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Hearing Of Emergency Communications, Preparedness, And Response Subcommittee Of The House Homeland Security Committee; Subject: The Fiscal Year 2010 Budget For The Federal Emergency Management Agency

Hearing Of Emergency Communications, Preparedness, And Response Subcommittee Of The House Homeland Security Committee
Subject: The Fiscal Year 2010 Budget For The Federal Emergency Management Agency
Chaired By: Representative Henry Cuellar
Witnesses: W. Craig Fugate, Administrator, Federal Emergency Management Agency

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REP. CUELLAR: The Subcommittee on Emergency Communications and Preparedness Response will come to order. The subcommittee is meeting today to receive testimony regarding the FY 2010 budget for the Federal Emergency Management Agency. Again, good morning to the members and to the witnesses. On behalf of the members of the subcommittee, let me welcome our sole witness for today, the Honorable Craig Fugate, the Administrator of the Federal Emergency Management Agency, FEMA, at the Department of Homeland. I believe you come from Florida, and we're told about your state and local experience, and we appreciate that state and local experience.

At the outset, I would like to express our gratitude for your participation in today's hearing, especially given the commencement of the 2009 hurricane season. Mr. Fugate, the subcommittee is impressed by your years of homeland security experience, both as a first responder and as an emergency manager there in the State of Florida. We look forward in working with you as you lead FEMA's efforts to improve the federal emergency and response, recovery, and preparedness efforts across the nation.

In the years since Hurricane Katrina crashed the shores of the Gulf Coast, FEMA has made significant progress, especially in the preparation for and response to Hurricane Gustav and Ike, as well as the response to the severe storms and tornadoes in the Midwest last year in 2008. Yet, there is definitely room for FEMA to improve. Mr. Fugate, you're certainly being put to task, and your leadership is definitely needed in the agency.

Today's hearing will be an opportunity to discuss President Obama's Fiscal Year 2010 budget request, submitted to Congress on May 7, 2009. Specifically, the subcommittee wants to discuss the $7.2 billion proposed for FEMA as well as the president's priorities in the budget. I should note that this subcommittee is very supportive of the president's budget request for the Fiscal Year 2010 funding. We applaud the department for developing a comprehensive budget proposal to support FEMA's -- to fulfill its critical mission to prepare, protect, respond and mitigate against major disasters or emergencies.

Although the president's budget provided an increase of $197 million above the Fiscal Year 2009 enacted budget, there are a few programmatic changes within FEMA that I look forward to discussing in greater details in today's hearing. In particular, the subcommittee is somewhat dismayed to learn that the proposed budget of $170 million, a 70 percent decrease for the Fire Grant Program. The committee is concerned that proposed funding is inadequate in addressing the equipment, training, and other resources needed for firefighters to carry out their critical lifesaving missions.

Another area of concern that involves first responders is the leveling of grants funds for the Interoperable Emergency Communications Grants Program, which is 85 percent short of the authorized level of $400 million in the 9/11 Commission Act that this committee worked very hard to develop. I will simply state that we must ensure that our first responders, the nation's first line of defense, are adequately equipped to protect, equip, to address any of the huge incidents that might hit us at any time.

As the chairman of this subcommittee, it's also become clear to me that a prepared citizenry is the cornerstone of a resilient nation. While the storm winds may change direction in the level of threats to us, the -- (inaudible) -- may vary. One thing remains constant, and that is the spirit of the American people to withstand any adversity that they may face. This is why we'll work to ensure that the Department of Homeland Security, in particular FEMA, has the appropriate resources and authorities to strengthen their partnership with individuals as well as the state localities and tribal governments.

In closing, Mr. Fugate, I look forward to your testimony and to hearing how the budget for FEMA will pull together the talents of our diverse nation to make sure that our government can provide for the American people the security, the accountability, and most importantly the freedom from fear. The chair now recognizes Mr. McCaul, who is taking the place of our ranking members. And he will make an opening statement.

REP. MICHAEL MCCAUL (R-TX): Well, good morning. And thank you, Chairman Cuellar, for holding this hearing today. I've been asked to sub in for Ranking Member Rogers. And I just got my prepared statement, so I'll be brief and to the point. But I do want to welcome our witness and thank him for taking the time from his important schedule to be with us here today. And let me say as a supporter of keeping FEMA within the department, I am pleased that the president agrees with us on this issue. FEMA has made great strides since Katrina and must stay integrated within the Department of Homeland Security.

This hearing is being held to look at the president's budget request for FEMA, answer or address whether the agency has the resources and support that it needs. The Fiscal Year 2010 budget request for FEMA shows a continued effort to strengthen preparedness and response programs and to continue to make the agency more effective. The budget request for many key state and local homeland security programs is similar to or higher than last year's enacted level of funding.

However, I have serious concerns about the administration's request to cut several programs, some of which were outlined by the chairman such as the Assistance to Firefighters Grant, cutting that by 70 percent. I think, Mr. Fugate, you're going to find that there's strong bipartisan support in the Congress to keep those grants in this budget. This vital program cannot afford to be undermined by a lack of funding in 2010, and it's important to our first responders. Now, we all remain mindful of the important work FEMA does, and I look forward to working with you to ensure that FEMA moves forward in an efficient and effective manner.

I will say that my questions, we passed out of this committee last Congress a FEMA Reform Bill in response to the waste, fraud, and abuse we say out of Katrina. And I'm going to be interested in your comments on how those reforms are working and how FEMA is responding in terms of comparing its response to Katrina to the response to Hurricane Ike that we more recently saw in our home state of Texas. So with that, I yield back, and I thank the witness for being here today.

REP. CUELLAR: Thank you, Mr. McCaul. The chair now recognizes the Chairman of the Committee of Homeland Security, the gentleman from Mississippi, Mr. Thompson, for an opening statement.

REP. BENNIE THOMPSON (D-MS): Thank you very much, Mr. Chairman. Welcome, Mr. Fugate. We've had a conversation, but this is our first opportunity to actually see you in person.

I think no other agency is as well known as the agency you direct. My own experience with Katrina was not good from a response standpoint in my state. There have been a lot of things with Hurricane Ike and Gustav since that time. My challenge to you, given your extensive experience in this area, is to help us get it right. Our country looks to FEMA from a point of last resort in terms of help. When we called the cavalry, the cavalry in this respect, is FEMA. I want you to look at the housing mission of FEMA. I'll talk a little bit about it later in my question.

