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80–223 PDF 2014

S. Hrg. 113–435 

HURRICANE SANDY: GETTING 

THE RECOVERY RIGHT AND THE 

VALUE OF MITIGATION 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

MARCH 20, 2013 

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

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

THOMAS R. CARPER, Delaware Chairman 

CARL LEVIN, Michigan 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

RICHARD J. KESSLER, Staff Director 

JOHN P. KILVINGTON, Deputy Staff Director 

MARY BETH SCHULTZ, Chief Counsel for Homeland Security 

JASON T. BARNOSKY, Senior Professional Staff Member 

ELYSE F. GREENWALD, Professional Staff Member 

KEITH B. ASHDOWN, Minority Staff Director 

CHRISTOPHER J. BARKLEY, Minority Deputy Staff Director 

KATHRYN M. EDELMAN, Minority Senior Investigator 

DANIEL P. LIPS, Minority Director for Homeland Security 

TRINA D. SHIFFMAN, Chief Clerk 

LAURA W. KILBRIDE, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Carper ................................................................................................. 1 

Senator Coburn ................................................................................................. 3 

Senator Johnson ............................................................................................... 13 

Senator Begich .................................................................................................. 19 

Senator Levin .................................................................................................... 24 

Senator Ayotte .................................................................................................. 39 

Prepared statements: 

Senator Carper ................................................................................................. 45 

Senator Coburn ................................................................................................. 48 

WITNESSES 

WEDNESDAY, MARCH 20, 2013 

Hon. W. Craig Fugate, Administrator, Federal Emergency Management Agency, U.S. Department of Homeland Security ....................................................... 5 

Hon. Shaun L.S. Donovan, Secretary, U.S. Department of Housing and Urban 

Development ......................................................................................................... 7 

Hon. Jo-Ellen Darcy, Assistant Secretary for Civil Works, U.S. Department 

of the Army ........................................................................................................... 9 

ALPHABETICAL LIST OF WITNESSES

Darcy, Hon. Jo-Ellen: 

Testimony .......................................................................................................... 9 

Prepared statement .......................................................................................... 67 

Donovan, Hon. Shaun L.S.: 

Testimony .......................................................................................................... 7 

Prepared statement .......................................................................................... 62 

Fugate, Hon. W. Craig: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 52 

APPENDIX 

Responses to post-hearing questions for the Record: 

Mr. Fugate ........................................................................................................ 74 

Mr. Donovan ..................................................................................................... 104 

Ms. Darcy .......................................................................................................... 128 

(1) 

HURRICANE SANDY: 

GETTING THE RECOVERY RIGHT AND THE 

VALUE OF MITIGATION 

WEDNESDAY, MARCH 20, 2013 

U.S. SENATE,

COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10 a.m., in room SD– 

342, Dirksen Senate Office Building, Hon. Thomas R. Carper, 

Chairman of the Committee, presiding. 

Present: Senators Carper, Levin, Begich, Coburn, Johnson, and 

Ayotte. 

OPENING STATEMENT OF CHAIRMAN CARPER 

Chairman CARPER. The hearing will come to order. Nice to see 

you all. Assistant Secretary Darcy, very nice to see you. 

Well, thanks to our witnesses for joining us today. This is an important hearing in our oversight of Hurricane Sandy, what we are 

doing right, what we are not doing right, and what we could do better. 

As you all know, on October 29, 2012, Hurricane Sandy made 

landfall in our country, and its impact, particularly on the Mid-Atlantic and the northeastern coast of our country, was devastating 

and heartbreaking. New Jersey, New York, and parts of New England were hit particularly hard. And on Staten Island we had, I 

think, about 21 people who were killed. In Breezy Point, Queens, 

a fire destroyed over 100 homes. In Hoboken, New Jersey, more 

than 1,700 homes were flooded. And I am sure we all saw pictures 

of the iconic Casino and Funtown Piers in New Jersey—where a lot 

of families have spent their summers—broken down and literally 

pulled into the ocean. 

In Delaware, just to the south of there, we did not experience the 

level of devastation that was inflicted on our neighbors to the 

north. But our own State was hit hard. Widespread flooding caused 

severe damage to many of our homes and businesses. Roads and 

bridges were damaged or washed out, hurting commerce and transportation and cutting off access to hospitals, schools, and work. 

The human cost of this storm was severe. I mentioned the lives 

lost on Staten Island. In total, at least 162 people were killed as 

a result of Hurricane Sandy. Preliminary estimates of the financial 

damage the storm caused are approximately $50 billion. When all 
2 

is said and done, Hurricane Sandy is expected to rank as the second-costliest hurricane on record, right after Hurricane Katrina. 

It will take years to recover from devastation like this. It is important that we get that recovery right. In the aftermath of Hurricane Katrina, we saw many problems during the recovery phase 

that held communities back and created great suffering. Money 

was not always well spent or coordinated. The recovery moved 

slowly as a result. 

For instance, millions of dollars were spent providing temporary 

housing for survivors in travel trailers. People stayed in those trailers far too long because permanent housing solutions were not 

identified. Rebuilding permanent housing was also complicated because red tape prevented us from making the impact we could have 

made with the Department of Housing and Urban Development 

(HUD) and Federal Emergency Management Agency (FEMA) funding that was available. 

The Post-Katrina Emergency Management Reform Act of 2006, 

which was shepherded through this Committee and through Congress by Senators Collins and Lieberman, took steps to try to fix 

these problems. And to be honest with you, we have seen a lot of 

improvement as a result. The Act required FEMA to bolster their 

regional offices in order to build stronger relationships with State, 

local, and tribal governments. This has not only improved the Federal Government’s ability to respond to disasters; it has also enhanced FEMA’s capability to support State, local, and tribal governments as they rebuild. 

The law also required FEMA to coordinate with other Federal departments to write a national disaster recovery strategy, and this 

eventually led to the National Disaster Recovery Framework 

(NDRF), which has helped organize and coordinate recovery efforts 

to Hurricane Sandy. Although the recovery from Hurricane Sandy 

is just beginning, we fortunately have not seen the sort of problems 

that we did after Hurricane Katrina. 

This Committee now has a Subcommittee with responsibility for 

FEMA. It is headed by Chairman Mark Begich and Ranking Member Rand Paul, and I know they will do great work in overseeing 

FEMA in general and this recovery in particular. 

A key question we need to ask after a storm like this is whether 

it was an aberration or a harbinger of things to come. Just a few 

short years ago, hurricanes hitting areas along the northernmost 

half of the east coast were relatively uncommon. Hurricane Sandy 

is actually the third major hurricane to threaten or strike the 

northern east coast in the last 3 years. Hurricane Irene devastated 

parts of the east coast in 2011. The year before that, Hurricane 

Earl was a major threat. Unfortunately, the Northeast, the Mid-Atlantic, and other vulnerable areas are expected to see more frequent and larger storms like Hurricane Sandy in the future. 

Additionally, just this year, Government Accountability Office 

(GAO) added a new area to its recently updated High-Risk List— 

the impact of climate change on the Federal Government. GAO explained that, among other things, climate change ‘could threaten 

coastal areas with rising sea levels, alter agricultural productivity, 

and increase the intensity and frequency of severe weather events.’ 

GAO also argued that the Federal Government is not prepared to 
3 

deal with the impacts of climate change and recommended that we 

take a strategic look at them and start to prepare accordingly. 

I think this is a smart recommendation, and it is essential we 

put it on our to-do list as a Congress, along with the other items 

included in GAO’s updated High Risk report. It is certainly on this 

Committee’s to-do list. The costs associated with responding to and 

recovering from a hurricane such as Sandy—both the human and 

the financial costs—are so severe that we simply cannot afford to 

face this devastation over and over again. 

I will point out that, so far in this recovery, we have seen States 

take some promising steps toward addressing the issues GAO has 

identified. In particular, I am pleased to see that the States of New 

York and New Jersey have begun to make plans to mitigate 

against future disasters. We know all too well that an ounce of prevention is worth a pound of cure. My grandmother would be 

pleased to hear me repeat those words today. 

In fact, a few years ago, the National Institute of Building 

Sciences issued a report that concluded that for every dollar spent 

on various mitigation measures, we can save $4 in response and recovery costs. Through mitigation, then, we can get better results, 

save money, and save lives. We must ensure that sound and effective mitigation policies are thoroughly incorporated into this recovery effort. 

This is especially important as climate change drives the sea 

level to rise and increases the severity and frequency of coastal 

storms. By working together, we can rebuild and become stronger 

by better protecting ourselves from future storms. It is that simple. 

But in doing so, we cannot ignore what I believe and what many 

experts believe may be the underlying cause of storms like Hurricane Sandy. Finding a way to address climate change is not the 

topic of this hearing today, but as we recover from this most recent 

major storm and put into place the protections we need to reduce 

the impact of the next one, we would be making a mistake if we 

did not also think about what we need to do to address not just 

the symptoms of climate change, but the core problem itself. 

With that having been said, I look forward to working with all 

of you, the Obama Administration, and my colleagues on these crucial tasks we have before us. 

I am happy to turn to Dr. Coburn for any comments he wants 

to make. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Well, first of all, let me apologize. I have to go 

to the floor to object to the lack of amendments that are being allowed on the continuing resolution (CR), so I will not be able to 

hear your testimony. I have looked at it, my staff have thoroughly 

read it, and I have summaries of all of it. I will enter my statement 

into the record. 

I just have to make a comment. I love Tom Carper, but the tone 

of climate change and the reality of what we have actually seen 

and what the predictions have been, do not have any connection. 

As a scientist who has actually looked at the science, we still have 

a long way to go to prove what has been made as fact in Senator 

Carper’s statements on climate change. This is not a hearing about 
4 

climate change. This is a hearing about the response to Hurricane 

Sandy, and I look forward to coming back and offering questions. 

I would also say I am very proud of FEMA’s response so far. They 

have done a great job. I also would say I am very thankful for the 

cooperation that you have offered the Committee as we have looked 

at the response and tried to oversee it in real time to see if we are 

actually making great improvements. 

So with that, I would ask that my statement be placed in the 

record, and I will return. 

Chairman CARPER. Without objection. 

All right. And before he leaves, I just want to say I love Tom 

Coburn, too, so there we go. 

I think we are going to go right to our witnesses. Let me introduce them and then, Senator Johnson, we will get into some questions. OK? 

Senator JOHNSON. Sure. 

Chairman CARPER. Our first witness is Craig Fugate, Administrator of the Federal Emergency Management Agency. I want to 

thank you and the folks that you lead for the really outstanding 

effort that you have made in response to Hurricane Sandy from our 

State and from the other States that were affected. Mr. Fugate 

began his career as in emergency management as a volunteer firefighter, emergency paramedic, and, finally, as a lieutenant with the 

Alachua County Fire Rescue. In 2001, he became Director of the 

Florida Division of Emergency Management and held that position 

until he was confirmed as Administrator of FEMA in May 2009. 

Mr. Fugate, again, we are glad to see you. Welcome to this hearing, and thanks for your testimony. 

The second witness is the Honorable Shaun Donovan, Secretary 

of the Department of Housing and Urban Development. Mr. Donovan became Secretary in January 2009. He is also currently serving as the Chair of the Hurricane Sandy Rebuilding Task Force, 

which is the topic we will discuss during this hearing. Before his 

appointment as Secretary, Mr. Donovan served as Deputy Assistant Secretary for Multifamily Housing at HUD during the Clinton 

Administration. He later served as Commissioner of New York 

City’s Department of Housing Preservation and Development. 

We thank you, Mr. Secretary, for joining us, and we look forward 

to your testimony and our questions and answers. 

And no stranger to the U.S. Senate, where she once toiled and 

I think worked for—was it the Finance Committee? 

Ms. DARCY. In the Environment and Public Works Committee 

(EPW). 

Chairman CARPER. In EPW, very good. Great to see you again. 

Ms. Darcy is Assistant Secretary for Civil Works at the U.S. Department of the Army. Ms. Darcy became Assistant Secretary in 

August 2009. Prior to her appointment, Ms. Darcy had a long and 

distinguished career in the Legislative Branch, which I have mentioned. From 1993 to 2000, she served as a professional staff member on the Senate Environment and Public Works Committee, 

which is in markup right now, and she then moved on to the Senate Finance Committee, where I have just come from, where she 

served as a senior environmental advisor. We thank you for joining 
5 

1The prepared statement of Mr. Fugate appears in the Appendix on page 52. 

us. We thank you very much for your work and the great work that 

is being done and the folks that you lead. 

I am going to ask you to go ahead and start your testimony. Try 

to keep it close to 5 minutes. If you go a little beyond that, it is 

OK. But if you go way beyond that, I will have to rein you in. We 

are going to start voting around 11:15, but we want to get as much 

done as we can. 

Mr. Fugate, please proceed. 

TESTIMONY OF HON. W. CRAIG FUGATE,1 ADMINISTRATOR, 

FEDERAL EMERGENCY MANAGEMENT AGENCY, U.S. DEPARTMENT OF HOMELAND SECURITY 

Mr. FUGATE. Well, thank you, Mr. Chairman, Senator Johnson. 

Hurricane Sandy was essentially two disasters in one, and it also 

covered a geographical area that today we know the heaviest impacts were in the Jersey shore, New York City harbor area, and 

into Connecticut with peripheral impacts. But before landfall, we 

were anticipating impacts from as far south as Cape Hatteras in 

the Carolinas, as far west as West Virginia, which was under a 

blizzard warning, all the way up through the central Ohio Valley 

and up to the New England States, including Maine. 

To prepare for that, we were able to utilize the authorities granted to FEMA, when FEMA was authorized in the Post-Katrina 

Emergency Management Reform Act, that clearly stated that in the 

anticipation of a major disaster, we would not have to wait until 

the States were overwhelmed before they were able to request assistance. We had pre-staged not only equipment and supplies, but 

we had sent teams into each State to link up with the Governors’ 

teams to begin that crucial planning on what if the storm did hit 

and produced the impacts possible throughout that region. 

As the scale of the impact became more apparent that it was 

going to be focused on the landfall somewhere between New Jersey 

and Boston, it allowed us to concentrate our resources and teams 

on those impacts. 

