city officials, private contractors came to Ground Zero to do
    search and rescue, recovery, and debris removal work

    11 FEMA was authorized to do so by the Consolidated Appropriations
    Resolution of 2003, Pub. L. No. 108- 7. $1 billion is a projected cost,
    but actual costs will be unknown for many years.

    Source: FEMA News Photo. Source: U. S. Army Corps of Engineers. Two views
    of inspectors at work at the city landfill in Staten Island, N. Y.,
    screening through mixed debris for victims* remains and personal effects
    and criminal evidence.

    Page 16 GAO- 03- 926 Disaster Assistance

    in the immediate aftermath of the terrorist attacks before entering into
    formal contract agreements with NYC. The outstanding issue that kept the
    contractors and NYC from reaching a final agreement on compensation for
    the work done was liability insurance coverage. City officials said that
    liability insurance could not be obtained from a private insurance company
    because of the unknown risks and potentially large number of liability
    claims. Based on input from insurance experts, city officials and FEMA
    determined that the best solution was to establish an insurance company
    with $1 billion in federal capital to provide $1 billion in coverage for a
    payout period of up to 25 years. The insurance fund will cover NYC workers
    and contractor employees. As of June 2003, the details of the insurance
    coverage had not been finalized. Additional perspectives on how aspects of
    FEMA*s establishment of the insurance fund differed from a traditional
    public assistance activity can be found on page 30 of this report.

    FEMA provided $2.8 billion to help fund an interagency agreement with the
    DOT to reconstruct the Lower Manhattan transportation system. The
    terrorist attack at the World Trade Center severely damaged the intermodal
    public transportation system that was used by about 80 percent of the
    350,000 daily commuters to Lower Manhattan* the highest

    percentage of people commuting to work by public transit of any commercial
    district in the nation. The Port Authority of New York and New Jersey
    (Port Authority) commuter station underneath the World Trade Center was
    destroyed, and subway stations servicing the area were sufficiently
    damaged to prevent trains from stopping at them. In addition, some tunnels
    were temporarily closed, preventing commuter buses from

    entering Lower Manhattan. Access to and mobility within Lower Manhattan
    was severely diminished. Many streets were closed due to debris from the
    collapsed buildings and the subsequent debris removal operations. Large
    rescue vehicles and heavy debris removal equipment also damaged the area
    streets, making them more difficult to navigate.

    Plans are underway to rebuild and improve the Lower Manhattan
    transportation system with funding from FEMA and DOT. These agencies,
    under an interagency agreement, will contribute $4.6 billion to these

    transportation system projects, with FEMA providing $2.8 billion and DOT
    providing an additional $1.8 billion. The agreement will result in not
    only rebuilding a system that was damaged, but also improving the overall
    Lower Manhattan transportation system. The agreement designated DOT*s
    Federal Transit Administration (FTA) as the lead agency in charge of
    Interagency

    Agreement for Lower Manhattan Transportation System Reconstruction

    Page 17 GAO- 03- 926 Disaster Assistance

    administering the federal assistance and coordinating with state and local
    implementing agencies.

    In February 2003, the Governor of New York submitted funding requests to
    FEMA and DOT for three priority projects estimated to cost between $2. 55
    billion and $2.85 billion* the World Trade Center Transportation Hub,
    Fulton Street Transit Center, and South Ferry Subway Station to improve
    the overall flow of commuter traffic in lower Manhattan. Although the uses
    for the remaining $1.7 billion to $2.0 billion of the $4.6 billion in
    FEMA/ DOT funds had not been determined as of June 2003, uses for the

    remaining funds being evaluated included improvements in access to JFK
    Airport and Long Island, improvements to West Street Route 9A, a tour bus
    facility, the World Trade Center sub grade infrastructure, and commuter
    ferries and street configuration work.

    Figure 5 shows the extensive damage to the PATH commuter station beneath
    the World Trade Center Towers after the terrorist attacks and a model of
    the permanent station planned to be constructed in its place with FEMA/
    DOT interagency agreement funds.

    Page 18 GAO- 03- 926 Disaster Assistance

    Figure 5: Interagency Agreement Will Fund Construction of a Permanent New
    Station to Replace the Extensively Damaged PATH Station Beneath the World
    Trade Center Towers

    FEMA is also funding transportation- related work for the Port Authority
    outside of the scope of this interagency agreement. This work is discussed
    on page 21 of this report. We provide additional perspective on how
    aspects of this interagency agreement differ from FEMA*s traditional
    public assistance response to major disasters on page 28 of this report.

    FEMA provided about $643 million in assistance to the NYC Police and Fire
    Departments to pay benefits and wages to emergency workers during response
    and recovery efforts and to replace vehicles and equipment. As first
    responders, these departments suffered heavy casualties and damages in the
    collapse of the twin towers of the World Trade Center: 343 NYC fire
    department employees, 23 active city police officers, and 5 retired city

    police officers died in the line of duty, and 238 emergency vehicles, as
    well as radios and other equipment were lost or destroyed. In the months
    after the attack, nearly 100 firefighters per shift worked at the disaster
    site around the clock standing over contractor- operated steel- ripping
    machines looking for victims* remains. Similarly, police officers were
    stationed 24 hours a day, 7 days a week to provide security at the
    disaster site. Figure 6 NYC Police and Fire

    Department Reimbursements

    Source: FEMA News Photo. The PATH train station beneath the World Trade
    Center Towers was severely damaged in the attacks. A new permanent station
    will be constructed within the FEMA/ DOT interagency agreement. Source:
    Port Authority of N. Y. and N. J.

    A model of the permanent station to be designed and constructed within the
    FEMA/ DOT interagency agreement in place of the damaged facility.

    Page 19 GAO- 03- 926 Disaster Assistance

    includes photographs of police and firefighters during the search and
    rescue phase of work immediately after the terrorist attacks and 2 of the
    emergency vehicles that were destroyed in the World Trade Center collapse.