We still -- over three years after Katrina, still have people in motels. That is clearly the most expensive housing effort probably known to this government. We can do better, perhaps bring the private sector in, ask them to help come up is an approach.

Apart from that, there are some deficiencies in working with the private sector to help respond to disasters that we need to enhance. There are clearly some training at the local level that continues to be needed. We've had several field visits to impacted areas, and people have told us that part of the reimbursement process for FEMA continues to be problematic. In areas in my state, I continue to be told that the misinformation, because people change from time to time -- and you've been there too. One person will tell a community, you do it this way. The next person comes and says, no, you don't do it; you do it this way, and the community is held in limbo. And in many instances, because of the reimbursement, the communities can't go forward because the reimbursement filled up.

The other issue, and I'm sure Mr. Cao will speak to this, is where there is a discrepancy or a dispute involved, we need to continue to work on streamlining how we resolve disputes relative to reimbursement. Lastly, there's an issue of tiering of contracts. I other words, if the prime contractor subs, those two entities you'll have standing in a dispute. But anybody below that sub on down has absolutely no standing in the reimbursement process, so they can write FEMA; they can write their congressperson. And there's nothing statutorily that can be done. Well, in most instances, those were the real people who were trying to help, might have had one tractor, one dump truck, doing really the physical work. But they don't have standing in the dispute. We need to fix that. And we'll happily work with you on resolving that, and I look forward to the testimony, Mr. Chair.

REP. CUELLAR: Thank you, Mr. Chairman. Other members of the subcommittee are reminded that under the committee rules opening statements may be submitted for the record. At this time, I would like to welcome the Honorable Craig Fugate at the sole witness for today's witness. Mr. Fugate has more than 20 years experience in emergency services in Florida, which as we know is a hurricane prone state. Before being confirmed by the Senate as the administrator at FEMA on May 12, 2009, he served as a volunteer firefighter, paramedic, lieutenant with the county fire rescue division and spent 10 years as the emergency manager for Alachua County in Florida. He most recently served as the Director of Florida's Division of Emergency Management, an appointment made by Governor Bush in October of 2001.

Administrator Fugate, we're pleased to have you present and greatly appreciate the testimony today. And without objection, the witness' full statements will be inserted into the record. I will now ask Mr. Fugate to summarize his statement for five minutes.

CRAIG FUGATE: Thank you. This is my first opportunity to present a budget and my first opportunity to provide testimony to the House. So I appreciate the opportunity, sir. And as we go through this, I'm listening to the questions. And first off, let me say that having been a customer of these programs, I understand many of the challenges. I look forward, Mr. Chairman, to working with you and with the rest of the members and Chairman Thompson with the overall committee of how we move forward and build a stronger team.

Today, my job is to present to you our budget request for FEMA, the president's budget. As you say, it's $7.4 billion in that discretionary budget authority. This is an increase of $188 million above last year's enacted levels. Additional funding will strengthen our ability to respond to disasters. But we also have to continue build, strengthen, and support our national response team. Those emergency responders include our state, tribal, and local governments. But also, it involves more than that.

One of the things that I recognized a long time ago was that this team has to move beyond just what government can do and look at our citizens as a resource, not a liability. So preparedness of working with our citizens and building that part of that team, as well as the private sector. In Florida, I learned a simple question to ask our private sector partners was not what they can do for us but what we can do to get them open and that working as a team so that we weren't competing with each other.

But we have to ensure that our front line responders -- and those are the local responders -- are equipped and trained and prepared for the threats we face, both natural hazards, manmade, but also threats of terrorism. We are in a situation that we, again, want to operate from a standpoint of resiliency and capability and capacity as we deal with these threats. We have a detailed statement. But again, just to summarize, again, we request an increase in our operation management and administration account. That is what we do to operate FEMA. We are still implementing many of the recommendations of the post-Katrina Emergency Management Reform Act as we continue to build that out.

We also are looking at one of our programs we are doing internally to help measure where states are and where we need to go as far as our capabilities in our gap analysis. So we identified that as a very specific point in our budget and ask for that to be recognized as a specific funding request. Also, it includes an increase in our state and local programs. And again, one of the areas we did fund more emphasis in this budget request was in the SAFER Program, looking at staffing issues for fire departments. I recognize there are still other needs out there, but one of the areas that we did come forth with this recommendation was increasing the SAFER Grants, looking at more staffing. That's something we're hearing a lot from departments right now given the financial challenge they're facing.

As we get ready for the hurricane season, I almost feel like I'm at a disadvantage. Because I come from Florida, and it's a hurricane prone state, that tends to be what people want to talk about. I always want to talk about the next disaster, and I don't know when that's going to occur. And I think that's part of our challenges. Hurricanes, at least they don't sneak up on us. We can see them. They're something we can anticipate, prepare for; they're seasonal. But a lot of other disasters such as earthquakes don't have seasons. And we have a lot of disasters in the natural world that occur outside of this year out of the hurricane season. But we also have a lot of other types of threats. So it's this constant process of preparing ourselves for the next disaster while we continue to rebuild from the challenges that we saw of the devastating hurricane seasons of '04 and then last year's hurricanes, as we have to stay focused on that.

We've looked at things such as our national disaster housing strategy. I know there are challenges here. One of the concerns I have is that we often times try to define our capabilities, our response to disaster by what we can do, instead of looking at what the challenges are. And I think that will help us clearly articulate where we need to go. We continue to look at mitigation against all hazards. We have the National Flood Insurance Program. We have the Pre-Disaster Mitigation Program, which we've asked for some additional fundings there.

And again, in conclusion, Mr. Chairman, we have presented the budget based upon what we were looking at in going into this next fiscal year. We've had to make choices that allocated funds based upon some of the decisions we were looking at within our budget. And this is our presentation to you to begin the consideration of working towards a budget. And again, we solicit your questions, your input, and your guidance on how to move forward as a team and a partnership so we serve our American citizens, sir.

REP. CUELLAR: I would like to remind each member that he or she will have five minutes to question the witness. I now recognize myself for questions. First of all, Mr. Fugate, thank you again for being here. Let me direct your attention to the Gap Analysis Program, where you requested funds for $3 million to address that issue.