But as Hurricane Sandy came ashore, we dealt with a storm that 

produced a very significant storm surge, probably greater than 

many people realized because of the nature of the storm and the 

fact that they had gone through Hurricane Irene and thought that 

was probably as bad as it was going to get. We saw Hurricane 

Sandy produce storm surge in areas that had not previously flooded, most notably in Manhattan, where the World Trade Center Memorial was being flooded, as well as nine of the hospitals in the 

lower boroughs, including New York University (NYU), Bellevue, 

and others that were taken out of service because of the damages. 

But that damage was also compounded by the power outages. It 

is estimated that 8.5 million customers were without power at 

some point during Hurricane Sandy, but I think that number 

underestimates the human impact in that those were actual connections, not people. When you looked at the region, there was in 

excess of 25 million people being impacted some way or another by 

the power outages, whether it was directly because they did not 
6 

have power or because it was affecting communications, transit, 

fuel, and other issues. 

And so as we responded to this disaster using the tools that we 

had, we were able to focus on the life safety issues, much of this 

done by the local responders, augmented by Homeland Security 

grant dollars they had received since 9/11 to build more capability 

in search and rescue. We then supported the immediate needs response—sheltering, distribution of supplies—and began the process 

of starting the initial recovery, getting debris picked up, dealing 

with those immediate issues that were required to provide expedient and temporary housing. 

Some of the tools we learned from Hurricane Katrina is that in 

long-term housing impacts, you have to start planning from the 

very first day what the solutions were. Merely putting people up 

temporarily in hotels and motels was not an answer. So that is, 

again, why we engaged very quickly with the long-term recovery 

type planning we do under the National Recovery Framework. We 

are engaging with our partners at HUD, the Small Business Administration (SBA), and others. 

But as the density of the population showed, this was going to 

be a very significant challenge to house people long term given the 

density of the population and the amount of impact that occurred. 

We implemented a variety of tools that we had been developing 

over the last couple of years, some very successful, some not as successful, and we continue to learn how to do that better. But, overall, the response was geared toward supporting the States divided 

into phases: life safety, life sustaining, and the immediate steps to 

set the stage for recovery. 

We are now seeing these communities begin to move into the 

long-term permanent work that will be required, and we also want 

to ensure that when we build back, we are not just building back 

to what was there. We are looking at how do we ensure that critical infrastructure is built back in a way that ensures its survivability and resilience in future storms. 

As the President has directed us, we are looking at the issue 

here as an adaptation to the hazards we face, and that for the future, we cannot just merely build back to previous standards. 

Again, if Hurricane Sandy was a record-setting storm, but is not 

the storm potential that could occur and we only build back to Hurricane Sandy, the next stronger storm may undo all of our work. 

We have seen where we have applied mitigation after Hurricane 

Katrina, and then the impact of Hurricane Isaac earlier this year, 

parts of the community that had mitigated against Hurricane 

Katrina actually saw storm surge greater than what they saw in 

that storm. But because of the mitigation, fire stations, schools, 

and emergency operations centers were up and running during the 

storm and able to continue to provide essential services during the 

life safety phase of the disaster, resulting in FEMA and the Federal agencies being able to focus on recovery. 

So we know mitigation works, but we also need to make sure we 

are mitigating against the future threats, not just past history, because every time we go out, it seems that the term ‘‘100-year 

storm’’ is being used several times a year to describe events that 

are occurring with even greater frequency. 
7 

1The prepared statement of Mr. Donovan appears in the Appendix on page 62. 

Thank you, Mr. Chairman. 

Chairman CARPER. Thank you very much. 

Mr. Secretary, please proceed. Your entire statement and all of 

your entire statements will be made part of the record. Feel free 

to summarize. That was a nice summary, I thought. 

Please proceed. 

TESTIMONY OF HON. SHAUN L.S. DONOVAN,1 SECRETARY, U.S. 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Secretary DONOVAN. Chairman Carper, Members of the Committee, thank you for the opportunity to testify today regarding the 

ongoing effort to rebuild in the region devastated by Hurricane 

Sandy. 

I chair the Hurricane Sandy Rebuilding Task Force established 

by President Obama. Hurricane Sandy had immense impacts in 

New York, New Jersey, Connecticut, Rhode Island, Maryland, and 

a number of other States, as you know, Senator. 

Based on the lessons learned from previous disasters, the President asked Secretary Napolitano and me to develop a new approach to disaster-related recovery and rebuilding challenges from 

a national perspective. That led to the creation of the National Disaster Recovery Framework, which we released in 2011. Administrator Fugate just mentioned its importance in allowing us to bring 

a coordinated, governmentwide approach to recovery and rebuilding. 

As a result of the NDRF, for the very first time, we are fully implementing the long-term recovery strategies that were part of the 

NDRF, and today we have 150 Federal staff on the ground in New 

York, New Jersey, and Connecticut who are working on long-term 

rebuilding, because we know from past disasters that planning for 

long-term rebuilding must begin even as response activities are underway. 

We also know that the unusual scale of the devastation caused 

by Hurricane Sandy meant communities would face greater rebuilding challenges than usual and that many of those challenges 

would cut across agency and State lines. 

For example, an issue like hardening our energy infrastructure 

will require involvement from Federal, State, and local government 

in addition to the private sector across the region. In recognition 

of this, President Obama created the Hurricane Sandy Task Force 

to ensure there was Cabinet-level, governmentwide, and regionwide coordination to help communities as they are making decisions about long-term rebuilding. 

The task force is a short-term entity. The President’s Executive 

Order (EO) calls for us to produce a comprehensive rebuilding 

strategy by August 2. Following the completion of this strategy, the 

task force will wind down and implementation will be carried out 

by the relevant regional support functions that are already in place 

under the NDRF. 

One goal of the task force and the strategy is to identify and 

share best practices adopted by other communities in the wake of 

disasters and to help communities apply those lessons to their own 
8 

rebuilding efforts. A perfect example of this work is an announcement we made last week to help communities get the Community 

Development Block Grant (CDBG) disaster funding into homeowners’ and business owners’ hands more quickly. We released several model programs based on best practices from other areas that 

local governments can modify and adapt to launch their own programs to repair homes and small businesses and offer their citizens 

housing counseling or, where appropriate, buyouts. 

Giving communities these model programs means they do not 

have to reinvent the wheel and design new programs from scratch, 

which ultimately means homeowners and businesses get more help 

quickly and at a lower cost to taxpayers. 

In addition to identifying opportunities for this type of coordination, supporting local rebuilding efforts with the financial resources 

that only the Federal Government can provide is a key part of the 

Federal role. Federal agencies and departments have already 

begun making money from the Disaster Relief Appropriations Act 

available to State and local governments in the region. In addition 

to what Administrator Fugate mentioned, the Administration has 

allocated the first tranche of CDBG disaster funds totaling $5.4 billion, and I would add that HUD allocated this funding within 8 

days of the President’s signing the supplemental, the fastest it has 

ever been done in history. We have also announced $2 billion in Federal Transit Administration (FTA) emergency funding, and FEMA has released more 

than $5.9 billion in National Flood Insurance payments. 

The task force’s role is to help supplement individual agencies’ 

efforts to get money where it is needed by sharing lessons learned 

about how to use it most effectively and efficiently. Our role is also 

to facilitate the monitoring of those programs to ensure accountability and to take additional measures to prevent waste, fraud, 

and abuse. We are working with the Recovery Accountability and 

Transparency Board (RATB) and with the relevant Inspectors General (IG) in support of their critical oversight mission and are also 

working with agencies and the Office of Management and Budget 

(OMB) to coordinate the delivery of enhanced agency internal control plans. 

In addition, we will monitor and share data about how the dollars are being spent on a public website similar to Recovery.gov to 

give the public confidence their dollars are being spent as intended. 

The task force will also help impacted communities use this 

funding to mitigate future risk from storms—storms that science 

tells us will have greater intensity and severity in the future. Mitigation is sensible and cost-effective, offering a $4 return on each 

dollar invested by preventing future damage, as you have recognized, Senator. And while each agency is focused on mitigation, the 

role of the task force is to ensure coordination and prioritization of 

projects across the region so that we can ensure that benefits are 

not being duplicated and that those efforts and investments are the 

most cost-effective options. 

We want to thank Congress and Members of this Committee, in 

particular Senator Landrieu, for your leadership that cut red tape 

and gave us new flexibility to build back stronger, and we are 

working to combine CDBG and other funds so that the opportunity 
9 

1The prepared statement of Ms. Darcy appears in the Appendix on page 67. 

to build back stronger is not an opportunity lost. We know mitigation works. As Craig Fugate just described, we saw it on the Gulf 

Coast, and we have seen it in Hurricane Sandy as well. 

We look forward to continuing our work with this Committee, 

others in Congress, and our Federal, State, and local partners to 

support communities’ rebuilding efforts in a way that makes them 

stronger, more economically sustainable, and better prepared to 

withstand future storms. 

Thank you again for the opportunity to testify today. I look forward to answering any questions you may have. 

Chairman CARPER. Thank you, Secretary Donovan. Assistant 

Secretary Darcy, please. 

TESTIMONY OF HON. JO-ELLEN DARCY,1 ASSISTANT SECRETARY FOR CIVIL WORKS, U.S. DEPARTMENT OF THE ARMY 

Ms. DARCY. Thank you, Chairman Carper. 

Everyone has talked about Superstorm Sandy, as we now call it, 

with the 80-mile-per-hour winds and a 13.7 foot storm surge; all of 

this caused a great deal of devastation. Flooding has occurred causing damage to public infrastructure, causing extensive power outages, affecting mass transit systems, and causing damage to public 

housing and private residences. 

It is clear that existing Corps of Engineers projects helped to 

mitigate some of the flood damages to the residents. However, degraded coastal features have resulted in increased risks and vulnerability from future storm events. In addition, expected changes 

in sea level rise, extreme weather events, and other impacts of climate change are likely to further increase those risks. 

The Corps has authority under Public Law 84–99, the Flood Control and Coastal Emergencies Act (FCCE), to perform emergency 

management activities in response to natural disasters. These include preparation for natural disaster preparedness, advanced 

measures, emergency operations both before and after a flood, and 

rehabilitation and repair of damaged projects. 

The Corps also responds to disasters at the direction of FEMA 

under the Stafford Act. Under FEMA’s National Response Framework, the Corps is the coordinator for Emergency Support Function 

(ESF) #3, which is ‘‘Public Works and Engineering.’’ FEMA missions assigned to the Corps are funded entirely from FEMA’s Disaster Relief Fund. 

During and after Hurricane Sandy, the Corps responded to 68 

missions assigned by FEMA, provided more than 1,000 highly 

trained technical personnel and deployed the 249th Prime Power 

Battalion. To date, FEMA mission assignments exceed $350 million 

in New York, New Jersey, Massachusetts, Delaware, Ohio, Pennsylvania, Connecticut, West Virginia, and Rhode Island. 

As of March 1, 2013, completed Corps response efforts under 

both its own Public Law 84–99 and FEMA’s Stafford Act include: 

Completion of 567 power assessments and installation of 211 

generators that at one time were generating 55 million kilowatts 

of power; 
10 

Installation and operation of 162 pumps to un-water 14 strategic 

sites identified by State and local authorities, including the New 

York City subway system’s tunnels and the Passaic Waste Water 

Treatment Plant, resulting in the removal of over 475 million gallons of water. We restored operation of the Hoboken Ferry Terminal and delivered 512 truckloads of drinking water to New York, 

New Jersey, Pennsylvania, and West Virginia. We refurbished 115 

transitional housing units. 

Completed an assessment of damages of Federal coastal protection projects, and closed breaches in three coastal barriers in New 

York and New Jersey. 

Another major FEMA mission assignment that continues today 

is the removal of debris left by Hurricane Sandy. I have an update 

on the debris removal information that was included in my complete statement for the hearing. I would like to do that now so we 

can update those numbers. 

As of this week, in the city of New York, more than 734,000 cubic 

yards of debris have been removed from public sites by the Corps 

of Engineers. 

On Fire Island, both the number of private property debris removal assessments that were assigned to the Corps and the number that have been completed has risen. The new total number of 

assessments that were assigned to the Corps is 1,814, of which 

1,779 have been completed. 

The success of these efforts was due to a dedicated and determined team that included the Corps, the Navy, the Coast Guard, 

the Department of Transportation (DOT), New York City’s Transit 

System, and many, many more. 

Damage sufficient to warrant repair under Public Law 84–99 

was reported for 19 Federal hurricane and shore protection projects 

within the Corps’ North Atlantic Division footprint. The Corps has 

approved project information reports for these 19 projects, and engineering and design has begun on each of the projects. 

There were damages to projects outside our North Atlantic Division for which we are continuing to prepare project reports. 

Finally, we also sustained damages to some of our Corps navigation projects. 

The Disaster Appropriations Act of 2013 provided $5.35 billion 

for the Civil Works program. This amount included $3.461 billion 

of construction funding, of which more than 80 percent was to reduce future flood risks in a way that will support the long-term 

sustainability of the coastal ecosystem and the communities, and 

reduce the economic costs and risks associated with large-scale 

flood and storm events. 

The Act requires that all Corps projects funded for construction, 

incorporate our current science and engineering standards. The 

Army is in the process of developing its implementation plan for 

the funding under the Act, with project-specific measures. The 

Corps will perform an expedited, limited re-evaluation that will address resiliency, economics, risks, environmental compliance, as 

well as long-term sustainability. Also, the Corps will enter into 

project partnership agreements that will be executed with the nonFederal project sponsor that, among other things, will ensure an 

updated floodplain management plan is developed by the respon-
11 

sible non-Federal authorities. The Corps will take a broad, longterm approach to reducing future vulnerability in a manner that is 

sustainable for the natural ecosystem, for the individuals, as well 

as the communities in which they live. 

Thank you, Mr. Chairman, and I look forward to your questions. 

Chairman CARPER. Thanks. Thank you all for your testimonies. 

Our Committee jurisdiction includes border security, and last 

month, I was down along the border of U.S. and Mexico in Arizona 

with Senator McCain and Congressman Michael McCaul from 

Texas, who chairs the Homeland Security Committee over in the 

House. I was joined on another day by Secretary Janet Napolitano. 

