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25–915 PDF 2006

A VISION AND STRATEGY FOR

REBUILDING NEW ORLEANS

(109–35)

HEARING

BEFORE THE

SUBCOMMITTEE ON

ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS AND

EMERGENCY MANAGEMENT

AND

SUBCOMMITTEE ON

WATER RESOURCES AND ENVIRONMENT

OF THE

COMMITTEE ON

TRANSPORTATION AND

INFRASTRUCTURE

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

OCTOBER 18, 2005

Printed for the use of the

Committee on Transportation and Infrastructure

(
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

DON YOUNG, Alaska, Chairman

THOMAS E. PETRI, Wisconsin, Vice-Chair

SHERWOOD L. BOEHLERT, New York

HOWARD COBLE, North Carolina

JOHN J. DUNCAN, JR., Tennessee

WAYNE T. GILCHREST, Maryland

JOHN L. MICA, Florida

PETER HOEKSTRA, Michigan

VERNON J. EHLERS, Michigan

SPENCER BACHUS, Alabama

STEVEN C. LATOURETTE, Ohio

SUE W. KELLY, New York

RICHARD H. BAKER, Louisiana

ROBERT W. NEY, Ohio

FRANK A. LOBIONDO, New Jersey

JERRY MORAN, Kansas

GARY G. MILLER, California

ROBIN HAYES, North Carolina

ROB SIMMONS, Connecticut

HENRY E. BROWN, JR., South Carolina

TIMOTHY V. JOHNSON, Illinois

TODD RUSSELL PLATTS, Pennsylvania

SAM GRAVES, Missouri

MARK R. KENNEDY, Minnesota

BILL SHUSTER, Pennsylvania

JOHN BOOZMAN, Arkansas

JIM GERLACH, Pennsylvania

MARIO DIAZ-BALART, Florida

JON C. PORTER, Nevada

TOM OSBORNE, Nebraska

KENNY MARCHANT, Texas

MICHAEL E. SODREL, Indiana

CHARLES W. DENT, Pennsylvania

TED POE, Texas

DAVID G. REICHERT, Washington

CONNIE MACK, Florida

JOHN R. ‘RANDY’ KUHL, JR., New York

LUIS G. FORTUN ̃ O, Puerto Rico

LYNN A. WESTMORELAND, Georgia

CHARLES W. BOUSTANY, JR., Louisiana

JEAN SCHMIDT, Ohio

JAMES L. OBERSTAR, Minnesota

NICK J. RAHALL, II, West Virginia

PETER A. DEFAZIO, Oregon

JERRY F. COSTELLO, Illinois

ELEANOR HOLMES NORTON, District of

Columbia

JERROLD NADLER, New York

CORRINE BROWN, Florida

BOB FILNER, California

EDDIE BERNICE JOHNSON, Texas

GENE TAYLOR, Mississippi

JUANITA MILLENDER-MCDONALD,

California

ELIJAH E. CUMMINGS, Maryland

EARL BLUMENAUER, Oregon

ELLEN O. TAUSCHER, California

BILL PASCRELL, JR., New Jersey

LEONARD L. BOSWELL, Iowa

TIM HOLDEN, Pennsylvania

BRIAN BAIRD, Washington

SHELLEY BERKLEY, Nevada

JIM MATHESON, Utah

MICHAEL M. HONDA, California

RICK LARSEN, Washington

MICHAEL E. CAPUANO, Massachusetts

ANTHONY D. WEINER, New York

JULIA CARSON, Indiana

TIMOTHY H. BISHOP, New York

MICHAEL H. MICHAUD, Maine

LINCOLN DAVIS, Tennessee

BEN CHANDLER, Kentucky

BRIAN HIGGINS, New York

RUSS CARNAHAN, Missouri

ALLYSON Y. SCHWARTZ, Pennsylvania

JOHN T. SALAZAR, Colorado

JOHN BARROW, Georgia

(II)
SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS AND EMERGENCY

MANAGEMENT

BILL SHUSTER, Pennsylvania, Chairman

JIM GERLACH, Pennsylvania

KENNY MARCHANT, Texas, Vice-Chair

CHARLES W. DENT, Pennsylvania

JOHN R. ‘RANDY’ KUHL, JR., New York

DON YOUNG, Alaska

(Ex Officio)

ELEANOR HOLMES NORTON, District of

Columbia

MICHAEL H. MICHAUD, Maine

LINCOLN DAVIS, Tennessee

JULIA CARSON, Indiana

JAMES L. OBERSTAR, Minnesota

(Ex Officio)

SUBCOMMITTEE ON WATER RESOURCES AND ENVIRONMENT

JOHN J. DUNCAN, JR., Tennessee, Chairman

SHERWOOD L. BOEHLERT, New York

WAYNE T. GILCHREST, Maryland

VERNON J. EHLERS, Michigan

STEVEN C. LATOURETTE, Ohio

SUE W. KELLY, New York

RICHARD H. BAKER, Louisiana

ROBERT W. NEY, Ohio

GARY G. MILLER, California

HENRY E. BROWN, JR., South Carolina

BILL SHUSTER, Pennsylvania

JOHN BOOZMAN, Arkansas

JIM GERLACH, Pennsylvania

TOM OSBORNE, Nebraska

TED POE, Texas

CONNIE MACK, Florida

LUIS G. FORTUN ̃ O, Puerto Rico

CHARLES W. BOUSTANY, JR., Louisiana,

Vice-Chair

JEAN SCHMIDT, Ohio

DON YOUNG, Alaska

(Ex Officio)

EDDIE BERNICE JOHNSON, Texas

JOHN T. SALAZAR, Colorado

JERRY F. COSTELLO, Illinois

GENE TAYLOR, Mississippi

BRIAN BAIRD, Washington

TIMOTHY H. BISHOP, New York

BRIAN HIGGINS, New York

ALLYSON Y. SCHWARTZ, Pennsylvania

EARL BLUMENAUER, Oregon

ELLEN O. TAUSCHER, California

BILL PASCRELL, JR., New Jersey

RUSS CARNAHAN, Missouri

NICK J. RAHALL, II, West Virginia

ELEANOR HOLMES NORTON, District of

Columbia

JOHN BARROW, Georgia

JAMES L. OBERSTAR, Minnesota

(Ex Officio)

(III)

(V)

CONTENTS

TESTIMONY

Page

Baker, Hon. Richard H., a Representative in Congress from the State of

Louisiana .............................................................................................................. 8

Blanco, Hon. Kathleen Babineaux, Governor, State of Louisiana ....................... 16

Farmer, Paul, Executive Director, American Planning Association, Washington, D.C. ................................................................................................................ 47

Felmy, John, Chief Economist, American Petroleum Institute, Washington,

D.C. ........................................................................................................................ 47

Jefferson, Hon. William J., a Representative in Congress from the State

of Louisiana .......................................................................................................... 8

LaGrange, Gary P., President and Chief Executive Officer, Port of New Orleans ......................................................................................................................... 47

Landrieu, Hon. Mitchell J., Lieutenant Governor, State of Louisiana ............... 16

Marsalis, Wynton, Musician, New York, New York ............................................. 16

Nagin, Hon. C. Ray, Mayor, New Orleans, Louisiana .......................................... 16

Perry, J. Stephen, President and CEO, New Orleans Metropolitan Convention

and Visitors Bureau ............................................................................................. 47

Ringo, Jerome, Chair, National Wildlife Federation, Lake Charles, Louisiana . 47

St. Julien, Mtumishi, Executive Director, the Finance Authority, New Orleans, Louisiana ...................................................................................................... 47

Voisin, Michael C., Owner and General Manager, Motivatit Seafoods, Inc.,

Houma, Louisiana ................................................................................................ 47

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Carnahan, Hon. Russ, of Missouri ......................................................................... 77

Costello, Hon. Jerry F., of Illinois .......................................................................... 78

Jefferson, Hon. William J., of Louisiana ................................................................ 135

Menendez, Hon. Robert, of New Jersey ................................................................. 166

Norton, Hon. Eleanor Holmes, of the District of Columbia ................................. 174

Oberstar, Hon. James L., of Minnesota ................................................................. 178

PREPARED STATEMENTS SUBMITTED BY WITNESSES

Blanco, Hon. Kathleen Babineaux ......................................................................... 73

Farmer, Paul ............................................................................................................ 80

Felmy, John .............................................................................................................. 93

LaGrange, Gary P .................................................................................................... 145

Landrieu, Hon. Mitchell J. ...................................................................................... 149

Marsalis, Wynton ..................................................................................................... 165

Nagin, Hon. C. Ray .................................................................................................. 167

Perry, J. Stephen ..................................................................................................... 183

Ringo, Jerome .......................................................................................................... 191

St. Julien, Mtumishi ................................................................................................ 198

Voisin, Michael C ..................................................................................................... 201

(1)

A VISION AND STRATEGY FOR REBUILDING

NEW ORLEANS

Tuesday, October 18, 2005

HOUSE OF REPRESENTATIVES, COMMITTEE ON TRANSPORTATION AND, INFRASTRUCTURE, SUBCOMMITTEE ON

WATER RESOURCES AND ENVIRONMENT AND SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC

BUILDINGS AND EMERGENCY MANAGEMENT, WASHINGTON, D.C.

The committee met, pursuant to call, at 9:30 a.m. in room 2167,

Rayburn House Office Building, Hon. John J. Duncan and Hon. Bill

Shuster [chairmen of the committees] presiding.

Mr. DUNCAN. I want to welcome everyone to our hearing on the

Vision and Strategy for Rebuilding New Orleans. We are joined

today by our colleagues from the Subcommittee on Economic Development, Public Buildings and Emergency Management. I am honored to chair this hearing today with my good friend, Chairman

Shuster of that Subcommittee, along with the Ranking Members,

who will be here shortly.

The flooding of New Orleans in the wake of Hurricane Katrina

was one of the worst disasters in our Nation’s history. On October

4th of this year, just a few days ago, I had the privilege to lead

a delegation of 11 members to the Gulf Coast. What we saw there

was some of the worst devastation; one of the most monumental

disasters this Country has ever seen. We saw first-hand the devastating impacts of the flooding, wind damage and storm surges

caused by the hurricane. In fact, while most of the publicity was

for New Orleans and Louisiana, because of the numbers of people

involved, we saw by far the worst damage along the coast of Mississippi.

Hurricane Katrina has taught us a lesson on the importance of

infrastructure. When infrastructure fails, the impacts can be devastating. We don’t notice it when everything is working, only when

it is gone. Flood control projects are often debated by anti-development groups and others who call them pork projects, but as

Katrina showed, these projects can be and are critical investments

for our Nation’s security.

In fact, in 1965, Congress authorized a barrier protection project

that might have kept the City of New Orleans from being inundated with floodwaters. This project was halted in the late 1970s

by a string of environmental lawsuits. The Federal Government, together with States and local communities, must continue to invest

in flood protection.
2

No one knows where the next hurricane will hit, or which river

valley will receive torrential rainfalls. So we must invest on a national scale. This nationwide effort will continue. New Orleans and

the rest of the Gulf Coast will be rebuilt. It’s just a question of how

it will be rebuilt, and of course, there may be some parts of New

Orleans and other places that should not be rebuilt.

We have to, on this Committee and in these subcommittees, be

good stewards of the taxpayers’ dollars. I grew up in a political

family and I have followed this Congress closely since the mid1960s. I don’t think I have ever seen an issue flip so quickly as this

did. There was a nationwide outpouring of tremendous sympathy

for the first two or three weeks, and then most people around the

Country seemed to feel that we were sending too much money too

fast to that area and there was great concern that some or much

of it might be spent in scandalous or wasteful ways.

We can’t allow Federal tax dollars to be wasted or spent on unnecessary projects. We must ensure that appropriate projects are

authorized to provide an adequate level of protection for New Orleans and the Gulf Coast and appropriate cost-sharing responsibilities for local project sponsors and integration of navigation, flood

control and ecosystem restoration. We live in a country with thousands of miles of coastline, so we must also keep in mind that

whatever decisions we make regarding New Orleans, Southern

Louisiana, Mississippi and Alabama will have implications for flood

control policy everywhere in the U.S.

The Federal Government will work in partnership with the City

of New Orleans and other affected cities, as well as the States of

Louisiana, Mississippi and Alabama to return the Gulf Coast to

prosperity. That area is a very important part of this Country for

many, many reasons, and we will hear more about that as we listen to the witnesses later this morning.

But to make decisions about Federal hurricane protection

projects for New Orleans, we need to know how the city can be rebuilt. Today we will hear from elected officials from the State of

Louisiana and the City of New Orleans about their vision for rebuilding New Orleans, the process they will use to make rebuilding

decisions, and how the Federal Government can help.

The Federal Government cannot do it all. The Federal Government cannot do it alone and certainly we do not have the $250 billion or figures such as that to be devoted to this project that we

have sometimes heard. The Congress has already appropriated $62

billion to go to this effort, and we need to make sure that that

money is being spent wisely and in a way that is fair to taxpayers

all over the Country.

Our hearing today will also provide the communities and industries that give New Orleans its vital culture and vital economy an

opportunity to share their views on rebuilding. I look forward to

hearing from each of the witnesses.

Before I turn to the Ranking Member, Ms. Johnson, for any

statement that she wishes to make, I will make a statement about

the process. We are going to allow opening statements only for

chairmen and ranking members and affected members. Following

opening statements, we will hear from Representative Baker and

Representative Jefferson on panel one. We have to do this, because
3

we are having testimony from Governor Blanco by video. We are

having a videoteleconference, and the time is fixed. We have to get

to that at 10:30, and then we will have until 11:15 to ask Governor

Blanco questions.

We first thought we were also going to have Mayor Nagin’s testimony by videoconference, but he has requested and we are pleased

that he will be here in person to testify.

At this time, I would like to turn to Ms. Johnson and then Chairman Shuster for their statements.

Ms. JOHNSON. Thank you very much, Mr. Chairman, for holding

this first in a series of hearings on the aftermath of the Hurricanes

Katrina and Rita and their devastating impact on the City of New

Orleans and the greater Gulf Coast region.

Just yesterday the National Weather Service named its 21st

storm for 2005, tying a 72 year old record for the most active hurricane season the Atlantic Ocean. With roughly six weeks remaining

in the hurricane season, no one needs to tell our invited witnesses

that this has been a historic year for natural disasters, both in the

impacts on everybody lives, but also in raising the question whether the 2005 hurricane season was just an overly active year or a

warning of things to come.

Yet while the history books have yet to reflect what actually exactly happened and what lessons can be learned from these storms,

one thing is certain: the City of New Orleans must be rebuilt and

the magical spirit that made that city great must be preserved.

Anyone who watched the coverage of Hurricane Katrina could not

help but be moved by the pictures and the stories of those least

able to escape the path of the approaching storm, as well as the

heroic efforts of those responsible for saving the countless numbers

trapped by the rising floodwaters.

The coverage also exposed a side of the Gulf region that many

probably did not even know existed: the widespread poverty that

plagues so many of the region’s citizens. Without special attention,

these individuals are the first ones to get lost in rebuilding efforts.

Mr. Chairman, I am thankful that we have invited guests who

can provide us with first-hand accounts of the devastation caused

by Hurricane Katrina, its impacts to local communities and cultures as well as where those who live and work in the region believe we should go from here.

As with any major rebuilding effort, it is essential to understand

exactly what was lost, what must be preserved and where things

might be improved upon. We must resist the temptation to build

first and understanding the resulting consequences later. This type

of approach will only lead to costly and ineffective efforts to restore

the City of New Orleans and the Gulf region.

In addition, this build first but ask questions later mentality has

the greatest potential to displace vulnerable populations with the

smallest voice in this debate.

Again, I welcome the witnesses. I thank you for your opening

statements, and I look forward to listening to the testimony.

Mr. DUNCAN. Thank you very much, Ms. Johnson. This is the

first in a series of three hearings. We will hold hearings on Thursday and we will hear from experts from the Army Corps of Engineers and others. Then on the 27th, we will have hearings from
4

some of the associations and some of the technical people that have

the most knowledge about what needs to be done.

We are planning these hearings to be not blame or fault-finding

hearings, but hearings about what should be done to prepare for

the future and to help rebuild the affected areas. Much of these

hearings will be chaired by my good friend and colleague, Chairman Bill Shuster, who chairs the Subcommittee on Economic Development, Public Buildings and Emergency Management, which

has oversight jurisdiction over FEMA and other agencies.

Chairman Shuster.

Mr. SHUSTER. Thank you, Chairman Duncan. I want to thank

you for working with me in putting this joint hearing together

today. I think this is important and I hope other committees in

Congress look at doing joint hearings, because I know that the witnesses that will be here today, it’s difficult for them to leave the

Gulf Coast, come up to Washington to spend a day or two up here

when they should be really focusing at home. So this is important,

that we best utilize their time, getting them up here, letting us

hear what they have to say and making sure they get back down

to the Gulf Coast in a timely manner.

I want to thank the witnesses for being here today. As I said, it’s

difficult to leave the immediate issues they are facing in Louisiana

to testify. But testifying on long term goals and strategies for rebuilding in New Orleans is important.

New Orleans is one of America’s great treasures, and I believe

it’s appropriate to remind our Congressional colleagues and the

Country of New Orleans’ unique place in our cultural history. At

this point, the future of New Orleans is largely unwritten and uncertain, other than the general goal of rebuilding New Orleans. It’s

not clear to me that a plan exists. One thing is for certain, however, most of the Federal recovery dollars will flow through this

Committee and how we spend those dollars will profoundly impact

New Orleans for at least the next 100 years.

One of our greatest challenges as a Committee will be to ensure

that the projects and programs we fund support local goals and decisions. Just a little over a week ago, President Bush made clear

his vision for the rebuilding process. I think he had it right: it

should be federally supported but locally driven.

It also has to be fiscally responsible, and we must use common

sense as we move forward. I would remind everybody that this is

not our money, it’s the taxpayers’ money and they demand nothing

less.

As all my colleagues know, rebuilding New Orleans will be a

massive and complicated matter. It raises a number of important

questions that I hope our witnesses will be able to discuss today.

For example, after the 1993 Midwest floods, a number of communities chose to use FEMA mitigation funds to relocate out of harm’s

way rather than rebuild.

Are there high risk areas of the city that should be relocated instead of being rebuilt? What should the Federal role be? How do

we utilize local residents and businesses in the reconstruction and

rebuild the economy along with the infrastructure? How do we increase home ownership and how do we help local governments survive in the short term so that they can succeed in the long term?
5

I look forward to hearing from today’s witnesses on their vision

and strategy for rebuilding New Orleans and also how they believe

these visions and strategies can best be implemented. Again,

Chairman Duncan, thank you for chairing this Committee.

Mr. DUNCAN. Thank you very much, Chairman Shuster.

Before we go to Ms. Norton, I want to welcome the newest member of the Committee, the person who will become the newest member of the Subcommittee at our next markup, Mrs. Schmidt from

Ohio.

Next we have the Ranking Member of the Subcommittee on Economic Development, Public Buildings and Emergency Management,

our colleague from the District of Columbia, Ms. Norton.

Ms. NORTON. Thank you, Mr. Chairman. I thank both Chairmen

and our Ranking Member for scheduling this very important hearing.

I’m pleased to serve on both subcommittees. Together, these two

subcommittees are the major authorizers for emergency relief, for

short and long term relief, and for major elements of the rebuilding

of the Gulf Coast, only now in the startup stage. We cannot do our

job as a committee unless and until we hear from the officials and

residents who were hurt, must guide and live with the rebuilding

effort. This hearing begins our efforts for New Orleans and particularly by hearing from State and city leaders and from other officials

who will have the responsibility for designing and leading the rebuilding efforts in their city.

The scale of the damage left by Hurricanes Katrina and Rita is

unprecedented in modern America. The challenges are beyond any

that have been confronted not only by State and local officials, but

also the Federal agencies charged with responsibility, including

FEMA and the Corps of Engineers. Our interest today is in the vision of those who lead and live in the State and city and the strategies that they and their Federal partners believe can get us from

here to where they want and deserve to be.

In turn, our subcommittees must ensure that our programs are

tailored to unprecedented conditions, including the temporary destruction of the economy of a vital region of the United States and

its lead city, New Orleans. Some of the problems are already clear.

For example, the Stafford Act requires that preferences be given to

local residents and businesses in contracting for Federal disaster

rebuilding. But residents have been scattered across the face of our

Country and business and commerce are crippled by the lack of

capital, employees and customers.

Already after some criticism and pressure from our Committee

and others in the Congress about no-bid contracts, and the limited

number of contracts to regional firms, FEMA has announced that

it will re-bid five $100,000 million housing contracts.

We can help rebuild New Orleans. But we understand our obligation to be helpful to Governor Blanco and Mayor Nagin in meeting

the challenges of safer and smarter rebuilding. Above all, we want

to ensure that the 300 evacuees that we were pleased to house here

in the District of Columbia and the hundreds of thousands of New

Orleans residents throughout the United States are getting the assistance they will need in short term and affordable long term

housing.
6

Policy decisions about where and how to house evacuees can determine who participates in the rebuilding efforts and indeed, who

ultimately returns to New Orleans at all. I look forward to hearing

from today’s witnesses with the knowledge and the wisdom we will

all need to get the job done together.

Thank you very much, Mr. Chairman.

Mr. DUNCAN. Thank you, Ms. Norton.

As I mentioned earlier, I was instructed that we would allow

opening statements from the Chairmen and Ranking Members and

members from the affected areas. Then if we have any time after

that, we will go to other members in order, but we will have to stop

at 10:30 to handle this videoteleconference with the Governor.