    Figure 6: Public Assistance Funded Police and Firefighter Overtime and
    Replaced Emergency Vehicles That Were Destroyed in the Terrorist Attacks

    Public assistance grants to these two city agencies included $341 million
    for police overtime and death benefits and $223 million for firefighter
    overtime, death benefits, and funeral costs. Grants also reimbursed
    emergency service departments $44 million to replace 98 firefighter
    vehicles, radios, and other equipment; and $26 million to replace 140
    police emergency vehicles and emergency equipment that were destroyed in
    the terrorist attacks.

    Although the NYC Departments of Design and Construction, Sanitation, Fire,
    and Police were the city agencies that received the largest amounts of
    FEMA public assistance funding for debris removal and insurance and for
    emergency response losses and expenses related to the terrorist attacks,
    FEMA also provided direct public assistance to a number of other NYC
    agencies for a wide range of work totaling almost $300 million. Projects
    included: Reimbursements to

    Other NYC Government Agencies Source: FEMA News Photo. Police and
    firefighters worked around the clock in the search and

    rescue phase following the terrorist attacks. FEMA public assistance
    reimbursed for overtime.

    Source: New York Fire Department. Two of the emergency vehicles destroyed
    when the World Trade Center towers collapsed. FEMA public assistance
    reimbursed NYC the funds to replace emergency vehicles and equipment.

    Page 20 GAO- 03- 926 Disaster Assistance

     $46.7 million to the Office of the Chief Medical Examiner for DNA
    testing, forensic analysis and equipment to help identify victims of the
    terrorist attacks;

     $8 million to the Department of Elections to reimburse the expenses it
    incurred to reschedule elections that were being held on September 11,
    2001, and to replace damaged voting equipment;

     $19.3 million to the NYC Department of Education to pay for
    instructional time for students who missed school due to closures, delayed
    openings, and school relocations 12 ; and

     $8.6 million to the NYC Department of Environmental Protection for
    exterior building cleaning.

    Other examples of funding that went to city agencies are $12.9 million to
    the NYC Department of Citywide Administrative Services for emergency
    supplies, equipment and services, and $10.6 million to set up the
    facilities and provide equipment and furniture for the NYC Family Center
    and reimburse city and state personnel for overtime at the Family Center
    who provided services for NYC residents in the aftermath of the terrorist
    attacks. Figure 7 shows the cloud of dust that covered buildings for
    blocks around the World Trade Center.

    12 Funding of $77 million was approved for the NYC Board of Education for
    this purpose. As of April 2003, $19.3 million was. The remaining funds
    were de- obligated from the project and directed to public assistance
    related work authorized by Congress after the close out of the traditional
    assistance program.

    Page 21 GAO- 03- 926 Disaster Assistance

    Figure 7: NYC Agencies Received Public Assistance Funding for a Range of
    Work Including Cleaning Dust from Buildings

    FEMA provided over $700 million in public assistance- related funding to
    agencies that were not part of the NYC government, including the Port
    Authority, state agencies, counties, and private nonprofit organizations.
    Among the agencies receiving some of the largest amounts was the Port
    Authority, which sustained substantial losses of lives and property as a
    result of the terrorist attacks. The funding for the Port Authority was in
    addition to the FEMA transportation funding provided in its interagency
    agreement with DOT to rebuild and improve the Lower Manhattan
    transportation system, as discussed on page 16.

    FEMA reimbursed the Port Authority for a wide range of work including
    $285.0 million to relocate offices that were located in the World Trade
    Center, repair commuter train tunnels that were damaged in the terrorist
    Reimbursements to

    Non- NYC Government Agencies

    Source: U. S. Environmental Protection Agency. Contaminant- filled dust
    covered buildings in the blocks around the World Trade Center. FEMA
    reimbursed the NYC Department of Environmental Projection for the exterior
    cleaning of 244 buildings in Lower Manhattan.

    Page 22 GAO- 03- 926 Disaster Assistance

    attacks, implement emergency ferry services, open a temporary PATH
    station, and pay overtime to the Port Authority police. The damage to the
    Port Authority*s PATH train system was extensive; tunnels leading from the
    station to New Jersey were flooded and the Exchange Place station in New
    Jersey had to be closed because the station could not operate as a
    terminal. All tunnel components (i. e., fiber optics, conduits, pipes,
    lighting,

    ductbanks, track, contact rail, and ballast) needed to be replaced. The
    Port Authority also received public assistance funds to replace equipment
    it lost when its World Trade Center facilities were destroyed, including
    its voice telephone network, desktop computers, and fax and photocopy
    machines, and to pay overtime labor costs for the emergency response.
    Figure 8 shows PATH tunnel repair and construction efforts.

    Figure 8: Port Authority Received Public Assistance Funding to Restore
    Tunnels That Were Flooded in the Terrorist Attacks

    FEMA also provided public assistance funds to many other non- NYC
    government agencies to reimburse them for emergency and repair costs. For
    example, the New York State Police received $45 million for security
    operations, and New York University received $5.9 million for air
    monitoring, environmental cleaning, and emergency supplies and services.
    Other examples include the NYC Office of Emergency Management, which

    Source: Port Authority of N. Y. and N. J. Ongoing efforts in June 2002 to
    restore two 2- mile PATH tunnels under the Hudson River, connecting Lower
    Manhattan and New Jersey. The tunnels were flooded as a result of the
    terrorist attacks.

    Source: Port Authority of N. Y. and N. J. As of March 2003, progress shows
    in one PATH tunnel as the PATH Service Restoration project moves forward
    to the goal of restoring service to Lower Manhattan in December 2003.

    Page 23 GAO- 03- 926 Disaster Assistance

    received $11.8 million from FEMA to replace destroyed equipment and leased
    office space that was located in the World Trade Center; Pace University,
    which was provided $4.4 million for damaged buildings; and

    the Battery Park City Authority, which received $3.9 million to repair
    damaged facilities.