One of the things we have wrestled with on border security is: 

How do we measure success? Is it the number of folks we apprehend trying to get into the country illegally? Are there other measures of success? And I think we are making great progress in border security in that part of our country. We still wrestle a bit with 

how do we measure success. 

Let me just start right there. Administrator Fugate, how do we 

measure success? And given that measure, how are we doing? 

Mr. FUGATE. We looked at disasters and response that—and responding to disasters, there was never a criteria of timeframe. So 

we looked at the first 72 hours that oftentimes is the most critical 

for life saving and immediate stabilization and said that, as a Nation, do we have enough resources to get to people quickly, to do 

rescues? Do we have enough law enforcement and security to make 

it safe? Do we have the emergency communications to allow the 

first responders to rebuild and get their systems back up, as well 

as provide the most essential, basic needs to a community in that 

short timeframe? 

Now, that cannot just be done with the Federal agencies, but we 

look at this through the whole community, what the private sector 

can do, what we do with our other partners. 

So the measures we look at very specifically are: Can we physically get back into the area? Can we make sure it is safe to operate in? Generally, law enforcement and security concerns. Can we 

get to the injured in 24 to 48 hours while we still have an opportunity to change the outcome? And do we have enough supplies and 

capabilities to meet the most immediate needs so that future loss 

from that disaster is not occurring because of lack of response? And 

we could then begin the process of setting the stage for the next 

immediate thing, such as sheltering, picking up debris to set the 

stage for recovery. 

And looking at our last responses, most notably Hurricane 

Sandy, we are achieving that by and large but not uniformly 

throughout the heavily impacted areas. And particularly in Hurricane Sandy, a challenge there is the dense population, and I think 

that is something we have to continue to look at, that you just cannot look at geography. You have to look at where the people are 

and make sure you have the resources there. 

But in using that as a standard, we are now going back and cataloguing our investments in homeland security, those grants, and 

looking at how much capacity have we built, what does that response look like? And one example we had, the Urban Search and 

Rescue Teams which Congress funds that we sponsor—there are 28 
12 

of them—had never been funded to do any type of water rescue 

even though they had deployed most recently, from Hurricane 

Katrina forward, to numerous hurricanes which involved water rescues. So we began equipping them through their grants with water 

rescue equipment. Six of those teams were able to deploy and augment State and local responders. 

Chairman CARPER. Good. Thanks. 

Secretary Donovan, how do we measure success, and how are we 

doing? 

Secretary DONOVAN. To complement Craig’s focus on the immediate response, we are also very focused on how do we measure 

success in the longer-term recovery. 

Chairman CARPER. Good. 

Secretary DONOVAN. And there is a set of, I think, more obvious 

measures, and then there is a set of measures that are perhaps 

less obvious and longer term. 

Clearly, how quickly are homeowners getting back into their 

homes, how quickly are small businesses getting up and running. 

More broadly, will the shore be open for business this summer in 

New Jersey and Long Island? Those are all critical measures, and 

I would like to thank Congress for giving us in this supplemental, 

for the first time, the ability to set clearer deadlines, a 24-month 

timeline for what we would expect to be most of the CDBG and 

other investments. 

One of the roles the task force is playing is to go through right 

now with OMB and try to set a consistent policy on how we will 

implement those timelines from obligation. 

We are also working with the agencies to get data-sharing agreements. Frankly, sometimes just setting up the pipes, if you will, to 

share that data in a single source so that we can track it, make 

it available to the American public, to all of you, and to the IGs 

to know whether we, in fact, are making speedier progress than we 

did, say, in Hurricane Katrina in helping businesses and homeowners get back. 

The last thing I would point to goes to your focus on mitigation. 

In the long run, one of the most important measures of the recovery is: do we save money the next time we have a storm? FEMA’s 

analysis has showed, as you quoted, Senator, that we save $4 for 

every dollar of investment in mitigation where it is done wisely, 

and that is something we are going to be gathering the data to be 

able to track going forward as well to make sure we understand 

where those mitigation investments have actually paid for themselves and where they have not. 

Chairman CARPER. Thank you. 

Assistant Secretary Darcy, how do we measure success? How are 

we doing? 

Ms. DARCY. Well, we can measure success in two ways: 

One is how we were able to respond to the orders and the missions that were given to us by FEMA, and that success is shown 

in the fact that we were able to un-water the Battery Tunnel, that 

we were able to call on the resources that we have not only within 

the Army but within the Defense Department to help with that 

mission. That is one way we can measure success. 
13 

Another way for our agency to measure success is to be able to 

look at the projects that we have built, especially our storm risk 

reduction projects along the coastline that provided storm damage 

reduction. And if you flew the coast of New Jersey after Hurricane 

Sandy, you could see where there had been a Corps of Engineers 

project and where there had not. The houses behind the housing 

projects, those sand dunes were still standing. And I think for us 

not only did we learn from that, but we have to learn what did not 

work as well. Part of that is working with the task force and looking at what kind of sustainability we need to make sure is part of 

any project that we plan to build. 

Chairman CARPER. Thank you. 

Before I yield to Senator Johnson for his questions, I just want 

to telegraph my next pitch. When he is finished and others have 

had a chance to ask questions, I am going to be asking you whether 

you think that State, local, and Federal Governments involved in 

this recovery have the authority and the resources that are necessary to make the recovery successful. And I will be asking are 

there any other tools that you need for your respective tool boxes 

or for other tool boxes to help make this recovery successful. 

All right. Thanks. Senator Johnson. 

OPENING STATEMENT OF SENATOR JOHNSON 

Senator JOHNSON. Thank you, Mr. Chairman, and thank all of 

you for coming in and testifying. 

I have not been along the coastline, I have not seen the devastation, so I just would like to ask some basic questions about that. 

How much of the damage was within what proximity to the shoreline? Can you kind of give me some indication? 

Mr. FUGATE. Senator, most of the damages that occurred fell 

within the 100-year floodplain area, so in some cases the damage 

were within blocks. In some cases, it was almost half a mile to a 

mile, depending upon where you were at. 

Again, you have got to remember in this coastline you have barrier islands and you have inlets and then you have rivers that 

flooded upstream. So most of the damage occurred within the first 

half-mile, is generally where you saw the concentrated damage. 

But because of the coastline and the shore, some of the water was 

going into places that may have bypassed higher ground and impacted further upstream. Particularly on the Hudson River, there 

was flooding well away from the shore area on the river banks 

where it had moved up the river. 

Senator JOHNSON. But would it be safe to say that 80, 90 percent 

of the damage occurred within the 100-year floodplain? 

Mr. FUGATE. The bulk of it did, although we did identify that in 

particular New Jersey, which had not had updated maps, there 

was flooding outside of that. This is part of the updated maps 

showing us better resolution of what could happen. But it is also 

important to note that the 100-year floodplain only shows the risk 

as 1 percent. In many areas, the flooding was greater than that 

based upon localized impacts of the storm, and in a stronger hurricane, the 100-year floodplain would not identify all of the risk, and 

that is one of the things Secretary Donovan and I and others are 

working on with the Corps of Engineers, is to make good decisions 
14 

on critical infrastructure, not just based upon the 100-year flood 

events but also what the potential storm impacts can be. 

Secretary DONOVAN. Senator, if I could. 

Senator JOHNSON. Sure. 

Secretary DONOVAN. Just to clarify one point there and to give 

Craig and his team some real credit, one of the most important 

steps that we have taken—and the task force has worked closely 

with Craig’s team on this—is to update those flood maps with new 

advisory maps. And so just to be clear, there are places where the 

100-year floodplain has gone up by more than 10 feet in places 

within the region. So I think when you described the 100-year 

floodplain, it is within that newer version of it. Compared to the 

old maps, it was substantially outside in many places, that original. 

And I think one of the most important things that Craig has 

done is to accelerate that process of getting those new flood maps 

out so that now as towns, particularly along the shore, are rebuilding they are using more accurate measures of what that 100-year 

floodplain is, which in some cases is dramatically different from 

what it was. 

Senator JOHNSON. Which leads me to my next question. Give me 

the effect of having a 100-year floodplain map, in terms of the laws, 

in terms of insurance rules. I mean, tell me what the 100-year 

floodplain actually does in terms of mitigation, in terms of insurance costs, in terms of what responsible individuals should do in 

response to 100-year flood maps. 

Mr. FUGATE. Where we have the updated maps and the community adopts them, the requirements to participate in the Flood Insurance Program is they have to adopt the maps as ordinances, 

and then they have to drive all of their construction based upon 

those maps as far as elevation requirements in areas where they 

are prohibited to build certain types of structures or use certain 

construction techniques. 

The most common one for residential areas is the requirement to 

build one foot above base flood elevation. We saw numerous homes 

where I was at in Connecticut that had flooding during Irene, that 

in rebuilding had been elevated. Those homes are standing. Homes 

next to them that were not elevated to the new data were destroyed. It oftentimes means the difference between communities 

being able to rapidly recover and people come home after cleanup 

and restoration of power versus losing everything, including the 

community’s tax base. 

So while it does not factor into the worst possible scenarios that 

there could still be damages, by and large across the gulf coast and 

now across the Northeast where these standards have been applied, storms that have hit show that, by and large, the elevation 

requirements preserve housing, the tax base, and homes for people 

to return to after the storm. Those that are not built to that level 

oftentimes are those that are destroyed, causing not only the loss 

of the home but the loss of the tax base. 

Senator JOHNSON. OK. So that really applies to the building 

codes. What about in terms of the insurance markets, the ability 

to access insurance, the cost of insurance? 
15 

Mr. FUGATE. Well, the cost of insurance, for flood insurance, 

again, is provided by the Flood Insurance Program, and if you are 

not elevated above that base flood, based upon the latest reauthorization of the National Flood Insurance Program (NFIP), going to 

an actuarially based rate is going to be a very expensive proposition to people. If they will build one foot above that base flood elevation, they will get a discounted rate showing the reduced risk. 

But moving toward a more actuarially sound basis is going to 

price many people to the point where they will have to make hard 

decisions about either elevation or not being able to rebuild based 

upon their insurance rates. 

Senator JOHNSON. Do you have any estimates so far of how much 

of the cost of the disaster is going to be borne by private insurance 

versus State governments versus the Federal Government? Do you 

have some sort of breakdown on that? 

Mr. FUGATE. No, sir. Given that almost all of the flood damage 

will be covered by the Flood Insurance Program as the Federal and 

commercial industry has not chosen to write flood insurance for 

homeowners, I think the preponderance of the costs will be borne 

by the taxpayer and through the ratepayers in the Flood Insurance 

Program. Those damages outside of that, primarily wind damage, 

for those commercial entities that had insurance, those would be 

the numbers that would be done by the private sector. 

Secretary DONOVAN. If I could add, Senator, one of the critical 

things about what Craig has said, historically we have not had a 

coordinated response across the Federal Government where we are 

using the same standards. And so typically what you have is that 

the official flood maps—in this case, this would be the old flood 

maps for New Jersey and New York—would govern the investments that we would make post-disaster. 

What we are doing is trying to use these new maps—the task 

force is working on this—to ensure not just FEMA is using the latest information on the maps, but that across the Federal Government we are doing that. 

So, for example, in our first Community Development Block 

Grant notice, we required that anytime, as FEMA does, you are rebuilding more than 50 percent of the cost of the home, you have 

to use these new maps, even if they are not going to be official for 

the Flood Program within 2 years. 

We also, for example, are looking at—you mentioned insurance. 

The Federal Housing Administration (FHA) provides insurance on 

lending. That is another area that we are looking at to try to set 

a consistent standard so that even though we have this new information, we are not rebuilding to an old standard that will ultimately cost us more, particularly where there are major investments being made by either private entities, private insurers, or by 

the Federal or local government. 

Senator JOHNSON. OK. Well, I am out of time, but I will give you 

a hint in terms of my followup, because I am going to want to be 

talking about the moral hazard of insurance pricing and how we 

basically just incentivize people to continue to build in areas that 

are going to get wiped out once again, and then the American taxpayer is on the hook for that. So that will be my next line of questioning. Thanks. 
16 

Chairman CARPER. Dr. Coburn. 

Senator COBURN. Well, thank you all again for being here, and 

I apologize once again for being absent during your testimony. 

I want to just make a few comments. We have had investigators 

up there, and it has been bipartisan in terms of what we examined. 

Overall, the initial response of FEMA has been very positive, but 

some of the criticisms that we heard from people on the ground, 

local mayors and other people, was that when FEMA staff changed 

out, there was not a good transfer or hand-off of what was done. 

The other thing is that it seems to be too many questions cannot 

be answered by your people on the ground; or people have to wait 

for an answer. 

And then the third thing is getting funds. Most of them are having to hire consultants to be able to access funds. 

Even though we have done a good, initial response, the criticisms 

by the people that are actually impacted, I think, are real and justifiable. I would love to hear your response to the hand-off process 

as you move people in and out and why people on the ground cannot give people who have been impacted answers to their questions. 

Mr. FUGATE. The short answer is historically FEMA has never 

staffed where we had the luxury of being able to deploy people for 

long periods of time from the initial outset of a disaster. We just 

do not have a workforce that is that scalable with that many people 

ready to go to that many impacted communities early in a disaster. 

So we used a lot of our permanent workforce from our regions to 

do the initial staff, and then as we were able to bring in our reservists and bring them in, we were able to backfill. That resulted in 

the first change-out, and that has never been a good change-out. 

We continue to work on that. 

But you get to the second point, which is even more of a problem, 

is the complexity of our programs have reached a point where part 

of what we were looking forward to in the Sandy Recovery and Improvement Act was better flexibility and tools to get more consistent answers quicker. Our goal was to get the right answer the 

first time, whether it was yes or no, and if it was maybe, get the 

answer so local officials know what to do. 

Part of this will come back to looking at how we staff disasters. 

What we have come to the conclusion with Hurricane Sandy is we 

have been using a lot of our reservists which are itinerant— 

brought on when we have disasters—workforce who, for a lot of the 

programs work very well. But as you get into the complexity of recovery, particularly as we have been updating and changing the 

program, it often delayed responses because they were not current 

and had to go to the next level to get answers. 