So we will now go at this time to Mr. Boustany.

Mr. BOUSTANY. I want to thank you, Chairman Duncan and

Chairman Shuster, for convening this joint hearing today. Both of

you personally reached out in the immediate days after Hurricanes

Katrina and Rita to offer your support and condolences. I appreciate all you have done, also the work your staff has done in helping us respond to this unprecedented devastation in the Gulf Coast

region.

Today we are focusing on the rebuilding of New Orleans. But the

devastation reaches far beyond. In fact, in southwest Louisiana, my

district, the Seventh Congressional District of Louisiana, Cameron

Parish was almost completely destroyed, with massive flooding and

hurricane force winds. Vermilion Parish, another coastal parish,

had extensive flooding, crops were destroyed from saltwater and

homes were lifted from their foundations. The storm surge from

Rita, in fact, impacted regions as far as 40 to 50 miles inland, with

hurricane forces reaching up into central Louisiana.

In addition, southwest Louisiana supplies much of the Nation’s

energy. Oil and gas production is still at this time less than half

of the pre-Katrina capacity.

Local officials and emergency responders in my district did an

outstanding job in evacuating those communities in Rita’s path and

thus saving countless lives. Now we must focus on rebuilding not

only New Orleans but much of the Gulf Coast region.

I think it is important at this stage to remember that Government cannot micromanage economic recovery. The Federal role in

this recovery must be targeted, spending must be prudent and fiscally sound with proper oversight and accountability. Federal actions must at every stage spur private investment. In my mind, rebuilding New Orleans and restoring New Orleans to the great city

it has always been hinges on our ability to provide a safe environment in which businesses can thrive and communities can flourish.

The Subcommittee will hear more in-depth testimony on the hurricane and flood protection needs for a rebuilt New Orleans on

Thursday. But I think this is really a key issue. It must be a top

priority in order for us to attract insurers back into this region, because business investment won’t follow unless we can attract insurers back.

I know the Corps is well underway in its work to prepare the

levee systems in preparation for the 2006 hurricane season. But we

need to make sure a rebuilt New Orleans is prepared for a future

category 5 hurricane. And I want to work with my colleagues to en-
7

sure the Corps develops a comprehensive, peer-reviewed levee plan

with an expedited time frame and a specific time frame for implementation.

We need to revisit the feasibility of constructing a Lake Pontchartrain barrier, an issue that this Subcommittee grappled with

nearly 30 years ago. I think we need to take this up again.

Another priority must be rebuilding health care infrastructure in

New Orleans. LSU Medical Center and its teaching hospitals, including the only level one trauma center in the entire region, were

devastated. This is critically important in rebuilding our economy

and our health care infrastructure for the entire State.

New Orleans will be rebuilt, bigger and better than before. But

we need to make sure it’s safe for occupation as well. I thank the

Committee for holding this series of hearings, and I look forward

to working with my colleagues as we move forward with the rebuilding process. Thank you.

Mr. DUNCAN. Thank you very much, Dr. Boustany. Dr. Boustany

is not only from the affected area, but he is vice chairman of our

Water Resources and Environment Subcommittee, and a very active member of the Subcommittee.

We will go next to Congressman Taylor and then to Congressman Baker. Congressman Taylor, who also helped host us when

our delegation visited Mississippi. We appreciate, Gene, very much,

your accommodations at that time.

Mr. TAYLOR. Thank you, Mr. Chairman. I want to thank my colleagues who were able to visit south Mississippi and coastal Louisiana for coming down to see first-hand the challenges that confront

us.

Mr. Chairman, what is good for New Orleans is good for south

Mississippi, what’s good for south Mississippi is good for New Orleans. I very much welcome this hearing today. Also we want to keep

in mind that this is a region that was hurt by this storm and not

just a city, that it affected hundreds of thousands of south Mississippians every bit as much as it affected New Orleans.

And we certainly want to help our neighbors to the west. We

want to help them rebuild their beautiful city, we want to help

with the Mississippi River delta restoration project, inappropriately

called the Louisiana Coastal Initiative. Because what is important

for the Mississippi River is of great importance to south Mississippi

as well.

We also hope at some point that my colleagues from Louisiana

could give me some idea of how many people from Louisiana lived

outside the flood plain and yet were flooded by this storm. I think

we have a lot in common there that a heck of a lot of people were

told by their insurers, by their bankers, by their mortgage landers,

that they were outside the flood plain, they don’t get flood insurance, only to have an unprecedented storm directly affect their

lives, their homes and now put them in a situation where their

wind insurance is saying, we’re not going to pay, it’s a water event.

Their homes are destroyed and they have no Federal flood insurance.

So I know that this affects tens of thousands of south Mississippians. I presume it affects a heck of a lot of Louisianans. I would
8

hope that this body could find some fair way to make these peoples’

lives whole.

What we want to see is that person who has invested in coastal

Louisiana and south Mississippi for decades, coached at our Little

Leagues, taught at our schools, attended our churches, we want to

see to it that they are able to make their lives whole, to get their

lives going again rather than having to sell out cheap to some developer. Because all the plans that I see thus far really do benefit

just the guy who comes in from outside, buys cheap, sells high and

doesn’t pay any taxes on it. That’s not what I want to see, and I

can’t believe it’s what this Congress wants to see.

But I thank Mr. Baker for appearing before this panel, I’m very

pleased we have such a distinguished panel of Louisianans joining

us this morning.

Mr. DUNCAN. Thank you very much, Mr. Taylor.

Before we go to Mr. Baker, Ms. Johnson has made a special request.

Ms. JOHNSON. Thank you, Mr. Chairman. I want to say happy

birthday to Mr. Wynton Marsalis, one of my favorite musicians,

and a native of New Orleans. I am sorry that you are here under

these circumstances, but delighted to see you.

Mr. DUNCAN. All right, thank you very much.

Now our distinguished colleague, Richard Baker, who also helped

host us when our delegation came to Louisiana and made a very

impressive presentation at that time. Congressman Baker is a very

valuable member of our Water Resources Environment Subcommittee and is a lead witness here today. Congressman Baker.

TESTIMONY OF THE HONORABLE RICHARD H. BAKER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA; THE HONORABLE WILLIAM J. JEFFERSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA

Mr. BAKER. Thank you, Mr. Chairman. I appreciate the courtesy

you have afforded me this morning, and wish to acknowledge that

my principal assignment of committee responsibility in the Congress is as member of the House Transportation Committee. My

secondary obligation in the House is as a member of the House Financial Services Committee. I wish to speak for a moment to some

of those obligations in the resolution that is being discussed this

morning.

Others will certainly validate the need to rebuild this region, and

I think that appropriate, because some of you are simply asking

the question, why go back. Others will validate the economic significance of this region which I think important, because many do

not understand how the Port of New Orleans, the energy production and our aquaculture really does impact our national economy.

Others will outline the necessity for important local perspectives

in developing the redevelopment plans which obviously will ultimately be proposed to the Congress. And I think that highly appropriate and necessary.

But what has not squarely been addressed, at least to this point,

is how we can assure as Louisianans access to continued Federal

dollars over the coming years, and I say it that way, coming years,
9

with appropriate accountability to you and your constituents for

the manner in which your hard-working taxpayers’ dollars are

spent in our State. It’s not lost on me that an increasing number

of members are expressing their concerns with votes against various measures. I handled a rather innocuous bill just last week

which had 65 votes against it on final passage. Clearly, a message

is being received by me and others in the delegation that there

needs to be more disclosure, transparent disclosure and accountability in how we go forward.

I will introduce this week with most members of the Louisiana

delegation a measure to create a Louisiana Recovery Corporation.

This will be a unique institution, intended at the moment only for

Louisiana, but I have talked with Mr. Taylor and those affected in

Texas as well about the appropriateness of a similar corporation for

their particular communities. The uniqueness of this entity is that

it will be an off budget enterprise, so we would not have the necessity of returning to the Congress for renewed appropriations measures.

Secondly, it would be given broad authority to issue public debt

obligations approved by the United States Treasury. This would

give assurance to the Congress and the Administration that there

is Federal oversight of these debt issuances and the debt that’s

being issued and therefore the capital being raised will be deployed

for a plan generated from the local level up, as the President has

indicted he would like to see us proceed.

There is precedent for such an entity being created. In the course

of our Nation’s history, there have been three which are large real

estate acquisition and disposition entities with similar powers and

responsibilities. Before redevelopment can proceed, however, it

must be preceded by restoration of levee integrity. It’s already clear

in the insurance markets that if insurance were to be made available, it would be at such a high price or simply not available at

all unless levee integrity is absolutely assured.

Environmental restoration is the second necessary step. Permanent habitation cannot occur until those pollutants which have

been deposited by the flood are removed and assurance is given to

homeowners that it will be safe for their children to play again in

the back yard.

Restoration of essential public utilities is critical for large scale

redevelopment capacity. In order for those steps to occur, it cannot

at this moment, I do not believe, be achieved either by local or

State resources. Unfortunately, Standard and Poors, Moodys and

Fitch have all put the State and the cities on a negative credit

watch. That’s the first step to a downgrade.

That means were we to issue debt for our own reconstruction, it

would come at an inordinate expense and some uncertainty as to

our ability to market that debt in capital markets. For that reason,

it is essential to have the Federal Government’s full faith and credit backing the debt issuances that do have the potential for a repayment at the tail end of the project.

How so? Well, with stage financing and the ability to establish

levee integrity, environmental remediation and public utilities, we

could then create large expanses of reclaimed properties available

for redevelopment. Those redevelopment areas would then be pro-
10

posed by local community leadership. Mayor Nagin, Governor Blanco and others have proposed and established commissions that involve local community leadership with various perspectives on how

communities should be rebuilt.

In an ancillary matter, we will consider a governmental reform

in the manner of Fannie Mae and Freddie Mac, two of the large

housing Government-sponsored enterprises later this month on the

House floor. As an element of those reforms, there is established

an affordable housing fund heretofore not existing, which would

dedicate somewhere between $500 million and a billion dollars annually of non-taxpayer money to affordable housing goals.

So this would be an augment to the redevelopment plan for those

concerned that this is only about developers getting rich off the

purchase of property from this entity to make money at the expense of the affected constituents in the arena. There will be

mixed-use, affordable housing, subsidized housing, multi-family

housing, to a great extent financed by the resources of Fannie and

Freddie as well as the Federal Home Loan Bank.

To have the ability to complete such a large scale reclamation

project can only be achieved with Federal resources. But the U.S.

taxpayer, accordingly, deserves some assurances that the dollars

spent are wisely spent and that there is some potential mechanism

for partial repayment. And I emphasize the word partial repayment. I would not represent to this Congress that any development

plan would make U.S. taxpayers whole as a result of some innovative or new strategy for reclamation.

The plan will call for the large scale sale of properties ready for

redevelopment to the private marketplace, but homeowners will not

be dispossessed. Several options will be offered to a homeowner.

One, you can take a cash settlement and move on with life in another community somewhere else if that is your determination.

Secondly, you can reserve the right to your 100 by 150 foot parcel

subsequent to the redevelopment activity if you choose to wait that

period of time and you can rebuild on a relatively similar size lot

in a relatively same location once the redevelopment has been concluded. And I want to emphasize that. There is great concern expressed by Mr. Jefferson and others to me that bulldozers will run,

peoples’ property will be taken and they will be dispossessed from

their communities and unable to return.

This proposal will not do that. If you choose to stay, you can stay.

It is your decision. You will simply have to await the restoration

process before you are able to return to normality.

There is one other provision which has received some statements

of concern. If you are building a highway project and you have

reached negotiated settlement with 99 out of 100 landowners, and

one person refuses to sell his property at what is determined to be

the appropriate level of compensation for that project to move forward, the public interest requires the Government to act and you

subsequently litigate that value in court, so that the project can

move forward.

I am not going to run from it, there is a necessity for some limited right of eminent domain, so that the redevelopment proposal

can move forward and families can be restored and home owner-
11

ship be re-established. But that is the last element in a long process of opportunities and choices which homeowners will make.

Ultimately, the commission will have a very difficult responsibility in assessing the literal thousands of financial relationships of

those who own outright to those who just bought last month with

their 95 percent LTD ratio in their mortgage, and the ability for

the commission to provide individuals some measure of compensation to move on with life, to provide some measure of compensation

to the lending entities to not cause disparate economic difficulty in

broad sectors of our financial economy is essential and very important.

Stated a more simply pointed way, I believe the plan will afford

us a mechanism to rebuild devastated communities in a responsible

manner, minimizing the cost to the United States taxpayer while

respecting the right of private property ownership. That is my goal.

It will not be easy. It can be done.

I am not aware of another plan that speaks to the need to measure Federal resources flowing to communities with accountability.

There’s a lot of planning going on and a lot of commissions out

there. But we just can’t ask you to give us money and go away. I

understand that.

If you will give us a chance to explain how we intend to proceed

with the Louisiana Recovery Corporation, I am hoping, Mr. Chairman, that you and members will find it to be an acceptable path.

I thank you for the time.

Mr. DUNCAN. All right, thank you very much, Congressman

Baker. Those are some very good suggestions. Obviously we won’t

be able to give everybody everything that we want, and obviously

as I said earlier, the Federal Government, people want to help in

that area, but the Federal Government won’t be able to do it alone.

Insurance companies will have to do their part. The State governments will have to do their parts and so forth.

Next we will hear from our very distinguished colleague, Congressman Jefferson, who represents so much of the affected area.

Congressman Jefferson.

Mr. JEFFERSON. Thank you, and good morning.

I would like to thank the Chairs and Ranking Members of the

subcommittees represented here for allowing me the opportunity to

appear before you to give testimony on Congressional efforts to revive and rebuild New Orleans in the wake of Hurricanes Katrina

and Rita.

I need not spend much time cataloging the devastation that we

have experienced as a result of these hurricanes and the consequent flooding of huge portions of southeastern Louisiana. As we

have all seen, these terrible storms were indiscriminate in their destruction, leaving behind unprecedented amounts of property damage, human casualties and economic losses.

It is estimated that nearly 228,000 occupied housing units, representing more than 45 percent of the housing stock in the metropolitan New Orleans area, were flooded. This total included

120,000 owner occupied units and 108,000 units occupied by renters, representing 39 and 56 percent of those respective stocks.

Moreover, New Orleans and a number of surrounding towns have

been virtually shuttered for almost seven weeks, decimating the
12

revenue base and forcing dramatic reductions in the labor force,

just at a time when those workers are desperately needed to assist

the recovery efforts.

A further effect of the storms was the disproportionate adverse

impact on the State’s most vulnerable and poor citizens. Thirtyeight of the metropolitan areas, 49 extreme priority assistance

tracts, were flooded. All 38 of the flooded property tracts were in

the city of New Orleans.

Sadly, these tragic effects were not inevitable. They represent an

unfortunate intersection of weather and water with the socioeconomic geography that had evolved over decades.

Accordingly, as we confront the future, our goal should not be

merely recovery, but transformation, a socioeconomic revolution

that leaves a region not just like it was, but better. Those impacted

by the storms deserve no less. The limited Federal resources we

can garner to meet New Orleans’s needs must target quality outcomes relying on existing, proven tools that meet the scale of the

task.

To that end, we should focus, I believe, on four principal goals.

First, we must create a region that is survivable for the long term

against storms that are ever more frequent and more ferocious

each year. Second, we must commit to turning the region into an

example of higher quality sustainable development. Third, we must

replace neighborhoods of concentrated poverty with neighborhoods

of choice and connection. And finally, we must transform the region

from a low wage economy to one of the highest skilled work force

commanding among the highest salaries in our region.

Without question, these are daunting goals. But this much is

clear: the reconstruction of New Orleans and southern Louisiana in

a proper way is going to require sustained, serious and even visionary concentration over many years from the grass roots level to

Capitol Hill. But I am confident that the will exists among my colleagues here in Congress and my fellow Louisianans to achieve

these goals.

With this firm commitment, we can rebuild those areas shattered

by hurricanes in a way that makes them more survivable, these

areas more sustainable and more inclusive and more competitive in

the global economy than they were before the storms. To enhance

survivability, the Army Corps of Engineers testified before the Congress a few weeks ago, they could build to a category 3 levee by

next June at a cost of $1.6 billion to protect New Orleans and the

New Orleans area, which means New Orleans and Jefferson Parish, basically, against a category 3 storm, and then it could build

to protect against a category 5 storm over the next 8 to 10 years

at a cost of another $5 billion or so.

In later discussion with the Corps in my office, they explained to

me that the time to rebuild to a category 5 was so long because

of three principal reasons. One was the legal reasons, they explained, were expropriation concerns and environmental issues.

The second was local share issues of how local government is going

to pay for their share of the project.

And the other was just geography issues about how long it takes

to settle levees when you rebuild, you build some more and you

wait for it to settle. It just takes time. And even with those, we are
13

able to mitigate and reduce those concerns, it gets us to a position

where we are talking about a four or five year project, even then,

to get to category 5 protection.

But while building a dependable levee and hurricane protection

system is vital, it’s not enough really to really on engineering oriented sea wall or levee oriented approach to flood protection. If

Hurricane Katrina taught New Orleaneans and the rest of us anything, it is that attempting to dominate nature solely with structural barriers is insufficient. Moreover, given the time required to

enhance those barriers to protect against a category 5 storm, as we

revealed in the interim, we must ensure that survivability and sustainability remain in the fore of any decision making.

As we move forward, we must plan where and how to rebuild scientifically, systematically and democratically. We must rebuild for

all who were displaced and for future generations. State and local

governments should call upon leading environmental engineering

and urban design experts to provide guidance both to Government

and to the citizens of New Orleans as to the best path forward.

Planning in a systematic, transparent and objective way with an

open and honest discussion of the costs and benefits of each approach will ensure that the city has a solid foundation on which to

build, not the cost and benefit approaches we normally talk about

here, which is to say, economic costs and benefits, but the costs if

a catastrophe strikes, which we have not taken into account over

the years.

We must confront perhaps the most extraordinary urban housing

crisis our Country has ever witnessed. We must move forward aggressively and creatively to re-settle those displaced by the deluge

in safe, comfortable homes and economically integrated neighborhoods, or as a recent Brookings Institution report describes them,

neighborhoods of choice and connection.

The images that pervaded media coverage in the days after Hurricane Katrina struck New Orleans exposed what President Bush

has described as a deep, persistent poverty. As we move forward

with the rebuilding of New Orleans, therefore, we must replace

neighborhoods of extreme poverty with neighborhoods of choice and

connection. The Brookings Institution report I referenced earlier

describes neighborhoods of choice as ‘‘desirable communities that

families of all income levels seek out for their quality, distinctiveness, sociability, location and amenities. These neighborhoods are

most importantly economically integrated, or mixed income neighborhoods.’’

The same report defines neighborhoods of connection as those

that lead families to opportunity rather than isolated by residents.

These neighborhoods offer their residents good schools and timely

services, provide their citizens easy access to nearby or distant job

markets, as well as a connection to the mainstream life of the region.

Shortly after Katrina hit, the American Institute of Architects

reached out to me and others in Government to offer their expertise in planning and helping to develop just such neighborhoods in

a renewed New Orleans. Such neighborhoods may represent the

best hope to solve many of the city’s urban dilemmas. They rejected

the concentrated poverty, residential segregation and economic iso-
14

lation that characterized too much of the city. They also represent

a vision of a city rich in economically integrated neighborhoods, attractive to all classes of people, with schools on a path to excellence, traversed by notably better public transportation, and tighter

links to greater economic opportunity.

So obviously the question becomes, how do we convert this vision

into reality? That is of course why we are all here today. This Committee will play an essential role in the rebuilding process.

This Committee holds the charge of ensuring that New Orleans

and the surrounding region are able to access all the Federal tools

and resources necessary for it to rebuild to a first class infrastructure situation as it is rebuilt, from flood and hurricane protection

to transportation to connect communities to port system reconstruction, so crucial not just to New Orleans but to 28 States over thousands of miles of inland waterways, to roads and rail. The New Orleans area will need this Committee’s support to implement a comprehensive plan to ensure that.

Since Congress returned from its August work period to confront

the effect of Hurricanes Katrina and now Rita, we have made significant progress. While Congress cannot write the individual recovery plans for each city and parish in our State, it can and must

create a box of tools that give our State and local governments the

authorities they need to make and carry out local plans for recovery. Congress has begun to do that weighty task.

We are grateful to the Congress for having passed the largest

disaster recovery appropriations package in our Nation’s history,

already committing direct spending of more than $60 billion to the

recovery and reconstruction effort. As of last week or a few weeks

ago now, some $21 billion of that money had been obligated or

spent, leaving $38 billion still unobligated. These FEMA dollars

can be used for a wide range of purposes, as you know, including

replacement and rehabilitation of infrastructure, water and sewer

system rehabilitation, fire and police stations, public hospitals and

clinics and schools, housing assistance, loans to State and local governments for operating expenses to certain health care expenses.

We have also passed several pieces of legislation providing individual tax relief and the rest that you have all voted for and supported. Under the current FEMA provisions, FEMA pays 75 percent of the costs of these projects that I have mentioned, such as

police and fire and any public infrastructure that has been destroyed.

The rest is paid by local share. This share is unlikely to come,

as Representative Baker said, from State and communities that

have been severely reduced in their tax bases. We therefore must

make provision on our level for States and cities to find ways to

take self-help steps to take advantage of resources that are under

the Stafford Act to rebuild critical infrastructure.