    Lastly, $1.2 billion was made available in June 2003 as a result of FEMA*s
    early close out of its traditional public assistance program to NYC and
    state for congressionally authorized costs associated with the terrorist
    attacks. Most of these costs would not have been eligible for
    reimbursement under FEMA*s traditional public assistance program. The
    close out freed funds for discretionary public assistance- related uses by
    NYC and state and ensured that FEMA would spend the entirety of the
    appropriated assistance to the NYC area. Funds obligated for all of FEMA*s
    programs, including individual assistance and hazard mitigation, were
    reconciled, and funds that had not been expended for approved projects as
    of April 2003 were de- obligated to be used for discretionary public
    assistance- related expenditures. To receive the $1.2 billion
    reimbursement for public assistance- related costs, FEMA officials
    reported that NYC and state officials must prepare traditional grant
    applications to document that disaster- related costs have been incurred;
    however, Congress authorized wide discretion on the type of costs that
    could be reimbursed.

    As we concluded our review, the list of projects to be funded had not been
    determined, but NYC and state had requested reimbursements for heightened
    security in the aftermath of the terrorist attacks and cost- ofliving
    adjustments to pensions of the survivors of firefighters and police
    officers killed in the line of duty in the terrorist attacks. A $19
    million reimbursement has been made for a public awareness campaign called
    *I Love New York,* which was designed to attract visitors back to the city
    after the terrorist attacks. We discuss the heightened security

    reimbursements in more detail on page 32 of this report as an example of
    funding that was different in scope than a typical public assistance
    project and that would not have been eligible for FEMA funding unless it
    was

    specifically authorized by Congress. Reimbursements for

    Public AssistanceRelated Work Authorized by Congress

    Page 24 GAO- 03- 926 Disaster Assistance

    Each disaster to which FEMA responds has aspects that make it unique from
    other disasters, resulting in some differences in forms of assistance
    provided to affected communities within the parameters of the Stafford Act
    eligibility requirements, according to the head of FEMA*s public

    assistance program. While FEMA followed traditional processes for
    considering most applications, the public assistance response in the NYC
    area after the terrorist attacks differed significantly from the
    traditional

    approach FEMA has used in providing assistance under the Stafford Act
    after major natural disasters. The three significant differences were:

     the elimination of any local sharing of disaster response and recovery
    costs,

     capped amounts of funding that resulted in significant modifications to
    the project selection and close out processes, and

     the size and type of projects funded. Many of these differences are
    based on presidential and congressional direction; however, some are the
    result of FEMA*s interpretations of the Stafford Act to allow the approval
    of funding for certain assistance to New York.

    The Stafford Act sets the federal share for the public assistance program
    at no less than 75 percent of eligible costs. The President can increase
    the federal share for the public assistance program if it is determined
    that the disaster costs greatly exceed a state*s financial capabilities.
    In practice, the federal share has reached 100 percent for emergency work,
    for limited periods of time, if determined that it was necessary to
    prevent further damage, protect human lives, or both. In 1992, for
    example, after Florida and Louisiana suffered large disaster expenses as a
    result of Hurricane Andrew, FEMA funded 100 percent of all public
    assistance costs above $10 per capita. 13 According to a FEMA official,
    the 1994 Northridge, California earthquake, which cost almost $7.0
    billion, was FEMA*s most costly disaster funding effort until the World
    Trade Center attacks occurred; FEMA provided for 90 percent of all public
    assistance costs. In discussing the question of state and local sharing of
    public assistance costs, FEMA

    13 Per capita personal income is commonly used in federal grant programs
    as a basis for sharing program costs between states and the federal
    government. Public Assistance to

    NYC Differed from the Traditional FEMA Response in Several Areas

    No Sharing of Public Assistance Costs by State or Local Governments

    Page 25 GAO- 03- 926 Disaster Assistance

    officials stated that they are reluctant to recommend a 100 percent
    federal share for projects unless there are compelling reasons to do so
    because the traditional process with a matching share creates incentives
    for state and local officials to control costs and closely evaluate
    projects.

    In the days immediately following the terrorist attacks, the President
    determined that the magnitude and nature of the disaster justified the
    federal government funding the total cost of public assistance projects,
    and he directed that FEMA fund 100 percent of the eligible costs with no
    state or local matching funds. This increased FEMA*s costs and

    significantly reduced costs to NYC and other recipients. For example, on
    the transportation repair and improvements efforts, NYC area recipients
    did not have to make a financial contribution that could have totaled
    nearly $680 million* 25 percent of the $2.75 billion that FEMA is
    providing.

    Although New York received the benefits of 100 percent FEMA funding of
    public assistance projects, the President reduced the amount of related
    Hazard Mitigation Grant Program funds provided to New York. Created in
    1988 by the Stafford Act, this grant program provides funds to communities
    affected by major disasters to undertake mitigation measures following a
    major disaster. At the time of the terrorist attacks, grants funds up to
    15 percent of the total amount of FEMA assistance provided are available
    to states following a disaster. 14 However, in this case, the President
    limited the mitigation grant funds to 5 percent of the amount spent. Had
    the hazard mitigation funding percentage not been reduced, more than $1.2
    billion in mitigation funds would have been required using the customary
    15 percent of total cost criteria.

    14 The Consolidated Appropriations Resolution of 2003, Pub. L. No. 108- 7,
    has since amended the Stafford Act to reduce the amount available for
    mitigation grant funds to 7.5 percent. However, pursuant to the The
    Disaster Mitigation Act of 2000, up to 20 percent of the total estimated
    federal assistance amount is available for states that meet enhanced

    planning criteria.