Based upon our analysis of Hurricane Sandy, we recognized we 

were going to have to put more emphasis on a full-time, non-permanent workforce to get the consistency in public assistance. I 

think there are areas where the people that we bring in as we need 

them work very well in disasters, but as you point out, Senator, 

when it comes to public assistance, getting the right answer the 

first time and the consistency in that answer has been an issue 

since I have been a State director and a local official. We feel the 

only way to address that, as the programs have increasing complexity, is to have the subject matter experts working full-time as 
17 

a temporary not permanent workforce, but having that full-time exposure and expertise to answer those questions. 

So we are in the process of reshaping that workforce in the aftermath of Hurricane Sandy to address that issue. 

Senator COBURN. So when they have to hire a consultant to work 

through the maze of bureaucratic red tape, does the American taxpayer end up paying for that consultant? 

Mr. FUGATE. They would get from us management costs. They 

may be using that to pay for the consultant, and that could be included in the bill. So the answer is yes. 

Secretary DONOVAN. Senator, if I could just add on one point related to this, some of this confusion comes out of public programs, 

but there is also a lot of confusion that homeowners have around 

the conflicting requirements or efforts of different servicers with 

different types of loans. 

So, for example, certain servicers may have a policy that your insurance proceeds will only be released under this condition; another might have that they would release insurance proceeds under 

a different condition. 

One of the efforts that the task force has undertaken, FHA is 

part of HUD, an important part of the mortgage market. Fannie 

and Freddie are overseen by a different agency. We have brought 

together the private servicers, Fannie, Freddie, and FHA to try to 

reach consistent standards for Hurricane Sandy, for example, on 

how long forbearance will be of foreclosures, what type of forbearance we will be offering, so that there is consistent information. 

The more we can standardize those things—we made a lot of 

progress on this—the more somebody who is in the field, whether 

it is a HUD person or a private sector person, can say, ‘‘Here is 

the rule. It applies across the board,’’ as opposed to, well, depending on what side of the street you are on or what lender you have, 

you are going to get different answers. 

So this is not just a question for sort of standardization across 

government. It is also one that we are working on through the task 

force to try to get consistency in the private—— 

Senator COBURN. But the eligibility requirements have not 

changed. They did not change. The last disaster we had, the eligibility requirements are the same. So why is it so hard to get an 

answer if the eligibility requirements have not changed? 

Mr. FUGATE. Well, Senator, I would like to talk specifically about 

what those issues are. I think there are two times when local officials have hired contractors, and based upon my conversations, 

they have hired contractors because of the workload issue, that 

they need additional staff because they are having to process literally hundreds of thousands, if not millions of dollars, and they 

just are not staffed for that. So they hire consultants to provide the 

staffing for that. It is when they have to hire consultants because 

of the complexity of the program. So it is a balance between simplifying the program without undoing or necessarily incurring increasing risk of waste and fraud. It is to maintain the consistency 

and the answers, but also the eligibility. 

And I think it also comes back to those communities that had 

gone through previous disasters have greater experience. Oftentimes they are hiring the consultants to provide staffing. So the 
18 

issue is: What are the specifics that are requiring the contractors 

to come in to answer questions on program eligibility? And is it because they are not familiar with the program and are looking for 

assistance or because the program has become so complex it requires that? 

I think the answer is a blend of that, and I am not going to deny 

that it is complex. 

Senator COBURN. All right. 

Mr. FUGATE. But I want to work toward that solution. 

Senator COBURN. I am just about out of time. I want to followup 

on one thing that Senator Johnson talked about. If you are in the 

Hurricane Sandy disaster area and you are not going to find out 

until July of this year what the floodplain map is, what are you 

supposed to do for your home? 

Mr. FUGATE. Senator, except in a couple of cases, most of the advisory based flood elevation maps are being published. They are 

being updated as the traditional data. Probably the biggest change 

will be in some of the tidal backwater areas where it may reduce 

the vulnerability zone, which would change construction, but the 

elevation requirements are not significantly changing. The question 

is: Would we see these go higher? And the answer is: Based upon 

our data, no. At best, what the updated maps will show is maybe 

less area. But in any case, building to those levels would ensure 

that you would not risk the preferred rate for your insurance premium and would also mitigate future storm damage. 

Senator COBURN. So could a homeowner in one of those floodprone areas take away from this hearing today that, based on the 

maps we have today, if they built to that, they are not going to 

have their premium adjusted upward because they did not follow 

a new flood zone map? 

Mr. FUGATE. As long as it is areas where we have the most current advisory maps. There are some areas—— 

Senator COBURN. Do all these people know that? I mean, do they 

know what is the most current versus what is not? In other words, 

how do we get it going faster based on this real limitation of not 

knowing what the requirements are? 

Secretary DONOVAN. Senator, if I could just—one of the things 

the task force has been doing, working with FEMA, is exactly what 

you are describing. I think it is one of the real successes of this, 

that FEMA was able to accelerate the process of those new maps 

being created, put them out publicly. They are now available across 

all of the State of New Jersey. Governor Christie has adopted those 

new maps, plus a foot, for the entire State for rebuilding. And 

there are meetings going on across the State with the task force 

and FEMA personnel to inform citizens about what those new 

standards are. 

Is it perfect? Can we say that there are not going to be some revisions in the months to come? No, because, obviously, if there is 

feedback from local communities that we have gotten it wrong or 

that things have changed, we ought to incorporate that. But this 

is a vast improvement to what we have had before where these 

new maps are out very quickly—— 

Senator COBURN. Yes, but it is highly unlikely that they are 

going to ask you to raise it. They are going to ask you to lower it, 
19 

the local communities, if they think you have gotten it wrong. So 

my question to both of you is: Can anybody in New Jersey and New 

York and all the rest of the areas that were affected, based on what 

is out there now, start rebuilding based on what is out there now? 

And, can you assure them that, following what is out there now, 

they are not going to get dinged in their insurance? 

Mr. FUGATE. Senator, do you want me to say that for every 

household or for—— 

Senator COBURN. Yes, sir I do. 

Mr. FUGATE. The answer is you cannot say that for every household. 

Senator COBURN. OK, and that is an important thing, because 

that creates a slowdown in the rebuilding and response to Hurricane Sandy, because people are not going to put themselves at risk 

if they do not know what the requirements are. What we ought to 

do is have a flat-out statement from you all that says if you are 

doing it based on what is out there now, we are not going to come 

back and ding you in the future. If we have to readjust rates again 

and then we have another storm, then we will. You ought to give 

them some certainty as to what the rules are. Do you understand 

my point? I think there are a lot of people waiting, from what we 

have heard, there are a lot of people waiting to do things based on 

floodplain maps. 

Secretary DONOVAN. I will—— 

Senator COBURN. Do you disagree that is not happening? 

Secretary DONOVAN. I do not believe that is what is holding people up from rebuilding. The more significant issues that we have 

heard have been in making sure that payments are getting to families and, frankly, being able to get the supplemental funding, once 

it was passed by Congress. We are now moving very quickly to get 

that out. But I have not heard that uncertainty about the flood 

maps being the issue holding folks back. And, again, this may not 

be—— 

Senator COBURN. Well, the investigators have heard exactly that 

over, and over, and over again. So maybe we need to direct those 

people to you so you all can hear it. But we have heard it over, and 

over, and over again. 

And I am way past my time. I am sorry. 

Chairman CARPER. That is OK. I think that is a very good idea, 

to make sure we followup and do that. OK. Thanks. 

Dr. Coburn and I, in restructuring the Subcommittees of this 

Committee, have created a famous Subcommittee that focuses on 

FEMA and emergency response. We are fortunate to have a former 

mayor of Anchorage, the Senator from Alaska, to chair that Subcommittee, and his Ranking Republican Member of that Subcommittee will be Rand Paul from Kentucky. We are delighted you 

are willing to take this on, and in the future, I think hearings of 

this nature will be done at the Subcommittee level, but this one for 

the lead-off, we wanted to do it at the full Committee level. 

So, Senator Begich, you are recognized. Thanks. 

OPENING STATEMENT OF SENATOR BEGICH 

Senator BEGICH. Thank you very much, Mr. Chairman, and I do 

look forward to the opportunity to continue to work on these issues 
20 

around emergency preparedness, and my experience as a former 

mayor gives me some on-the-ground experience dealing with FEMA 

and emergency preparedness and other issues. 

First I want to say, Administrator Fugate, thank you very much 

for one provision that was in the Hurricane Sandy appropriation 

package that allows now federally recognized Native American/ 

Alaska Native tribes to actually directly request from the President 

in an emergency disaster. We think this is a huge plus, and we are 

hearing positive things from folks back in Alaska about how this 

gives them some opportunity to recognize and not wait for State 

bureaucracy. To be frank with you, in a couple disasters it has 

taken the State too darn long to get an answer, and the people on 

the ground were feeling the pain. So, first, thank you for having 

that in the package. 

But I would ask, I know you are working through the regulatory 

process now. What is your timetable to get that into play? And the 

reason I say this is we are moving into our disaster time. This is 

when, if there is going to be a disaster, between now and October 

is when we kind of see these things occurring. So what is your 

timetable on putting those regulations in place and giving some 

consultation to the tribes to know how this will work? 

Mr. FUGATE. Well, thanks to the Senate and to the House for 

providing that provision. We have already implemented it. Based 

upon the statutory change, we are currently using the provisions 

we use for States to determine that. There have been two requests 

and two Presidential disaster declarations already issued, one for 

the Eastern Band of the Cherokee Indians in North Carolina and 

one for the Navajo Nation. 

We are right now entering into a consultation process to begin 

rule development, but we did not want to deny tribal governments 

the opportunity to make their requests. 

Senator BEGICH. So you are doing it simultaneously, basically? 

Mr. FUGATE. Yes, sir. 

Senator BEGICH. That is fantastic. 

Mr. FUGATE. We are doing this as a pilot. The consideration is, 

though, many tribal governments based upon the current rules, 

would not have the resources to manage that. So we recognize selfdetermination. The tribal governments may elect to request directly from the President if they have the capability to manage a 

disaster. If not, they can still go with the State and they will still 

receive disaster assistance. It is not predetermined, but it is selfdetermination for a sovereign nation to determine how they would 

like to request and receive disaster assistance. 

Senator BEGICH. Fantastic. Thank you for that. 

Second—and this is my experience, again, as mayor—one of the 

things we did, we recognized—and no disrespect to FEMA. We did 

not want to do the programs where we had maybe Homeland Security, FEMA, or whatever agency would assist us in this and storing 

food and products and so forth. I think it might have been one of 

the first. It was after Hurricane Katrina. We did an agreement 

with companies like Home Depot, Sam’s, and others where they are 

our stock house. We have an agreement where for the first 72 

hours, certain stock keeping units (SKUs) that we have listed out 

with the products are not able to be purchased by the general pub-
21 

lic so we can determine if—for example, plywood is a great example 

where people will come in, buy everything, and then resell at a 

very high price. So what we did is we created a system that the 

types of emergency products that we needed in a case of emergency 

would be locked out from purchase for 72 hours until we gave an 

OK to move it. 

We think this has been very successful. It costs us nothing. It 

was just civic responsibility. We did not have to put a fee on it or 

anything. I will say this because our school district decided to get 

big old vans and load them up with stuff and put them at every 

school site, which to me is a total waste. A lot of money, then you 

have got to rotate that inventory, and it just does not make sense 

when we have got huge warehouses that have a better understanding of logistics than any Federal agency will ever have. 

So tell me how you partner with the private sector about ideas 

like this, are you exploring them? 

Mr. FUGATE. Yes, sir, Senator, this was actually something I experienced in Florida under the leadership of Governor Bush. We 

found ourselves competing with the private sector at something 

they do better than us. 

Senator BEGICH. That is right. 

Mr. FUGATE. So the goal was to quit competing with the private 

sector and look at how we bring them onto the team and complement where there are gaps. We currently have a Business 

Emergency Operations Center where we work with the major corporations. Part of what we track is where stores are open. If we 

know stores are open, we know those are areas that most likely do 

not need bulk supplies. They may need some tailored equipment, 

but bulk distribution would be counterproductive. We focus on the 

areas where the stores would not be open, and we work with the 

industries on what supply chain issues are going to occur. 

Our experience tells us there are some things that make sense 

to store, certain durable goods and certain consumable items that 

oftentimes in the first 24 to 48 hours are the hardest things to get 

into an area. But we also recognize that the private sector needs 

to have a seat at the table. Much of the planning has always been 

what I call ‘‘government centric.’’ 

Senator BEGICH. Right. 

Mr. FUGATE. And ignored what the private sector was already 

doing. 

Senator BEGICH. Can you on that point—and you do not have to 

do it now, and maybe we can have a further discussion later. But 

I would like to get some additional information from you on those 

relationships and how they are doing. 

I give the Anchorage example, the school district, because we 

have three Sam’s, we have four Home Depots, and we have more 

concentration of bulk supply in Anchorage, but yet now we are 

doing these things that they had to get a grant from somebody, and 

I just want to understand a little more of this. So if you could prepare something or at least whatever you have that you can share 

with us. 

Mr. FUGATE. I would be more than willing to, Senator. 
22 

Senator BEGICH. Let me jump, only because of time limitations 

here, to Secretary Donovan. Thank you very much for being here. 

Always good to see you. 

Secretary DONOVAN. Thank you. 

Senator BEGICH. When you visited Alaska some time ago, we appreciated it. Let me ask you, you are doing the task force on Hurricane Sandy. Out of that, will you derive ideas that will say here 

is the list of structural changes we need, maybe in FEMA or whatever other agency? Is that part of the goal of that task force other 

than just making sure it all works well? 

Secretary DONOVAN. Absolutely. So we are required to deliver a 

report to the President by August 2. One of the pieces of that report would include recommendations for how to improve not response, but longer-term recovery going forward. And that might include structural changes to the Federal Government. It also will 

likely include a set of other types of recommendations. Just to give 

one example, the inability to get gasoline in the region was a major 

problem after the storm. 

Are there things that we could do at the Federal level, but also 

are there sort of model programs that States or localities could 

adopt to deal with situations like that? So that would be an example in addition to the structural changes internal to the Federal 

Government that we would be looking at. 

Senator BEGICH. Will you also look at—and I think Senator 

Coburn was talking a little bit about it, but to expand on this— 

one of the issues you always hear is how long it takes from one 

point of entry into the system for an individual and then how they 

can get their resources delivered to them, whether they be monetary or otherwise. Are you going to look at logistics and system 

issues, gas was one example, but throughout the whole system? 