While the news laws that we have passed move the ball forward,

there are many proposals to be enacted. I see that my time is fast

getting away from us here, but let me just say this. We have in

this Congress passed a few provisions which are on our side, the

tax side, the Ways and Means side, that will give our city and our

State the tools it needs to borrow money virtually tax-free over the

next several years, to permit it to raise the money it needs to meet
15

local share requirements and a way to self-help itself, to permit it

to refinance its current bond obligations because of Federal limitations now on that, not to lower the interest rate, but to extend the

time for repayment, to give them more wherewithal to do the

things they need to do to meet local share requirements.

But there is going to be, over the next several years, an important role for this Congress to play in permitting these self-help opportunities and in giving direct help to our State and to our local

areas to rebuild. I am confident that with the efforts that are being

made, with the reaching out that is being done by members of Congress and others around this Country that we will rebuild our city

bigger and better and safer than it has ever been in the future,

with more opportunity for more people and with a more shining example of what an urban city, a modern urban city ought to be these

days.

So I thank the Committee and there are many issues, proposals

out here that we have to work through, some of which Mr. Baker

has talked about and others have talked about. But I feel confident

that there are enough good ideas around that at the end of the day,

we will have a chance to rebuild a New Orleans with the collective

help of all of you that we can all be proud of and that can serve

our constituents well.

Thank you very much for the chance to be here.

Mr. DUNCAN. Thank you very much, Mr. Jefferson.

We are fortunate that on the Water Resources and Environment

Subcommittee we have as members Congressman Taylor, Congressman Baker and Congressman Boustany, three members who,

along with you, Congressman Jefferson, and your work on the

Ways and Means Committee, the four of you have really been the

leaders in the House in this whole tremendous effort that has already begun but will continue for quite some time.

We have a rule in this Subcommittee that we do not question

members on members’ panels, in consideration of other witnesses

that have come from all over the Country and in consideration of

the fact that each of you have such busy schedules, and also that

we have a chance to later question you on the Floor or various

other places.

In addition to that, Governor Blanco has been waiting since

about the time that Congressman Baker began testifying. So Congressman Baker, you are a member of the Subcommittee, if you

wish to take a seat on the dais, you are certainly welcome. We will

welcome Congressman Jefferson to stay as long as he is able.

In my six years as Chairman of the Aviation Subcommittee, and

this is now five years as Chairman of this Subcommittee, I have

had the privilege to chair about 200 hearings, I suppose. I have

had many Governors testify, but I have never had any witness testify over the videoteleconference. I don’t know how this is going to

work. There is Governor Blanco now. I hope she can hear us, and

I hope she has been able to hear the very important testimony that

Congressman Baker and Congressman Jefferson have given. We

will see how this works.

We certainly are pleased to have Governor Blanco. We did allow

her to testify in this manner because of the tremendous work that

she is having to do there in her State and because of scheduling
16

difficulties. After her testimony, Mayor Nagin will be here to testify

in person. We are pleased at this time to have as our next witness

the Honorable Kathleen Babineaux Blanco, Governor of the State

of Louisiana, from Baton Rouge.

Governor Blanco, I hope you can see us and hear us, and we welcome you to the Subcommittee. You may begin your testimony.

TESTIMONY OF THE HONORABLE KATHLEEN BABINEAUX

BLANCO, GOVERNOR, STATE OF LOUISIANA; THE HONORABLE C. RAY NAGIN, MAYOR, NEW ORLEANS, LOUISIANA;

THE HONORABLE MITCHELL J. LANDRIEU, LIEUTENANT

GOVERNOR, STATE OF LOUISIANA; WYNTON MARSALIS, MUSICIAN, NEW YORK, NEW YORK

Governor BLANCO. Indeed, sir, I can see you and hear you, and

I appreciate this opportunity to speak to you.

Mr. Chairman and Ranking Members, committee members,

thank you indeed for allowing me to videoconference in with you

today. In the worst natural disaster in this Nation’s history, Hurricanes Katrina and Rita hit New Orleans and most of south Louisiana hard. You have all seen and read about the devastation. Hundreds and thousands of our citizens remain scattered all across the

Nation. Over 200,000 homes have been destroyed, leaving tens of

thousands still homeless.

The hurricanes shuttered or displaced almost 81,000 firms. That

is 41 percent of Louisiana’s businesses. The Congressional Budget

Office reports that more than $375,000 Louisiana citizens lost their

jobs.

The task of rebuilding Louisiana is massive and it is complex.

Many schools, universities, hospitals, churches, businesses, utility

systems, have been destroyed. Much of our transportation and port

infrastructure, both sea and air, has been damaged or destroyed.

Indeed, entire communities, entire parishes, have been destroyed.

These mothers and fathers and sisters and brothers and their

children want to come home. And I want them to come home. They

want us to rebuild and I insist that we rebuilt. But we must protect what we rebuild.

Our people of coastal Louisiana must feel safe. They must be

safe. They deserve no less. We must build newer, higher, stronger

levees to protect New Orleans and other south Louisiana communities.

Repairing the damaged levees is only a step. But it is an important first step. New Orleans must be protected. Without better levees, who will invest, who will insure, who will return? Without restoring and improving the critical infrastructure, levees and drainage canals, roads and bridges, hospitals and schools, we can’t rebuild New Orleans.

Let there be no doubt about the importance of the New Orleans

area to the economic health of the Nation. America’s economy must

have a vibrant, commercial port at the mouth of the Mississippi

River, its most important waterway. South Louisiana is the center

point of the Nation’s energy economy. This is the export hub of the

Nation’s bread basket. This region fills the Nation’s restaurants

and supermarkets with seafood.
17

Indeed, the quality of life of our Country depends on a vibrant

Louisiana economy. Just as the Nation recreated the economic

greatness of New York City after 9/11, the Nation needs New Orleans, the Nation needs south Louisiana. America needs this region

not only for our rich culture but also for the unparalleled and

unique contribution that we make to America’s economy.

We are working hard to restore Louisiana and to bring our people back, back to sound homes, quality jobs and revived neighborhoods. But we must have help from Congress. That is why I am

here today. We are dealing with a crushing blow to the revenues

of both State and local governments. Jobs and businesses are at

the heart of our recovery efforts. Without a thriving business community providing quality jobs, our people will have no reason to

come home.

In the first 18 months of my administration, we scored success

after success as we brought in new industries and enhanced existing businesses. We closed deals worth $3 billion of new capital investment for Louisiana. We scored those successes with targeted

State tax credits and tax incentives that reward companies for investing in Louisiana and creating quality jobs.

We are proposing to use the very same kind of economic development tools in our tool basket in the recovery of Louisiana. But the

problems are so great, we need additional help. That is why we are

here today.

We need direct incentives to help businesses and individuals

move back, so that they can move back into the storm zone. That

is an idea that President Bush included in his Gulf Opportunity

Zone proposal. We support that. Up to $30 billion in tax-exempt hurricane recovery bonds are essential to our efforts. This would dramatically lower the cost of capital to companies of all sizes. A job creation tax credit would motivate large companies with significant payrolls to remain in the region. A $10 billion Louisiana business development fund to provide

grants to small businesses that returned to the affected areas of

our State would be critical. We are asking you to help us in all

these counts.

We need your help with these important incentives in order to

regain our footing. If you help us with these incentives, we believe

that we only have to step aside and let business do what it knows

how to do.

We project a 20 percent shortfall in State tax collections because

our economy has been stopped in its tracks. But just yesterday, I

announced the creation of a bridge loan program to help our small

businesses with much needed cash flow. The need for financial assistance is so great in the damaged area that this program will be

tapped out in two to three days. Our businesses need more of this

kind of immediate help. I have asked the United States Senate and

President Bush for $200 million to fund these kinds of bridge loans.

That is the size of our need.

We are making other advances. Days ago, we reopened an important bridge on Interstate 10 east of New Orleans, connecting New

Orleans to the east. This temporary repair was completed earlier

and at a lower cost than we estimated and by Louisiana contractors, I proudly add. A permanent repair to this section of I-10 will
18

cost about $600 million. That is just one part of the needed repairs

to the infrastructure in and around the City of New Orleans. Roads

and bridges that are not normally eligible for Federal aid suffered

about $845 million worth of damage.

South Louisiana’s port system is functioning, but only at a fraction of its capacity. Damage to public port and rail facilities alone

totaled more than $825 million. The Federal navigation system on

the river suffered more than $300 million in damage.

Those are just a part of this massive recovery effort, an effort

that requires a daring, yet a realistic plan. To recover from the

trauma of this devastation, we cannot simply recreate the protection levees that those storms destroyed. It’s essential that we build

stronger, smarter and safer.

To coordinate the continuing rebuilding effort, I have created the

Louisiana Recovery Authority. They will function as my board of

directors of our recovery effort. I have selected some of the best

minds from or with connections to Louisiana. I have appointed as

chair Dr. Norman Francis. He is President of Xavier University in

New Orleans, and one of our State’s most respected leaders.

As Vice Chair, I have appointed Walter Isaacson, a New Orleans

native who has served as managing editor of Time Magazine,

Chairman and CEO of the Cable News Network, otherwise known

as CNN, and he is now President of the Aspen Institute. I have directed these members to act boldly, reach out for new ideas, forget

old limits, ignore the ancient rivalries of politics, race and region,

imagine a better Louisiana and help me create it.

This Authority will go to work immediately. They will focus on

prioritizing key issues, safety, housing, jobs, transportation, education, infrastructure needs, economic and work force development,

health care, the environment and family services. I am confident

that this Authority can deliver tangible results in a timely fashion.

I want to spend a moment addressing the issue of fiscal and financial accountability. I understand the questions that some in

Congress have about how our State will handle the Federal funds

that are coming to us for disaster relief and recovery. First, during

my administration, the financial operations of the State of Louisiana have been highly rated for government accountability. But I

want to emphasize that the financial affairs of Louisiana will be

transparent and wide open as it pertains to this period of recovery,

more so than ever before. I believe that we will stand well to the

expected scrutiny by the public, the Congress and the media.

Second, in addition to our normal auditing processes, we will hire

a Big Four accounting firm to audit every single recovery dollar

that the State receives. We will then have a second Big Four accounting firm audit the audit of the first firm. And finally, on top

of that, I directed the Louisiana Recovery Authority to appoint an

audit committee to add further oversight to this financial accountability process. I expect to account for every single penny of Federal money that is received by the State of Louisiana. I believe that

this process will enable us to do it in a way that inspires public

confidence.

Only with the confidence of the public and this Congress can we

properly restore New Orleans and south Louisiana, a task that we

believe is vital to the future of our Nation. I come to you today to
19

ask on behalf of hundreds of thousands of United States citizens

who call Louisiana home to continue your generous support of our

recovery efforts. Without the financial support of Congress and the

American people, we cannot adequately meet the challenges before

us.

But I am confident that with the support of our President and

each of you, we will be able to bring our people home, restore our

communities and reunite our families in a stronger, more vibrant

Louisiana.

President Bush has repeatedly expressed his desire that we succeed in these rebuilding and restoration efforts. He is fully committed and Louisiana appreciates his commitment.

That is the awesome task before us. And I hope each of you will

become our partners in this historic undertaking, and I appreciate

the opportunity to speak to you today. Thank you.

Mr. DUNCAN. Thank you very much, Governor Blanco. We will

have some questions for you. This is, as you know, a joint hearing

of the Subcommittee on Water Resources and Environment, which

oversees, among other things, the Army Corps and the EPA. Then

the Subcommittee on Economic Development, Public Buildings and

Emergency Management, which has oversight jurisdiction over

FEMA and other areas, and certainly economic development and

Federal Government buildings, that are also great concerns.

Co-chairing this hearing with me is Chairman Bill Shuster, who

was one of the first members of Congress to go to the scene and

also accompanied us on the larger delegation that came down two

weeks ago today. I am going to yield my time for questions to

Chairman Shuster at this time.

Mr. SHUSTER. Thank you, Mr. Chairman. I appreciate that. Can

you hear me, Governor?

Governor BLANCO. Yes, I can.

Mr. SHUSTER. First of all, welcome. I thank you for appearing before us here today.

The first thing I would like to say is that there is no doubt in

my mind that this Nation and this Congress will support and send

billions of dollars, which we already have, to the Gulf Coast and

to Louisiana for the rebuilding effort. I think it is important that

we ask questions. The folks in my district, the rural district in

Pennsylvania and Pennsylvanians in general hear all about the rebuilding, and of course, as I said, I am sure we are going to be assisting, and I know people in Pennsylvania are ready to contribute

to the effort with their funds, with donations and with their time.

But again, the question that is imperative to ask is not only

about the rebuild, but what about what parts of New Orleans there

needs to be mitigation, what parts of New Orleans do we look at

and say, maybe it doesn’t make sense to rebuild them where they

are, maybe we need to put them in other places. I don’t hear a

plan, and I hope there is a plan put forward. Is there a process that

you will go through, you and the Mayor, I will ask the same question to the Mayor, is there a process that you are going to put forward to decide where it may not make sense to rebuild in certain

parts of New Orleans?

Look to the floods in 1993 in the Midwest, there were whole

towns that decided to move, because it didn’t make sense being
20

where they are. In my district in Pennsylvania, we are right now

going through mitigation where there are going to be eight to ten

houses that have decided they are going to move, because it doesn’t

make sense to be where they are or to spend the money to protect

those houses. The cost benefit isn’t there.

So can you talk a little bit about the plan or the process, if there

is one, for determining where to rebuild, where not to rebuild in

New Orleans?

Governor BLANCO. Chairman Shuster, I do appreciate your concerns and the generosity of the people of your district and the people of the United States. Indeed, Louisiana has been blessed to be

the beneficiary of so much outpouring from our fellow citizens.

We do know that there are some difficult decisions that have to

come before us. The Louisiana Recovery Authority and indeed the

Mayor’s own commission will be struggling with those particular

issues as we move through these next few months and few weeks.

We have the monumental task of simply creating order right

now. But those decisions are the kinds of decisions that are going

to be determined as the process evolves. We will be bringing in experts on land use initiatives, probably new construction concepts.

Indeed, I think the most important thing that we have to consider is how to create safer communities. People do not want to put

their lives in jeopardy, nor do they want to put their properties in

jeopardy.

So those issues will be coming before us in the next weeks and

months as we conclude our own groups of people doing this deep

analysis.

Mr. DUNCAN. Governor Blanco, this is Chairman Duncan again.

I was a little bit concerned about this, because they first told me,

when we first started this hearing this morning, that the hookup

was working fine. Then we lost it for a few minutes and then it

came back. We were able to hear your testimony perfectly, but for

some reason we are having a problem with both the video and the

sound system at this time.

They do tell me it is fixable. What we are going to do, I apologize

to you, but what we are going to do is we are going to have Mayor

Nagin present his testimony at this time. He is here with us in person. Hopefully, after Mayor Nagin finishes his testimony, we will

be able to get back with Governor Blanco.

We are very pleased to have the Honorable C. Ray Nagin, who

is the Mayor of New Orleans. He met with our delegation that journeyed to New Orleans two weeks ago, and we’re so honored and

pleased to have him here with us here today.

Mayor Nagin, you may begin your presentation.

Mayor NAGIN. Mr. Chairman and members of the Committee, I

want to thank you for holding this session this morning. It’s so

good to see some of you who visited New Orleans and had an opportunity to see first hand some of the devastation that has happened in this wonderful city.

I am in a very unique position from most, I was there from the

beginning. I strayed on the ground in New Orleans, I was among

the people, I know what happened, I saw it unfold. I was able to

impact it, hopefully history will say in a very positive manner.
21

We evacuated 1.5 million people from the region before the storm

hit. It will go down in history as the most successful evacuation

ever undertaken by this Country. You saw the complexities of this

evacuation when Hurricane Rita was approaching the Texas coast.

And you saw exactly what Louisiana has learned over the years in

doing evacuations and how smoothly ours has gone. So we have

something to share with the Nation as it relates to evacuations.

Ladies and gentlemen of this Committee, I have also had the opportunity to visit shelters throughout this Country. I have had the

opportunity to visit all of the shelters in the State of Louisiana. I

have also had the opportunity to visit the morgue that is in St. Gabriel in Louisiana. And I can tell you that it is an amazing thing

to see the process that is going on in our State. After evacuating

1.5 million people, we have about 1,000 confirmed deaths.

The thing that really got me when I visited the morgue, there

were 361 people, or bodies, that could not be identified. We are still

in the process of trying to identify them.

The other thing that struck me from looking at the statistics was

the media basically painted the death, the destruction and the misery as being mainly poor, black people. But when I went to the

morgue and saw what was happening, the people that were affected are just like you and I, they are black, they are white, they

are Hispanic. As a matter of fact, there is an even break of people

that died during the storm as it relates to African-American and

Caucasian. It is almost an even split.

This tragedy affected just about everyone. Katrina did not discriminate. It hit some of the poor areas of the City of New Orleans,

it hit some of the not so poor areas of the City of New Orleans.

There are lots of people and families that are hurting throughout

this Nation. The New Orleans diaspora extends over at least 44 different States. We probably have 600,000 people in hotel rooms

throughout this Country.

We are here today to basically ask you for expedited support. We

need New Orleans back. We need it back in its full form, and we

need your help as the Federal Government.

I was on Bourbon Street last night, I wasn’t at the strip clubs,

let me just make that clear. I was enjoying a nice meal at the

Bourbon Cafe, which is owned by the Brennans, a wonderful New

Orleans family. I did get a chance to view Bourbon Street, and it

was packed. There were lots of activities. There was a lady on a

balcony throwing beads down to some of the workers, and they

were having a great old time.

They really reminded me of what we all know and love about the

great City of New Orleans. That is that it is the most unique place

probably in the world.

I know there is great debate about whether we should or should

not rebuild. In my mind there is no question: we should rebuild.

We can have the debate about whether certain sections should

come up or not. But the great City of New Orleans that is so culturally unique, that has given this Country so much, whether it be

jazz, whether it be food, whether it be music, whether it be the

wonderful people that when you come to New Orleans they make

you feel so comfortable. There is no doubt we should rebuild.
22

And if we are going to start this discussion about whether we

should rebuild communities that have natural disasters that attack

them on a regular basis, I don’t think we want to go down that

road. Because then we would be talking about California that sits

on a fault line, or we would be talking about Florida that got hit

with six hurricanes, I think, last year. We would be talking about

the north that has snow blizzards and that devastates and causes

problems. This is a unique American icon.

And it deserves the cypriot from this Committee and this Congress. Because when nobody else wanted to drill oil off their coasts,

Louisiana did it. When nobody else wanted to drill for natural gas

and have salt domes, Louisiana did it. We are a very unique place

economically. We have a port that is strategically positioned for one

of the greatest land deals that ever happened, the Louisiana Purchase, that fueled this entire Country. This is a place that deserves

Federal support, and I am encouraging all of you to do it.

Just for the sake of background, the City of New Orleans and the

Port of New Orleans is the only deepwater port with access to six

class one rail lines. The Mississippi River transports a big percentage of the Nation’s oil and natural gas, probably 30 percent of the

domestically produced oil and gas. We are the top importer of five

different raw materials: steel, raw metals, natural rubber, plywood

and coffee.

When you look at our port from a strategic standpoint for the

Nation, if you look to the west and you see the west coast and you

see the ships that are coming in from various parts of the world,

and you see those ships docked for seven days before they can offload their cargo, and when you look at Miami to the east, and you

see their facilities pretty much at capacity, you truly start to appreciate how wonderful and how unique and how well positioned the

Port of New Orleans is.

Then when you talk to the grain farmers that harvested and are

looking for ways to get their grain to market, and then you have

the soybean farmers right behind them, getting ready to move their

products, and they have to come through the Port of New Orleans,

there is no doubt that we should rebuild.

My vision to rebuild New Orleans includes the citizens, the private sector and Government. Our top priority is securing a commitment now to upgrade our levee systems. This Congress, this Federal Government in my opinion should give us the cypriot to immediately upgrade our levee systems to make sure that we can withstand another Katrina or whatever the next one that comes, maybe

it is a Wilma, I hope not. We have already gone through the various cycles of a washington machine. Katrina was the wash cycle,

Rita was the rinse cycle. And I’m hoping that Wilma is not the spin

cycle.

But we have determined that we need hurricane protection, and

we need it in the worst way. But as we are thinking about the

levee systems, I would like this Congress to also consider our wetlands. Our wetlands provided us a significant amount of hurricane

protection. For every mile of wetlands, it provided us a subsidence

of least a foot of storm surge. And the big problem we had with

Katrina was not only the winds, but the storm surge that overtopped our levees. So we need your support with flood control.
23

To bring back New Orleans, we also must revitalize our business

climate. There are a couple of things I would like for you to consider as we are thinking about how we go about this recovery. I

urge you to establish a minimum funding formula that is based

upon the number of people affected and the number of buildings

damaged. That way we can assure that the dollars that are necessary go to the most affected areas.

I also encourage you to look at local workers and businesses and

make sure that they get an opportunity, a fair opportunity to participate in this rebuilding process. I am also asking for Congress

to establish a New Orleans, a Katrina tax recovery and jobs incentives zone that would allow us to create the incentives necessary

to jump start our economy.

We also need assistance as it relates to critical infrastructures,

like our universities, hospitals and businesses who need bridge assistance as they are out there, spread throughout the Country, and

trying to decide whether they want to come back.

One of the biggest struggles we had was dealing with how Federal dollars flow to our affected areas on a timely basis. We have

really had some struggles, and as a result of my total economy

being collapsed, I have no revenues coming in at the moment to

run city government. I have already laid off half of my work force,

which is about 3,000 workers, in the City of New Orleans, because

we have no revenues coming in.