    Page 26 GAO- 03- 926 Disaster Assistance

    In a typical major disaster, FEMA*s consideration of whether work is
    eligible for public assistance is not constrained by a limit on the total
    amount of public assistance funding that can be spent, and disasters
    remain *open* with FEMA until public assistance work is substantially
    completed. Generally, FEMA officials approve all public assistance
    applications that meet eligibility criteria under the Stafford Act, and
    they fund the work from FEMA*s disaster relief fund. Also, according to a
    FEMA public assistance official, direct congressional appropriations are
    not typically made for a specific disaster. The official explained that
    damaged facilities are identified within 60 days following a kick- off
    meeting to begin federal disaster assistance between FEMA officials and
    state and local officials of the area impacted by the disaster. Proposed
    work is then considered for eligibility and funded through *project
    worksheets** applications for specific funding amounts to complete
    discrete work segments. Project worksheets document the scope of work,
    cost estimates, locations, damage descriptions and dimensions, and special
    considerations of each work segment. No limit is set on the dollar amount
    of eligible work that can be approved. As the response and recovery
    progresses, states reimburse applicants for all costs that meet the
    Stafford Act*s public assistance eligibility criteria and FEMA reimburses
    the states for the federal share. A public assistance official noted that
    disasters remain open with FEMA long after public assistance funds have
    been obligated. For example, as of June 2003, the Northridge, California,
    earthquake was still an open FEMA disaster 9 years after it occurred due
    to large and long- term reconstruction efforts. Disasters are *closed*
    when the project is complete, the final costs are known, and all appeals
    of funding decisions have been resolved.

    Following the terrorist attacks, however, the process of selecting
    projects that were eligible for funding and closing out the public
    assistance for the NYC area did not follow FEMA*s customary process
    because FEMA had a

    set amount of funds available for public assistance efforts. Congress
    provided FEMA with specific appropriations for the terrorist attacks that
    resulted in a capped funding amount of $8.8 billion for its efforts to aid
    the NYC area from the President*s pledge of at least $20 billion in
    federal assistance. In consideration of funding required for its other
    programs (assistance for individuals impacted by the disaster and hazard
    mitigation grants), $7.4 billion remained available for public assistance
    and public assistance- related projects. To help ensure that the amount of
    public assistance did not exceed this amount, FEMA asked that city and
    state officials prioritize their funding needs. As a result, about $400
    million in funding initially budgeted for the Port Authority was
    eventually reallocated to other projects. FEMA also delayed a decision on
    funding for Different Processes

    for Selecting Projects and Closing Out the Disaster Based on Capped
    Funding Amounts

    Page 27 GAO- 03- 926 Disaster Assistance

    city and state pension actuarial losses resulting from line of duty deaths
    of police and fire fighters at the World Trade Center site so that
    officials could be certain that the costs of the project would not cause
    FEMA to exceed its total appropriation for the disaster.

    A second major difference from how FEMA typically manages a disaster
    occurred when it established a June 30, 2003, deadline for closing out the
    regular public assistance program and the disaster before work was
    completed. According to FEMA officials, they established this deadline for
    closing out public assistance projects eligible for funding under the
    Stafford Act so that any remaining funds could be used for work identified
    as high priorities by city and state officials in New York and authorized
    by

    Congress. They said that deadlines for closing out public assistance had
    not been set in any prior disaster until work was completed, but that they
    believed it was necessary for the NYC area to manage the available funds
    to ensure that its priorities are best met as quickly as possible.

    The response to the NYC terrorist attacks was the largest public
    assistance effort in FEMA*s history and by far its largest response to a
    terrorist event. Prior to the World Trade Center attacks, FEMA*s most
    costly disaster assistance* almost $7 billion* was provided to aid in the
    recovery from the Northridge, California, earthquake in 1994. FEMA spent
    more than $1 billion for five other disasters in its history. Further,
    FEMA*s experience with terrorism was limited to two occasions prior to the
    World Trade Center attacks. In April 1993, a major disaster was declared
    in the aftermath of an explosion caused by terrorism at the World Trade
    Center. FEMA spent about $4.2 million on that disaster recovery. In April
    1995, an emergency and then a disaster were declared in Oklahoma City,
    Oklahoma, in the aftermath of the bombing of the Murrah federal building*
    FEMA spent about $530 million on that recovery effort.

    In its response to terrorism in the NYC area, FEMA provided public
    assistance funds for the same types of projects that are funded after a
    natural disaster (e. g., removing debris, repairing roads, and replacing
    emergency vehicles that were destroyed). However, other work funded

    was quite different because of the magnitude and nature of the disaster.
    FEMA officials said that they determined that some non traditional work
    was eligible for its public assistance program using flexible
    interpretations of the Stafford Act. Examples of public assistance
    projects approved by FEMA that we identified as being different from
    traditional public assistance work due to their size and/ or type of work
    done included Size and Type of Work

    Was Different Than Work in Other Major Disasters

    Page 28 GAO- 03- 926 Disaster Assistance

    improvements to the Lower Manhattan transportation system and air quality
    testing. Some of these projects are discussed as follows.

    Improving Lower Manhattan*s Transportation System ($ 2.75 billion). Public
    assistance has traditionally been limited to repair of disaster- related
    losses and damages to existing infrastructure. Assistance has not
    generally

    been provided to enhance or modernize the infrastructure beyond its pre
    disaster conditions. In recognizing the interdependence of Lower
    Manhattan*s transportation system, however, FEMA officials said that they
    broadly interpreted their guidelines to enter into an interagency
    agreement

    with DOT to rebuild physical facilities that were damaged from the attacks
    and construct new facilities that may improve the overall Lower Manhattan
    transportation system. FEMA attorneys said that they determined that the
    Stafford Act would permit funding for the restructuring of the Lower
    Manhattan transportation system because they concluded that repairing and
    replacing individual elements would not

    completely restore the system*s functionality. Testing air quality and
    cleaning buildings ($ 36.9 million). FEMA officials said that air quality
    testing and removing dust from buildings had not been an issue in prior
    major disasters, however, it was important to the physical and
    psychological well being of NYC citizens in the aftermath of this

    disaster. FEMA determined that the testing of air quality and cleaning
    were eligible for public assistance funding where the collapse of the
    World Trade Center buildings, resulting fires, and subsequent debris
    removal caused potential health issues related to air quality. To meet
    this need, FEMA entered into interagency agreements with EPA to sample and
    test air quality in the NYC area, as well as to test ways to clean
    potentially hazardous dust in building interiors. FEMA also provided
    funding to the New York Department of Environmental Protection for the
    exterior cleaning of 244 buildings and the interior cleaning of
    residences. EPA provided oversight over the interior cleaning program as
    part of the interagency agreement with FEMA.