Secretary DONOVAN. Absolutely. Let me give you one example 

that we have already done. The Small Business Administration has 

the authority after a storm to provide loans to small businesses. 

Senator BEGICH. Right. 

Secretary DONOVAN. But what we have typically found in Mississippi and a range of other places is that there are a set of businesses where a loan does not work for them because of the loss of 

income for some temporary period of time. So CDBG typically provides grants to local governments, to States and locals, that they 

then set up to help small businesses. 

One of the things that we have done as the task force is to take 

all the data that we get from SBA of folks who applied, businesses 

that applied but were not eligible for loans. We have provided that 

information to the States and the locals so that they do not have 

to go back out and find these businesses and do not have to re-underwrite—go through the paperwork again that they have done the 

first time. So that is a benefit to small businesses, it is a benefit 

to the agencies, and it will get money to those businesses faster 

and at lower cost. 

Senator BEGICH. Very good. Let me end on this question. I am 

not sure who mentioned it in their opening statement, but the 

issue we always hear about FEMA dollars replacing in the current 

location after something is destroyed, but the Corps—and I feel so 
23 

bad, Ms. Darcy. No one is asking you questions, at least, but maybe 

that is good. 

Ms. DARCY. Do not feel badly. [Laughter.] 

Senator BEGICH. Maybe that is good. I do not know. But, on the 

one hand, the Corps might say, if you keep rebuilding in the same 

location, you are going to have the same problem. But FEMA has 

limitations. It just seems our goal in this big picture is disaster relief, do not repeat the mistake, maybe systematically or structurally. 

Will you be, in your work through Hurricane Sandy, looking at 

that broader picture? Because I tell you, it is the most frustrating 

thing to hear. I hate hearing it, actually. 

Secretary DONOVAN. Yes, and this drove us crazy in the longerterm rebuilding in Hurricane Katrina and a range of other areas. 

So let me just take an example of exactly what you are talking 

about. 

One of the things that Congress did in this supplemental that 

was terrific was give FEMA more authority to say do not just rebuild exactly what was there before—— 

Senator BEGICH. Right, mitigate. 

Secretary DONOVAN. Mitigate. But the funding that FEMA has 

will not necessarily pay for more than the cost to just rebuild. 

Senator BEGICH. Right. 

Secretary DONOVAN. And so what we are going to see with 

FEMA projects and with Army Corps projects is that CDBG will 

supplement those other funding sources where local governments 

are making a choice, no, we should build back stronger, it is going 

to cost a little more money, it will pay for itself through mitigation; 

but we are going to have to blend those funding sources in ways 

that has been a real problem in the past. 

So you gave us authority not to require a duplicate environmental. It makes perfect sense. 

Senator BEGICH. Right. 

Secretary DONOVAN. We are now implementing that. We are 

looking at other ways that we can basically streamline using different pots of money for the same project to make it as efficient 

and quick as possible, and those models will be useful in Hurricane 

Sandy, but also for future disasters, we will have a sort of template 

for the way to bring those funds together in as seamless a way as 

possible. 

Senator BEGICH. Very good. Let me end on that to say, Ms. 

Darcy, see that, you did not have to answer the question. That is 

not bad. 

Mr. Secretary, thank you. I will be very anxious—and maybe, 

Mr. Chairman, as we move forward on these issues, as you finish 

your work there, at least start preparing some of these recommendations, maybe within our Subcommittee we will have some 

further discussions about what is the next step to make sure it is 

more seamless and less complicated for the agencies, but also the 

recipients who are coming in on the front end. 

Secretary DONOVAN. Amen. 

Senator BEGICH. Thank you all very much. 

Chairman CARPER. Before I recognize Senator Levin, let me just 

say, Senator Begich, and you are the Chair of the FEMA Sub-
24 

committee and have Rand Paul as Ranking Member. Dr. Coburn’s 

staff has done some good investigative work up there northwards 

of where I live, and I would just urge that there be a good exchange of information between your staff as you staff up and the 

work that has been done by his investigators. 

Senator BEGICH. I look forward to it. 

Chairman CARPER. Good. Thank you. 

Senator Levin, welcome. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Thank you very much, Mr. Chairman, and let me 

welcome our witnesses as well. 

Hurricane Sandy, incredibly enough, did some damage not only 

where it was the most visible on the east coast but in the Great 

Lakes as well. The destructive forces were so huge that they 

caused damage to breakwaters and created a silting problem in 

harbors on the Great Lakes. Prior, to Hurricane Sandy we had already seen massive damage on the Great Lakes. We are in a disaster situation because of drought and low water levels. Lakes 

Michigan and Huron set new record lows, hitting more than 2 feet 

below their average. This was before Hurricane Sandy’s problem 

with the silt in the harbors. This was a drought problem that Hurricane Sandy came on top of. Lake Superior is a foot below its longterm average. The Army Corps is predicting that all of the Great 

Lakes water levels are going to remain below average. This is a 

huge problem for our freighters that are getting stuck in channels 

and harbors threatened with closures, and for boats that are unable now to sail. We have apparently seven of our Great Lakes 

ships, these so-called lakers, which are 1,000 feet long, that are not 

going to be able to sail this summer. 

So the damage of Hurricane Sandy is relevant to us. Compared 

to the other damage that Hurricane Sandy created, this seems 

small. But, if you are trying to do commerce in our Great Lakes 

harbors and those harbors cannot function, it is a big deal for you. 

Assistant Secretary Darcy, we got an e-mail this morning saying 

that of the $18 million estimated damage from Hurricane Sandy, 

$5 million is going to be directed to Great Lakes projects which 

were damaged as a result of Hurricane Sandy. Did I read that email correctly? 

Ms. DARCY. Senator, my staff informs me that today we will be 

providing $19 million of supplemental money for—— 

Senator LEVIN. OK, because I know it was 18 to 19 all together, 

so that is very good news, and we thank you for that. 

The other questions that I have, if I have—yes, I guess I have 

at least another minute or two—got to the question of whether or 

not the Stafford Act allows for support where drought is the cause 

of the problem. So I guess, Mr. Fugate, I would ask you that question. 

Mr. FUGATE. Senator, having been in a State that dealt with 

droughts and looked at the Stafford Act at that time, and now 

being the Administrator of FEMA, drought in itself would not necessarily warrant a Stafford Act declaration. You would have to look 

at the consequences. Since most of the drought consequences are 

economic, the Stafford Act does not address economic losses. It ad-
25 

dresses uninsured losses that are the responsibility of State and 

local governments to pay for. 

So when we have looked at this, it really comes back to whether 

or not there is an emergency to this that is not economic, such as 

a failure of a major water system that may require emergency supplemental assistance for drinking water. Or is this causing physical 

damage or other types of loss that are not economic in nature but 

are damaged due to the drought that would warrant a declaration 

based upon the State’s impacts? 

In looking at this, we think the thing we see most often with 

droughts, is the symptom of droughts which is wildfires. We 

worked with the U.S. Department of Agriculture on this looking at 

drought last year. We provide elements of the National Recovery 

Framework to support drought recovery. But the Stafford Act itself 

does not address what is usually the underlying issue, which is the 

economic impacts of drought versus physical damages that are uninsured and may require additional taxpayer support. 

Senator LEVIN. And presumably that now is within the jurisdiction of the Department of Agriculture? Is that where it comes? 

Mr. FUGATE. The jurisdiction would be based upon the programs. 

Agriculture, because of the agricultural droughts, has had a big 

lead, but there are other Federal programs that have support roles, 

such as Interior and others for Federal lands and water management, and the Corps of Engineers. So, again, using that National 

Recovery Framework, we knew States were having to weave 

through all of the acronym soup of the Federal Government looking 

at drought-related issues. But when it came back to the Stafford 

Act, unless we have physical losses that were uninsured, we think 

that the primary role of the Stafford Act may be an emergency declaration if you had a critical water system failure, but that the economic losses are not addressed in the Stafford Act. 

Senator LEVIN. Thank you. Thank you all. 

Thank you, Mr. Chairman. 

Chairman CARPER. You bet. 

I am going to ask a couple of questions for the whole panel and 

start with you, Assistant Secretary Darcy, if you would. We talked 

a little bit earlier about whether or not there are sufficient resources at the Federal, State, and local government level in order 

to make the recovery successful. We talked about how do we measure success, and I want to just ask you to think about what other 

tools you need in your tool box, each of you; it could be money, it 

could be people, it could be regulatory relief, it could be regulations. What other tools do you need in your tool box to enable us 

to get closer to the success we want? 

Ms. DARCY. We have a pretty good tool box; however, oftentimes 

in a recovery, there needs to be additional flexibility. In the response, as opposed to the recovery, we often have certain situations 

where we can use what we have planned for a recovery response, 

to prepare us to do some things a little quicker than we would ordinarily. But in recovery, we need some additional flexibility. 

One of the things that we are finding in response to this 

Superstorm Sandy, through the work of the task force, we see the 

more that we can coordinate our efforts, such as a CDBG grant 

going to a community where there is a storm damage reduction 
26 

project that needs to be rebuilt. I think the mechanisms that Secretary Donovan is talking about are being developed through the 

work of this task force. These mechanisms are the kinds of things 

that would help us to be able to recover more quickly. 

Chairman CARPER. All right. Thank you. Secretary Donovan. 

Secretary DONOVAN. Yes, I will just build on that, and I want to 

recognize that we are still very much in the middle of this and, 

really for the first time ever, fully implementing the National Disaster Recovery Framework. So I want to make sure we come back 

to you this summer when we are issuing the report with a fuller 

answer to that. There are lots of things, costs and other things, we 

do not yet know. 

Having said that, I think one of the most important things that 

Congress did is to make improvements in the Community Development Block Grant program with this supplemental, flexibility—for 

example, I talked earlier about not to having to do duplicate 

environmentals, or a range of other things, will make it easier to 

use with other funds. 

However, I do think that going beyond that to create a kind of 

permanent program for a disaster block grant would make sense. 

There are still problems and issues with using kind of disaster by 

disaster, creating supplementals using CDBG that do not have a 

consistent structure that is set up to deal with disasters. And we 

would be happy to provide you more specifics on what exactly those 

are. 

Again, a number of those, particularly led by Senator Landrieu, 

were included this time. But I think there are others that we could 

continue to work on to improve the CDBG program for these cases. 

Chairman CARPER. All right. Thanks. 

Administrator Fugate, but just very briefly, if you could respond. 

Mr. FUGATE. There are a couple things. One, getting back to Senator Coburn. Unless I am prohibited by legislation, I want to look 

at what you recommended about what we can provide, if you used 

the advisory-based flood map, best available data, there would not 

be future penalties. I am not sure if I can do that with the reauthorization, but I will review that. 

Chairman CARPER. Let us know what you find out. 

Mr. FUGATE. The second thing is that probably the biggest tool 

that I am still wrestling with, which goes back to Senator Johnson 

and Senator Coburn, has raised this issue with me about threshold 

of disaster declarations, do we have the right balance point for the 

risk that the Nation accepts? And is that transfer to the Federal 

taxpayer disproportionate to what local and State officials should 

be responsible for? And I think, again, in the Flood Insurance Program, the key piece of that is becoming that we want to make sure 

new growth and new construction is not subsidized. But in doing 

that, we have created a second situation where there is no affordability built into that for pre-existing residents. My fear is the 

backlash there may thwart our efforts to continue to build in the 

future, an unsubsidized risk beyond which the taxpayer benefits. 

And so affordability I think may be an issue that thwarts our attempts in trying to make sure we do not transfer risk to the taxpayer without benefit for future development, given the enormous 

amount of homes that currently exist in floodplains. As the rates 
27 

go up, we are going to see a lot of pressure to do something about 

that. 

But, again, I think that we have to build better incentives. This 

is a shared responsibility. It is not solely the burden of the Federal 

Government to provide all assistance in disasters, local and State 

governments have roles and responsibilities as well as the private 

sector and individuals. And if the thresholds for disasters are too 

low, there is not much incentive for States to build that capability 

to reduce future losses. 

You directed us in the Sandy Recovery Improvement Act to review the General Accountability Office reports on thresholds for 

disaster declarations. We have undertaken that. We have looked at 

some of the things we would do that would not require legislation, 

Senator Coburn. There are some things I think may actually increase a better understanding of States as to what their threshold 

responsibilities will be versus the current system, which in many 

cases we are seeing a lot of disasters declared that you raise questions about whether the State could manage it. 

I want to make sure that in the rulemaking and consultation 

process we are moving that, so States understand better what their 

responsibilities are and when is it appropriate for the Federal taxpayer to support those recoveries. Hurricane Sandy is obviously one 

of those shared responsibilities. But it is getting that right so that 

we do not continue to transfer risk to the taxpayer without understanding the benefits and the impetus to reduce that risk through 

mitigation. 

Flood insurance, building codes, and land use management are 

probably the three biggest tools in our arsenal, but only one of 

those do we have direct control over, and that is flood insurance 

and the regulations. Building codes and land use management is 

often a local decision that has even greater influence on the survivability and resiliency of our communities. 

Chairman CARPER. Let me just followup on this notion of shared 

responsibility. It is something I talk about a lot. I am pleased to 

hear that this panel is doing the same thing. 

Just an anecdote. I went to the high school basketball tournament in our State this last weekend at the University of Delaware. I was talking with a really good high school basketball coach, 

and we were talking about who were the best players—the best 

shooter, the best passer, the best rebounder, the best dribbler—who 

were the best players. And he said something to me that I think 

is really relevant here. He said, ‘‘The best player is not necessarily 

the one that passes best, shoots best, rebounds best. The best player is the one who makes everybody else on the team better.’’ 

What can we be doing at the Federal level to make the rest of 

this team, including State and local governments, including emergency responders, including insurers, what can we do, what should 

we be doing in addition to what we have already done to make everybody else better so we can be more successful? 

Jo-Ellen, do you want to go first, please? 

Ms. DARCY. Having the support from the Congress for us to be 

able to, in recovery, move out quickly as well as provide the support of what is needed for the long term. Oftentimes what we are 

looking for in a recovery response is to get everything back exactly 
28 

the way it was today. We need the support to be able to take a 

long-term view on what we should be doing, we especially want to 

make a Federal investment that is smart; to make a smart expenditure of the dollars that the Congress is going to give us. So I think, 

to have your support and to look long-term at how we can be better 

at storm damage reduction, recovery, and need less recovery and 

disaster response. 