I encourage, I strongly implore you to make some adjustments,

further adjustments to the Stafford Act that will allow for a government to continue to operate in the event of a catastrophic crisis

such as this. I know that you have made some progress, but we

still need further help.

On the transportation side, our transportation system has been

severely impacted. We lost a major bridge to the east, which I understand part of it has been restored. One of the other things I am

asking for is I need a rail system for future events that would allow

us to effectively move residents from the City of New Orleans to

as far away as Baton Rouge. We also need assistance to restore our

airport to pre-Katrina service levels. Right now we are limping

along and it is just not good enough.

Mr. DUNCAN. Mayor Nagin, we have just a few more minutes

with the Governor, so if you could take just a minute or two and

sum up, and then we will go back to the Governor.

Mayor NAGIN. I will sum up right quickly and say to you, ladies

and gentlemen, I know there has been lots of discussion and debate

about Louisiana and New Orleans as it relates to whether we can

handle the amount of money that the Congress is talking about

sending to us. I have no doubt we can do that.

Why don’t you just take a minute and google me, and you will

see that since I have been in office almost four years, my whole

focus has been on reform, reforming government, honesty and integrity. I think our Governor has also been about the same thing.

I have set up a 17 member commission of some of the best and

brightest, people of very high integrity in New Orleans. We promise and pledge to you that whatever money you send down, and I

am not going to get into a debate about whether it should be $50

billion, $100 billion or $250 billion. You make that decision and we
24

will work with you as the Congress to ensure that this money is

spent very well and you won’t have anything to worry about.

Thank you very much.

Mr. DUNCAN. Thank you very much, and we will go back to

Chairman Shuster, who was talking to the Governor. Then we will

go to the Ranking Member of the full Committee, Congressman

Oberstar, for any statement or comments.

Mr. SHUSTER. Thank you, Mr. Chairman.

Governor, we didn’t hear a lot of your response, but the question

was dealing with mitigation and with looking at what parts may

not make sense to rebuild. As I said, I want to also go back to the

beginning, I don’t think there is a debate in this Country about

whether to rebuild or not to rebuild. It is, are there parts of New

Orleans or parts of Mississippi and Louisiana that don’t make

sense to rebuild.

So if you could continue with your answer there, I would appreciate it.

Governor BLANCO. Those difficult decisions will be made in the

coming weeks and months. The Louisiana Recovery Authority that

I have appointed will be looking at a variety of strategies. We will

be talking to land use experts from around the Nation, and indeed,

from around the world to determine exactly what needs to happen

in the future.

I think that building codes will be certainly changed pretty dramatically to encourage different forms of housing units, for instance, or even building for business units. I think that right now,

we are not prepared to identify specifically anything new. This is

a gradual process that will come forth as we move through these

next weeks and these next months.

Mr. SHUSTER. Thank you. I obviously think that is what you

have to do. But for me, it is important that there is a process and

there is a critical eye looking at those different areas.

The other thing that I want to mention, make a statement, when

we talk about rebuilding the levees, as you build them up, you are

also going to have to build them out. I am not an engineer, but I

have talked to the Corps, we are going to displace people by building those levees up. So this is not a statement, it is a question that

you probably can’t answer, I don’t know if you are an engineer or

not.

But as we go up and we displace people, do we need to raise the

levees if we are going to displace people, and instead, not build

close to the levees at their present height and width, and do we

take those people out of the flood plain, the potential flood plain?

I don’t know that, and I think that is something we also need to

take a close look at.

Governor BLANCO. And I am not an engineer either, sir, but I

think that those questions are yet to be resolved. Each property

owner will also be making their own decisions as to whether or not

they feel it is appropriate to be building there or not. I think that

we will develop tools to address all of these concerns, and I think

many issues will become self-apparent.

Mr. SHUSTER. A final question, do you believe the creation of a

recovery czar, or there was also talk about a new Federal department modeled after the Tennessee Valley Authority, do you think
25

that is necessary for the rebuilding effort that will go on for the

next two or three years? What are your thoughts?

Governor BLANCO. Well, I think that Louisiana people want to be

self-empowered to determine all of the issues that come before us.

But indeed already, President Bush has named various people to

work with us and to be point people. It may become apparent that

we need a point person in Washington, so that we don’t have to be

disturbing a whole lot of otherwise very busy people, as we have

been doing.

But it would be good to have a coordinated effort.

Mr. SHUSTER. Thank you very much, Mr. Chairman.

Mr. DUNCAN. Thank you, Chairman Shuster. We are always

pleased to have the Ranking Member of the full Committee, the

senior member of the Committee, who also accompanied our delegation down to Louisiana, Mississippi and Alabama two weeks ago,

Mr. Oberstar.

Mr. OBERSTAR. Thank you, Mr. Chairman. We were very honored

to be there under your distinguished leadership and that of Chairman Shuster, and to be received by Mr. Baker, who displayed an

extraordinary command of the history and evolution of the flood

control and levee protections of New Orleans and the Gulf Coast

area.

Mayor Nagin, we are very honored to have your presence, and

the very distinguished presentation that you made to our delegation, ending on a note of sadness of having to go from our meeting

to a news conference to announce the laying off of half your community work force.

Governor Blanco, thank you for being with us from afar, and

Lieutenant Governor Landrieu, we have met on other occasions

when my wife and I have been in her home town, New Orleans.

The question of rebuilding New Orleans, this is a city that

taught America how to eat. It taught us to appreciate music, a jazz

form that Louie Armstrong brought to the beleaguered Soviet

Union, to the largest crowd that had ever been assembled to welcome a foreign visitor. It taught us to bridge cultures, Canada,

Spain, France. It taught us to bury our dead with a celebratory

march.

In the aftermath of September 11th, this Congress rushed to the Floor to appropriate $20 billion to help rebuild New York City, appropriately. Shortly after, another $5 billion to restore the economic

health of the airlines, another $10 billion in loan guarantees and

additional billions to rebuild a path, the subway system. There was

no question about how we are going to pay for it. There was no

question about whether, but only how to rebuild.

New York is a financial center and symbol to the world, and New

Orleans is a cultural center and symbol to at least four nations: the

U.S., Canada, Acadia, where I just visited recently, New Brunswick, and Spain and France. You led out a vision when we visited

with you in New Orleans. And we must not be quibbling about

where that money is going to come from. We will find a way to do

that.

What we need from you, from the Governor, the Lieutenant Governor, is your vision of where, how, what you are going to rebuild.

We will help you with the finances. That is our responsibility.
26

When the snows come in northern Minnesota in another three

weeks or so, that snow will be there until March. It doesn’t go

away. It is like your water, when the canal levees broke on 17th

and Industrial. The water stayed there, depressed the soil, created

further problems.

But when our snow leaves, it enriches the soil with the nitrogen

deposits, brings new growth. But when in Gulfport, 28 foot wave

surges blew in, photographs I took on that tour showed salt residue

left behind, killed the trees, killed the grass, blew everything off its

foundations, nothing like it. Cold weather in the norther climes, my

district and that of Chairman Young, and every fall the glacier

makes a return visit, in the spring it retreats. But that salt water

isn’t going to retreat. It’s going to be in that ground.

I will just tell you the story of Rosalie, who was my mother-inlaw’s caregiver until she, until Mary Denechaud passed away three

weeks before the hurricane. Rosalie works in New Orleans, lives in

Mississippi, drives back and forth. Lives in a trailer with an ailing

husband, many children. Her trailer was blown away by the storm.

She is now trying to care for her ailing husband on Baton Rouge

and for an aunt, a cousin, and 10 or 12 children of her extended

family in a trailer. She wants to rebuild her life and that of her

city, the city that she loves.

She is no different from the 250,000 or more, 300,000 plus who

have had to leave New Orleans. We should find a way for them to

come back, for New Orleans to come back, for Louisiana to rebuild,

this tragedy strikes, as you alluded to.

The corn farmers in Minnesota and Iowa, Illinois, Wisconsin, Nebraska and now the soybean farmers, because New Orleans is the

world’s most important grain export facility, they are the most important coffee import facility and sugar and other products. The

port is critical, community is vital and the debt of the Nation is

great. We owe it to the people to help them rebuild.

We did not ask when or how or what were the offsets when

Northridge earthquake struck, when San Francisco shook in 1989,

bridges collapsed. We didn’t ask where the money was going to

come from and whether it should be rebuilt or why do you want

to live on an earthquake fault, just how much is it going to cost

and how are you going to use the money. And that we should do

for New Orleans, for Gulfport, for Mobile, for all the people in the

path of weapons of nature of mass destruction.

Thank you, Mr. Chairman.

Mr. DUNCAN. Thank you very much, Mr. Oberstar.

The Vice Chairman of our Subcommittee is Dr. Boustany. We

will go to him for any questions he has at this time.

Mr. BOUSTANY. Thank you, Mr. Chairman.

Governor Blanco, welcome. It is good to see you. You mentioned

earlier transparency, and we were talking about money and so

forth, and you talked about the decline in tax revenues as a result

of the disaster, ranging anywhere from 20 to 30 percent. Can you

give us some indication of what the status is of the State’s finances

beyond that, and talk a little bit about the State’s rainy day fund,

what authority you have to tap into this, what is the legislature’s

authority and what is the intent for those funds?
27

Governor BLANCO. Well, the State does have a very strong and

solid rainy day fund. We also have one of the most tightly designed

access routes into that rainy day fund. It is locked by constitutional

demands.

We have to abide by the revenue estimating conference’s estimate, and it has to have an actual reduction from the previous

year. Of that, we can only get into one-third of it.

So in order to really access that money, which would be approximately maybe $400 million, and incidentally, we are looking at a

$1.5 billion shortfall in State revenues right now, but to access that

$400 million we would have to call for a legislative session, a constitutional amendment that would have to be passed by two-thirds

vote of both houses and then go to a vote of the people.

We are certainly looking at all this, but then we have problems

with our electoral process. When we are examining the situation

with regard to calling a statewide election, and we have one devastated region where our citizens are displaced across the United

States, and they are still Louisiana citizens who want to be able

to vote, we have a tremendous problem that we have to solve before we can go in to bringing it to a vote of the people.

Of course, the secretary of state, who is in charge of voting procedures, is looking carefully at all of these options and trying to discern what is appropriate, what is fair to all of the citizens of Louisiana, to the citizens who are the caretakers as well as the citizens

who have been displaced.

So nothing is exactly easy to accomplish in the environment that

we currently live in. Everything has something of a complication.

But indeed, we are going to be looking at all of these issues in

order to try and stabilize our own situation. We undoubtedly will

exhaust all resources that are available to the State of Louisiana,

not just the rainy day fund, but other funds that have been set

aside for very special and protected investments. I cannot even

imagine a greater time to define as a rainy day than what Louisiana is facing right now.

So again, Congressman Boustany, we thank you for the hard

work that you have done in order to make this effort sensible and

workable. But let it be known that the State of Louisiana is facing

extraordinary difficulties. Again, we believe a conservative estimate

of our shortfall on the State side of our revenue stream will be at

least $1.5 billion. That is approximately 20 or more percent of what

we normally realize from State collections as perhaps a $7.5 billion

revenue stream.

Now, again, let me say that is from the State side. We use a significant amount of our funds to attract Federal funds. So a significant amount of this money would be used to bring in more Federal

revenues in our ordinary world. When we have this shortfall on the

State side, that means that perhaps there would be $2 for every

$1 lost from the Federal revenue stream as well. So our situation

is even more complicated than what becomes initially apparent.

Mr. BOUSTANY. Governor, thank you for that answer. I think it

was important to elucidate more about the finances. It really shows

the dire straits that we are in as a State. I appreciate your hard

work.
28

One other quick question. You are proposing this commission to

work with you, and I know Mayor Nagin has a commission that

you are putting together. How do you envision those two working

together? Could you talk a little bit about that?

Governor BLANCO. I envision these two working together beautifully. Mayor Nagin and I are in regular conversations about it.

Just before I appointed mine, or a week or two before I appointed

mine, I contacted him and suggested that he appoint a point person

from his commission to work with ours. Indeed, he returned the invitation and we have done that.

We believe that it is important for the local communities, New

Orleans has been the leader in this, to appoint such commissions

all across south Louisiana in the dramatically affected areas in

order to focus local eyes on local recovery needs. This will be the

best tool that our State recovery team will be able to use, it will

be the best tool that we will have to understand the depths of the

problems at each local area. We want local participation. We want

their eyes and ears delivering to us the kinds of information that

we will need as we begin our deliberations.

My authority is a State authority. We have urban devastation,

certainly, in the Orleans region. But we have rural devastation

across the rest of south Louisiana. Every coastal parish and indeed

some inland parishes have been affected by the devastation of this

hurricane season.

So our needs are great. They spread far and wide. So my Louisiana Recovery Authority covers a lot of dimension, a lot of breadth

and width that the New Orleans group does not need to deal with.

But we do.

Mr. DUNCAN. Thank you very much, Dr. Boustany.

The first member here on the minority side was Mrs. Tauscher.

I am going to go to her and I apologize to other members, because

we do have to let Governor Blanco go after Mrs. Tauscher’s questions. Then we will go to Lieutenant Governor Landrieu and Mr.

Marsalis and back to the regular panel.

Mrs. Tauscher.

Mrs. TAUSCHER. Thank you, Mr. Chairman.

Governor, Lieutenant Governor, Mayor, and the many supporters

of the Gulf region, let me first of all send my condolences from the

people that I represent in California’s Tenth Congressional District

and reiterate our strong support for all of you, that we hope that

your folks can return home as soon as possible. I am very appreciative of your testimony.

I think we are all deeply concerned that first and foremost, that

their return be guaranteed by making sure that we do everything

we can to create a safe environment. And that is about making

sure that the levees are restored, way beyond where they were before, clearly, but also that we do all the good work to make sure

that the efforts of providing hope for people are really balanced

with understanding that there is a test that we have to pass. And

that test is that we are going to put together the best engineering

and the best people that can possibly assure that there is no doubt

that there will be no such thing as another situation that we lived

through with Katrina.
29

So let me offer my condolences and my hopes that we can continue to work together.

I don’t really have any questions, Mr. Chairman. I do want to

say one thing. I did spend 14 years on Wall Street as a very small

child. And I will tell you that it is a very big challenge that you

are facing. You have to do many things at once. You have to restore

a sense of hopefulness for people that have had devastating situations to them, loss of family, loss of their livelihoods, loss of their

homes, loss of their possessions and loss of hope.

Wall Street is a very tough place to operate. At the same time

that you are restoring hope, the pragmatism has to be there to

send a very clear signal to the financial markets, the bond markets

that you will return. You have to calibrate the sense of hopefulness

that you have to deliver with your heart with a very smart head.

All the things you have to do to make sure that people have a restoration of confidence that the business and vitality, that the travel

and tourism will return and return quickly, so that you can get

Wall Street and your creditors to stand by you.

I think that I understand from your presentation that you have

a keen awareness of you, so I think many of us are standing ready

to support that.

Mr. Chairman, I yield back. I want to say I appreciate that I

really appreciate that we had this hearing. I look forward to hearing the rest of the testimony, and good luck to all of you.

Mr. DUNCAN. Thank you very much.

To close out Governor Blanco’s portion, we are going to go to Ms.

Norton. She has some comments. Then one final question from Dr.

Boustany.

Ms. NORTON. Thank you very much. I thank Governor Blanco for

being with us and helping us as we try to decide how to help New

Orleans and the Gulf region.

I am impressed that there are mechanisms being put in place

ahead of time to avoid accountability problems such as the accountability panels, apparently more than one, you spoke of. I understand from testimony that was taken at the first hearing we had

that Louisiana’s legislative auditor is working, and inspector general, are working with the Department of Homeland Security Inspector General, Mr. Skinner, who testified before us, and that you

have dedicated 36 auditors to review transactions.

I do believe that is the kind of action ahead of time, and by the

way, I don’t know that our IGs regularly take action ahead of time,

that I think is very useful here.

My question goes to these various committees and authorities

that are beginning to come forward, because I think that of course

we want to see such action taken by the State and the city. I understand the relationship between the Louisiana authority and the

Bring New Orleans Back Authority. After all, the city is a creature

of the State and must work together with the State.

We have had testimony from a member of your delegation this

morning, Representative Baker, who testified concerning something

called the Louisiana Recovery Authority, who said that most of the

delegation was in agreement that there should be such an authority. I wonder if you have been consulted about this recovery, is it

authority or corporation? I am sorry, it is a corporation.
30

We are not sure who would be on that corporation. I think the

point of Representative Baker was to aid in the rebuilding effort

with mechanisms that perhaps would not be available otherwise, I

am not sure. But given the fact that this is yet another authority

or corporation, I wonder whether, how much consultation there is

with your entire delegation in the House and the Senate, and

whether these matters are matters that you have somebody here

working on with your delegation and whether you know anything

about this Recovery Corporation.

Governor BLANCO. Thank you. I do believe that there will be ongoing discussions about this, and many other kinds of organizations that may be necessary to fulfill our complete mission. I believe that the Louisiana Recovery Authority that I have created

must sit down with the members of Congress, and we plan to do

that very shortly, to discern what kinds of organizations might yet

be needed.

We don’t exclude any ideas at this point in time. We believe that

all good ideas must be put on the table for clear examination. I

think as each of our communities and the State and the Congress

develop a comprehensive plan, many of these authorities or commissions or initiatives may become self-apparent.

So right now, we don’t take anything off the table. We believe

that every good idea deserves examination, and coordination efforts

are important. We will be doing just that very thing, we will be coordinating our efforts with our members of Congress who indeed

are working very hard, each in their own way, to bring forth the

best concepts to try and identify the things that are necessary.

Ms. NORTON. Thank you, Mr. Chairman. That is my only question.

Mr. DUNCAN. All right, thank you, Ms. Norton

Dr. Boustany.

Mr. BOUSTANY. Thank you, Mr. Chairman.

I have two quick questions, and I would like to yield some time

to Mr. Baker so he could respond as well, if that is okay.

Mr. DUNCAN. Just make both of them in one question. We need

to move on as quickly as we can.

Mr. BOUSTANY. Yes, sir.

Governor Blanco, what has the State spent today and what percentage of the annual budget does that represent?

Governor BLANCO. Mr. Boustany, we have not put a dollar figure

on our expenditures, but we do know that money is running

through our hands very quickly, because of the situation that we

have been in as we speak. We have a hold on State spending, I put

a freeze on hiring, I put a freeze on spending of all kinds.

Everything has to be justified, and it has to be recovery-oriented

as we speak. But we have some expenditures that have not totally

been identified yet.

Mr. BOUSTANY. When did you call the special session?

Governor BLANCO. On November 6th.

Mr. BOUSTANY. Thank you. I want to yield to Mr. Baker.

Mr. BAKER. Just a brief statement, Mr. Chairman. With regard

to the recovery corporation as proposed, the State’s credit has already been impaired and the concept is to allow Federal resources

to issue public debt over a long period of time, enabling us to have
31

a year over year construction effort funded off budget, out of Congressional appropriation necessity.

I have visited with Mr. Copland, who is the person appointed by

Governor Blanco to coordinate the Katrina-Rita response, as to the

elements of the Recovery Corporation, and have shared the information available with their staffs in order to accommodate appropriate communication. I just suggest that in going forward, if we

are spending Federal resources on my State’s problems, we should

exhibit some accountability to Federal taxpayers as to how those

resources are deployed. Thus the reason for the Recovery Corporation, and I appreciate the gentlelady’s questions.

Mr. DUNCAN. All right. For closing comments to the Governor,

Ms. Johnson.

Ms. JOHNSON. Thank you very much, Mr. Chairman, and thank

you, Governor for appearing. We recognize that you are facing a

very difficult task and we will try to be supportive as we move

through this process. I look forward to the rest of the testimony.

Thank you.

Mr. DUNCAN. Thank you very much. Thank you, Governor Blanco, for being with us today.

Now we will go back to the regular panel, which of course still

includes Mayor Nagin, who can be here with us until noon. I would

like to introduce and thank him for being here, the Honorable

Mitchell J. Landrieu, who is the Lieutenant Governor of the State

of Louisiana, and Mr. Wynton Marsalis, who is a musician from

New York City, also, I understand, a native of New Orleans.

Governor Landrieu, you may begin your testimony.

Lt. Governor LANDRIEU. Mr. Chairman, members of the Committee, thank you so much for allowing me to be with you. It is a great

honor, of course, to be with Wynton Marsalis, Mayor Nagin, Governor Blanco, Congressman Jefferson and Congressman Baker earlier, and Congressman Boustany. Thank you for allowing me to be

here.

This, as you know, was truly an American tragedy. It requires

an American response. As Mayor Nagin said earlier, there were

some of us, me included, who were on the ground when this happened. If you go into some areas of Congressman Boustany’s district in Cameron Parish, there is not a building standing. I know

the same is true in the area of Mississippi and Bay St. Louis and

in Gulfport and in those areas. There are some neighborhoods in

New Orleans that do not exist any more.

But Mr. Chairman, I have a lot of missions this morning, and

unfortunately, as an ambassador of the State of Louisiana whose

job it is to help re-image the State to the Nation and to the rest

of the world, I would like to speak to two uncomfortable points, if

I might, because I would like to end the myths today.

There are some members of Congress and of course members all

over the Country that have said, you should not rebuild, because

for some reason New Orleans or south Louisiana is located in a not

very smart place. There are some who have said that we should not

send Louisiana any money because they are corrupt.

I think Congressman Oberstar spoke to the issues that basically

could fall under the heading of there but for the grace of God go

I. There have been many tremendous natural tragedies in this
32

Country that have decimated and obliterated areas. This Nation

has responded in a very real way.