As you know, this the one that looks at the strengths and the weaknesses of each state's emergency plans and evacuation plans that you all might have.

Why is it important to identify this gap between the emergency and evacuation plans? And number one, is there an inventory that goes state by state that shows you where each state is and if there's any gaps between those two plans?

MR. FUGATE: Mr. Chairman, we've done this process. And originally, we started with hurricanes but looking at all hazards. The purpose of this is to help identify at what level states would be requesting federal assistance so that we would have a better understanding of things we would plan for ahead of time, particularly with our federal family of agencies. We've gone back, and we've continued to refine this.

But I think this is important for two things. One is to understand what the delta is, and quite honestly, Mr. Chairman, I wouldn't have picked the term "gap." I'd have used "capabilities," and then from the capabilities we look at the event, and we know what the additional resources are going to be. But what's important is to help demonstrate that in the money that we've been expending to build capability and capacity in the nation that we identify one, what we have been able to accomplish; what the states and local governments have as that capability.

And if we have an event such as an evacuation scenario or a housing mission scenario or some kind of debris mission, we understand what the local and state governments are capable of; what they're going to be able to do and anticipate what the federal support will need to be to address that challenge. And looking at that across a variety of hazards and trying to use, as much as we can, realistic scenarios such as previous events or modeling data to help us understand that as we continue to encourage states to increase that capability and capacity, that we also know when we would likely need to provide federal assistance in a coordinated manner, so we can prescript and have missions ready to go, versus waiting at the last minute; which, as we saw, was very inefficient and very costly when we didn't have a plan for how we were going to support a state.

REP. CUELLAR: One of the items that GAO has reported related to FEMA's monitoring of Homeland Security Grant expenditures is that it does not provide a means to measure the achievement of the -- (inaudible) -- Program outcomes, whether it's customer service or measuring the performance. And I know the State of Florida has it; Texas has it, and I believe a lot of other states have a lot of those performance measures on it. And if the committee and the chairman will be, we're hoping that on the reauthorization of FEMA we add some language dealing with customer service and with the performance of certain points.

But in particular, I want to focus just on the grant itself. Given your perspective from the state level and concerning your new responsibilities as the FEMA administrator, how important is it to calculate a rate of national return on investment for our Homeland Security Grant funding to states and locals?

MR. FUGATE: Mr. Chairman, the short answer is looking at our current economic situation, we're going to have to justify and be able to show that what we are doing is actually adding value. Part of this comes back to -- and I had an opportunity to meet with the state homeland security advisor this morning, is we've been building a lot of capability and capacity, but we do not yet have the way to articulate in a cost benefit analysis what that costs to build. More importantly, what is it going to cost to maintain that? And have we addressed the threats and developed enough capacity to address not just the ones that we already have in place, but is there anything else we need to do.

A part of this that I found is what are we building? How do we know it's built, and how do we maintain it? And those are very simplistic question, but the magnitude of the challenge is until we can start articulating in that manner, it's very difficult to show what progress we're making, how we defend, and continue to support the maintenance of these issues and where, as we get new intelligence or a new threat, that we need to address where the capability shortfalls are.

REP. CUELLAR: And later we'll spend a lot more time on the grant, because we certainly want to make sure that we're as efficient -- (inaudible) -- and accountable on those grants, of course, measuring the results. If we send dollars to a particular community, we want to know what's the impact on that. So we'll spend a little bit more time.

But let me talk to you about another performance measure. The 9/11 Act allows states to keep 3 percent of ICE and the SGP Grant funds for the associated administrative costs. The states used to be able to keep 5 percent for that purpose, for administrative costs. There's been a recent push by states to return to the 5 percent. And I'm a little biased; I would rather have 3 percent than the 5 because you keep that money in the administrative costs. I'd rather get that money more directly, and I don't mean to speak for the committee. But as a former state employee, give us your thoughts on this 5-3 percent. And again, personally speaking, I would rather keep that at 3 percent than send it out there; I'd rather send that directly out to the firefighters or whoever might get those dollars on that, but if you can give us your opinion.

MR. FUGATE: Mr. Chairman, I would agree. The more money we spend on doing stuff and less on process is a good outcome. And initially, our approach in Florida was we were able to -- we had the luxury; we passed on all the money with no admin costs. But the reality of what we were getting hit on in IG reports, both from the state and federal level, was accountability and monitoring. We actually had to go out, as we issued those grants, to make sure what was intended in those grants was occurring. We were having to demonstrate that we were fiduciarily monitoring not only that the Single Audit Act was provided to us. But also, we had to physically go out and visit that. That creates an overhead on the states to be able to resolve and satisfy those IG findings so that we are accountable. That takes staff; that takes time. That is an overhead process.

So I think it's a balancing act. I would -- before I would automatically say more money, let's look at what their costs are and see what they're having to spend above and beyond what those management costs are and make sure that we are clear in what we are looking at. Again, if we can streamline the grant process, but can we streamline the monitoring process? We have accountability that we are achieving -- that the U.S. taxpayers' dollars are going for the intended purposes but streamline that process as well so we can keep it within that 3 percent. But I would ask that we actually get actual numbers from them to come back and look at what are those costs above and beyond 3 percent.

REP. CUELLAR: Right, exactly. All right, well, it sounds good. What I would just ask you is we'll spend some time on this performance issue, because we want to make sure that we are sending that money directly as much as possible and getting the best bang. At this time, I would like to recognize Mr. McCaul for any questions that he might have. Mr. McCaul.

REP. MCCAUL: I thank the chairman. As I mentioned in my opening statement, we, out of this committee, passed the FEMA reform after Katrina. We found that people were making applications out of prisons, that cemeteries were being used for addresses to receive payment assistance, on and on and on. And I'm curious as to the progress we've made since then in terms of taking out the waste, fraud and abuse from the system.

I also want to make a comparison between Katrina and Hurricane Ike. There appears to be a large disparity in the amount of payments. Now granted, I think Katrina was a larger scale type hurricane. There were a lot of differences between the two hurricanes. But I just wanted to throw out a few figures. For instance, under housing assistance, there were 506,000 applicants under Ike, and under Katrina there were 939,000 applicants. In Ike, only 17 percent of the applicants received assistance, and under Katrina 74 percent received assistance. And that's a fairly wide disparity when you're talking about 17 percent were actually granted versus 74 in Katrina.