Chairman CARPER. Thank you. Mr. Secretary. 

Secretary DONOVAN. It is a great question, and I would just go 

back to—I do think on CDBG, and in a range of other areas, permanently authorizing programs that are more flexible, that really 

do get this balance right, as Craig has said, between private responsibilities and public responsibilities is important. 

The other thing I think I would say from our experience, not just 

here but over the last 4 years across the country, is that planning 

matters. And we spend an enormous amount of time and effort and 

public cost recuperating from these disasters, where smaller investments up front, both in mitigation—and I mean the infrastructure 

there—but also in getting localities and States ready for these 

kinds of events. 

I happen to have been involved in planning for exactly this kind 

of disaster in New York City when I was Housing Commissioner 

there, and I will tell you, not just the evacuation plans but a lot 

of the other longer-term mitigation work that was put in place has 

made a difference. There is lots more that could have been done, 

but I think we could do more as a Nation to help localities and 

States prepare for these kind of disasters and to do smart things 

in advance. 

Chairman CARPER. OK. Good. 

Craig, if you could respond just briefly, I want to yield to Senator 

Johnson and then back to Dr. Coburn. Please, go ahead. 

Mr. FUGATE. Ask the hard questions, Mr. Chairman. I think as 

Federal agencies we dread hearings, but I think the reality is that 

it is in the process of exercising the healthy debate of how we get 

better that forces us to do the things that oftentimes may not be 

easy, but it pushes us to make those changes. 

Chairman CARPER. Good. Dr. Coburn and I, as I said, had a conversation when we assumed our new responsibilities in leading this 

Committee that we were going to focus a lot on oversight. And it 

is interesting to me how often that oversight is welcomed. But 

there is that old adage, ‘‘Be careful what you ask for.’’ You are 

going to get it. Thank you. [Laughter.] 

Thank you. Mr. Johnson. 

Senator JOHNSON. I hope you think we have been pretty kind 

and gentle on you. I think these are some pretty legitimate questions. 

I would like to go back to the public-private and the pricing of 

risk. I realize it is too early on Hurricane Sandy, but do we have 

the final figures on Hurricane Katrina in terms of how much was 

the total cost of that disaster, how much was borne by the Federal 

Government, State governments, and private insurance? 

Mr. FUGATE. Off the top of my head, Senator, I think it may be 

there, but I do not have it at my fingertips. We will provide that. 

I will put that together and get you that. And I am not sure it is 
29 

a complete story because what I keep finding is, since FEMA only 

looks at what were the FEMA assistance provided, we can look at 

what other Federal agencies provided. But the hard number to get 

is what the private sector went through. 

Senator JOHNSON. Yes. 

Mr. FUGATE. Because if it was not insured, it is not always easy 

to get what that number was. But I think on the Federal dollars 

spent, we have that. I do not know if I am comfortable with what 

the private sector has. 

Senator JOHNSON. I would be interested in just private insurance. I mean, forget uninsured, but, we will submit that for the 

record. 

Mr. FUGATE. And part of that is still contested; particularly in 

the wind insurance arena, that was heavily contested and is still 

being litigated over the differences between flood damage, wind 

damage, when the homes were impacted by both hazards. 

Senator JOHNSON. You administer the Flood Program, so, again, 

if you do not have these figures at your fingertips, I understand. 

But to what extent has the Flood Program been underfunded year 

after year? Can you kind of go back, starting with this year versus 

last year versus as far as you can go back? 

Mr. FUGATE. Well, again, we sought an additional borrowing au- thority of $9 billion to cover potential losses for Hurricane Sandy 

as well as provide a cap going into the rest of this year. We still 

owed a little under $18 billion that we had borrowed from the 

Treasury from payouts from Hurricane Katrina. Those are outliers, 

and generally the program, on what you see as a typical year, provides enough revenue to pay those out. 

Senator JOHNSON. Now, is that through premiums, or is that also 

from Federal funding? 

Mr. FUGATE. That is from premiums. 

Senator JOHNSON. Just from premiums. 

Mr. FUGATE. But the problem is it has undervalued the risk, and 

that is why, again, in moving toward more actuarially based, particularly new growth and new construction, we were subsidizing 

risk below the actual cost of those impacts. And so our exposure 

is far greater than the typical year-to-year impacts. So outliers 

such as Hurricanes Katrina and Sandy produced tremendous impacts that result in us having to borrow additional funds. But those 

funds and the premiums themselves are what drives the payments 

and the borrowing authority. 

Senator JOHNSON. If it was a private insurance program, to what 

extent do you think it is underfunded? What do you think a private 

insurer would actually have in terms of reserves for potential 

losses? 

Mr. FUGATE. Private insurance refuses to write flood insurance 

because they cannot capitalize the risk. 

Senator JOHNSON. And I guess that is somewhat the problem 

there, isn’t it? Do you have any feel for what that amount would 

be? Would it be $50 billion? Would it be $150 billion? 

Mr. FUGATE. You are probably talking levels that are in excess 

of half a billion or greater, depending upon the exposure and what 

risk they will write. But in looking at—— 

Senator JOHNSON. Half a billion or half a trillion? 
30 

Mr. FUGATE. Half a trillion. Sorry, sir. 

Senator JOHNSON. OK. 

Mr. FUGATE. Just knowing the exposure in certain areas, it really comes back to if they were able to write policies in less risky 

areas where there were strong building codes and mitigation, they 

may be getting to that point now where there may be opportunities 

where it would make sense to offer commercial insurance. But in 

far too many areas, their concern is that they cannot leverage borrowing authority, reinsurance, and apply this nationally on a Stateby-State basis given the risk. 

So, I mean, one of my earlier stated goals was: could we privatize 

or privatize elements of the Flood Insurance Program, create the 

incentive that the commercial industry would write that so you 

would not have bifurcated policies, you would have all-hazard policies, instead of one for wind, one for flood, one for whatever. 

Those conversations, although they have taken place, have not 

resulted in industry seeing this as an opportunity to return a sufficient return on their investments. And as I tell people, it should 

be a sign when the commercial industry cannot figure out how to 

manage this risk and make money, the Federal Government—that 

we are probably undervaluing that risk and have a greater exposure. And so part of the reauthorization of the Stafford Act is to 

start moving toward more actuarially sound. 

But the true test when we are actuarially sound is when people 

realize they can write flood insurance and make money from that 

and begin writing it and offering it commercially rather than just 

as a federally backed program. 

Senator JOHNSON. I understand your point that if you start writing policies that are more actuarially sound, how do you grandfather the neighbor right next door that did not—so how do you 

start moving that direction then? What is the process? 

Mr. FUGATE. Well, the rulemaking will take place—we have already taken all of the secondary homes. They went to full actuarially rate this year, so they are getting their renewal policies, they 

are getting their initial bills. For the other policies that are not secondary homes, we are going into rulemaking. We are looking at the 

rulemaking process and we expect to start those comments in the 

next couple of months. Those rules would go in effect by fall and 

it would start the next iteration of those policies as they move to 

full actuarially. 

If we were able to look at affordability, we would very much 

want to limit that to only those that are existing or primary homeowners, not new construction, and look at a means test versus 

what we have done before, which was giving entire communities a 

phased-in, a preferred rate as their risk had changed. We want to 

make sure that it is means tested so that we are not continuing 

to subsidize risk except where it makes sense for affordability. But 

the hard part here is you do not want to create an incentive that 

says: if I build something new or I sell my home, I am giving that 

affordability to the next buyer without them accepting that risk. 

Senator JOHNSON. That is the problem. When you bring in the 

concept of affordability, you are basically subsidizing the risk, and 

you are incentivizing people to build where, truthfully, unless they 

can afford to do it, they probably should not be building, and you 
31 

are just putting the American taxpayer on the hook again in the 

same situation. 

Secretary DONOVAN. I do think it is a very important distinction 

Craig has made between existing homeowners until you have a 

transaction on that versus new construction. And this is where— 

flood insurance is a critical lever, and I do think that these new 

maps, as I said before, are a huge step forward. The problem is, 

if they are not adopted, not just for flood insurance but in a range 

of other areas, we will not make as much progress. 

So one of the critical things I think we are trying to do in the 

CDBG, in other investments we are going to be making in the region for rebuilding, anytime you have a substantial enough level of 

damage, we should be requiring that they move to those new maps, 

including where we are issuing a new mortgage in those areas. And 

so those are all, in addition to the Flood Insurance Program, other 

levers that we have in the Hurricane Sandy rebuilding process that 

can go to the exact same goal that you are talking about. 

Senator JOHNSON. Just one quick question. As you are trying to 

make that distinction between new and recovered construction, are 

we doing that across the board, all coastal areas, all floodplains, or 

just strictly in the Hurricane Sandy area or each particular disaster area? 

Mr. FUGATE. Senator Johnson, as the NFIP was reauthorized, 

there is no affordability. So as we go through the rules, what will 

happen over the next several years is we adjust the rules to reflect 

actuarially based for all. We did it for the secondary homes. That 

was a clear direction. For the other policies, we are having to do 

that through rules. We are going to look at about a 3-year phasein. So after 3 years, no matter where you are, you are going to be 

paying the full cost of that insurance. Our concern is, there is going 

to be tremendous pushback on low-income people that live in 

floodplains that are not coastal, that are going to be faced with tremendous bills, which potentially could force them out of their 

homes. Knowing that there will be pushback, how do we mitigate 

that—if that is even possible, because currently we do not have 

that authority. But, more importantly, how do we ensure whatever 

we do for that does not translate into subsidizing future risk when 

a transaction takes place or somebody builds new? 

But my concern is if the affordability piece is not addressed in 

this timeframe, there will be tremendous pressure to reduce those 

costs, and, unfortunately, historically we have done that in a way 

that did not keep future growth at an actuarially sound rate. 

Senator JOHNSON. Thanks a lot. 

Secretary DONOVAN. And I would echo Craig’s point here. As the 

lead Federal official now dealing with the Governors, the Mayors, 

the pressure is building on this affordability question, and there is 

some, I think, political risk that it gets reversed or that localities 

would not adopt the maps there. There are other things that can 

happen that could set us back. 

I would also say, unlike flood insurance, we do not have Federal 

standards at this point that would take the same things we are trying to do for Hurricane Sandy and apply them nationally. That is 

one of the things that in our report to the President we will be 

making recommendations about. I see this as a testing ground out-
32 

side of the Flood Insurance Program for how we can put these 

measures in place nationally that will avoid this kind of incentive 

that you have talked about to build in the wrong places. 

Senator JOHNSON. Thanks. 

Chairman CARPER. Dr. Coburn. 

Senator COBURN. I hope you will send us a copy of those recommendations. 

Secretary DONOVAN. Absolutely. In fact, we would love to come 

talk to you about them before we finalize them. 

Senator COBURN. You bet. So far your task force has spent a couple million dollars. Has any of the CDBG money authorized in the 

supplemental been granted? 

Secretary DONOVAN. We have allocated $5.4—— 

Senator COBURN. Has any of it been granted? 

Secretary DONOVAN. The States have not submitted their plans 

to us yet, and we expect that within the new few weeks, we will 

start seeing allocations. 

Senator COBURN. Let me ask you one question about—— 

Secretary DONOVAN. Senator, there has been about $170 million 

that has already been obligated, about $50 million from the supplemental that has been disbursed already. So there is spending that 

is happening. 

Senator COBURN. It is starting. 

Secretary DONOVAN. Yes. 

Senator COBURN. OK. Is the New York City Housing Authority 

likely to receive significant CDBG funding? 

Secretary DONOVAN. We expect that in the plan we will get from 

New York City, they will propose funding, particularly for mitigation measures in the housing authority there. 

Senator COBURN. According to the New York City Comptroller, 

the New York City Housing Authority operation is like an onion— 

I am quoting—‘‘the more you peel back, the more you want to cry.’’ 

I have also read that the New York City Housing Authority is sitting on $1 billion right now. I would hope that you would take 

that into consideration. That $1 billion—as well as some of the 

other problems with the New York City Housing Authority. That 

$1 billion should be applied first to these issues before we give 

more CDBG money for the disaster up there. 

Are you at all concerned with how they will spend the money— 

I am talking about the New York City Housing Authority—given 

their track record? 

Secretary DONOVAN. We have actually been looking at this issue 

of the $1 billion that you are talking about. The vast majority of 

that is committed to particular projects that are underway. So just 

to be clear, it is not that there is $1 billion that is not slated to 

go to particular projects. I will say, however, that we do have some 

concerns about the speed of that spending and the effectiveness, 

and we will be looking very carefully at how they are spending this 

money. 

Senator COBURN. So they should take note that we are going to 

keep our eye on it. The $16 billion for the CDBG block grants, they are not just for 

the Hurricane Sandy area, right? They could be used in any of the 

disaster areas. Do you have any idea what proportion of that will 
33 

be spent in other areas? Kind of like what Senator Levin was talking about, the port areas on the Great Lakes and some of the other 

disasters that we have noted. 

Secretary DONOVAN. So you did give us authority to use it for 

2011, 2012, and any remaining disasters in 2013. 

Senator COBURN. Right. 

Secretary DONOVAN. So we will not be fully allocating that until 

we have a better sense of what is happening. But I do expect that 

this week we will send the Appropriations Committees allocations 

for non-Sandy storms and that next week we will be announcing 

those. 

I will tell you that the vast majority of the $16 billion will go to 

the Hurricane Sandy-affected areas, but there will be a substantial 

allocation, I would expect less than $1 billion, toward those other 

places. 

Senator COBURN. Good. Director Fugate, if I remember correctly—and you can correct me; I may not be right—I think there 

is still $4 billion from Hurricane Katrina that is unspent. Do you 

know the percentage of what has been obligated? 

Mr. FUGATE. That would be—— 

Senator COBURN. And how many years, 9 years, 8 years? 

Mr. FUGATE. Yes, sir. Senator, there are still projects that have 

not been completed. We have been working, as we have with the 

State, to try to get all remaining projects finalized. And where 

there is still dispute, we have an arbitration process, but we are 

trying to get those finished. 