I don’t recall there being any pushback in Mississippi, Texas or

New York post September 11th, or, if I might remind you, in 1976

when New York went bankrupt. So it is very curious to many of

us in Louisiana why the pushback is coming now. Hopefully we can

make the case to you that choosing not to rebuild the soul of America or the cradle of culture will be bad for the Nation and Louisiana

as well.

Secondly, I shall say to you more directly than the Mayor or the

Governor did that Louisiana does not have a corner on the market

in terms of public corruption. I should not have to remind you that

in the past ten years, governors of New Jersey, Connecticut, Rhode

Island, Arizona, Illinois, Ohio and Alabama have had their own

troubles with ethics and other matters. There are a number of

other public officials that are facing that now.

I should also remind you that members of this Committee can

take a look at the public integrity division section on the web site

at the Department of Justice, and I assure you that you will find

the same issues in your States as well. Just to give you a few in

the last ten years: California, 1,296; New York, 1,191; Illinois,

1,028; Florida, 719; Texas, 651, et cetera.

So I assure you, just as no member of Congress would like to

have themselves tainted by the actions of a few, nor do the people

of Louisiana. And on behalf of the people of Louisiana, I came to

assure you that those 4.3 million people are people of faith, family

and country. One point five million people were evacuated, 1,000

of our brothers and sisters and mothers and fathers are dead, 40

percent of our businesses are gone, and we would like to ask you

respectfully and as nicely as we possibly can to please, let us stay

focused on the issue at hand. The issue is whether or not you want

to rebuild one of the great States of America.

In an effort to do that, I would like to mention to you that we

understand that we are part of an area of the Country called the

New South. In the 1990s, most of the people that moved in this

Country, moved from outside of the Country into the Country

moved into the 14 lower southern States. This is an area of economic engine. It is really important to the rest of the Country and

some of those specific issues were addressed before.

I would like to say to you though that, with Wynton Marsalis sitting next to me, we fully understand that culture is a really important part of what it is that we do, as is tourism. This industry is

ready to stand up with your help. The tourism industry in Louisiana provides about $9.6 billion in the economy and 126,000 jobs.

On the cultural economy side, jobs provided by food, music and

things that were alluded to earlier represent about 144,000. We

have shortly after the storm come together with a national advisory

board and a local advisory board and come to you with a very direct and important plan that if funded can provide jobs today. As

a matter of fact, if we could find a way to work with FEMA to provide housing, we could provide 4,000 jobs starting tomorrow.

Most of our hotel rooms and restaurants will be open and operating on January 1st. One of the things we could do to jump start

the economy is to focus on the cultural assets of the State.
33

So many people have spoken about the soul of America. I talked

about how important culture is. Culture isn’t important just because it is fun, culture is important because it provides jobs. And

we do that about as well as anybody else in the Country.

So we come to you today to tell you that we are here to help ourselves. We are here to give you a transparent delivery system. We

are here to make sure that every dollar is well spent, and we are

here to make sure that it is well directed.

I thank you for your time.

Mr. DUNCAN. Thank you very much, Governor Landrieu. Governor Landrieu requested that he be accompanied by Mr. Marsalis,

and Mr. Marsalis, we are pleased to have you here with us. You

may give any statement you wish to make at this time.

Mr. MARSALIS. It is a great pleasure to be here, and an honor.

I must say it is important to understand about New Orleans culture and what we represent to the United Sates of America, the

amalgam of ideas that went into the building of New Orleans, the

combination of French, Spanish, West African, British, the things

that went into our city, what we created. And the Nation has

drunk from the stream of our culture for over 200 and something

years. Now it is time for us to seek support and for that to be recognized.

There is a point I like to make about Louis Armstrong. We know

he traveled around the world representing the United States of

America. And we know, of course, of his genius as a musician.

However, as a Nation, we have yet to embrace the actual fact of

his artistry and what he represented to the world in the way that

we perhaps should have done. We have not received the benefits

that come with recognizing such a great figure.

So now is the time for us to signal to the world that we are a

new United States of America. We have an opportunity to in fact

do things that will impact the culture of our Nation and bring people closer together. We are big on slogans, a lot of times we like

to come with the we are the world, feel good story. But underneath

that is nothing but tatters and stuff that is quite ugly.

I want us to keep in mind that our people are spread all over

the United States of America. These people are hurt and separated

from their families. They are dazed, shocked, confused. They need

to get a very clear signal from the leadership of our Country that

they are loved. They are being loved by people all over the Country,

individual people are doing all types of heroic things. But they need

to get a clear signal from our Government, from our leadership,

hey, we are with you.

There are two types of people in the culture business. One is the

culture from above. That is big organizations that you give money

to. They might ever meet the regular people. Then there is the culture from below. What makes New Orleans such a unique city in

the world is that our culture comes from the street up. We have

a combination of that elegance and wildness that is desired all over

the world. Beethoven had it, Picasso had it. That is why their art

endures. The Greeks had it. When we read Homer, that is what we

are reading. Odysseus was like this, but he also was like that.

So we have to understand that that combination of elegance and

wildness is important. In New Orleans, a lot of times we think of
34

us only as kind of frat boy kind of going to Bourbon Street and get

drunk. We are much more than that, and it is important for us to

make sure that that neighborhood infrastructure is maintained, because these are people who many times don’t have a voice that is

heard.

It is important when we are assigning this money, when we look

at things, I have to ask these committees to be vigilant and understanding that the urban renewal programs that we have had since

the 1950s, destroying neighborhoods of people, confusing them with

slums, and rebuilding them with big buildings with big parking

lots, we need to reverse a lot of that and be a part of the New

South.

I assure you, the people of New Orleans want to come back. If

I could tell you how many phone calls I get from people from home,

man, do something. We don’t know what. But it is not just the people with the big business interests who many times have the most

arrogance and carry the biggest stick. It’s a lot of the quiet people

that put their Mardi Gras Indian suit on, play that quiet gig in the

hotel, teach in elementary and middle schools.

You don’t see those people. Those people are very, very important. They are the fabric of our Nation. These are the people that

are our constituents everywhere. They are looking to us for a very

clear signal that we are going to do more than just give lip service

and give the money to somebody who is going to waste it. We are

about the people.

I assure you, when you look at a city like Newark, New Jersey,

what New Jersey PAC has done for the rebuilding of that city in

the last ten years, it is phenomenal. When you look at a city like

Vienna, and how they utilized the art of Beethoven and Mozart and

the Strausses, you get an idea of the power of the arts.

New Orleans represents that and more to our Nation. We have

never visited with the type of love and care that the music of Beethoven has been visited by the city of Vienna. But this is a grand

opportunity for us to do that. So I thank you for having me and

letting me speak. I assure you, when you invest in our culture in

New Orleans, you will not be disappointed.

Mr. DUNCAN. Thank you very much, Mr. Marsalis. And thank all

of the witnesses for being here.

I am trying to save my questions until later to give more members a chance to participate. But I do have one question at this

time. I have read several articles with all sorts of widely varying

estimates as to how much insurance is going to cover of the damage that was done. The costs range from $20 billion to $100 billion.

I wonder, Mayor Nagin, if you or Governor Landrieu can help us

on that. Are you still having trouble? I know there is some dispute

over whether this damage was caused by wind and the wind surge

or whether it was flood damage, which a lot of people apparently

did not have flood coverage. What can you tell us about that?

Mayor NAGIN. Well, what I can tell you is it is not a very pretty

picture. It is my understanding that the insurance companies are

estimating that they may only cover maybe a fifth of the property

damage that happened in New Orleans and in the region. Most

claims that are coming through are being processed only as flood

events. It is pretty curious to me that, when you think of floods,
35

you think of the Mississippi overflowing, because there was too

much snow up north and it overflowed the banks.

But this was a hurricane. Hurricane winds caused the storm

surge to flood New Orleans. It is a very difficult issue, and I understand that Mississippi is seeking some legal action. I am hoping

that the State of Louisiana will follow that lead.

Mr. DUNCAN. Governor?

Lt. Governor LANDRIEU. Mr. Chairman, Louisiana and Mississippi might be the only place where somebody would consider

themselves lucky if a tree fell on their house and they got flooded.

That is because that particular fact would allow you to recover

from your homeowner’s insurance and from your flood policy, because there is a loud noise coming from the insurance industry

about the issues that the Mayor just spoke about earlier. It is a

very difficult problem, as I said earlier, for many, many neighborhoods and large spots of land.

However, make no mistake about it, when there is homeowners

coverage and when there is property damage coverage, the insurance industry is stepping up to the plate. So when members of the

Committee speak about the private industry and the public industry, we are not just talking about Federal dollars, we are talking

about dollars from the private sector as well. Those issues are

being taken care of, but unfortunately, I think the Mayor is absolutely correct, it will only cover a very small portion because of the

onset of the damage and the position that some members in the insurance industry have taken.

Mr. DUNCAN. All right, Mr. Pascrell.

Mr. PASCRELL. I hope we are listening to the Lieutenant Governor and the Mayor as well as Wynton. I think that the entire situation in the Gulf hurricanes will shed a tremendous amount of

life and light on insurance policies, not only in the Gulf but

throughout the United States of America.

Let us shift the scene for a second up to New Jersey. I am interested that you mentioned us in your presentation, Lieutenant Governor.

[Laughter.]

Mr. PASCRELL. Seriously, we have had flooding in the past, we

have had eight days of rain and the people who have home insurance, many of them flooded out, many of them could not get flood

insurance because this is an act of God. And insurance policies

changed about ten years ago, because electric is needed, pumps

need to be used when you pump water that gets into your cellar.

I think we should take a look, this Committee should take a look

at not only helping, and we will help Louisiana, Mississippi and

the other States in the Gulf, but I think we need to take a total

examination of the insurance industry in this Country, of how it

has desolated insurance policies and not helped the homeowner.

Because you are going to find that many of the constituents in your

town, in your city, Mr. Mayor, their policies are to the wind right

now. It is no different in any other part of the Country.

So we have insurance and assurances, but they are not covering

the damage.

I have one question to ask of you, Mr. Mayor, about the schools

that have been damaged. It seems to me, from the reports that I
36

have read in depth, and I will be going next week, that the parochial schools are getting cleaned up, the areas, faster than the public schools. I want you to reassure this Committee that we are trying to give equal opportunity to everybody.

Mayor NAGIN. The school system is a very challenging situation

in the City of New Orleans. But I do have good news on both

fronts. Algiers, which is an area on the west bank of the river, was

virtually not damaged, not flooded. Both the private, parochial and

public schools are coming up in that area very quickly. As a matter

of fact, in the next week or so there will be public schools, at least

eight public schools open on that side of the river.

On the other side, where we had most of the flooding and damage, it is a little bit of a different story. Most of the public schools

that are talking about opening, as well as the private and parochial

schools, are targeting January 1 for limited offerings.

Our public school system was in crisis before the storm. Its buildings and its infrastructure was in severe disrepair. So in a way

Katrina cleansed us in a way where we can now focus on building

the types of structures for the children in our city.

But if I could just mention for a moment, we also have another

struggle, and that is our universities. Our universities also received

significant amounts of damage. The University of New Orleans I

think is getting ready to start up. Tulane University is trying to

get itself together.

But we have some historically black colleges that were really

devastated. Xavier University, which graduates more AfricanAmericans that go to medical school and become pharmacists than

anybody else in the Country. Dillard University, those two institutions, as well as Southern University of New Orleans, received significant damage and are struggling to get back on their feet.

Mr. PASCRELL. Would you agree, Mr. Mayor, mayor to mayor,

would you agree that, you understand the anxiety in Congress of

providing dollars and we are not sure what we are going to build

in New Orleans. I am sure you feel the same anxiety.

How do we get to that point as to what we want the shape of

the city, the contour of the city to be, and the city that you would

like, reflecting the culture, obviously, and reflecting the industry

that is there? How close are we, are our engineers to designing options that could be laid before the citizens of New Orleans to make

a decision as to what we want our own city to be like?

Mayor NAGIN. I think the vision of the city of New Orleans is to

basically rebuild it into something that is better than what we had

before. When I first flew around the city and saw the devastation,

I ended along the French Quarter, Tremayne and uptown areas. It

was like God placed a hedge around the city as it relates to its culturally unique aspects. Taking the people out, because the people

are really what makes New Orleans special.

So we have a foundation to build around. Everything west of the

Industrial Canal is ready to go to rebuild, where we can rebuild,

all the schools, we can have the best school system in America, we

can have transportation systems, we can continue to have the most

unique neighborhoods in New Orleans and in the world that we

have had before. And all that can be protected pretty quickly. The

Corps is saying that they are going to build the levee systems up
37

to 17 feet by June of next year. So we will have a pretty self-contained area to really grow and get our city back.

The question is, on the east bank of the Industrial Canal, which

had the most significant flooding, which is New Orleans East and

the Lower Ninth Ward, how do we protect that. And that question

has not been answered yet. But the rest of the city, we can rebuild,

we can make it one of the most liveable, unique cities in the world.

Mr. PASCRELL. Thank you, Mr. Mayor.

Mr. SHUSTER. [Presiding] The gentleman’s time has expired.

I know that the Mayor has about 15 more minutes, is that correct, Mr. Mayor?

Mayor NAGIN. Yes, sir.

Mr. SHUSTER. Okay, so we are going to adhere very closely to the

five minute rule.

I have two things, one a statement. I just want to make sure it

is very clear, because I have been one of those people talking about

the rebuilding effort. I have never said, and quite frankly, I don’t

know that I have heard anybody in public life say don’t build New

Orleans. It is, I think, we make sure we question, we would be abdicating our responsibility by saying, just give them the money, let

them build wherever they want to.

There are parts of New Orleans that we need to look at closely,

you need to look at. That is a question I am going to come back

to over and over again. Does it make sense to rebuild this part,

that part. There is no question in my mind New Orleans is important to this Nation, economically, culturally. So once again, I want

to make sure that, if you have heard anybody in public life say,

don’t rebuild New Orleans, let me know, because I would like to

talk to them.

One quick question I have for the Mayor. We were down there

two weeks ago and I know your problem with your revenues. It is

extremely important to you, I know, to get people to move back into

New Orleans.

Mayor NAGIN. Yes, sir.

Mr. SHUSTER. Is FEMA’s strategy on housing, long term, short

term, is that going to accomplish that? Can you talk about that just

a bit?

Mayor NAGIN. Short term, once we get the trailers and all the

regulation worked out, we should be able to repopulate pretty

quickly. What we are doing is identifying every available open

space in New Orleans, and we are trying to design, both from the

short term temporary living space as well as long term to go up

vertically and re-establish some of our unique neighborhoods.

Long term, I am not sure FEMA is set up to handle that. I think

that is where we do a hand-off, if you will, or a baton toss to HUD.

HUD will come in and hopefully help us with the long term housing needs that we have.

Right now, we think we can repopulate the city of New Orleans,

whereas pre-Katrina it was about 480,000 people, we think we can

quickly re-populate up to about 300,000 to 350,000 maybe. Beyond

that, we are going to need HUD’s assistance for more long term

housing.

Mr. SHUSTER. Do you feel fairly confident that FEMA’s strategy

to get up to that 350,000, 380,000 is going in the right direction?
38

Mayor NAGIN. We have a wonderful chief officer. His name is Admiral Allen. But I will tell you, if I have any recommendation to

anybody in the Federal Government right now, it is take a hard

look at FEMA and figure out how to reorganize that agency. It is

not modern enough, not updated enough and not quick enough to

deal with this type of crisis.

Mr. SHUSTER. Thank you. I will now to go Mr. Gilchrest for five

minutes.

Mr. GILCHREST. Thank you, Mr. Chairman.

Gentlemen, I want to compliment you on the work you have done

since the hurricane. I also want you to know that all of us up here,

mainly because of Richard Baker and Charlie Boustany, we feel the

depth of your sense of urgency for these issues. Mr. Marsalis, I can

play a couple of Irish songs on the piano, maybe we could get together some time and do a gig there in the French Quarter.

[Laughter.]

Mr. GILCHREST. I want to just quickly make a couple of points,

because I share Mr. Shuster’s sentiment about not only rebuilding

lower Louisiana, the Gulf of Mexico, but there is an extraordinary

opportunity for the rest of the Country to see what you do in Louisiana so that human activity does not have to be grossly incompatible with nature’s design, and when a storm hits, that storm tragedy is exacerbated.

But what you can do, and what we can watch and learn from,

is show how human activity can be compatible with nature’s design. And you are working on that with 2050, you are working on

that with Louisiana Coastal Restoration. You are putting these

commissions together.

Here is what we need to continue to follow up on, so we can be

of assistance. FEMA studied storms between 1972 and 2005 and

found in the Gulf of Mexico, Louisiana, Alabama, and Mississippi,

are most likely to receive the most devastation from these storms.

The Corps of Engineers, U.S. Geological Survey, NOAA, a whole

range of Federal agencies have said that if nothing is done, and

you know this, by 2050, 500 square miles of coast line is going to

be lost. As much as 800,000 square acres is going to be lost.

We have also heard that under the present plan, the best that

can be done will be to restore half of that under these commission

recommendations. We think we want to do more than half.

But what we are dealing with up here in Congress is how to appropriate money with the best available science so that we can protect New Orleans, the oil and gas infrastructure, the enormous

fisheries that you have there, the coastal communities. What we

are facing, though, is an understanding of what to do about sea

level rise, subsidence, levees, where is it appropriate to have canals, what kinds of storms are going to be coming through there

to impact that. Plate tectonics underneath New Orleans, underneath about 600 feet of mud, that creates more instability with the

levees. The coastal barrier islands.

So all of these issues, we don’t have control over sea level rise.

We don’t have control over storms and we don’t have control over

plate tectonics.

So the sense of urgency that we have, and I represent the Chesapeake Bay. I know most often, including myself, there is a dis-
39

connect between the sound fundamentals of those scientific researchers and then what elected officials want to do. So we feel the

sense of urgency. You can be a laboratory for the United States on

how to deal with subsidence, how to deal with the re-engineering

of the Mississippi River, how to deal with the coastal wetlands

which are those buffers that will protect the infrastructure for oil

and gas. Ninety percent of the fisheries spawn in the wetlands that

are caught in the Gulf of Mexico.

I represent a beautiful area that I want to restore and benefit.

And I think we will be looking to the coastal areas of Louisiana

from Lafayette or New Orleans on down on telling us how this all

can be done.

Mayor NAGIN. My comments to that are, I agree with you, I

think we can do something unique and teach the Nation. I think

this Nation has a wonderful Corps of Engineers, and they are very

talented in what they do. I have seen the wonderful work they do

with the Mississippi. I saw the work they did after the storm event.

And the issue is whether the Nation has the will to give them the

resources they need to protect the coast line.

The Corps’ budget has been cut over the past, since I have been

in office three or four years, every year I come up here to try and

get a plus-up to make sure that the Corps has the resources that

it needs. This can be fixed. We have people from Holland, from

Germany, we have the Corps of Engineers, we have the best minds

in the Country working on this particular challenge right now.

They can fix this. We can protect this area, but it is going to take

some resources.

Lt. Governor LANDRIEU. Mr. Chairman, I would agree with you,

Congressman. And I agree with the Mayor. I really do believe that

it is a matter of will power. It is a matter of money. And of course,

it is a matter of accountability.

I thank you for your comments about the need to rebuild this

metropolitan area of New Orleans. If we can get us past that issue

so we don’t have to discuss it any more and get into the how to,

I think the idea of becoming a laboratory of democracy, if you will,

for the Nation, is a very good one. And I think that we have some

wonderful opportunities to address not only wetlands, not only address the energy issues that we face, but poverty as well, which of

course has become a major issue brought to the forefront.

So I think everybody in Louisiana, the Mayor, the Governor, the

Congressional delegation, all the elected officials and the people

stand ready to work with you hand in hand, to make sure that you

rebuild it, as the Mayor said, better than it was before.

Mayor NAGIN. Can I just make one other comment? There is a

new phenomenon that I just started reading about called the loop

current. I think this panel may want to study it a little bit.

The question I have always asked is, what caused this hurricane

to be so powerful and to have such momentum when it hit the

coast. I have talked to Max Mayfield at the Hurricane Center a little bit about this. What is happening is there is a new phenomenon

of warm water that is coming from the Caribbean around Cuba and

entering the Gulf of Mexico. Normally when a hurricane hits the

Gulf, it hits the warm waters and then when it gets close to the
40

coast, the waters are cooler so that the hurricane starts to dissipate.

This new phenomenon has warm water that instead of just being

on the surface a couple of feet deep it goes down 200 or 300 feet

deep. So when a hurricane hits that warm water, it’s like throwing

gasoline on a fire. So I make this point just to tell you that even

though the Corps is saying, Mississippi, Alabama and Louisiana is

now in danger of having a catastrophe, with this new loop current,

it is going to impact Florida, Texas and every State along the Gulf

coast. We need to give the Corps the resources to make sure that

this Nation is protected more fully.

Mr. SHUSTER. I would now like to recognize the Ranking Member

of the Economic Development and Emergency Management Subcommittee, Ms. Norton.

Ms. NORTON. Thank you, Mr. Chairman.

If I may say, the Chairman is right, no one in our Subcommittee

has ever suggested that the great City of New Orleans not be rebuilt. But what gives rise to this concern or the kind of comments

that were reported made by a member of the other body, I am not

humorous when I suggest we should turn it back to what it was,

a wetland.

I am not going to ask that this remark and other slanderous remarks of this member of the other body, I don’t think he said this

on the Senate Floor or any such remark on the House Floor. You

would have your words taken down. But that is the kind of remark

that makes it seem as though some parts of America, parts like

this vital region that we depend upon in so many respects, are not

worth recovering. It is not a serious remark, although he said he

wasn’t being humorous.