Other needs assistance, a total of 65,000 applicants were approved under Ike and about 265,000 under Katrina. The average payment, when you compare Katrina to Ike, Katrina was about $5600; Ike was about 1700. So there's about a three times variable there between assistance granted in Katrina and Ike. And then finally, total assistance of the average payment per registrant under Ike came at a total of $722 versus Katrina, which came at a number of almost $5,000, so $5,000 versus $722. There seems to be a big discrepancy.

I have asked the GAO to look at these numbers, explain why this disparity. And I know there are probably reasons for it and answers.

But I've asked the GAO to do a study. And Mr. Chairman, I intend to send a letter to you asking for a hearing on this issue so we can find out, number one, lessons learned from Katrina. Maybe we're doing -- these controls are in place and the taxpayer is saving money. And maybe there's a good story here. But also I would like to know, being from Texas and having my constituents hit by Hurricane Ike, I'd also like to get the answer to why such a big disparity.

MR. FUGATE: The short answer is I'd have to look into it. What I would recommend, if we're asking for this review is -- one of the things I'd like to know, what I would ask is given the payouts, what kind of damage were recurring (ph) per household? Were we seeing the household was destroyed or the household damaged and what that percentage was? The other thing is that the bias in our controls now, filtering out people that would otherwise be eligible, it's always the balancing act. The more accountability, the more checks and balances, the more people that are outliers who don't fit the definition perfectly that are eligible that fall out.

And we saw this in our '04 hurricane season. We had to devote tremendous staff time just to work with people so that the automatic that would kick them out but they were still eligible, we'd have to go back and work case work on each one of those to make sure. Our goal is that if it's a need based upon the eligibility and it's warranted that we should award that as effectively as possible. We should do everything we can to monitor and control fraud.

But it's a balancing act, and so it would be, to me, interesting to look at what was the household damage that's percentage wise. That would reflect payment. But also, are the controls we're putting into control fraud unnecessarily also now penalizing people? And how do we strike the proper balance between speed and effectiveness but not having the runaway or the situation where there are a lack of fiduciary controls on who is getting assistance, who is not warranted. And that actually takes away from the people who are most vulnerable.

REP MCCAUL: I agree. There is a balance that you need to strike. And I think right after hurricanes hit, as they have in our state, we advocate on behalf of our constituents to make sure they get the assistance they need. And sometimes we don't think that comes fast enough. I know the chairman mentioned the idea that people are still in these rentals systems, properties in New Orleans. I don't know what the status with the trailers are, but at some point this needs to be -- kind of we need to move on and close the chapter.

But I'd be interested in your thoughts on that and interested in what the GAO has to say about this as well. And Mr. Chairman, I do hope that we could have a hearing on this issue. And with that, I yield back.

REP. CUELLAR: We did have a hearing on lessons learned. Didn't we have one? So maybe we can do a follow-up on that. But I think we did have one on this, but we certainly will follow up on that. Thank you. Thank you, Mr. McCaul.

The chair now recognizes other members for questions they may wish to ask the witness in accordance with our committee rules and practice. I will recognize members who were present at the start of the hearing based on seniority of the subcommittee, alternating between majority and minority. Those members coming in later will be recognized in the order of their arrival. The chairman now recognizes, for five minutes, the gentleman from Mississippi, Chairman Thompson.

REP. THOMPSON: Thank you very much, Mr. Chairman. Mr. Fugate, are you comfortable with this budget with respect to you being able to do your job?

MR. FUGATE: Sir, at this point, given all the information, I am comfortable with what we have. I think that before I would ask for any adjustments, I would like to have some more time looking at my programs to make sure we are operating efficiently. But I don't see any gaps here that would preclude our ability to support states and local governments in their response. And again, the grant programs are those that we have recommended, and we are working with this process to get that budget through.

REP. THOMPSON: You mentioned the grant program. There is a program, the Fire Grant Program that's gotten cut.

MR. FUGATE: Yes, sir.

REP. THOMPSON: Do you support the cutting of the Fire Grant Program.

MR. FUGATE: Mr. Chairman, we are putting together a budget that actually looked at increasing funding for staffing. That decision was made not to continue supporting the equipment but to support additional staffing in the budget request. The other part of this was the Fire Grants were previously identified stand-alone. We've merged them into several areas to give us, for purposes of budget, four program areas that we have put funds into.

So our emphasis was putting more money into staffing, not necessarily continuing the same level of equipment purchases and providing that in response to local governments who have said they needed staff. So we put our emphasis there in this budget request, sir.

REP. THOMPSON: Well, I'm going to ask you to revisit that, Mr. Director, because most of what members of this committee hear is just the opposite, is that they need equipment. Most of us serve many areas where there are either volunteer fire departments or departments with limited resources. And so I think to make the characterization that well, we don't do personnel and cut -- (inaudible). Probably just let me suggest needs revisiting, because there is significant support for the program in its present form. And I don't find any support to cut it along the committee. And it's been a good program, and I would encourage you to do it.

The other issue is I've been to Hope, Arkansas, and I've been to Columbia, Mississippi along Interstate 59. I see thousands of trailers. When I say "thousands of trailers," I mean thousands of trailers. What can we tell the public if another emergency occurs? What will happen differently?

MR. FUGATE: Chairman, one of the first things is that we've looked at -- and this is an ongoing issue -- how many of the mobile homes should we maintain in inventory. We also recognize that the travel trailers have significant challenges, primarily looking at issues such as formaldehyde. We've gone back to industry, and we've come up with some specifications to address some of the concerns we've had. We actually have some pilots that industry has produced for us at our training center in Emmitsburg that we are actually providing as housing units to get feedback from people that come through Emmitsburg about how do we provide that.

But here's the challenge, sir. We look at a disaster and look at housing, I think we got to state what the problem is. In Florida, in the New Madrid earthquake and some of these other disasters, we can look at housing issues that would generate a half a million or more housing units destroyed in that disaster. How do we address that housing challenge? And often times, when we start looking at using any type of trailer or mobile home, we reach a point where there is a finite capacity before we have to start moving populations.

REP. THOMPSON: I don't want to take all of my time, but have you looked at any other alternatives to trailers?