So I would have to get back to you with an exact number, but 

that is something—— 

Senator COBURN. If you would, I would appreciate it very much. 

Assistant Secretary Darcy, I want to thank you for the cooperation of the Corps. We got a load of information last night and this 

morning, so I am going to be submitting multiple questions for the 

record. We see two different ways to handle debris cleanup, one 

going on in New Jersey and one going on in New York, and there 

are a lot of questions about that. I would just give you my general 

note. 

The reason I am so interested in this is I saw the wasted money 

in Hurricane Katrina on debris cleanup, and it was atrocious. During Hurricane Katrina, the Corps contracted at about $70 a cubic 

yard, but the guys that were actually doing it and hauling it to the 

dump were making about anywhere from $6, $9 to $15 a cubic 

yard. In other words, the people actually doing the work were consuming about 25 percent of what actually was allocated, and subcontractors all through that took that money and actually did not 

do anything except organize. 

So we are going to be very interested in following up on that. I 

hope you will take it in good faith. It is not to be critical of the 

Corps, but we think wise spending of that money and in a way that 

is efficient and yet accomplishes the purposes is important. So I 

have a lot of questions. Why do we have a dump site for New York 

300 miles away from the facility? And what are the rules that 

make us have to go 300 miles when, in fact, there are other areas 

in other States that it could have been transferred to? 
34 

In other words, there are a lot of costs based on either State 

rules or city rules or other factors. We want to help you figure that 

out for the next time so that we are not spending too much. I think 

so far we are averaging about $62 a cubic yard, and we are 7 or 

8 years later on debris cleanup. There is a contrast between New 

York and New Jersey and how it is done. We also have the prepositioned contracts, and the requirement to use local contractors 

and, there is a question of whether or not that is efficient for the 

taxpayer—because basically we are paying for it. The Federal Government is paying for debris cleanup. We need to look at the controls on it, because we are going to pay what they submit. Yet, we 

have very little influence on how they spend that money and 

whether or not it is a clean transaction, and the most efficient and 

the most effective way to get it done. So I hope you will take our 

questions in that light, and we are just going to be good stewards 

with taxpayer money asking these questions. 

Ms. DARCY. I look forward to the questions. 

Senator COBURN. All right. I want to go back to you, Administrator Fugate. The Stafford Act says that the Federal Government 

should get involved in disasters when State and local capacity is 

overwhelmed. Right? 

Mr. FUGATE. Yes, sir. 

Senator COBURN. And there is no question in Hurricane Sandy 

that happened. Do you believe the per capita damage indicator is 

a good measure to determine whether or not State and local capacity is overwhelmed? 

Mr. FUGATE. It is a factor that has been accepted, but I do not 

think it is the best tool. 

Senator COBURN. I want to pin you down. Is this per capita damage indicator a good measure to determine State and local capacity 

to handle disasters? 

Mr. FUGATE. No, sir. It only looks at, on a numeric basis, the 

population of the State and total damages. It looks at nothing such 

as the State’s reserves, financing, taxing authority. It does not look 

at the impacts of that disaster. It is also clear that the Stafford Act 

does not require a declaration merely because you reached your per 

capita threshold. In fact, there have been recent declarations that 

were denied. Even though they made a numerical mark, it did not 

demonstrate it had exceeded the State capability because no life, 

critical infrastructure, or other issues were involved other than economic impacts. 

Senator COBURN. Right. You and I visited in the office about the 

political problems with changing that, and I understand that. But 

we have got to figure out a way to have a better assessment. The 

per capita indicator is $1.37 today, yet it has not been changed to 

account for inflation. There is nothing to it. So we have to work together, both with Secretary Donovan and you, to figure out how do 

we really know when to apply Federal funding. When are our 

States overwhelmed? In Oklahoma, we are the highest State in the 

country as far as disasters in the last year, but some of those certainly did not overwhelm Oklahoma’s capability. 

And so we need to figure out together, how we do this more effectively to really help States when they are overwhelmed versus not 

helping them when they are not, especially when States have a 
35 

surplus—like Oklahoma has a surplus. We put $600 million in the 

bank last year. 

Mr. FUGATE. Senator Coburn, as we go through this, again, in 

the Sandy Recovery Improvement Act, you have directed us to look 

at this. We do find a lot of agreement with the general accounting. 

I think we have to really look at what is the outcome we are trying 

to achieve. If it is merely reduce the number of disasters being declared, that is one route. I would rather take an approach that says 

we give States some more predictable level of a support so they are 

driven to build that capacity. 

Senator COBURN. Right. 

Mr. FUGATE. Because ultimately a disaster occurs, somebody is 

paying for it, whether it is a local, State, or Federal taxpayer. I 

think that should be a shared responsibility. But I think it should 

be done in such a way that it incentivizes building more capability 

at the State and local level and reducing the cost of disaster response and use that to drive that process. But as you point out, the 

minute you start talking about raising the threshold, States are 

going to be very concerned about how that adversely impacts them. 

Senator COBURN. Right. 

Mr. FUGATE. But I do not think it is a reason not to look at it. 

But we are going to have to work to look at this as the end game 

of how do we build capacity and a better understanding of what the 

expectations are for State and local response to when it becomes 

a Federal shared—— 

Senator COBURN. That is much better said than I did. 

Let me make one other—— 

Secretary DONOVAN. Senator, if I could just add quickly on that, 

I would love to be part of that conversation because CDBG by definition is only authorized and appropriated when there is a major 

disaster. We have done a lot of work over the last few years to try 

to focus on a formula—because you give me flexibility to determine 

the formula—that is not just a per capita formula. We do use only 

severe damage. We use concentration measures and a range of 

other things in how we determine the formula that could be useful 

in this—— 

Senator COBURN. Did I hear you say that you only get CDBG 

funds based on disasters? We allocated CDBG funds every year. 

Secretary DONOVAN. The CDBG disaster funds are not available 

in every disaster. Really, typically they only come when you have 

something that overwhelms the State and local capacity by definition. 

Senator COBURN. Right. One last question, if I might. We authorize I think $9.7 billion into the NFIP, and according to my staff— 

and you correct me if this is not correct—85 percent of the claims 

have been closed to date. Is that correct? 

Mr. FUGATE. It has been going up, sir. I think as of yesterday 

we were at 90, 91 percent of all claims—— 

Senator COBURN. So we are worried about $6.2 billion or so that 

has been spent? 

Mr. FUGATE. Yes, sir. 

Senator COBURN. So if you take that, we overshot a couple billion 

dollars, right? Does it look like that to you? 
36 

Mr. FUGATE. It gave us the borrowing authority going into the 

rest of the year. 

Senator COBURN. Right. 

Mr. FUGATE. Again, these were borrowed dollars. This was not 

an appropriation. 

Senator COBURN. Right. 

Mr. FUGATE. So what this gave us was, we were getting up close 

to our borrowing authority, and with Hurricane Sandy we would 

have reached that and possibly exceeded it and would not have 

been able to service claims. 

Senator COBURN. Got you. 

Mr. FUGATE. So we will pay out approximately two-thirds of that 

loan. That will leave us about $3 billion—— 

Senator COBURN. About $3 to $5 billion. 

Mr. FUGATE. $3 to $5 billion depending upon final payments for 

future disasters. And that is borrowing authority. 

Senator COBURN. Yes. It is not borrowed. 

Mr. FUGATE. The way that it is structured is it has to be serviced 

by the claims, and that, again, is a second issue. But it is that potential that it raised the borrowing authority for the future flooding, knowing that Hurricane Sandy was going to take us to our 

caps that we already had. 

Senator COBURN. Got you. Well, I want to again thank you all. 

This is the way to do oversight. We actually learned a lot here 

today from all of you. 

I would love some promptness in response to these questions that 

we are going to have. My questions for you, Assistant Secretary 

Darcy, may take a little longer because you gave us a lot to chew 

on. 

Ms. DARCY. I gave you a lot of information last night. 

Senator COBURN. You sure did, and they are still going through 

it right now. But a prompt response to the questions for the record 

would really be appreciated so we can continue to work on this. 

Ms. DARCY. Thank you. 

Senator COBURN. Mr. Chairman, I thank you. 

Secretary DONOVAN. Thank you. 

Chairman CARPER. You bet. I am going to ask one more question, 

and then I am going to ask Senator Johnson if he would like to ask 

one, and that will probably wrap it up at that point. But we expect 

to be out of here by noon. 

Senator Coburn alluded to how much money was spent down in 

the southeastern part of our country on debris removal, whether or 

not that money was spent effectively. I think most of us agree not. 

Sometimes people ask me, well, why do you talk so much about 

waste, fraud, and abuse? I say it is because there is a fair amount 

of that, and part of our responsibility and one of the reasons why 

we do oversight is to try to reduce that wherever we can. 

The Hurricane Sandy supplemental legislation, as you know, required the Recovery Accountability and Transparency Board, a 

body that was created to oversee stimulus spending, to develop 

oversight mechanisms that can detect waste, fraud, and abuse with 

regards to Hurricane Sandy funds. 

I wonder if each of you would just very briefly explain how you 

are working with the Oversight Board to try to ensure that your 
37 

program funds, which are limited, are well spent. Assistant Secretary Darcy. 

Ms. DARCY. The funding that we are receiving under the supplemental? Is that what you are referring to, Senator? 

Chairman CARPER. Yes. 

Ms. DARCY. We provide monthly expenditure reports to the Appropriations Committees on both sides in order to keep you informed as to how funds are being spent. We were very involved in 

Hurricane Katrina and have many lessons learned from what we 

did there and are using that, not only in our engineering, but also 

in our contracting. So I think in each disaster, we learned something new, and from this one we are going to find out how we can 

be more expeditious and efficient in our contracting response to disasters. We are looking at any other improvements we can make, 

not only through contracting but also through re-looking at design 

criteria we use for the rebuilds of some projects. 

Chairman CARPER. Good. Thank you. Secretary. 

Secretary DONOVAN. Senator, the task force has a primary role 

in working with the Recovery Accountability and Transparency 

Board and the IGs of the individual agencies. 

First, we are creating a centralized data system to collect all the 

information on spending, locations, other things for the projects, to 

provide that to—we call them the ‘‘RAT Board,’’ the Recovery Accountability and Transparency Board—and also to make sure that 

we are working with them on the internal control plans. 

OMB has essentially designated in advance that this is potential 

high-risk spending. Every agency is required by the end of this 

month, by March 31, to create an enhanced internal control plan. 

We are coordinating with all the agencies on producing those plans 

by the end of the month, and then we will be helping to implement 

those. 

We are also having a regular ongoing meeting with each of the 

IGs and the Recovery Accountability and Transparency Board to 

make sure that there is ongoing communication. 

So those are three ways that the task force is working with them 

regularly. 

Chairman CARPER. Good. 

Administrator Fugate, same question. How are you working with 

the Oversight Board to ensure that your program funds are well 

spent? 

Mr. FUGATE. The short answer, Mr. Chairman, is we are doing 

it through the Sandy Recovery and Rebuilding Task Force that Secretary Donovan is leading. We have an additional requirement that 

you had in the Sandy Recovery Improvement Act for us to post our 

transactions within 24 hours on the website, at FEMA.gov. That is 

being done already. But we are also working with Secretary Donovan and the other members of the task force, as you said, because 

many of our programs are touching similar projects. We wanted to 

make sure that all of those projects and all the funding that goes 

to those projects is visible, and we are going to use this process to 

seam it, bring it together. 

The first step was to make sure we had the data fees that would 

support that, so each agency that was funding and receiving dollars 

in the supplemental can show where those dollars are being ex-
38 

pended, and then we can use this tool to display it to you and the 

public. 

Chairman CARPER. OK, thanks. 

Senator JOHNSON. I got a quick one. 

Chairman CARPER. Senator Johnson. 

Senator JOHNSON. Plus I guess Senator Ayotte is coming here, so 

I will do a little place holding. 

First of all, I do want to say I agree with Senator Coburn. I really appreciate your testimony here, and it has really been very instructive. And I truly appreciate the fact that you really are looking at the Flood Insurance Program and working through those 

very difficult issues of how do we design that program so we are 

not incentivizing uneconomic behavior. Let us put it that way. 

But going back to one of the points that Senator Coburn was 

talking about, just in terms of claims processing, answering questions, coming from the private sector I am big into benchmarking, 

taking a look at what are the best practices, taking a look at my 

competitors and going, well, if they are doing it better than I am, 

how am I doing then? 

Now, I am not sure it is always true, but you certainly hear in 

the private insurance market, disaster strikes and that claim check 

is issued that next day. Are you looking at the private insurance 

model? Are there things that we can do legislatively to make—the 

bottom line is I think the solution here is reduce the complexity. 

I do not doubt that you are dealing with a great deal of complexity. 

So is there a legislative solution looking at a kind of benchmarked 

approach that obviously private insurance companies are pretty 

concerned about the efficiency, the lack of fraud in terms of making 

the payments, in terms of reimbursements. Are you looking at that 

type of model? 

Mr. FUGATE. Yes, sir, Senator, and that probably explains some 

of the delays. We use write-your-own companies. We use major 

companies who, although it is a national flood insurance policy, 

they write it, they service it, they adjust it. They want to do their 

due diligence because they know that if they have made excessive 

payments or fraud or waste, we are not going to reimburse them. 

So they do a lot of accounting to make sure their adjusters, as that 

information comes in, they make those payouts. 

The second thing is the Flood Insurance Program is not what you 

would normally find as a commercial model in that it is not designed to do replacement costs. It is designed primarily to make 

sure that the mortgage is protected and to provide limited consumer benefits. So where it is easy for an adjuster to come in and 

say, ‘‘Your home is destroyed. I am going to give you replacement 

value,’’ we look at depreciated value. We look at servicing the mortgage, and we look at your contents’ depreciated value. 

Again, the Flood Insurance Program was never designed by Congress to be what I would call consumer friendly. It was to be a tool 

to provide insurance that nobody else would provide, providing 

what was essential to protect, essentially the mortgage, the lender, 

and provide some limited benefits to content and household for 

those people that own their homes outright. But unlike a traditional policy, we use depreciated value. The third parties that write 

those have to be very diligent in making sure as they adjust those, 
39 

they do the depreciated values, because, again, they are subject to 

audits by our IGs if they make excessive payments, and we would 

seek to get reimbursement from them. 