    Reimbursing costs for rescheduling New York elections ($ 11 million).
    According to a FEMA official, this disaster was the first during which
    elections were being held on the day of a federally declared disaster
    event. FEMA officials said that they considered whether the costs of
    canceling

    the elections statewide and rescheduling them at a later date were
    eligible for public assistance or were increased operating expenses for
    the state and local governments that are not considered to be eligible for
    assistance under the Stafford Act. After initially denying the public
    assistance application for reimbursement, FEMA officials reconsidered and

    Page 29 GAO- 03- 926 Disaster Assistance

    determined that the costs were eligible for reimbursement as disaster
    related expenses. NYC was also reimbursed for costs of damaged and
    destroyed computers, voting machines, and ballots as Stafford Act eligible

    public assistance. Aiding WNET Public Television (covered completely by
    private insurance) and the Legal Aid Society of New York for Public
    Assistance ($ 1.6 million). According to FEMA officials, WNET, a nonprofit
    television station, requested reimbursement from the public assistance
    program for expenses for a communications antenna that was damaged in the
    World Trade Center attacks. The New York Legal Aid Society asked for
    reimbursement of disaster- related costs including repair of damages to
    its building and reconstruction of its data hub that was destroyed in the
    attacks. Although public television stations are not among the specific
    types of non profit organizations that are normally considered to be
    eligible applicants for public assistance because they provide essential
    government services (i. e. educational, medical, water, and sewer
    treatment facilities), FEMA

    determined that WNET was eligible as a public facility because it provided
    health and safety information to the general public during the crisis.
    Later, WNET received full coverage for its claims from a private insurance
    company, so FEMA funds were not awarded. Similarly, FEMA officials said
    that although legal aid societies are not generally eligible for public
    assistance, the Legal Aid Society of New York was eligible because it
    provided government services as the public defender for NYC. These
    projects were not traditional because they required flexibility in FEMA*s
    interpretation of Stafford Act definitions of private nonprofit and public
    facilities that are eligible for public assistance.

    Notwithstanding its efforts to be flexible in defining public assistance
    activities eligible under the Stafford Act, FEMA officials denied some
    applications because they determined they were not eligible for public
    assistance under the Stafford Act, but the Congress directed FEMA to
    reimburse the NYC area for some public assistance- related costs that
    would not otherwise have been eligible for funding. An estimated total of
    $2.2 billion of FEMA*s public assistance funds* about 28 percent* will go
    to these costs. 15 This public assistance- related funding was different
    from work FEMA funds under the Stafford Act. The projects included

    15 The congressionally directed funding includes funding for projects that
    FEMA officials said were at least partially eligible for public assistance
    under the Stafford Act (i. e. the contractor portion of the $1 billion
    debris removal insurance fund to cover workers at the World Trade Center
    site.)

    Page 30 GAO- 03- 926 Disaster Assistance

    authorizing a debris removal insurance fund for workers at the World Trade
    Center site and reimbursing NYC agencies for the costs of providing
    heightened security after the terrorist attacks. In addition, as discussed
    on

    page 24 of this report, as we concluded our review, FEMA and NYC and state
    officials were considering projects to be funded with $1.2 billion that
    became available after the close out of traditional work in June 2003 for

    congressionally authorized purposes. None of these reimbursements were
    eligible for funding under FEMA*s public assistance program.
    Reimbursements being considered included payment of increased costs of the
    Medicaid program to meet health needs of recipients after the attacks, a
    public awareness campaign called *I Love New York,* which was designed to
    attract visitors back to the city after the terrorist attacks, and cost of
    living adjustments made to the pensions of survivors of firefighters and
    police officers killed in the line of duty in the terrorist attacks.

    Debris removal insurance for workers at the World Trade Center site ($ 1
    billion). As discussed on page 15, this project establishes an insurance
    company to insure NYC and its contractors for claims arising from debris
    removal at the World Trade Center, including claims filed by workers who
    suffer ill health effects as a result of working on debris removal
    operations. FEMA officials said that the project is unprecedented in its
    size and complexity and because it involves long- term health and
    environmental issues of a scope FEMA had not considered in prior major
    disasters. Although officials said that FEMA has never established an
    insurance fund to manage claims from other major disasters, FEMA Office of
    General Counsel officials noted that FEMA does frequently pay for
    contractors* insurance because it is built into the contract between the
    public assistance applicant and the contractor. In this instance, workers
    rushed to the disaster site before any contracts were approved, and no
    private insurance company would carry the insurance because of unknown
    liabilities. FEMA officials said that the portion of the project
    pertaining to contractors qualified for public assistance under the
    Stafford Act and is a disaster- related cost that FEMA has traditionally
    assumed in major natural disasters. Expanding the coverage to include
    liability for claims filed against NYC or by city workers was an
    eligibility issue that was under consideration within FEMA when Congress
    authorized the funding in the Consolidated Appropriations Resolution for
    fiscal year 2003. 16 16 Pub. L. No. 108- 7. Descriptions of Three

    Projects and the Congressional Actions Taken to Fund Them Follow

    Page 31 GAO- 03- 926 Disaster Assistance

    Reimbursement for heightened security costs in the aftermath of the
    terrorist attacks (amount of funding not determined). FEMA denied
    applications for public assistance to reimburse city agencies, including
    the Departments of Environmental Protection, Corrections, Fire, and
    Transportation to cover costs for increased security (e. g., the
    Department of Environmental Protection took increased security measures to
    protect the city water supply). A FEMA official said that the applications
    were not eligible for public assistance because the work was of the sort
    that was being done nationwide after the terrorist attacks and were
    intended to prevent future attacks rather than respond to the disaster
    that had occurred. However, NYC Office of Management and Budget (OMB)
    officials said that some of the heightened security costs would be
    reimbursed as a result of the enactment of the Consolidated Appropriations
    Resolution for fiscal year 2003, which allowed NYC flexibility in covering
    disaster- related costs not otherwise reimbursable under the Stafford Act.
    At the time of our review, the amount of funding to be provided for
    heightened security costs had not been determined, but it was anticipated
    by FEMA officials to be over $100 million.