MR. FUGATE: Yes, sir, and what we come back to is what is there currently in the manufacturing base that could produce something that could provide a housing unit and looking at what people have requested.

REP. THOMPSON: And I don't want to belabor -- but I want you to provide this committee with how you have pursued alternatives to this temporary housing thing. And I want to know how many of those temporary housing units can we reuse, because part of what I saw in Hope, Arkansas was brand new trailers, never used, probably not being able to be applied to a disaster because they're not usable. And so we've never put a family in it. And so I refuse to think that that's the only alternative for responding, because if we bought them and they sit out and decay, then clearly that didn't serve a useful purpose.

So I would like for you to provide us how you're studying that issue. I want to know, have you looked at providing housing that can be reused the next disaster.

And I'd venture to say, there are little of those trailers can be reused, based on what I saw. But I would like for you to provide that.

The other thing, I have a letter, Mr. Chairman, I'd like to introduce into the record --

REP. CUELLAR: Without objection.

REP. THOMPSON: -- with the gentleman's consent, that talks about housing. I just got it yesterday, as you know. We can't figure out, based on what you sent us, how much it's costing us. And I don't know how we can come up with any kind of solution to this housing issue if we really don't know how much it's costing. We have seen prices up to $75,000 per unit. That's an expensive trailer. And I just want your commitment that you'll work for this committee on trying to get down into the weeds and see what the real costs are and what alternatives we can put on the table to help with this situation.

MR. FUGATE: Mr. Chairman, then assume that what you have asked me to do is if we're going to spend $75,000 on a temporary, 18-month solution, there would be a better way to meet the housing needs that would be long-term and not just a temporary fix, because that's where I look -- concerns here. We're putting an awful lot of money into a temporary solution, and we know in these big hits, these are long-term challenges.

And in 18 months, we're just not going to have every house rebuilt. And we're investing a lot of money in a patch that isn't getting us through and helping a community move to recovery and keeping a community viable if all our options are based upon a very short timeframe, that we are looking at things that don't provide a housing solution. And we're not partnering the long-term so that people have a home and we can reestablish the tax base in the community.

REP. THOMPSON: No disagreement here.

MR. FUGATE: So I'm real -- that is something I'm earnest about, having seen what we did in Florida and know that we have got to come up with a better way to do this, both for the immediate needs but also the longer term issues.

REP.THOMPSON: I yield back. Thank you, Mr. Chair.

REP. CUELLAR: Thank you, Mr. Chairman. At this time, the chair recognizes, for five minutes, the gentleman from Texas, Mr. Olson.

REP. OLSON (R-TX): Thank you very much, Mr. Chairman. And thank you, Mr. Fugate, for coming today to testify before us, for your service, and again, congratulations on your appointment. I kind of want to follow up on some of the comments my colleague, Congressman McCaul, made about Ike and some of the experiences we've had back home in Texas.

It's no longer national news, but the recovery from Ike is still an ongoing situation and is of great concern to me and the people in my district. And I'd like to invite you to come on down and see the region, see first-hand on what is being done and more importantly, what still needs to be done. I think you'd be impressed with the progress that has been made, but you might be surprised about what we still need to do to get back in recovery. And as you know, we're back in hurricane season again. I mean, we could have another one coming any time now.

Last month, FEMA denied a request from the State of Texas for 90 percent reimbursement for category C through G. Now, also 100 percent reimbursements for categories A and B. FEMA's reasoning was that Texas had not reached the $122.00 per capita threshold under 44-CFR- 206.47B. It sounds like I'm back in law school.

It is clear, however, that Part C of that same regulation gives FEMA leeway to take into account other factors, such as the impact of tax disaster declaration in the state over the past year.

As you know, Texas has had one federal emergency declaration, two federal disaster declarations in the last year for Hurricanes Dolly, Gustav and Ike. And if FEMA waits until Texas reaches the $122.00 threshold, it will cost communities an extra $51 million that they simply do not have.

And working together, what can we do immediately to see to it that Texas, and specifically the southeast region, is a recipient of the proper reimbursement rates, 90 percent and 100 percent -- (inaudible).

MR. FUGATE: Sir, we will have to go back and look at that, again. Having been on that end, we actually faced that challenge, as well, of getting to that per capita before the 90/10 would kick in. I know one of the things that we looked at in '04 was the series of hurricanes, and used that to determine how we would accomplish the 90 percentile.

So, again, we continue to work, but there are some within the process that does that threshold under public assistance for when that would be warranted. So we will continue to work.

REP. OLSON: Sir, I look forward to working, because, again, there is authority in there to, to alter the threshold. It is not just locked down by the title that, "Gee, that's let the government -- (inaudible)."

The other thing I would like to talk to you briefly about or ask you about is the Port Security Program. As you know, I represent part of the Houston Ship Channel, and that's one of the largest ports in our country. All sorts of trade flows through there, gas -- natural gas, oil, just products coming from across the world. And it is only going to grow.

As we know, the Panama Canal is going to be expanded here in the next two to three years, and those container ships that are stopping on the West Coast of the United States and Mexico, now are just going to punch right through and come to the Gulf Coast.

And I see that the Port Security Grant Program that was funded at $400 million in 2009, but the budget now seeking -- the president is now seeking cuts by 38 percent. And I know there is some funding in the stimulus for that, but can you tell us why the president wants to cut the security grants in fiscal year 2010?

MR. FUGATE: Again, Congressman, I believe that we were looking at -- with those stimulus dollars and looking at what additional dollars to bring us back up to the pre-existing, the '09 funding levels, and that's what the rationale was behind leveraging the funding that was in the Stimulus Bill that would be going out in this process with the '010 request, which would actually overlap.

REP. OLSON: So it is just a future request that will reflect the '09 or the previous levels, but not the, not the one that was in the 2010 budget?

MR. FUGATE: I think, Congressman, one of the things that we attempted to do this year was often times -- previously we came in at much lower numbers. We try to reflect a more stable level funding. We know for planning purposes that it makes more sense for us to come in at that level, and keep a more appropriately -- and our request recognizing what the previous funding was.

And so that is kind of -- when you look at some of the requests we put in -- if you go back what the previous requests were, often times they were much lower than what the request for this year. So we are trying to recognize what you have been doing on the committee to put money there, and recognizing more of a stable level of requests to reflect that.