So the process is using the insurance model. However, the tool 

itself is really focused on first-party payee, which is generally the 

lender, depreciated value, not full replacement value. And that is 

part of what has driven to make it as affordable while making sure 

the exposure to the taxpayer is not excessive. 

Secretary DONOVAN. And, Senator, I did host this past Friday my 

second lender roundtable in the region with the four largest lenders in the region. We are working with them, as I said earlier, to 

streamline and make consistent the policies around disbursements 

of the flood insurance. What evidence do you have to have that the 

work is done? How much do you hold back with the concern that 

the money may get used for other purposes—all of those policies, 

we are working with them to try to get the best practices from the 

private sector to make them consistent. 

Senator JOHNSON. OK. And based on the fact that this is way underfunded, I am not encouraging you to change it to replacement 

value. I understand that. I appreciate the fact that this is insurance of last resort, and that is the way it should be handled, and 

I would obviously encourage you to keep working on the pricing 

model so that we reduce the risk. 

Mr. FUGATE. The biggest lesson there, sir, is that the pool of the 

adjusters—which are not standard adjusters, they have to be specifically trained to do the flood insurance—was a limited pool. We 

were able to work and expand that with the private insurers, and 

that was one of the initial bottlenecks, was to get the adjusters out 

there. So the lesson learned there is that pool is not sufficient 

given the large, dense population areas. We are continuing to work 

with the private sector to see how we continue to maintain a larger 

pool of trained adjusters for flood insurance. 

Senator JOHNSON. OK. Again, thanks for your testimony. 

Thank you, Mr. Chairman. 

Chairman CARPER. You bet. And then there was one. Saving the 

best for last, Senator Ayotte, happy you are here. Good to see you. 

OPENING STATEMENT OF SENATOR AYOTTE 

Senator AYOTTE. Thank you, Mr. Chairman, and I thank the witnesses for being here today. 

I wanted to ask Assistant Secretary Darcy, you in your testimony 

had said that the Corps will undertake a broad and conceptual examination of the best ideas and approaches to reducing the vulnerability of major storms over time. And I certainly think that it is 

very important that we take a long view. And in my view, the 

budgeting for mitigation and disaster preparedness, we often do 

ourselves a disservice by lumping them together and not looking at 

a longer-term view. We end up in this concept, whenever there is 

an emergency, of putting it all together in the immediate aftermath 

of that disaster, and I would like to see us think about planning 

ahead. 

Part of planning ahead is coordination, and New Hampshire 

homeland security and emergency management officials have said 

that they are working to identify and prioritize mitigation projects. 
40 

In developing the mitigation approach, how much coordination will 

there be between the Corps and local and State officials? 

Ms. DARCY. Senator, through the supplemental appropriations 

bill, we received direction to do a comprehensive study. We are beginning to scope out that study. It is due to the Congress 2 years 

after the initial appropriations act was funded. We are already beginning to scope that out with local and State officials as well as 

other Federal agencies. We are looking at long-term sustainability 

for our coastline within the North Atlantic Division, which begins 

in Norfolk and goes all the way to Maine. 

So we are coordinating that and looking for input from State and 

local officials when we put that study together. 

Senator AYOTTE. And the study will be 2 years from the passage 

of the appropriations bill? 

Ms. DARCY. Yes, due to Congress. Yes. 

Senator AYOTTE. OK. Have we done anything like this in the 

past? 

Ms. DARCY. We have done comprehensive studies, but not to the 

degree that this is directed toward a specific geographic area of the 

country, which is our North Atlantic Division. That is the boundary. It is as a result of Hurricane Sandy and looking at what we 

have done and what we need to look to in the future, especially in 

planning for any additional projects that are focused on reducing 

flood risk. 

Secretary DONOVAN. Senator, I would just add that there is going 

to be a significant amount of investment in mitigation beyond the 

Army Corps’ investment—from the CDBG program, from the Department of Transportation, from FEMA, a hazard mitigation program. 

One of the jobs of the task force is going to be, on a shorter-term 

basis than the 2 years, coordinating a mitigation strategy for the 

region more directly affected by Hurricane Sandy. So we will have 

in our report to the President a strategy to coordinate and effectively pick the most cost-effective strategies across the various programs and types of infrastructure and other investments. 

Senator AYOTTE. When we look at this report that we will be receiving, will it contain—for example, we find ourselves providing 

emergency disaster funding, but if we look at a more long-term 

plan, there are probably financial investments we could make along 

the way that would actually save us, in the event of a disaster, taxpayer dollars. Will this plan also—when you said it would take a 

long-term view, will that be part of the analysis? I mean, I think 

that is the goal. Obviously, we want to make sure that people are 

prepared for emergencies, but then when we are in an emergency 

situation, if there are things we could have done in advance that 

would have saved lives, property, and taxpayer dollars, we want to 

look ahead instead of, like we do a lot around here, moving from 

crisis to crisis. Is that part of what we are hoping to get from this? 

Ms. DARCY. It will be part of the study, but I also believe it will 

be part of the plan that the task force is looking into in the short 

term, in the August timeframe. 

Senator AYOTTE. Good. I appreciate that. I think that is really 

important. 
41 

And I also want to say I appreciate that there is going to be a 

lot of coordination with the State and local officials. They are really 

obviously the front lines, and they are directly dealing with these 

issues. And they, I think, have a lot of terrific advice to offer, all 

of the Federal agencies interacting with them, not only on how we 

can best address disasters and emergencies, but on the mitigation 

piece and how we can more effectively do that. 

In my prior position, I had a chance to work with many of these 

officials, and I was always really impressed with their depth of 

knowledge. So I am glad that there is going to be—and I will hope 

and continue to press to make sure that there is maximum amount 

of coordination. 

Secretary DONOVAN. We convened the first meeting of the advisory group for the task force last Friday. It includes almost 50 

State and local officials from across the five States that were most 

directly impacted. 

What I would like to do is get the contact information of the folks 

that you are thinking of—— 

Senator AYOTTE. Terrific. 

Secretary DONOVAN [continuing]. To make sure that the advisory 

group can reach out to them and try to get their input. 

Senator AYOTTE. That would be terrific. We appreciate it. Thank 

you all for being here today. 

Secretary DONOVAN. Thank you. 

Chairman CARPER. Senator Ayotte, I know you have a lot going 

on today. Thank you for making the time to be here. 

Senator AYOTTE. This is an important hearing. Thank you for 

holding it, Chairman. 

Chairman CARPER. You bet. Thanks for joining us. 

A lot of times when we have time—and we have a minute or two, 

and I am going to just do this. We appreciate your coming. We appreciate the preparation that goes into your testimony. We appreciate all the hard work for the last couple of months that really 

back it up. 

We appreciate your willingness to respond to our questions here, 

and before I forget, let me just note that the hearing record will 

remain open for 15 days, until April 4, for submission of statements and questions for the record. We appreciate your willingness 

to respond to those questions, even all those questions, Assistant 

Secretary Darcy, that you are getting from Senator Coburn. 

What I would like to do is ask—you gave an opening statement, 

I would like you to give a closing statement. Just take maybe a 

minute. Over in the House of Representatives, they give these 1- 

minute statements. Maybe give us 1 minute, just a good takeaway, 

kind of thinking about what has been said here; what you said, 

what you have heard your colleagues say at the table there, some 

of the questions asked and some of the dialogue that we have had 

back and forth. Just give us a good 1-minute close, please. Craig. 

Mr. FUGATE. Well, I think, I want to come back to flood insurance in that the way it is designed, the way it operates, oftentimes 

the public believes it is one tool, we think it is another tool, and 

we have not communicated well what it can and cannot do. 

I think it is a good tool to help reduce the risk to people to the 

financial ruin that a flood can cause by providing that tool. But it 
42 

is also important to understand it cannot continue in a way that 

subsidizes risk below which the Nation can afford. And I think this 

is really the tool we have to look at across our programs. Are we 

building and investing not just to the disaster we responded to, but 

will this reduce our vulnerabilities and drive down costs and provide more stable tax bases to government? And I think too often 

we make decisions about the immediate and do not always make 

sure that we are planning for the future as well. And I think this 

is one reason why with this task force structure of bringing together all the Federal agencies in implementing this large recovery, we want to avoid what we saw in Hurricane Katrina, knowing 

that we have to get better, because we cannot continue to afford 

disaster after disaster after disaster and see the same things occur 

over and over again. The lessons have to be learned. 

Chairman CARPER. Thank you. 

Secretary Donovan, a takeaway, please? 

Secretary DONOVAN. Senator, first of all, just thank you for 

hosting this hearing in the spirit that you and your colleagues 

have. In my 4 years in this role, there is no moment where a family 

or a community recognizes the need for Federal help more than in 

a disaster like this, and there is also no moment when we have 

more risk of disappointing the citizens if we do not respond effectively. 

There is no Democratic or Republican way to respond to a disaster. There is simply effectiveness and speed as well as excellence. 

And I just want to commend you on the spirit of the way you have 

carried on your duties, you and your colleagues, in this hearing. 

And I do think this is in the spirit of how do we get better. We 

are getting better, but there is much more that we can continue to 

do. 

The only other thing I would say is that one of the consistent 

themes we heard today was how do we make the investments that 

will lower the loss of lives, the devastation to communities, and the 

costs to the taxpayer going forward. And I think if we can learn 

out of Hurricane Sandy—and, clearly, the task force has this—I see 

this as a major goal. The President has asked us to make it a 

major goal. How do we do a better job of investing—whether you 

call it mitigation, whether you call it being smart, rebuilding better 

and stronger, we have to find ways to invest in those kind of important measures, and this is a testing ground in my mind for doing 

that. 

Chairman CARPER. Good. Thank you. That was excellent. That 

was very helpful. Thank you. Assistant Secretary Darcy, please? 

Ms. DARCY. When you hear the word ‘‘disaster,’’ you do not usually think of the word ‘‘opportunity,’’ but I think as a result of this 

disaster, we have an opportunity to look long term at the way we 

are going to not only plan for future disasters but rebuild as a result of what has happened. 

Craig mentioned earlier that one of the things that we cannot 

control is land use planning and zoning, which happens at the local 

level. I think it is an opportunity for us not only to help with, but 

also educate those people in the local floodplains. Educate those 

who are living in the floodplains about their risks. We build storm 

risk reduction projects, but we call them ‘‘reduction projects.’’ We 
43 

do not call them ‘‘protection projects,’’ because you are not totally 

protected. I think it is an opportunity for us to not only educate 

people, but also look into our own internal programs as to what it 

is we should be looking to for the future. We are looking at our 

planning process within the Army Corps of Engineers, looking toward incorporating sea level rise into what we are looking to in future projects because that is a reality. We need to be able to adapt 

now to what we can anticipate in the future. Our planning to do 

that is a way for us to anticipate and also hopefully have some risk 

reduction in future disasters. 

Chairman CARPER. Thank you very much for that. 

I am going to give a very short closing statement of my own, just 

kind of looking back on the last couple of hours and what we have 

heard and said here. 

Something you just said, oh, gosh, 10, 15 minutes ago, Assistant 

Secretary Darcy, I wrote it down. You said, ‘‘In each disaster we 

learn something new.’’ And I used to say to my sons, who are now 

23 and 24, I used to say to them, ‘‘There is nothing wrong with 

making mistakes. We all make mistakes.’’ 

I like to quote Richard Nixon. I think I am the only Democrat 

around who quotes Richard Nixon. But Richard Nixon used to say, 

‘‘The only people that do not make mistakes are the people that do 

not do anything.’’ 

Well, as it turns out, there are plenty of opportunities for making 

mistakes. And you said, again, ‘‘In each disaster we learn something new.’’ 

The key here is when we respond to these disasters—and, unfortunately, we are going to be seeing more of them. The scientists tell 

us we are going to be seeing more of these along our east coast. 

How do we learn from each one? And it is very clear that we have 

learned a lot since Hurricane Katrina. And we continue to learn literally each week that has passed since Hurricane Sandy struck the 

east coast. 

Among the takeaways for me today was the emphasis on shared 

responsibility. This is not just about the Federal Government. This 

is not just about State or local governments. This is not just about 

the private sector. We are in this together, and we need to be able 

to work together, and part of our responsibility, as I said earlier, 

is like that basketball coach saying, ‘‘The best player is the one 

who makes sure that everybody else on the team plays to their capability.’’ And that is part of our responsibility. 

In order to do that, we hold these oversight hearings, and for the 

most part, they are welcome by agencies and folks who come before 

us. But I think—and thanks for what you said, Secretary Donovan, 

because the nature of our oversight—we do not do ‘‘gotcha’’ hearings. We try to be constructive. Where there is good behavior, exemplary behavior, we try to put a spotlight on that and applaud 

it, reinforce it. And when there is not, we try to shame people 

sometimes, other times just make it clear we expect better, and 

they know that. 

But one of the things that I take away from here is, again, the 

reinforcement. When there has been a disaster, let us respond to 

it swiftly, let us respond to it cost-effectively, and so that when the 
44 

next one comes, we will have learned and will be able to do that 

even better. 

The issue of—I did not count the number of times ‘‘mitigation’’ 

was said here today. It has been said a lot. And there is huge value 

in mitigation and preparing for the worst. So we have this shared 

responsibility. We know the need to respond swiftly and effectively 

when there has been a disaster, the idea that we mitigate against 

future disasters to reduce our exposure and reduce the loss of life 

and the harm to people. 

But I am going to go back to something I said earlier, and I will 

not dwell on this, but I want to say it earlier. All my adult life I 

have been taught and reinforced to focus not just on symptoms of 

problems but on underlying causes. And today we are talking about 

symptoms. How do we treat the symptoms? How do we do that in 

a cost-effective, smart way? How do we mitigate against those 

symptoms in the future? But there are some underlying causes out 

here that it is not the purview of this hearing to go into. We need 

to be mindful of those, and we need to be guided by good science. 

And with that, I am going to say again thank you all, and we 

look forward to seeing you again soon and working with you for a 

long, long time. Thank you. 

With that having been said, this hearing is concluded. Thank 

you. 

[Whereupon, at 12:07 p.m., the Committee was adjourned.] 
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Æ