    Reimbursement for instructional time for students to make up for days
    missed after the terrorist attacks ($ 19.3 million). FEMA initially denied
    a public assistance request to pay for additional hours of instructional
    time for students who missed school due to closures, delayed openings, and
    school relocations in the aftermath of the terrorist attacks. FEMA
    officials said that the application was denied because the after- school
    program designed by the NYC Board of Education to make up for the lost
    instructional time was predicated on direct FEMA funding, but it did not
    meet the standards of emergency work for which applicants must perform
    work immediately after a disaster, regardless of who will pay, to
    eliminate an immediate threat to health, life, and safety. However, FEMA
    was specifically directed by the congressional conference committee making
    supplemental appropriations for fiscal year 2002 to provide funds for the
    additional instructional time. The conference report also directed FEMA to
    provide compensation to the NYC school system for costs stemming from the
    terrorist attacks for services and supplies, including mental health and
    trauma counseling, guidance and grief counseling, and replacement of lost
    textbooks and perishable food. 17 NYC Board of Education had spent $19.3
    million of a total $77.6 million approved for this 17 House Report 107-
    593.

    Page 32 GAO- 03- 926 Disaster Assistance

    work as of April 30, 2003. The remainder of the funding was de- obligated
    to be used for public assistance related spending authorized by Congress.

    Because the public assistance response to the NYC area after the terrorist
    attacks was unique and expanded in terms of the level and types of
    assistance provided, it creates uncertainty about how public assistance
    will be delivered if another catastrophic terrorist attack occurs. Both
    NYC and FEMA officials, including managers of the World Trade Center
    Federal Recovery Office and top officials of the NYC Offices of Emergency
    Management and OMB, agreed that they were uncertain regarding the level

    and type of future FEMA assistance. These officials stated that if another
    major terrorist disaster occurs, other communities might seek similar
    types of assistance as was received in the federal public assistance
    response to New York. In this regard, an official of the NYC OMB
    anticipated that one of the first calls by a mayor of a city that
    experienced a major terrorist event would be to NYC to discuss the
    decisions made in

    the aftermath of the World Trade Center attacks. FEMA Recovery Office
    officials agreed that the decisions made in New York would be on the table
    at discussions of federal assistance for any future terrorist event. They
    noted that it would remain to be seen whether an approach similar to the

    one that evolved in NYC, including a 100 percent federal share for public
    assistance funding, a capped funding amount, and flexibility in addressing
    needs, would be used following any future event. The Congressional
    Research Service noted similar concerns in a June 2002

    report about the implications that the response and assistance provided to
    the NYC area may have on future federal response to catastrophic terrorist
    events. 18 The agency*s report pointed out that one of the long- standing
    principles of federal disaster assistance policies has been that federal
    aid should supplement* not supplant* nonfederal efforts and that the
    actions

    taken in the aftermath of the terrorist attacks might have established
    precedent for an expanded federal role in consequence management after
    terrorist attacks. The report noted that traditionally, the types and

    amounts of assistance provided after one disaster have been sought
    following succeeding catastrophes.

    18 Congressional Research Service, Federal Disaster Policies After
    Terrorists Strike: Issues and Options for Congress (Washington, D. C.:
    June 24, 2002). Response to NYC Area Creates

    Uncertainties about How Assistance Would be Delivered in a Future
    Catastrophic Terrori st Event

    Page 33 GAO- 03- 926 Disaster Assistance

    The report also states that the overriding question is whether the range
    of existing federal policies for responding to disasters is appropriate if
    a terrorist attack more devastating than that of September 11 were to
    occur. This is a question to which NYC and FEMA officials have differing
    positions. With respect to the effectiveness of the Stafford Act in
    dealing with a major terrorist event of an impact equal to or greater than
    the World

    Trade Center attacks, the officials from NYC involved in the response and
    recovery efforts whom we interviewed did not believe that the act fully
    addressed the needs of the city and did not think it should be used to
    respond to major terrorist events unless it had significant amendments to
    address the unique challenges related to terrorist events. According to
    top officials of both the NYC Office of Emergency Management and OMB, the
    public assistance program authorized by the Stafford Act is not a good fit
    for the needs of a large municipal government that is coping with the

    effects of a terrorist event. They pointed out that the impacts of the
    terrorist attacks in NYC were different than impacts from the natural
    disasters that the act was created to address. For example, the Stafford
    Act does not address concerns such as the federal government*s
    responsibility for addressing long- term environmental liabilities.
    Additionally, a NYC emergency management official noted that the Stafford
    Act lacked provisions for cities and states to be eligible for
    reimbursement of money spent to provide security in the immediate
    aftermath of terrorist attacks. The city officials noted that funding to
    help alleviate these impacts was eventually approved, but not without

    considerable discussion with FEMA officials and specific direction from
    Congress.

    A key NYC OMB official also said that the Stafford Act is too restrictive
    for responding to a major terrorist event because it does not allow the
    reimbursement to affected communities for budget shortfalls resulting from
    lost tax revenues. The official said that NYC lost tax revenues, both from
    real estate taxes from the destroyed buildings and corporate, sales,

    and income taxes from displaced businesses and individuals that were
    eligible for reimbursement under the Stafford Act. He said that NYC
    requested $650 million in reimbursement for revenue shortfalls in fiscal
    years 2002 and 2003 that were directly related to the terrorist attacks.
    While FEMA officials agreed that the estimate seemed reasonable, the
    amount was not eligible for reimbursement under the Stafford Act.