But also we have to look is, is, again, as you point out, growing needs and challenges. And a lot of our partner agencies, as part of DHS, actually provide input into our grant programs. So we anticipate that is actually going to be based upon the changing threats and environments, and where we see we have to then increase capacity or capabilities based upon, as you point out, new growth and new opportunities.

REP. OLSON: Well, thank you very much for your answers. I look forward to working with you to get some prequel treatment for the gauge in southeast Texas area for Hurricane Ike. And then, again, we would love to have you come down and see it firsthand.

You have my time.

REP. CUELLAR: Thank you, Mr. Olson.

At this time, the Chair will recognize for five minutes the gentlewoman from California, Ms. Richardson.

REP. RICHARDSON: Thank you, Mr. Chairman. Mr. Fugate, in recent years FEMA has been plagued with an inability to attract and retain the management and operational personnel necessary for the agency to provide optimal performance.

What assurance and information can you provide to this committee to assure us that this will be addressed in a serious manner, and what plan do you have?

MR. FUGATE: Congresswoman, we are working to both fill out the team that we have, but also I would like to give some credit to Dave Paulison. One of his big undertakings as he was serving with the Post-Katrina Emergency Management Reform Act was to build that staff that Congress had provided more funding for to increase the number of dedicated staff.

We are committed to continue to build that workforce. It is interesting that we still are able to attract a very powerful group of people. Particularly, a lot of them come from local and state government, which add that capability to FEMA, which traditionally has always, you know, from the standpoint of States and what we call Federal Centric. And we really wanted to build that --

REP. RICHARDSON: Excuse me, sir. I have got now less than four minutes.

What is your current staffing capacity?

MR. FUGATE: I would have to get back to now, because one of the things we have asked in the budget was to address a shortfall in funding to get up to the staffing levels. We're currently -- and this request will be able to maintain 92 percent of all positions filled, figuring at 7 percent is the natural process as you go through replacement and hiring; 92 and 93 percent is generally about optimum. And this would provide us funding for those positions, as authorized.

REP. RICHARDSON: 92 percent is whose standards?

MR. FUGATE: 92 percent of the authorized positions that we had, we would have funding for those positions, based upon this budget request.

REP. RICHARDSON: Okay. Would you supply to this committee what is your staffing capacity in the areas that I requested.


REP. RICHARDSON: And I would venture to say that in your particular department, what may be okay to have 92 percent of authorized is maybe not necessarily reflected of what this country needs.

My second question is: Is there a report that indicates where the Army Corps of Engineers stand in terms of levees and sand walls that do not meet potentially known disasters that could occur? What I mean by that is I had an opportunity to go to New Orleans on a Congressional Delegation with the Speaker and the others, and we knew that the levees in the New Orleans would not meet potential hurricanes and other things that occur. And it is my understanding that the repairs and the work that has been done still do not meet what, in fact, occurred with Hurricane Katrina.

So I would be interested in you providing to this committee what various sand walls and levees that we have that do not meet the requirements of really a potential disaster that we know that could occur in this, in this country.

MR. FUGATE: We will go to the Corps of Engineers to get a response, ma'am.

REP. RICHARDSON: What does that mean?

MR. FUGATE: Most of that data will actually be Corps data that we will have to get from them what they are -- what they have, and to provide that information.

REP. RICHARDSON: Is that important to your department, as well?

MR. FUGATE: Yes, ma'am. And the Flood Insurance Program, that often times is one of the considerations in determining what flood risk is, particular when those designations change.

We had the example of Lake Okeechobee where the designation of the dike changed. Well, that actually then resulted in the National Flood Insurance Program having to change the rate or what the (water ?) risk and the increased premiums for people who lived around that facility.

REP. RICHARDSON: Okay. Well, my question isn't just for an rate and insurance perspective. My question is: What responsibilities do we have to ensure that the Army Corps, based upon your particular department, if you know for example, that Sacramento, that it is prone to flooding, and you know that the current levees that we have there do not meet what we expect could, in fact, occur, at what point are we going to get both folks together, you, Army Corps of Engineers, and ensure that people who are living are not risking their lives and their property and everything else, that we know that it's not sufficient?

MR. FUGATE: I will need to work the Corps to get back and sat down and address these issues, specifically.

REP. RICHARDSON: Okay. I look forward to working with you. Thank you very much.

REP. CUELLAR: Thank you.

Thank you, Ms. Richardson.

At this time, the Chair will recognize for five minutes, the gentleman from Louisiana, Mr. Cao.

REP. CAO: Thank you very much, Mr. Chairman.

And first of all, I would like to congratulate you on your appointment. I'm glad to see that we have an administrator in FEMA who actually lived in a hurricane zones, and who had to experience the difficulties of recovery. And I also would like to commend the FEMA agencies for making the necessary changes at the local CDL office in New Orleans. The changes have produced an office that is more efficient and more cooperative in our recovery process. So thank you for that.

Now, I just have a couple of questions concerning recovery issues in my district. And the first one concerns the CDL. As you know the incumbent period has ended, and I would like to know what plans that you have to expedite release of guidelines and a criteria for the different agencies, different municipalities to apply for Community Disaster Loan Forgiveness?

MR. FUGATE: Again, we are working with our partners and getting that together. And I would have to get back with very specific details of where we are at in providing that to you, sir.

REP. CAO: Because as you know, many of those agencies and municipalities need this information in order to make their budget.

MR. FUGATE: Yes, sir.

REP. CAO: And my second question concerns the FEMA appeal process, and, and the establishment of the arbitration panel. As you know, one of the biggest issues in our district now is the discrepancy concerning Charity Hospital. The State contends that FEMA owes the State $492 million because the structure was -- (inaudible) -- because of hurricane, and FEMA contends otherwise.

How can you assure us that the FEMA appeal process is effective and objective when it is being made by FEMA officials? And would like to know the -- when do you expect an arbitration panel to be established?

MR. FUGATE: Honestly, I think that in trying to say that we are working towards the consistency in the public assistance in the appeal process has been demonstrated by many that it concerns the members about, but that has not always been that case. We are actually looking forward to this arbitration panel, because I am, again -- I don't like a process that does not have a conclusion.

And I really think that this arbitration panel is going to give us an opportunity one, to reach a consensus and get a decision, but more importantly, to help us examine what our current process is. And if we see that the arbitration panel is constantly finding where we need to improve our product, that gives us a better direction on where our policies are being overruled or that we need to adjust those so that -- and, again, we are not having to wait for an arbitration process to resolve things quickly and efficiently.