I am not being entirely humorous when I look for, ask you a

question about quick repopulation. It is really based on testimony

from Lieutenant Governor Landrieu and Mayor Nagin. There will

be many benchmarks. For a short term benchmark, I want you to

know that a lot of folks out here, Mr. Marsalis, are hoping that

Mardi Gras will be a short term benchmark. Because I am serious

when I say that I think there will be Americans all over the Country that would like to come down there, use Mardi Gras as an excuse, some out of curiosity, some to have a good time, and some to

send to the world what we understand in this Country and the

world understands, and that is that New Orleans is the seat of the

only indigenous culture in our Country.

I want to ask about return strategies, because Mr. Mayor, you

talked about 361 bodies still unidentified. You said that your residents were in 44 States. We know that they were transported by

private and Federal transportation. Lieutenant Governor Landrieu

indicated that 4,000 jobs could be filled tomorrow if there was adequate housing for them.

I want to ask about getting that housing, whether it is trailers,

and I know the dangers of these trailers, or what. Because we have

read, or perhaps it is an urban myth, that there are signing bonuses for people to take minimum wage jobs in fast food restaurants.

Mayor NAGIN. It is true.
41

Ms. NORTON. I am not sure the word is out here. I want to know

what FEMA or this Subcommittee can do to get 4,000 people back

to New Orleans to take those jobs right away. I want to know, Mr.

Mayor, how you are identifying the residents who are scattered

through 44 Sates so they can be identified and know about things

like 4,000 jobs that could be filled tomorrow.

Mayor NAGIN. That is a lot of questions. I will try and answer

them as best I can.

With the diaspora of New Orleaneans all over the Country, I

have been asking the question of where did they go. FEMA has

provided us with a map, a map which basically has identified

where New Orleaneans are based upon when they have applied for

FEMA benefits. So we do have addresses and information to contact our residents.

We have identified the top five cities that our residents are in.

And we are in the process of doing mailings, teleconferences to

start to reconnect and make sure that our residents understand the

opportunities and what’s really happening in the City of New Orleans.

As it relates to FEMA and how they can help, FEMA can do a

couple of things. They can really accelerate the amount of trailers

that they are moving into the New Orleans area. There are several

staging areas around the region where we have trailers on the

ground that could be expedited. Now, we are working to identify

lots and open green space to put them in there. But we really need

an expedited process.

The second area that they can help us with is that we have hotels coming online in the City of New Orleans where we could put

people up for temporary housing. FEMA has maybe, I don’t know,

the last number I heard was a couple of hundred thousand people

living in hotels around the Country. We can support the local economy by encouraging a lot of those people to come back and to do

away with the exemption of the Federal Government not paying

hotel-motel taxes. Because if you bring people back and they are

staying in New Orleans, it could help the local economy and the

local government to get up and running quickly.

Lt. Governor LANDRIEU. If I might, Mr. Chairman, a couple of

brief comments. Congresswoman, you mentioned comments that

folks made, and whether they are taken seriously or not here, they

scare the heck out of people in Louisiana, which is one of the reasons why I saw the need to direct the two issues that I did very

directly. I apologize for having to do that.

I have sat in the legislature. It is not a smart thing to come before a committee and slap the hand that feeds you. I am aware of

that. I did that for 16 years.

However, I have to tell you how seriously people in Louisiana

take those comments. If we could just get past those two points,

that we definitely are going to rebuild and that we are going to

have structures in place to make sure that the money is spent well,

we could get on about the business of making sure that rebuild a

great portion of our Country.

I should say to you, though, I have with us today folks from the

American Hotel and Lodging Association, Metropolitan Visitors

Convention Bureau, the National Restaurant Association, the Trav-
42

el Industry of America and the Travel Business Roundtable. We

have been working with the Mayor’s office and the Governor’s office

to stand up the tourism industry immediately.

One of the things we can do when we deal with, and this is a

tough issue, the front of the house, as Wynton talked about earlier,

most of the great things that people know about downtown New

Orleans, the French Quarter, the hotels, the restaurants, are ready

to open with some minimal work. Whether or not those take a priority over building levees, whether it takes a priority over putting

people in housing trailers, to stand up the chemical industry is a

difficult issue for the Mayor and the Governor to deal with.

But the industry that can provide these jobs now is ready, and

to have benchmarks for you. We believe that we are going to have

a semblance of Mardi Gras, to tell the Nation and the rest of the

world that Louisiana and New Orleans in particular is alive and

well. We believe that with very direct subsidies and partnership

with the private industry, we can host the jazz festival and the Essence festival and those things that people know about how Louisiana cultural economy can stand up very quickly. We have a very

detailed and direct plan that we have submitted to you through

your staff that we would commend to you for your review. There

will be some other testimony on that today.

Later in the week, I believe that our office and the Mayor’s office

and the head of FEMA are going to meet to speak specifically about

this housing issue dealing with the tourism industry. If we can get

that worked out, that would be great.

But it is going to require, as the Mayor alluded to, FEMA being

more flexible than they have been in the past. They are not, in my

opinion, prepared to deal with the long term housing issues that

we are going to have to face a year down the road. They may very

well be prepared to do it on the short term, but they are not quick

enough. We have to get down there with them, talk to them and

find a way to get it done so that we can put as many people to

work as is possible.

Mr. DUNCAN. Thank you, Governor.

Mayor, I know your timing, there was a request up here for two

more questions. Are you okay with that?

Mayor NAGIN. That’s fine, yes, sir.

Mr. DUNCAN. Mr. Dent from Pennsylvania.

Mr. DENT. Thank you, Mr. Chairman. I do have a question. Lieutenant Governor Landrieu, I do agree with you, we have to get to

the issue of how we rebuild the Gulf and Louisiana, New Orleans

in particular. I will pledge to work with you to rebuild your infrastructure and establish basic services, restore productive capabilities, your petrochemical industry, your port, financial services, fishing, agriculture, tourism. We certainly have to work to reclaim and

protect and preserve your rich culture, history and heritage.

But Mayor, I have read recently that you proposed expanded

gambling as part of New Orleans’ recovery. As an observer from

Pennsylvania, I really have to take issue with that. I think that is

about the last thing we need to do right down there now, looking

at all the needs that you have for the people there. I would like

you to explain to us what is the reason and logic in establishing

a casino, mecca or whatever, Las Vegas Lite, whatever you want
43

to call it, why that would be part of this recovery effort. I just don’t

see that as a priority for your region at this critical time after suffering this terrible calamity.

Mayor NAGIN. Congressman, that is an area that has been a

pretty good controversy. What happened was I wrote a letter to the

Governor. It outlined about five different aspects of what I was proposing. It centered around trying to jump start our economy. It focused on two key strengths that we have, tourism and the port of

New Orleans.

As it relates to the port, I was advocating some incentives for

driving jobs and opportunities with the port. I was also advocating

that we set up a recovery district where we had a 50 percent, both

Federal and State employer-employee tax credit for a period of time

until we got to pre-Katrina population levels.

As it relates to our tourism industry, I was looking at what was

happening with our convention center business and the cancellations and our inability to host conventions in the short term. We

are going to recover, but it is going to take us a little time to get

back. I looked at what was happening in the city and in the State.

We already had a land-based casino there, we had riverboat casinos, we have a lottery, we have bingo, we have cockfighting, you

name it. So this is nothing new for our region.

My concept was to look for a quick investment as it relates to the

larger hotels. Any hotel that had 500 rooms or above, and that they

would be allowed to convert. They is the only locations, and there

are about six or seven locations that would have been eligible. The

Governor didn’t like that idea, so it is pretty much dead.

Mr. DENT. Thank you. I just wanted to emphasize that we should

be focusing on the productive capabilities of your region, and focusing our efforts there as opposed to things that redistribute wealth.

Mayor NAGIN. I was trying to do both, Congressman, both productive and the things that people are a little uncomfortable with.

Mr. DENT. Thank you. I yield back the balance—can I yield the

balance of my time to Mr. Boozman?

Mr. SHUSTER. I don’t think you have any time left. Too quick on

the clock. I wish that was the way in the Michigan-Penn State

game on Saturday.

[Laughter.]

Mr. SHUSTER. We will now go to Mr. Taylor from Mississippi.

Mr. TAYLOR. Thank you, Mr. Chairman. I do want to thank our

distinguished panelists from Louisiana.

A couple of things, Lieutenant Governor. If you get the chance,

I would very much welcome if you could provide me with the number of Louisianans statewide who fell into this problem of not having flood insurance who are not in the flood plain yet who did flood,

and therefore being told by their wind coverage, you’re out of luck.

That has devastated tens of thousands of south Mississippians.

We are trying to build a case to allow those people to buy back

into the Federal flood insurance program, pay ten years’ past premiums and then be treated as if they had been in the program all

along. I think that will also affect a lot of Louisianans but I don’t

know. So again, off the top of your head, if you could get that information, I would greatly appreciate it.
44

Mayor Nagin and Lieutenant Governor, this is really going to affect both of you. You have a program called the Louisiana Coastal

Restoration Project. I very much support it. I think you would find

more support nationwide if you called it the Mississippi River Restoration Project, because quite frankly, it is bigger than just Louisiana.

One of the things that representing south Mississippi I would

like to bring to your attention is that none of the plans call for

growing the Louisiana coastal marshes on the Mississippi side of

the Mississippi River Gulf outlet. As someone who ran boats for the

Coast Guard, as someone who actually went to high school and college in New Orleans, I am a bit more familiar with the Mississippi

River Gulf outlet than most. I know that it has been under-utilized.

It has also been a barrier to trying to get some fresh water on the

marshes down in the St. Bernard Parish area.

I would really hope that since we are giving so much thought to

the future that you in your capacity as Mayor, you in your capacity

as Lieutenant Governor would give some serious consideration and

let the Mississippi River Gulf outlet just become a barge canal. It

is a heck of a lot of money to dredge it. It has contributed enormously to the saltwater intrusion problem. It becomes a problem

with trying to get fresh water over again on the Mississippi side,

State of Mississippi side of that body. I think we would all be better served if you would give some serious thought to that.

Second thing I would ask is, we are going to have some unique

opportunities for fresh water diversion, either in places like the

Violet Canal or even at the Industrial Canal locks. And I for one,

knowing that area, resent when the New York Times and others

called it a wasteful project to replace the Industrial Canal locks.

Those locks are close to a hundred year old. There is a heck of a

lot of barge traffic that has to wait for days to get through them.

It is important to the entire commerce of the Gulf Coast that they

be replaced.

But I would ask that they be replaced in a way that helps not

just Louisiana, but helps get some fresh water, again, from the

Mississippi River, starts rebuilding the coastal marshes south of

there. And Mayor, I very much agree with you, I do think part of

the problem that occurred, not only in Louisiana, but in Hancock

County, Mississippi, is because those marshes in St. Bernard are

due south of Hancock County. Had those marshes not eroded to the

point they have, they quite possibly could have lessened the impact

on places like Waveland and Bay St. Louis.

So I would like to hear your thoughts on that. As far as I am

concerned, we are in the same boat. And what is good for you is

going to be good for us.

Mayor NAGIN. Congressman, thank you for that question. Most

of the river issues are State issues, but I do have some pretty

strong opinions on them. I think the hurricane and the event that

has happened allows us a unique opportunity to revisit a lot of different things. For example, the State of Louisiana has multiple

dock boards and levee boards that should be in my opinion consolidated into one coordinated entity.

I think as we look to do that, we ought to look to coordinate with

Mississippi and our other neighboring States to make sure that
45

anything that’s done at the Mississippi does not negatively impact

either State, either Louisiana or Mississippi. It is a unique opportunity for us to come together with the Corps of Engineers and to

figure out how to make this river work for both States. I would be

very supportive of that.

Lt. Governor LANDRIEU. Congressman, if I might. This storm

forced you to look at words that you say before and understand

their true meaning. Unbelievable is a word that we say a lot that

I really now know and understand.

The other is, we are all in the same boat. That actually became

literally true, African-American and white, rich and poor. Truthfully, as the Mayor said, it really has opened up a lot of things that

people didn’t see before. Mississippi and Louisiana are really partners. So when we talk about the issue of thinking regionally so we

can compete globally, when I say that, I am actually talking about

partnering with Mississippi. We do that with your State with tourism. We now need to do it in a lot of other ways, and we are talking about coastal restoration.

On the issues of insurance, I am going to have the attorney general and the commissioner of insurance contact your office and give

you their update on what they are doing on that issue, to give you

the numbers. Later you are going to have testimony from Gary LaGrange, he is the head of the port, who is on top of the Mississippi

River Gulf outlet issue and he will tell you about his communications with other members of Congress and the State delegation to

give you the latest on the activity. I think you will be happy with

what he has to report to you.

Mr. SHUSTER. Thank you.

Mr. TAYLOR. Lieutenant Governor, while I have you, sir—

Mr. SHUSTER. The gentleman’s time has expired.

Mr. TAYLOR. I will be so quick, you can’t imagine.

Let’s do away, while we have the chance, with this idiotic retribution on we charge you too much for hunting licenses and you

all charge us too much for fishing licenses.

[Laughter.]

Lt. Governor LANDRIEU. It’s a deal.

Mr. TAYLOR. Thank you, Mr. Chairman.

Mr. SHUSTER. That was quick. That was like a shot.

If you would, Mayor, indulge us, just one more question. The

Ranking Member, Ms. Johnson, didn’t have a chance to ask a question. I believe you had one.

Ms. JOHNSON. Thank you very much, Mr. Chairman. My question is pretty simple to the Mayor. To read in the paper about 97

percent of the contracts being given to large companies outside the

State met me with a great deal of chagrin. Then having the opportunity to ask questions with some of them about whether or not

they gave any priority to hiring local people, their answer was very

unsatisfactory.

Has that improved any, one question, and number two, do you

think that starting with trying to build the levees very early will

be of any assistance?

Mayor NAGIN. I must be honest, I know I am not under oath, but

I still am implored to be very honest with you, the contract in process as it relates to this event is not going as well as you would ex-
46

pect. Local people in the City of New Orleans and in the State are

not participating in any significant level as it relates to the work

that needs to be done.

We have gotten some people’s attention, but the results are just

not there yet. There are lots of companies in and around the city

of New Orleans that could really use a hand up, not a handout.

And they are ready to go to work.

In addition to that, we have a significant number of working people outside of the State that want to come back and participate and

clean up their city. That has not worked.

It seems to me that the rules that were in place right after this

event favored quick contracting. When that happened, you had

$400 million contracts going out with no real oversight, no real

thought to how we can make this work for the community. I think

that needs to be investigated and looked at from a Congressional

standpoint to make sure that doesn’t happen again.

Lt. Governor LANDRIEU. I just would like to echo what the Mayor

has said, number one, no, it has not been fixed yet. Number two,

we are happy that the contracts are going to be rebid. Number

three, those five major contracts were let by the Federal Government, FEMA, not by the State of Louisiana or the local governments. We do think that if it was necessary for the first two weeks

to help get people out of the water and to be safe, perhaps that was

so. But now we are in a new day.

And as we think about redesign and rebuild, we really do have

to make sure that people in Louisiana have the ability, because we

certainly have the competence to rebuild the State.

Mr. SHUSTER. Ms. Johnson?

Ms. JOHNSON. In terms of the levees, my concern is that this

water is not going to cool under there for a while with global warming. We could be subjected to another hurricane. In rebuilding the

levees, do you consider that a high priority, and if so, how much

do you think it will cost?

Mayor NAGIN. I consider it to probably be if not the top priority

in the top three. The reason being is because most New Orleaneans

are still shell-shocked, if you will, from the event. They want the

comfort that the Federal Government is going to come in and help

us to make the environment safe for them to move back in, number

one, but also to invest money. If the insurance companies continue

on their current trend, there are lots of people that will be upside

down as it relates to their equity. They are going to have to make

the decision to come out of their pockets and reinvest in New Orleans, which most are willing to do. But they want to make sure that

the levee systems are going to be rebuilt adequately.

Mr. SHUSTER. I am getting the word that the Mayor has to go,

they are giving him the hook. I just want to say there is a lot of

work to be done, obviously, in New Orleans and here in Washington. You have tough work down there, we are going to be asking

tough questions. I appreciate you coming here, Mayor, before this

Committee. We talked about it three weeks ago and I asked you,

you said you would be there. I appreciate that greatly. Although I

have to say, I almost didn’t recognize you without your signature

golf shirt. But when I saw you drink your water, I knew it was you.

[Laughter.]
47

Mr. SHUSTER. Governor Landrieu, thank you for coming. I appreciate your fiery spirit. Myself coming from a long public service, I

appreciate your continuing on the tradition. Mr. Marsalis, thank

you. We invited you here, we thought you would give us a different

perspective, you did that eloquently. Your words will continue to

ring on.

The only thing I think that could have been done better is if you

had got that horn out and played us a tune. But other than that,

thank you all very much for coming. We appreciate your taking the

time. You are excused, and our next panel is invited to come to the

table.

Mr. St. Julien, Mr. Farmer, Mr. Perry, Mr. LaGrange, Mr.

Felmy, Mr. Ringo and Mr. Voison.

[Recess.]

Mr. SHUSTER. The Committee will come back to order.

Again, I want to welcome all of our second panel. We appreciate

your coming to Washington, traveling up here to testify and help

educate us and learn what your thoughts are as we move forward

in New Orleans and Louisiana and the Gulf Coast.

We will start with Mr. St. Julien. You are recognized for five

minutes. We would like for you to try to keep within that five

minute time frame. Your entire statements, all your entire statements, will be in the record. So Mr. St. Julien, proceed, please.

TESTIMONY OF MTUMISHI ST. JULIEN, EXECUTIVE DIRECTOR,

THE FINANCE AUTHORITY, NEW ORLEANS, LOUISIANA; PAUL

FARMER, EXECUTIVE DIRECTOR, AMERICAN PLANNING ASSOCIATION, WASHINGTON, D.C.; J. STEPHEN PERRY, PRESIDENT AND CEO, NEW ORLEANS METROPOLITAN CONVENTION AND VISITORS BUREAU; GARY P. LAGRANGE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, PORT OF NEW ORLEANS; JOHN FELMY, CHIEF ECONOMIST, AMERICAN PETROLEUM INSTITUTE, WASHINGTON, D.C.; JEROME RINGO,

CHAIR, NATIONAL WILDLIFE FEDERATION, LAKE CHARLES,

LOUISIANA; MICHAEL C. VOISIN, OWNER AND GENERAL

MANAGER, MOTIVATIT SEAFOODS, INC., HOUMA, LOUISIANA

Mr. ST. JULIEN. Members of the Committee, thank you so much.

I am Mtumishi St. Julien, Director of the Finance Agency for the

City of New Orleans.

I am serving because I have a lot of experience in housing,

served as general counsel for public housing, served on a Fannie

Mae affordable housing advisory board, served as president of a

Freddie Mac housing advisory board and also as the president of

the National Association of Local Housing Finance Agencies. But I

made a prepared presentation, but I am going to pass it in and just

skip it, because there is a lot of repetition of what has already been

said.

I think my role primarily right now is to reinforce certain key

issues that I think are important. Number one is, in addition to my

background, I too have a house in eastern New Orleans that was

overtaken by mold. I just came back this weekend from visiting my

mother who is temporarily housed in Baltimore and had to suffer

her tears and pleas of wanting to come back home. To be honest,

I don’t know what to do. I think a lot of people in New Orleans
48

don’t know what to do. I have a house here, don’t know where the

flood plains are, don’t know when the Corps of Engineers is coming

in. I have to make a decision whether I am renovating my house,

whether I am knocking it down, whether there is a possibility of

building. And that is a common issue.

There are four key points that I just want to make quickly so

these other panelists can speak. Number one, we can’t build in

New Orleans without the participation of its people. New Orleans

is New Orleans because of its people and its culture, and understand that. Therefore, when I hear issues of maybe a czar ought

to come in and deal with this redevelopment, we need to discus

that more and make sure that there is a process for full participation of its people. Otherwise, New Orleans is not going to be New

Orleans when these buildings are built.

The second issue is, we need to quickly provide housing for our

essential workers, housing that is suitable for their families. We

have police officers, fire, who have shown their loyalty, have shown

their courage during this crisis, and many of them not knowing

where their families are. Their families now are all over, yet they

are still loyal to the City of New Orleans, but the pressure is really

tight for them to continue working and living on a cruise ship and

trying to go back and forth and dealing with their families. We

need housing for the essential workers that is suitable for the families or otherwise, we will not have essential workers.

The same thing with our business community. They have essential workers, skilled workers who know their business, ready and

wanting to come back. But we need housing as quickly as possible

that is suitable for their families.

Thirdly, in our experience as a housing finance director, it has

been the private banks and financial institutions that have been

some of the most successful channels of distribution of services in

the area of housing. We need to get the local banks and the private

sector involved in the process. One experience I have with my service in Government has been, when Government handles money, I

call it the hourglass impact. It has a tendency for the goods to kind

of get stuck at that small waist of the hourglass.

Others have made an analogy of a cup that you will give us

something from a cup, but the distance to the lip is very, very difficult to get to. And again, we have to be very, very careful about

our channels of distribution. That is why I feel we need to look at

the banking structures that we have, because I think they are

going to be positive in providing those and distributing more efficiently those Federal funds than depending on new governmental

bureaucracies.

Finally, I have been hearing every day, people call me up, and

you have to understand that our people are having different conversations than are going on here. We want to thank you all for

the work that you are doing, it is very, very important work that

you are doing. And a lot of times, it is very difficult for our people

to react or to hear what is going on, and we hear rumors and so

forth.