    Congress recognized the problem and provided the city some flexibility to
    cover expenses in these areas. However, the New York OMB official said
    that a federal block grant would have allowed the city to spend the money
    in ways that were most needed without specific congressional

    authorization to do so; he viewed a block grant approach to providing

    Page 34 GAO- 03- 926 Disaster Assistance

    disaster relief as preferable to trying to obtain the funding under the
    Stafford Act.

    In contrast, FEMA officials said that the Stafford Act worked
    appropriately for the NYC area. FEMA attorneys said that the Stafford Act
    contains enough flexibility to allow funding for non traditional
    activities. They added that every disaster has unique aspects, which
    continually challenge FEMA officials to exercise their discretion under
    the act to provide needed

    assistance. Furthermore, they point out that it is always the prerogative
    of the Congress to provide additional assistance to disaster- affected
    areas to address specific and unique needs. If Congress saw a need to fund
    public assistance- related work not covered under the Stafford Act in the
    event of another major act of terrorism, it could appropriate funds
    specifically for

    the disaster, as it did in NYC. Consequently, the FEMA officials are
    generally satisfied that they are able to apply provisions of the Stafford
    Act to respond to the terrorist attacks and, as of June 2003, did not
    believe significant changes to the legislation were necessary in the
    aftermath of September 11, 2001.

    Nevertheless, FEMA recently initiated an effort to develop a concept for
    redesigning the public assistance program. A working group of the Public
    Assistance Program Redesign Project, formed at the request of the director
    of FEMA*s Recovery Division, held its first meeting in May 2003. Members
    included FEMA public assistance and research and evaluation staff and
    state program managers to provide a broader perspective on the issues and
    concerns. The project was established to suggest proposals to improve the
    public assistance program and make it more efficient and capable of
    meeting community needs for all types and sizes of disasters, including
    those resulting from terrorism. Among other things, the project seeks to
    transform the program to one that:

     is flexible enough to meet the demands of disasters of all types and
    sizes,  reduces overall resource requirements,  offers incentive for
    timely close outs,  places operational control principally with states
    and applicants, and

     eliminates redundancies in decision making and processes. The working
    group will examine potential options for redesigning the program that
    include an annual block grant program managed by the

    Page 35 GAO- 03- 926 Disaster Assistance

    states, a disaster- based state- managed program, and a capped funding
    amount. The project is currently scheduled to hold a listening session for
    local officials and representatives of other organizations in August 2003,
    and develop a basic concept design for revising the program by September
    30, 2003.

    The public assistance program FEMA delivered in the NYC area after the
    terrorist attacks was substantially different in several ways from a
    *typical* FEMA public assistance response. For example, in the NYC area
    there was a lack of cost sharing with state and local governments; a
    smaller than usual federal share of hazard mitigation funding; a different
    process for project review, selection, and close out; and, most
    significantly, the size and scope greatly exceeds the traditional public
    assistance response after a major natural disaster. The reasons for these
    differences are many and include the President*s early commitment to
    providing a specified amount of funding to New York, congressional
    direction on activities to fund, and FEMA*s discretion under the Stafford
    Act.

    Irrespective of the reasons for the differences in the way public
    assistance was delivered after the terrorist attacks, these differences
    raise questions about FEMA*s response to any future major terrorist event
    in this country. The key issue is whether the differences in the ways the
    public assistance program in the NYC area was delivered will serve a
    baseline for the federal approach in the event of another major terrorist
    event. Should such a terrorist event occur, it is not unrealistic to
    assume that affected communities will expect to receive public assistance
    comparable to that provided for the NYC area to meet their needs.

    DHS, within its Emergency Preparedness and Response Directorate, has an
    opportunity to assess the questions raised as a result of these
    differences and, if necessary, revise the public assistance program or
    provide Congress with suggestions for legislative changes that are needed
    so that it will be positioned to address new expectations for disaster

    assistance. The newly formed Public Assistance Redesign Project,
    established as we were concluding our audit work at the request of the
    Director of FEMA*s Recovery Division, plans to address many of the issues
    raised in this report, including whether the approach used in NYC is the
    appropriate way to provide federal assistance for recovery from terrorist
    acts. It is too early for us to assess the impact the project will have on
    the public assistance program in the future; however, it is a promising
    first step toward addressing these issues and better ensures that DHS will
    have Conclusions

    Page 36 GAO- 03- 926 Disaster Assistance

    a process in place to deliver public assistance that eliminates
    uncertainties and questions about the ways in which the needs of affected
    communities will be met in the event of another major terrorist attack.

    In commenting on a draft of this report, the Acting Director of FEMA*s
    Recovery Division said that FEMA officials are proud of the agency*s
    response in delivering public assistance programs to NYC and state, and
    that they are satisfied that FEMA*s authority was adequate and flexible
    enough in most circumstances to meet the response and recovery needs of
    New York. The Acting Director did not take exception to any of the

    information provided in our report. FEMA*s comments are reprinted in
    appendix II. FEMA also provided technical comments on our draft, which we
    incorporated into the report where appropriate.

    As we agreed with your offices, unless you publicly announce the contents
    of this report earlier, we plan no further distribution of it until 30
    days from the date of this letter. We will then send copies of this report
    to the Secretary of Homeland Security and interested congressional
    committees. We will make copies available to others upon request. In
    addition, this report will be available at no charge on our Web site at
    http:// www. gao. gov.

    If you or your staff have any questions about this report, please contact
    me on (202) 512- 2834 or at heckerj@ gao. gov. Individuals making key
    contributions to this report are listed in appendix III.