REP. CAO: And when do you expect an arbitration panel to be established?

MR. FUGATE: We are currently working through DHS to get that announced. That is in the works, and we will have staff contact you and give you the latest details, but sooner rather than later. I'm looking at something that we can get going here, and get moving on things like Charity Hospital and get resolutions, and start that process.

REP. CAO: And my last question concerns the FEMA, I guess assessment or at least the completion of the Visa. I live in an area outside of the particular flood. And in connection with the budget for first responders, the nearest fire house from my, from my subdivision, and the surrounding subdivision, it's approximately 10 miles down Highway 90. FEMA obligated the money to build the firehouse -- (inaudible) -- and then re-obligated the money to rebuild the firehouse -- (inaudible).

Can you explain to me this discrepancy, and how will you resolve this issue in the future?

MR. FUGATE: Congressman, I think you just set upon a challenge we are going to find more and more in this country, as we look at mapping the hazards, and look at where the highest hazards are. Historically, our program has always been based on what I call, past mitigation. Don't build in those areas and if something is there and it is damaged, move it out.

But it never really addressed the fact that if you got communities already there, what do we do for that, particularly if you lose the fire station, but the houses are still there. So we have been working to one, adjust and look at how we better quantify replacing structures. We have implemented a better clarification of the Visa on rebuilding, that it is 90 percent replacement costs of a new structure.

But also looking at how we mitigate structures that are there to protect them, and looking at how do we provide for existing communities as these designations change a more active way of mitigation versus a pass away, which is not to rebuild or to move out of that area when that is not to happen with the existing community.

REP. CAO: Thank you very much.

REP. CUELLAR: (Laughter.) Thank you very much. At this time, the Chair recognizes (Laughs) for five minutes the gentleman from New Jersey, Mr. Pascrell. (Laughter.)

MR. PASCRELL: Thank you very much.

Speaking of mapping, good luck to you, Administrator Fugate. You have big shoes to fill, too. Mr. Paulison did a great job. Both you guys are involved in fire safety, which is something new for Homeland Securities, since it had been shut out up until Paulison was appointed to that position.

I want to bring up with you very briefly, before I get into the Fire Act, regarding a decision made prior to your confirmation, one that I think is very vital, not only to my district, but many districts throughout the United States. It seems that FEMA -- the FEMA Mitigation Division is cutting out small and medium size businesses in the Risk MAP Program, very critical and essential.

This is -- you have to, you have to understand flooding and the risks, but you need mapping that is good, and people should have -- small business should have a shot at that. Why they did that, I have no idea.

So I'm asking you -- and I sent the letter to you. Senator Menendez sent a letter to you. We would like greatly to work with our staffs and see if we can come up with some resolution. Would you just quickly respond to that.

MR. FUGATE: Yes, Congressman. Competition is good.

REP. PASCRELL: So therefore, we can -- you have (Laughs) -- we can -- I like short answers, though.

I can look forward to productive discussions in the future, and I have no idea why they did that. And particularly at this time, in view of the hazards that small business face.

By the way, the Ranking Member, probably algebraic reason for these -- in comparing Katrina with Ike, Katrina covered 90,000 square miles, the size of some European countries. And while Ike had economic damage of $19 billion, the economic damage in Hurricane Katrina was $125 billion. Perhaps that is one of the reasons.

I want to get into the -- this issue that I think is very, very important. I wrote both of the Bills, the Fire Act and the Safer Act. In fact, we wanted to pass both at the same time, but we took a half of glass of water. Those needs existed before 911, Mr. Fugate. And based upon those very essential and basic needs, the fire department's on an average of 23,000 applications every year. That is $3 billion. It is about $4 billion that have come through the program since 2000.

This is essential. Wellness, fitness, protective equipment, apparatus, imaging, all the way down the line. There is no indication, Mr. Administrator, that there is a minimizing or a lesser demand now for any of those areas. In fact, the Secretary was before us, and I asked him a question. And I was very disappointed with her response in that she said, "Well, there's money, there's money in the Recovery Act."

The money in the Recovery Act, Mr. Administrator, is strictly for the building of fire houses. The language is very clear. We want this program. Both the Chairman and the Ranking Member of this committee, when they were in reverse roles, fought for the money in the Fire Act. It is the least bureaucratic program in the entire federal government. There is no skimming from the top. We have made sure that through peer evaluations, we have cut out all the bureaucracies.

So there is no reason under the sun. And to say that you are going to take some money from the Fire Act to put it into the Safer Program, both, both need it. By the way, the Safer Act is not only a legislation that deals with career fire fighter, also the volunteer fire fighters are involved, as well. Because in many areas of this country, we cannot get staff to do this. This is absolutely a Homeland Security issue, and I ask you to address it forthright.

MR. FUGATE: Congressman, I hear you. I am ready to work with you.

REP. PASCRELL: Thank you. That's all the questions I have.

REP. CUELLAR: Thank you, Mr. Pascrell.

Gentleman -- and the Chair recognizes Chairman Thompson.

REP. THOMPSON: Thank you. I appreciate the indulgence, Ms. Titus.

Mr. Director, so much of what you have heard is based on real- life experiences of members of this committee. Sir, I do not want you to say what we say personally, but I want you to take it as a challenge to try to go back and work with your team.

So many times when a new person comes in, they get told, "We've already done it this way." And so much of what we hear as members of the Congress from our constituents, "Yeah, but it doesn't make sense." And so I hope you will take our concerns as real-life everyday scenarios, and help us work through their trying times for a lot of people.

When you have a staff that more have personally gone through an experience like that and try to match that with people who do not have a roof over their heads and other kind of things, it's a tough situation. So given the fact that you have resources, but if you take the resources and apply them to business, as usual, your legacy will not be what it should.

And I, I say that in all sincerity, and pledge to work with you on creating it, because we can be better.

We have to do it smarter, and I am sure I speak for every member of this committee. Your agency was spawn with regardless of political affiliation or anything like that, when Americans need help.

FEMA should be there ready, willing and able to do just that. And it's -- and that is good that we commit ourselves to working with you, if you in return, help us get some of the (non-centrical ?) approaches to addressing catastrophes out of the way.