The reason is, and I kind of made a poster to summarize what

it is, this is the experience that the people of the City of New Orleans and all the Gulf Coast have had, and that is, sorry, all circuits
49

are busy. When we left the City of New Orleans and all the people

left the Gulf Coast, this is what we heard from the phones when

we were trying to find our families. When we would try to call our

insurance adjusters, this is what we are getting today, sorry, all

circuits are busy.

When we were trying in the beginning to call FEMA and Red

Cross and so forth, this is what we continued to get. I hope that

Congress, and the evidence is clearly here that Congress is picking

up this phone and listening to our pleas for help. Therefore, the

final point that I wanted to reinforce that was basically stated before is, there is a sense of urgency here, we need your help, we are

willing to help in any way we can, do whatever is necessary to be

accountable to the Congress, because you have to be accountable to

your citizens. But we need the help now.

Thank you so much.

Mr. SHUSTER. Thank you, Mr. St. Julien.

I apologize for not introducing you as Executive Director in the

Finance Authority of New Orleans, Louisiana. In my haste I didn’t

do that, so thank you and thank you for your testimony.

Next is Mr. Paul Farmer, the Executive Director of the American

Planning Association. Mr. Farmer.

Mr. FARMER. Chairman Shuster and distinguished members of

both of the Subcommittees, thank you very much for hosting this

meeting here today, and I appreciate the opportunity to meet with

you today on this. I am Paul Farmer, the Executive Director of

APA. I appear today both as the CEO of the largest and oldest organization in the Country dedicated to the issues of planning and

public policy making, but also as a planner who worked in communities such as Pittsburgh and Minneapolis and now in Oregon.

I grew up in Shreveport, Louisiana, the other end of the State.

I was fascinated by changes in my city. My sister and I still own

the home that my granddad built in 1908. I was back there just

last week. We put on a workshop on disaster recovery and reconstruction for about 200 of our members from Mississippi and Louisiana and even from many other States around the Country. Our

members are very hard at work on recovery issues not only for this

disaster but in disasters as they occur around the Country.

Our members are involved in public sector and private sector

firms and activities and involved in creating plans that reflect local

values, that promote the wise stewardship of our resources and increase choices for how we live, work, play and how we increase the

quality of life. In short, it is the kind of transformation that we

heard Representative Jefferson refer to earlier today.

Hurricane Katrina and the subsequent flooding was among the

greatest urban disasters ever to occur in the U.S. The rebuilding

of New Orleans and the rest of the Gulf Coast will include some

of the most difficult planning issues of our time. Environmental

justice, racial equity, restoration of natural systems, infrastructure

repair, property acquisition and condemnation, environmental

cleanup, cultural heritage preservation, hazard mitigation, economic development and urban redevelopment, all on a scale that

we have not seen before and in a compressed time frame.

Planners are trained to examine a situation and provide a comprehensive perspective. I believe that is what our members are
50

bringing to this situation. The viewpoint enables planners to look

not just at intended consequences of an act, but the unintended

consequences of growth and change.

In planning on special skills, the planners are used to help diverse groups find common ground and mutually agreeable solutions

to community issues. A broad-based agreement is what is necessary

for a New Orleans rebirth to be sustained. We need the town hall

meetings, and those town hall meetings are going to be held in Dallas and Fort Worth and Shreveport and Jackson as well as New

Orleans. Yes, New Orleans is its people.

Planning decisions, I believe, are among the most essential of

local government responsibilities. All the actions flow from those

coordinating kinds of decisions that we see on the ground in New

Orleans and other communities. The Federal Government needs to

provide tools and assistance, organizations such as ours need to

also provide assistance.

I have always said that good planning facilitates responsible reinvestment. This investment of time, energy, creativity and of

course money, those are central to a city’s success. Good planning

is ultimately what drives investor confidence. Good planning is

what investors need to feel confident that their work will be rewarded, not undermined. You heard Governor Blanco speak earlier

about the comprehensive plan her Recovery Authority will develop.

And also as noted by Governor Blanco and some of you, rebuilding

levees only to pre-Katrina standards is not likely to instill investor

confidence. Those levees failed.

The types of levees must be reconsidered with earthen levees

possibly replacing the highway type walls that failed along the canals. And yes, Government must be prepared to use the tool of eminent domain, just as Representative Baker outlined, a tool of last

resort. But it has to remain an available tool.

Some property may have to be acquired for any property to have

value and for lives to be protected. We must also begin to implement the Coast 2050 plan. What is rebuilt, where rebuilding occurs

and what standards should be used are all challenging questions.

Where not to rebuild is equally important.

In the last decade, New Orleans set aside 20,000 acres. Representative Shuster has raised this issue several times today already. Other opportunities abound. That is just one example.

Schools can be brought back as true centers of the community,

showing the best of the innovative schools that are being developed

around the Country today.

Public spaces, too, I think, can be enhanced. We often think only

of the hard infrastructure, not of some of the other infrastructure

of our city. The area’s unique history and culture must be protected. Mr. Marsalis was quite eloquent on this point.

More here than any city in the Nation, historic structures are a

critical part of both culture and economy. New Orleans should not

sacrifice this key asset on the altar of expediency. We should use

New Orleans as a laboratory of innovation in these areas by expanding traditional rehabilitation tax credits to spur re-use of vital

structures in the city.
51

Additionally, we should include a residential historic tax credit

for New Orleans homeowners to assist in rebuilding in a way that

preserves the vitality of existing neighborhoods.

We also need to learn from elsewhere. Florida has shown how regional coordination of local decisions can be effective in post-disaster situations. Florida has also demonstrated the value of mandated comprehensive plans with the force of law. My home State

would be well to heed this lesson.

We have posted a number of resources on the web and I invite

you and your staff and others to access those. We are going to be

providing a team to assess New Orleans in rebuilding its planning

function. We will be providing other planning assistance teams to

the smaller communities of the Gulf Coast.

Now, effective disaster prevention, response and mitigation

measures can only occur with adequate and effective investment in

infrastructure for all our communities and in this region. So we

support pre-disaster mitigation grants, the hazard mitigation program and other initiatives of the Congress.

Lastly, I would suggest that Congress provide new support for

expanding the community planning capacity, particularly in these

kinds of post-disaster situations. That capacity is usually in short

supply when given the nature of the decisions to be made and coordinated.

This is not about a quick fix. Our efforts are sure to leave a lasting and permanent effect. This is precisely why we need to go

about this rebuilding process systematically and comprehensively,

but with a sense of urgency.

Our annual conference for our organization draws about 6,000

people. We were in San Francisco last year, and I invite you to San

Antonio this year. But I really invite you to join our conference in

2010 in New Orleans. Thank you.

Mr. SHUSTER. Thank you, Mr. Farmer.

Just a point to clarify. You were contracted with FEMA, or are

you contracted with the State?

Mr. FARMER. We do not have any contract with FEMA or the

State at this time. We are working through our local chapter, our

local members. We are providing our own financing from our foundation for some of the activities that we are engaged in.

Mr. SHUSTER. Okay, thank you.

Next, Mr. LaGrange, who is the President and Chief Executive

Officer of the Port of New Orleans. Mr. LaGrange, please proceed.

Mr. LAGRANGE. Thank you, Mr. Chairman and members of the

Subcommittee. Good afternoon to all of you. We truly appreciate

the opportunity to be heard here today.

I would be remiss if I didn’t take one second to put on my American Association of Port Authority chairman’s hat and to tell you

that overall, 22 ports were affected by both Katrina and Rita, collectively, from the golden triangle of southeast Texas all the way

over to Mobile. My former port, at Gulfport, just totally annihilated, as I am sure Congressman Taylor has alluded to and talked

to you about, and now the Port of New Orleans.

I can tell you that it is no small task, as you have heard so many

times and from so many good people today, to recover. But let me

tell you a little bit about the Port of New Orleans, the things that
52

you have already heard earlier today, some of them, it wasn’t just

an accident. Two hundred and two years ago, Thomas Jefferson

and Napoleon Bonaparte entered into some small degree of negotiations, and the result of that was the Louisiana Purchase, which as

we all recall from our history books was for the explicit purpose of

gaining access to the Port of New Orleans for the deliverance of

commerce and cargo into mid-America and up into the northeastern seaboard.

The Mississippi River is a natural resource that not a lot of ports

have and not a lot of ports share around the Country. We are very

fortunate. And we don’t take that for granted. It connects 15,000

miles of inland navigable waterways to the mouth of the Mississippi River.

In that same area, it serves 62 percent of the consumer spending

public of America and therefore has been dubbed the gateway to

America. It is first in the United States in five areas in imports.

It is the largest importer of steel in the United States, the largest

importer of rubber in the United States, the largest importer of

plywood and forest products in the United States. Sometimes the

largest importer of coffee. New York will argue that, so maybe we

are second this year. We will yield to New York, but we will get

it back next year, in the United States. And we are the largest certified London metal exchange in the United States, lead, copper,

zinc, aluminum and so on.

We are the largest exporter of poultry in the United States and

we are doubling in that capacity until that facility was totally annihilated in the recent storm with Katrina.

Thirty percent of the Port of New Orleans as we knew it on August 28th does not exist today. That is the bad news. The good

news is 70 percent does. And that 70 percent survived with moderate to severe wind damage and no flooding. The 30 percent that

didn’t is one of the main reasons that we are here today. Again,

if you are the fourth largest port in the United States in tonnage,

which is the Corps of Engineers’ standard, somebody has to step

up to the plate and recoup that particular cargo.

From the Port of New Orleans, we touch, as the Mayor alluded

to this morning, 28 States. We can reach 28 States without touching dry land. The net effect of that from an economic benefit standpoint annually is $37 billion. The net effect federally is $2.8 billion

in Federal taxes paid as a result of ships coming into the lower

Mississippi River and the Port of New Orleans. The net effect nationally is 380,000 jobs, nationally, in the United States, as a resort

of cargo flowing through the Port of New Orleans and the lower

Mississippi. If that 30 percent portion, according to our economists,

is not restored, we are in jeopardy of losing 200,000 of the 380,000

national jobs which have resulted indirectly and directly as a result

of those activities.

I would be very remiss if I didn’t give some really good, great

credit, because so much has not been given in the past, to Federal

agencies that stepped up to the plate in the early, early days. First

and foremost, the Maritime Administration John Jamien, Secretary

Mineta. On the night of the storm, I made a phone call to my old

former port director friend John Jamien from the Port of Detroit

in Wayne County. He said, what do you need. It occurred to me at
53

that point, because it was all knee-jerk reaction at that time, that

what we really needed to operate a port was really simple: manpower, electrical power and intermodal connectivity and power.

Now, the question was real quick, and John and I discussed that

on that very evening: how are we going to derive manpower? From

the Maritime Administration standpoint, through Secretary Mineta

and Donald Rumsfeld, within three days we were able to get a

green light to have six Maritime Administration vessels deployed

over the next two weeks to serve as floating dormitories for workers to bring back, without families and without pets, but to bring

workers back to the Port of NEW so that we could begin commerce

flowing to America again immediately.

Those six ships, four of the six are still there and today house

over 600 workers, stevedores, truck drivers, freight forwarders,

ships agents and on and on, all of the many types of people that

you need to operate a port facility.

The Army Corps of Engineers were johnny on the spot with their

surveys early on, the Coast Guard with their aids to navigation,

NOAA with their surveys. It was just a huge, huge effort on a lot

of folks’ part. And our goal, we were told the day after the storm

by the doubting Thomases that we would not get a ship back into

the Port of New Orleans for six months. Within eight days, the

@@##@@Likes Flyer was calling on the Port of NEW, in large part

thanks to the first MarAd ship arriving. That MarAd ship provided

housing for the first 45 workers who came back to work that ship

and to get commerce flowing in America and at the Port of NEW

again.

What is it going to take to restore the Port of NEW and get it

back to pre-Katrina days, August 28th? It is going to take roughly,

all together, private and public, roughly a little over $1 billion to

get everything rebuilt, relocated and put back into place. As far as

a public port authority at the dock board and the Port of New Orleans, what it is going to take us, it is not covered by insurance or

FEMA, is roughly $275 million of that $1 billion price tag. We are

talking about gantry cranes, folks, that cost $8 million to $10 million.

Mr. SHUSTER. Can I get you to summarize?

Mr. LAGRANGE. Summarize, I am doing it.

The Congressman left, so you will have to tell him for me, but

basically the Inner Harbor Navigation Canal was authorized by

Congress before I was playing Little League baseball in 1954. I am

going to be 60 Saturday. That tells you something. Construction

started on that project in 2002.

We have to escalate completion of that project. That is a Corp of

Engineers project which has been punily funded, unfortunately, by

OMB in the last several years. That is a solution to discontinuing

the dredging of the Mississippi River Gulf outlet. Please tell that

to Congressman Taylor for me.

Thank you.

Mr. SHUSTER. Thank you, Mr. LaGrange.

Next will be Mr. Perry, who is the President and CEO of the

New Orleans Metropolitan Convention and Visitors Bureau. Mr.

Perry, please proceed.

Mr. PERRY. Thank you, Mr. Shuster.
54

Ladies and gentlemen, thank you for the opportunity to appear

today. I appear here as the leader of New Orleans’ largest industry,

the tourism and hospitality industry, and its largest employer, with

over 85,000 people. That’s in the parish or county, only about

470,000 people in the metropolitan area, but about a million and

a half people.

Eighty-five thousand people, the working men and women of

New Orleans, work largely in our industry. Not only is it the driving economic force in the city, along with oil and gas and petrochemical and the port, but it also helps make up the texture and

the fabric of what New Orleans is. It drives quality of life, the restaurants, the plays, the theater the performers. What New Orleans

has meant as an indigenous creator of American culture resides

and is housed and is developed in our industry.

New Orleans is not a highly diversified economy. We are not an

Atlanta, a Houston or a Dallas. We have much more targeted industries, we are much less diversified, and unfortunately, disproportionately dependent upon our three core industries: the port,

the maritime industry, oil and gas, and tourism.

I know what you are trying to get today is a sense of what do

we do to rebuilt, what does the recovery mean, what does it take

to get there. In our industry, a $5 billion to $8 billion is dependent

at this point in time on probably an infusion of between $100 million to $200 million. That would probably be one of the wisest investments the Federal Government would ever make. Because with

that money, we can drive another $5 billion back into this economy

in the next 12 months, the next 24 months, another $5 billion to

$8 billion and on and on.

What has begun to be realized in New Orleans is that tourism

and hospitality is not just about the tourism business, but those

85,000 people are the depositors in the banks, they go to the hospitals, they purchase the goods and services, they buy the cars.

Without that part of the economy, New Orleans can’t live, it can’t

have its identity, it can’t have its culture.

Mr. Oberstar did a wonderful job today of talking about that,

with Mr. Marsalis. Because that has become not only what we are,

but it has become the economics of what we have become. In many

ways, tourism has become the new oil and gas as changes have occurred over the years.

How do we approach this? What is really needed and what is

necessary? We have to have marketing dollars. Because you know,

after 9/11, we provided a lot of money to help New York get back

on its feet from a marketing and imaging perspective. That is

frankly critical for us as well. It is critical across the entire Gulf

Coast, from Pensacola to Gulf Shores, Alabama to the Mississippi

Gulf Coast and to us. Ten million visitors, $5 billion to $8 billion,

and yet our infrastructure was some of the least damaged, some of

the least damaged in all of New Orleans. We are the group that

can get back the quickest and the fastest and bring the most jobs

and the most working people back.

What are the priorities sitting in this Committee and looking at

us and looking at the city and thinking, how do we tackle this massive task? In order, they are these. Number one, the levees have

to be restored and the city protected. Number two, we have to pro-
55

vide housing mechanisms to provide transitional and then eventually permanent housing to allow people to be repopulated, the city

to be repopulated and people to come home. But those won’t matter

if the tourism industry does not have the dollars to rebuild itself

and to bring the greatest sporting events of America, more

SuperBowls than any other city, more final fours, more great sporting events, more of the national, one of the great four convention

cities of America. Our economy is based on this.

The working people cannot come home until the housing is in

place. But even if the housing is in place, if their jobs are not back,

they can’t come back home.

So we have multiple billions of dollars of urban planning to do,

housing to engage in, levee construction to deal with. The people

are what matters. And those people can’t come home until tourism

and the cultural economy is rebuilt. Frankly, economic development does not occur in places where there are not great museums,

where there is not great art, not great sports and performances,

and where there are not great restaurants and culture and parks.

We have to have that to be able to survive and to drive the economy and the economic rebirth of the city. What we are asserting to you today is, the $200 million that is contained in this proposal for me will make you $8 billion back. It

will allow the repopulation of the city and it will be another piece

of the puzzle that brings together the rebirth and renaissance of

New Orleans as one of the great cities of America. Our partners

with the oil and gas industry, with the port, with the housing authority, with the Urban Land Institute, with McKenzie, all the different groups that are going to work with us, are absolutely critical

as a whole to make it work. The pieces have to come in order, but

we have to critically path plan and make each one go simultaneously.

We are prepared. We want you to know we are prepared. For us,

we give you unbelievable return on investment from the private

sector. I can tell you, as for seven years the chief of staff to the

former Republican Governor of Louisiana, the money is gone for us

to be able to turn to them. We looked there first, because that’s

where—we didn’t want to come here. We never envisioned our industry that we look at as the third Fortune 500 company in Louisiana coming here for funding.

But we know it is critical, because you heard from the Governor

today, $18 billion budget, only $7.5 billion of which is State general

fund and a $1.5 of it is gone, matched two and a half times by the

Federal Government. We have no resources to go to, no way to accelerate the rebuilding. We ask for your partnership, and we promise you phenomenal return on your investment, economically and

culturally.

Mr. SHUSTER. Thank you, Mr. Perry.

Next, Mr. Felmy, who is the Chief Economist at the American

Petroleum Institute. Mr. Felmy.

Mr. FELMY. Mr. Chairman, members of the Committee, thank

you very much. I am John Felmy, Chief Economist of the American

Petroleum Institute, the national trade association of the U.S. oil

and natural gas industry, representing all sectors of the industry,

including companies that make, transport and market gasoline.
56

The oil and natural gas industry recognizes the catastrophic impact of Hurricanes Katrina and Rita on millions of Americans. The

Gulf Coast is the very heartland of our industry, and New Orleans

has been a hub of our industry’s operations for many decades. We

are not just responding to this disaster, we are living it. Thousands

of our workers are also suffering the effects of living in New Orleans and throughout this devastated region they call home, many

now without their homes.

In concert with fire and police, friends and neighbors, suppliers

and government officials, our employees are restoring the production, bringing the refineries back online and restarting the pipelines. Our companies have made much progress in recovering from

the hurricanes, but much remains to be done. Let us remember,

this is a once in a century natural disaster of monumental impact.

It has been 90 years since two hurricanes of this magnitude struck

the Gulf Coast in the same year. And Katrina and Rita came within a month of one another. Their side by side impacts directly

touched 99 percent of the Gulf region production facilities.

In recent testimony before the House Budget Committee, the

Congressional Budget Office, CBO, estimated that the energy industry as a whole incurred between $18 billion and $31 billion in

capital losses from the two hurricanes. Only the housing industry

suffered comparable financial damage, according to CBO. Moreover, CBO estimates total capital losses across all industries and

consumer durable goods could be between $70 billion and $130 billion.

While many refineries, pipelines and other facilities are back in

operation, some facilities are still out of service, either because of

a lack of electricity or damage. Fuels are flowing to consumers nationwide, but below normal levels in some areas.

At this time, energy conservation is critically important. We support recent calls to conserve energy by President Bush, the Alliance

to Save Energy and others. API has run full page ads in major

metropolitan newspapers across the Nation, urging consumers to

use available supplies efficiently. We have urged common sense

steps, such as planning trips carefully, properly maintaining your

car, driving efficiently, and using energy wisely at home. Access to

crude oil from the Strategic Petroleum Reserve and various Government waivers to expedite the flow of fuels, particularly to emergency responders, has been vital in speeding recovery.

The Gulf Coast region includes some 4,000 offshore platforms in

Federal waters, two dozen refineries and hundreds of production,

transportation and marketing facilities. These Federal waters account for nearly 30 percent of the Nation’s crude oil production and

approximately 20 percent of natural gas production.

There is a reason for this geographic concentration. Government

policies have largely limited offshore exploration and production to

central and western Gulf. And our onshore facilities, including refineries, have been welcomed in communities in the region. Unfortunately, offshore oil and natural gas development has been barred

elsewhere, specifically the eastern portion of the Gulf and the entire Atlantic and Pacific coast.

In my written testimony I have provided you with our latest detailed information, along with some lessons we have learned. The
57

situation can change markedly from day to day. But in summary,

here is where we stand. Offshore shut-in oil production is about a

million barrels per day of production of crude oil, or 66 percent of

daily Gulf of Mexico production, down from 100 percent shut-in a

couple of weeks ago. Shut-in natural gas production is 5.5 billion

cubic feet per day, which is 55 percent of our daily Gulf production,

also down from 80.4 percent a couple of weeks ago.

Of the Nation’s refining capacity, 19 percent remains offline or

was restarting in the aftermath of Katrina and Rita. Refineries in

the Beaumont-Port Arthur are still down as is one in the Houston

area. Three Katrina-affected refineries remain down, a fourth is restarting. All refineries affected by hurricanes now have partial or

full power.

As of last Friday, all on-shore interstate oil pipelines have resumed 100 percent normal operating capacity. However, some systems continue to experience reduced availability of products to

transport.