    JayEtta Hecker Director, Physical Infrastructure Issues Agency Comments

    Appendix I: Scope and Methodology Page 37 GAO- 03- 926 Disaster Assistance

    To determine what activities the Federal Emergency Management (FEMA)
    supported through its public assistance program, we analyzed published
    FEMA reports and FEMA*s National Emergency Management Information System
    (NEMIS) data. NEMIS is FEMA*s primary information system that manages
    disaster grant funding, and we analyzed NEMIS data on public assistance
    funding for this disaster. Though we were not able to completely assess
    the reliability of the published FEMA program data, we did perform logic
    tests of the data and found no obvious errors of completeness or accuracy.
    Also, according to FEMA officials, the published reports are the most
    reliable information available. The officials said that published FEMA
    reports were compiled based on NEMIS data, as

    well as the knowledge of public assistance program managers of funding for
    specific projects. We also updated spending amounts for some projects to
    reflect changes made after FEMA*s June 30, 2003, closeout of the
    traditional public assistance program, based on technical comments to our
    draft report. We interviewed FEMA headquarters, regional, and recovery
    office officials in New York City, N. Y., and Washington, D. C. We
    analyzed

    FEMA, Office of Management and Budget (OMB), and Congressional Research
    Service reports on federal assistance to the New York City (NYC) area to
    recover from the terrorist attacks. We reviewed the Stafford Act and FEMA
    regulations for ensuring that public assistance program

    funds are spent appropriately on eligible work and discussed oversight
    processes with FEMA headquarters, regional, and recovery office officials.
    We also discussed the agreements that FEMA used to coordinate responses of
    other federal agencies. We selected and examined the FEMA agreements with
    the U. S. Army Corps of Engineers, Department of Transportation (DOT), and
    Environmental Protection Agency (EPA) and reviewed support documents. We
    met with officials of the FEMA Inspector General to discuss planning for
    full audits of selected projects within 3 years of their completion.

    To determine how the federal government*s response to the terrorist event
    differed from FEMA*s traditional approach to funding public assistance in
    other disasters, we selected 10 projects for detailed review from an issue

    matrix created by the public assistance officer at the World Trade Center
    Federal Recovery Office. The issue matrix tracked 32 public assistance
    funding issues and other types of concerns that required higher than
    normal levels of review. In making our selection of projects, we consulted
    with officials of the FEMA Office of General Counsel in Washington, D. C.,
    and FEMA officials at the World Trade Center Recovery Office in New

    York City, N. Y. For each project selected, we reviewed available written
    documentation such as project worksheets, case management files, letters,
    and memoranda. We reviewed the legislation that directed FEMA to fund
    Appendix I: Scope and Methodology

    Appendix I: Scope and Methodology Page 38 GAO- 03- 926 Disaster Assistance

    selected projects. Using structured interview instruments, we interviewed
    FEMA project managers and representatives of agencies that applied for
    public assistance to discuss how the challenging issues were considered
    and resolved. Table 1 lists the 10 projects we reviewed and the applicant
    organizations that participated in interviews on each of them. We also
    discussed FEMA*s staffing processes with human resources officials at FEMA
    Headquarters in Washington, D. C., World Trade Center Federal Recovery
    Office managers, and representatives of each of FEMA*s three technical
    assistance contractors who sent staff to NYC.

    Table 1: Ten Projects We Reviewed and Applicant Organizations Interviewed
    for Each of Them Project Applicant organization

    Debris removal insurance for workers at Ground Zero  NYC OMB

    Reimbursement for NYC budget deficits directly related to the terrorist
    attacks

     NYC OMB Reimbursement for instructional time for students to make- up
    for days missed after the terrorist attacks

     NYC Department of Education NYC share of reimbursement for pension
    actuarial losses resulting from line of duty deaths of police and
    firefighters at Ground Zero

     NYC OMB Commuter train station construction costs  Port Authority of N.
    Y. and N. J.

     NYC Department of Transportation Reimbursement for damage to voting
    equipment and rescheduling NYC elections

     NYC Board of Elections Reimbursement for heightened security costs in
    the aftermath of the terrorist attacks

     NYC OMB

     NYC Office of Emergency Management  NYC Fire Department

     NYC Police Department

     NYC Office of Corrections

     NYC Department of Environmental Protection

    Cleaning of dust and debris from emergency vehicles

     NYC OMB

     NYC Office of Emergency Management  NYC Fire Department

     NYC Police Department WNET Public Television eligibility for public
    assistance for disaster- related costs

     Educational Broadcasting Corporation

    (WNET)

    Appendix I: Scope and Methodology Page 39 GAO- 03- 926 Disaster Assistance

    Project Applicant organization

    Legal Aid Society of N. Y. eligibility for public assistance for disaster-
    related Costs

     N. Y. Legal Aid Society Source: GAO.

    To identify some of the implications these different approaches may have
    on the delivery of public assistance should terrorist attacks causing
    similarly catastrophic damage occur in the future, we interviewed FEMA
    officials in NYC, and FEMA and Congressional Research Service officials in
    Washington, D. C. We also analyzed our report and Congressional

    Research Service reports on federal emergency response and recovery
    policies, and we reviewed the Stafford Act and FEMA regulations.

    We conducted this review from August 2002 to July 2003. We performed our
    audit work in accordance with generally accepted government auditing
    standards.

    Appendix II: Comments from the Federal Emergency Management Agency Page 40
    GAO- 03- 926 Disaster Assistance

    Appendix II: Comments from the Federal Emergency Management Agency

    Appendix II: Comments from the Federal Emergency Management Agency Page 41
    GAO- 03- 926 Disaster Assistance

    Appendix III: GAO Contacts and Staff Acknowledgments

    Page 42 GAO- 03- 926 Disaster Assistance

    JayEtta Z. Hecker (202) 512- 2834 John R. Schulze (202) 512- 4390

    In addition to those named above, John E. Bagnulo, C. Vashun Cole, Kara
    Finnegan- Irving, Julian L. King, Deborah A. Knorr, and John A. Rose
    Appendix III: GAO Contacts and Staff

    Acknowledgments GAO Contacts Acknowledgments

    (544046)

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