MR. FUGATE: Chairman Thompson, I have been in government long enough to realize what I have said in front of other groups at the state level and often times at county commissions, and I have often wondered about what I just said, thinking that is the most unbelievable stupid thing I am getting up here talking about.

I appreciate and I pledge as a partner, and I look at the bottom- line and the outcome, and sometimes when we start talking about programs -- I basically went back to, if I cannot explain it to my family where they understand it, we have got to go back and work on it some more. Our goal is the same, to meet the needs of our citizens in a time of disaster. Not to commit fraud or waste, but to address the needs and to ensure that communities move forward, rebuild and recover, and that we define that in such a way that we are not spending decades after a disaster not getting back to long-term recovery.

I want to get the tax-base back where it was, so we can pay for the services. That makes no sense to rebuild the fire station if we do not have the money to pay for the fire fighters.

REP. THOMPSON: Absolutely. Thank you.

REP. CUELLAR: The Chair now recognizes for five minutes, the gentlewoman from Nevada, Ms. Titus.

REP. TITUS: Thank you, Mr. Chairman.

Congratulations, Director. I understand you will have as part of your team, a young woman from Las Vegas, Alison Schwartz. So I look forward to working with her and with you.

First, I want to say you have heard from the Chairman and many of my colleagues about their opposition to the cuts in the Fire and Grant Program. I would like to go on record as saying I completely agree with their position, and I am opposed to it, too.

I have two questions that relate to my district, specifically, but I think they have broader implications. I represent the suburbs of Las Vegas. So we do not have hurricanes, but over the years we have had exploding atomic bombs, we have had earthquakes, we had the strip on New Years Eve, all the places which can be potential disasters.

You began your talk by mentioning that you want to work more with the private sector. And I do not think we are doing enough of that. And we saw where in -- (inaudible) -- where you do not have enough coordination and planning that you can have disaster. In Las Vegas, we have got about 125,000 hotel rooms filled with people on any day who only know how to get from the Eiffel Tower to the Pyramid. They would not know anything about evacuating.

So I just wanted to hear you elaborate more on what we can do to bring in the private sector, because they have got some of the best trained security and the best technology, the eye in the sky is about the best you can find. And second, my district, as you know, is region nine, and it goes from Guam to Arizona. And I think your region originally went from Tennessee to the tip of Florida. I wonder if those regional designations are really appropriate or we should look at restructuring those where they are more demographically, geologically, meteorologically similar. If you would comment on those two things, I would appreciate it.

MR. FUGATE: Well, the first one is, to me, quite one of my passions. After the '04 and then the '05 hurricane season, work in the private sector took on a whole new meaning when I found ourselves passing out water and ice and food in the parking lot of an open grocery store the day after the hurricane because we did not coordinate ahead of time. It did not seem to me to be a good way to work.

So I went back and recognized that you cannot have a government- centric response to these types of events. You have to bring the partnership of the private sector as part of the team. We often talk about it, but I do not think we really embrace that they need to have their place in EOC. And, you know, a lot of people say, "Well, they are private. How do you government -- how do you reconcile stuff?" Well, I will work through the associations. I have got attorneys. We will figure it out.

But the bottom-line is, just like in Las Vegas and Orlando, we have got a lot of tourists that are not even from Florida, much less the United States. Don't even speak -- you know, they are coming from internationally, so we have got languages of the different visitors we have. And so we know that if we as -- we are not one of those business, and our businesses don't meet the needs of those folks in an emergency, they won't come back. That kills the tax base.

And as a critter that has always been around government, I recognized a long time ago, if you do not have a tax base, you do not have the ability to provide services. So it is not a question of one or the other. That is part of the team, and if we do not make sure that our businesses are part of that process, that we understand their role in the economy, and we make that a focus of what we are doing, we may respond well to disaster and kill the recovery, because we never get back that economic engine to keep us going forward.

REP. TITUS: Well, great. I hope you will be working with our hotels and our resort association in Las Vegas to make those plans. And what about the regions?

MR. FUGATE: Regions. I would have to go back to the history of FEMA. I have never understand that. I just know they got established back in 1979. I think part of it was trying to cluster geographically -- (inaudible) -- and areas, and also population. But quite honestly, it is a discussion that is occurring right now within Homeland Security, looking all the different components that we do not even have a standard regional structure within DHS, less the federal government.

And to be honest with you, Congresswoman, we tried this in Florida. There has never been more kicking and screaming about counties, about which region they were moving to or out of to get them all to be the same between law enforcement, fire, emergency management help, but we got it done. But, again, it is a partnership of looking at making sure it makes sense, because those regions are really how we want FEMA be delivering services and working with our states, so that we are closer to the people we serve versus everything having to come from Washington.

REP. TITUS: And I appreciate that. Thank you.

Thank you, Mr. Chairman.

REP. CUELLAR: Thank you, Ms. Titus.

Members, are there any other questions that you all want to ask? Follow up?

Mr. Fugate, I want to thank you for being here on behalf of the Committee. Just two points before we close. The first point I would like to make is the, we want to understand that sometimes between executive and the legislative branch, there is a feeling of us versus them. And I certainly want you to understand that this committee, in a very bipartisan way, wants to work with you.

We want to be your partners. We want you to be able to communicate. I know you had the congressional liaison folks -- (inaudible). But we certainly want you to, you know, be able to sit down with us and talk to us. So to break through us versus them, because it is one team together.

So we certainly want to be able to work with you -- with us. We want to work with you, and we certainly want you to feel comfortable to talk to us, and have your staff talk to our committee staff, both Democrats and Republicans are working together.

The second thing is our ninth year approach, I think Bill said it, we got very simple answers to certain things, very indefinite about certain things. Use your state and local experience to think outside the box, because at the end of the day, we do not want people to say, "God, what a good process we had there a FEMA." I think that they want to say, "Man, they are able to get results." I think we want to see the results. We want to talk about results, and not talk about processes. So we just want you to just keep those two points in mind.

I want you thank you for being here with us, for your valuable testimony, and of course, for answering the members' questions. Keep in mind that the members of the subcommittee may have additional questions, and they might submit those questions. We ask you to submit those back as soon as possible.

Hearing no other business, the hearing is adjourned. Thank you, members. Thank you, Mr. Fugate.

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