We know that the hurricanes have had a nationwide impact

through skyrocketing prices for gasoline and other fuels. We understand the concerns consumers have expressed and our companies

are doing everything in their power and are working 24/7 to restore

operations and get supply back to normal levels. This work, wise

energy use by consumers and a do no harm approach by Government officials provides the quickest path to consumer relief and

tight supplies.

In conclusion, we remain focused on the serious work needed to

ensure Americans continue to get the fuel they need. We look forward to working with the Committee in that regard. And as a Penn

Stater, I made it in time.

[Laughter.]

Mr. SHUSTER. We didn’t make it in time on Saturday.

Thank you very much, Mr. Felmy.

Next, Mr. Ringo, who is the Chair of the National Wildlife Federation from Lake Charles, Louisiana. Please proceed, Mr. Ringo.

Mr. RINGO. Thank you, Mr. Chairman, distinguished Committee

members. Thank you for inviting me to provide testimony on behalf

of the National Wildlife Federation and our 4 million members and

supporters.

The rebuilding of New Orleans and the Gulf Coast is a top priority, not just for the National Wildlife Federation and our State affiliates, the Louisiana Wildlife Federation and the Mississippi

Wildlife Federation, but for me personally as a native and resident

of Louisiana and as a current evacuee of Hurricane Rita. I have a

longer written statement which I would like to submit for the

record of this hearing.

Louisiana has a well deserved reputation as a sportsman’s paradise. Like so many others from my State, I grew up fishing and

hunting, catching crabs, hunting for deer, goose and duck. I grew

up among people whose livelihoods were tied to the year’s catch of

fish, shrimp and oysters. So I feel very personally the dramatic loss

of up to 24 miles per year now of our wetlands that support our

abundant wildlife and fisheries and economic vitality of our State.

Congressmen, this number does not include the loss of Hurricane

Katrina. I have been at ground zero. I have seen the losses that
58

our coasts have suffered. Mr. Boustany, I was in Cameron Parish

two days ago and walked the streets of Cameron, as well as Holly

Beach, Louisiana. That reminded me of the morning after of 9/11

at ground zero. It was a terrible disaster. I went to visit the cemetery where my uncle was buried, and all the graves had floated

away. Some may never be found.

I also spent 20 years working in the petrochemical industry of

Louisiana, so I know well how important our costal wetlands are

to our Nation’s energy security. The fight to restore Louisiana’s

coast is vital to wildlife and fisheries, the oil and gas industry, and

the health and safety of our people. To achieve this, we need to restore the natural buffers that protect our communities and lessen

the destruction on our properties. The need to restore Louisiana’s

coast has only been amplified in the aftermath of Hurricane

Katrina.

As we set about the task of rebuilding New Orleans, which will

include strengthening levees against future storms, we must recognize equally the importance of restoring the vast complex of coastal

marshes and barrier islands that constitute our first line of defense. We call upon Congress to authorize and fund a bold, expedited restoration program in the next post-Katrina energy bill. National Wildlife Federation recommends a $5 billion down payment

on coastal restoration to go hand in hand with the rebuilding effort.

I won’t go into the details now, but if members of the Committee

would like to see the specifics of this recommendation, I would be

happy to share them with you. I cannot emphasize enough, both as

a conservationist and as a former industry worker, that we cannot

provide blanket waivers to our Nation’s fundamental environmental statutes for this multi-year rebuilding effort. We want the

citizens of New Orleans who return to their native city to know

that their water is safe to drink, their air to breathe and their back

yards are safe for their children to play in. Simply put, when we

rebuild New Orleans, we must rebuild it right.

Mr. Perry, to demonstrate National Wildlife Federation’s commitment to the great city, we have decided to continue our plans to

have our national convention in New Orleans this March.

Hurricane Katrina provided a stark wakeup call, not only to the

residents of New Orleans, but to Americans everywhere on how to

address water resource issues needed in this Country. In the aftermath of the storm, it has become clearer and clearer that our Nation does not have an objective, reliable system to prioritize its

water resource needs.

It has now been more than 22 years since the basic principles for

planting Federal water resource projects have been updated. It has

been increasingly shown that there is a strong need for greater

oversight and accountability in the planning process. We strongly

urge Congress to address these issues in the upcoming months to

provided needed direction in project planning and priority setting.

Furthermore, the need to restore Louisiana’s wetlands to absorb

the shock of future storms is all the more critical in the face of

global warming. Global warming is a reality today. For me and for

millions of Gulf Coast residents, global warming has hit home. As

we sit here this morning, yet another tropical storm brews in the
59

Caribbean, likely headed to the Gulf. Warmer ocean temperatures

are the equivalent of steroids in the storm.

Due to the intense warming of the waters of the Gulf, I fear that

we will never again see a storm below a category 3 level of intensity in the Gulf of Mexico.

In conclusion, I would like to emphasize that there is no question

that we must build the great city of New Orleans and other impacted communities along our Gulf Coast. But if we are to avoid

creating another generation of victims, we must rebuild it right. To

do this, any reconstruction effort must go hand in hand with the

ecologically sound restoration of coastal Louisiana. We must update

the Corps’ antiquated playbook while also establishing a set of criteria to help prioritize our Nation’s water projects.

All these efforts will be for naught if this Country does not address the looming threat of global warming. We call upon you, our

elected representatives, to embrace this long term task that recovery will be.

Thank you for this opportunity to testify. I will be happy to address whatever questions you may have. Thank you.

Mr. SHUSTER. Thank you, Mr. Ringo. Next, Mr. Voison. The

name of your company, you are the owner and general manager of?

Mr. VOISON. Motivatit.

Mr. SHUSTER. Okay, I guess I could have figured that out.

Motivatit Seafoods, Inc., from Louisiana. Thank you, sir, you may

proceed.

Mr. VOISON. Thank you, Mr. Shuster. I appreciate the opportunity of being here today.

I am the Chairman of the Louisiana Oyster Task Force. I am

also currently President of the Mollusk and Shellfish Committee of

the National Fisheries Institute, a board member of the Gulf Oyster Industry Council and the Louisiana Oyster Dealers and Growers Association.

I am a seventh generation oyster farmer and processor. Our farm

comprises approximately 14,000 acres of water bottoms in coastal

Louisiana which produce between 15 to 25 million pounds of inshell oysters annually. The State of Louisiana produces approximately 250 million in-shell pounds of oysters annually, or 750 million individual oysters. The Gulf States, combined with Louisiana,

produce annually approximately 500 million pounds of in-shell oysters, totalling approximately 1.5 billion individual oysters and

maintaining approximately 4.5 billion individual oysters in Gulf

producing areas at any one time.

Hurricanes Katrina and Rita dealt a harsh blow to the oyster

and seafood community of Louisiana and the Gulf Coast. Being a

seventh generation oysterman in Louisiana, our family has never

been impacted by a disaster as drastically as by these hurricanes.

It has been two months now that the oyster harvest in Louisiana

has been closed and shut down for the production of oysters.

Louisiana is the leading producer of oysters in the U.S., accounting for over 40 percent of the Nation’s oysters. Louisiana oysterman land the 250 million pounds I discussed earlier, or the 750

million individual oysters annually.

I have submitted testimony that is much longer than my discussion with you today. We have seven recommendations that we
60

would make. The first step that needs to be taken is to provide

funds to remove the debris from the navigational channels leading

to and from the area docks, St. Tammany Parish, St. Bernard Parish, Plaquemines, Jefferson, Lafourche and Terrebonne Parish in

southern Louisiana as well as Cameron Parish in southwestern

Louisiana. These State navigational channels are cluttered with debris and need to be cleaned.

Secondly, we need funds provided to public and State oyster reefs

that need to be cleaned from debris and lifted from under the silt

and dead marsh grass smothering the reefs. In 1992, following

Hurricane Andrew, Congress appropriated funds to clean oyster

reefs. The Department of Wildlife and Fisheries of Louisiana put

a plan in place allowing commercial fishermen, including oyster,

shrimp, crab and fin fisherman, to pull open rakes or dredges to

lift the reef and remove the marsh grass. That program was very

successful and needs to be re-implemented immediately today.

Third, we need funds to repair and rebuild seafood docks and dry

docks that are used to unload our catch, supply fuel and water to

our boats, and repair the vessels that harvest this bounteous crop.

Fourth, we need funds for cultch planting on damaged oyster

reefs using shells purchased from other oyster processing facilities,

dead reef material, crushed limestone or crushed concrete to re-establish the oyster reef and allow for a clean reef that will support

an oyster spat, that hopefully by next March we will be able to

have a recovery from.

Fifth, we need funds provided to install a State oyster hatchery

facility or similar purchase of seed from existing facilities to supplement the natural spawning this year and in future years to improve our productivity.

Sixth, we need funds for vessel owners, farmers, oyster and seafood processing facilities that suffered both physical and economic

losses caused by Hurricanes Katrina and Rita so we can get back

to providing jobs, planting, harvesting, selling oysters and seafood

and paying tax revenues to municipal, State and the Federal Government.

And seventh, we must provide funds to rebuild the levee systems

and restore the coast of Louisiana to protect the citizens of Louisiana from another catastrophic disaster that these hurricanes have

done to our home.

The Louisiana oyster and seafood community has suffered significant and physical losses due to Hurricanes Katrina and Rita.

Oyster and seafood farming, harvesting and processing are culturally important as an economic engine that has provided income

to coastal and municipal residents for hundreds of years. Coastal

erosion in Louisiana has been a problem for decades, and restoring

the coast in Louisiana is imperative to protect citizens in south

Louisiana, as well as numerous businesses that are important to

the U.S. economy. Providing funds to re-establish the oyster and

seafood business is a necessary beginning point to drive this economic engine, so that tourism as we know it in New Orleans can

begin again.

Representative Oberstar earlier said that New Orleans taught us

how to eat. I would add only a couple of words to that, it taught

us how to eat seafood.
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[Laughter.]

Mr. VOISON. When you go to New Orleans, that’s what you eat.

I will close with the words from Raul Ernesto, he said that most

people aren’t concerned with the storms that we run into, but are

concerned with whether or not we bring in the ship. I am here

today to ask you to help us bring in the ship. Thank you.

Mr. SHUSTER. Thank you, Mr. Voison, we appreciate that.

Might I inquire, how many people do you employ in your business?

Mr. VOISON. Approximately 150.

Mr. SHUSTER. Small business, then.

Mr. VOISON. Yes, sir.

Mr. SHUSTER. Thank you.

We are going to start with the questions, we are going to stick

to the five minute rule. If we need to, we will go to a second round.

I am going to start first with Mr. Boustany from Louisiana.

Mr. BOUSTANY. Thank you, Mr. Chairman.

Mr. Voison, I remember we had a conversation right after Hurricane Katrina and you talked about moving all the oysters beds to

western Louisiana, Gulf Coast, but that’s out of the question now.

The issue of debris removal is important, and it has been somewhat neglected. I have had some conversations with shrimpers

about this, because it affects their industry, it is going to affect

shipping and so forth. So it is something we are starting to look

at to figure out how to get contracting done in that area. I see it

as something very serious that needs to be approached.

Mr. Ringo, good to see you. I know we have had many conversations before, and I appreciate all your comments on coastal erosion

and those issues.

One question I have for you, I did read your testimony. You

talked about creating an independent commission within the Army

to handle restoration projects, coastal restoration projects. Do you

feel that the Army Corps cannot handle this? I want to pursue that

a little bit more with you.

Mr. RINGO. The National Wildlife Federation and the conservation community recognizes how important, and the great work that

the Corps of Engineers has done. What we also recognize is that

there are things they can do better.

We have been concerned about pork barrel spending in the past,

the selection of some of the programs that the Corps of engineers

has gotten involved in that we see have been counter-productive to

protecting. Surely they have done a lot more good things than bad.

Our position in the conservation community is that we want to

make sure that one, there is environmental impact consideration

given with respect to Corps projects; two, that we change the playbook that they have been using. The playbook that the Corps of

Engineers used in selecting projects and implementing its projects

has not been updated since 1983. So we have an antiquated playbook that we are using.

So we really just want the Corps of Engineers to improve upon

its processes and how it moves forward to better the conditions of

our State and protecting our rivers.

Mr. BOUSTANY. Thank you.
62

Mr. Felmy, I know certainly looking at the energy industry, it is

concentrated in the Gulf Coast and Louisiana has played a major

role in that over the years. We have the Henry hub down there,

which sets basically spot prices and future prices for natural gas.

I think it accounts for 49 percent of natural gas production in the

Country.

You mentioned spreading our infrastructure out, but we have politically been unable to get that done. So we have to focus for now

on how do we protect what we’ve got down there in the Gulf and

also how do we speed up the process. We’ve got an interdependence, when you’re looking at rigs, to pipelines to refineries, each of

these steps requires multiple steps to get back online.

What are you doing as an industry to improve and speed up that

process? Because I know when Ivan came through, I think we are

still dealing with some of the aftermath of Ivan.

Mr. FELMY. That is correct, Congressman. We are working very

hard across all dimensions trying to restore those facilities. Because of course, it is our line of business. If you are not operating,

you are not making any money and you are not proceeding with

what you need to do for your shareholders.

It is a function of damage. Electricity was a very big concern initially, because without power you can’t really do anything, whether

it be a pipeline or a refinery or a gas processing plant or anything

along the way. Now it is a question of bringing the facilities back

online, both offshore, especially importantly the gas processing

plants going. Because without that processing, it is a huge problem

in terms of getting more gas supplies.

The story from the small natural gas that is perhaps the bigger

concern in terms of what we have going forward in the winter, because whereas in the case of oil, we can import more oil crude or

products, natural gas, we have a limited ability to increase imports

either from Canada or to get it more through the liquefied natural

gas terminals. There again, because of limitations on LNG terminals and so on, except in the Gulf, we have been faced with a difficult challenge there.

So we first had to find our people, we had to get places for them

to stay. We had to help them and their families. Then it is inspecting facilities, both on shore, offshore, above the water and then finally below the water, because if you don’t have your pipelines in

proper conditions, if you haven’t tested everything, you of course

can’t continue to produce.

So we are moving forward, but we still do have these large

shares of production offline.

Mr. BOUSTANY. I appreciate that. Anything Congress can do at

this stage to help expedite this?

Mr. FELMY. I think going forward we had some very helpful

things happen in terms of some of the fuels waivers that happened,

the SPR releases, certainly Congress has taken a step forward with

the first energy bill and now potentially some other legislation following on.

The key thing for making our infrastructure more robust, more

diverse and more sound is to be able to have more infrastructure.

So we need, we feel more permanent streamlining, more thoughtful
63

looking at where we can produce oil and gas in an environmentally

sound manner.

Mr. BOUSTANY. Thank you.

Mr. SHUSTER. Thank you. Next, Ms. Norton.

Ms. NORTON. Thank you very much, Mr. Chairman.

Mr. Voison, I really have a question for you about whether or not

one can incrementally bring back your industry so that people feel,

given the contamination issues, you are such the provider of seafood for our Country, that it is fit to consume.

I do want to ask Mr. St. Julien a question first, because I think

we ought to confront these notions that simply the press spins

around. The notion about the Ninth Ward, because we are told it

was so vulnerable, located so near where the levees broke. And yet

I know, we have read the testimony before you that the Mayor and

the Governor want all citizens to return to New Orleans.

I don’t know if New Orleans is so configured that the land is all

full up, as they say, or what. But may I ask you, if in planning the

city it would be possible to plan for a city of the same number of

residents, about half a million residents, without building in the

most vulnerable to natural disaster parts of the city?

Mr. ST. JULIEN. Thank you so much for that question. Your analogy of the lower Ninth Ward, let me start with the lower Ninth

Ward, so we can clearly understand what’s going on. Believe it or

not, this morning I got a call while I’m waiting in here from my

aunt who lives in the lower Ninth Ward, telling me that her adjuster is coming Monday and she wanted to make sure that I am

there to help her. She is 76 years old and so forth.

Ms. NORTON. Which brings up the question where people are

wiling to insure.

Mr. ST. JULIEN. That is correct. That key question is one of the

questions that I raised about my house. I just don’t know what to

do right now, as many other people do.

But the lower Ninth Ward, just to clarify, and I did see that article in the Washington Post, I thought the article was an accurate

article as to the breakdown of those areas that were considered a

flood zone that require insurance and those that did not. I used to

live on the second house from Caffan Avenue on Dauphine Street,

which is three blocks from the river, in the Holy Cross neighborhood. It is popularly in the press called the Lower Ninth, but really

that is two communities.

When you look on the river side of Claiborne Avenue, you have

a community that is extremely viable, historical, a lot of historical

buildings. In fact, my sister’s house is right there at the River Bend

Industrial Canal. We went over there, it is standing proud and tall

just like the old captains’ houses there, made of the very, very

thick cypress wood.

But I lived on Dauphine Street, and I have seen storms come in

and I have stood on my front porch and I have watched the water

go down Caffan Avenue and you could actually see the flow with

even whitecaps. Which tells me that the way the so-called lower

Ninth Ward is constructed is somewhat like 12 to 15 feet lower

than the area in the river.

So to answer these questions simply about the lower Ninth Ward

and whether people can come back or what should we do, these are
64

important questions. The distinction I am trying to make here is

you have two different communities, and let’s not oversimplify. You

have an area closer to Florida Avenue which is very, very low. And

yes, you are going to have water there continually. Yes, there is a

valid question on whether we should build close to that area or

what to do.

But yet, we must make sure that the people who invested so

much of their lives there are able to get real value so they can

move and settle somewhere else.

But yet, another area which is called the lower Ninth Ward in

the press, the Holy Cross neighborhood, is very, very important. If

I am not mistaken, that is the area where the slaughterhouse cases

were, and for those of us who are lawyers, I think the second case

in constitutional law were the slaughterhouse cases that we dealt

with. Then you have the old captains’ houses.

So it is a valid question that we have to raise about certain areas

of the community. I live east of New Orleans. That is a good 40

percent of the land mass. Again, we need to work hard in planning

and to come to decisions real fast so our people will have choices.

I am sorry I ran on, and I forgot the second part of your question.

Ms. NORTON. That’s all right. I just wanted to get that on the

record as to whether you thought that in fact planning could be

done to bring back a city of the same size.

Mr. ST. JULIEN. I’m sorry, that was the other one. The other

point I wanted to make, certainly in terms of policy and planning,

certainly the city of Portemon and several other cities have made

in terms of planning decisions to create greater density. We certainly can do that in the City of New Orleans, and certainly we believe that we have the technology and the will to rebuild, bring

that entire population back even though there might be certain

areas where we may have to do something different.

Mr. SHUSTER. Let me go to Mr. Gilchrest. We’ll come back to you,

Ms. Norton.

Mr. GILCHREST. That was a good question, Ms. Norton, and I enjoyed that answer.

I eat Chesapeake Bay oysters, but I know we import some Louisiana oysters, because our population is down significantly. We

don’t have shrimp, so I like to eat your shrimp and I like my crabs.

I just had a couple of your crabs last week. Charlie said they were

better. I don’t know.

[Laughter.]

Mr. GILCHREST. We use Old Bay, you use some Cajun mix. But

it is all pretty good.

I hope to import some nutria, roasted, once we get rid of ours.

I have been working with Billy Tauzin for a number of years, you

have a more significant problem with the nutria than we do up in

the DelMarVa Peninsula. And we don’t have anything like this. I

guess it is more difficult to fool the Marylanders about the taste

of these critters, but I guess you have better chefs.

I just wanted to compliment all of you on the extraordinary undertaking that you are now intimately involved in and the difficulties. I went down with Mr. Shuster a couple of weeks ago, I was

down again last week, I actually met Charlie’s brother in Lafay-
65

ette. We were joined together by a myriad of scientists, geologist,

hydrologists, climatologists, meteorologists, wetland biologists, you

name it, for three days of an intense discussion on the ecological

condition of the Gulf of Mexico and specifically the lower portion

of New Orleans.

There was conflict with the people who was giving us information. And Mr. Ringo, I would agree with you wholeheartedly that

the Corps of Engineers, as good as they are, need what I would

refer to as conciliance. That is a unity of knowledge from different

disciplines, seeing this picture in its wholeness in order to restore,

and it is going to take an enormous amount of intellect and resources and cooperation.

I would recommend to everyone here, and forgive me for making

this recommendation, but I do it in all sincerity, to sit down with

a group of a myriad of scientific disciplines, you may know a lot

more about this than I do, to see what it is going to take to protect

the oil and gas industry, to protect the ports, to protect the convention center, to protect those communities. And to do that, the ecological conditions must be met for the waterfowl, for oysters, which

is wetlands.

What do you do about subsidence? What do you do about sea

level rise? What do you do about plate tectonics that create that

instability of the mud upon which the cities rest and the levees

rest? What do you do about all those canals which caused that

storm surge to be exacerbated? Where do you build the new levees?

You have an enormous task ahead, and I want to compliment

Charlie and Richard and all those other folks that are intimately

involved in it. We here want to be a part of the effort to help.

Every one of my constituents has either given to the Red Cross or

quite a few of them left everything and went down to help. They

are still doing it, they are still raising money, they are ready to go.

The Nation is doing that. The Nation wants to make sure, though,

and you folks are in a fishbowl right now, you are in a laboratory,

and when we appropriate funds to do all the myriad of restoration

projects that need to be taking place, our constituents want it done

right.

And our constituents want that sediment to build up and counteract that subsidence. They want the wetlands to protect the buffers. And I am not just saying that because I am a green, radical

moderate Republican. These are issues now that are in the forefront.

So Mr. Ringo, the idea that the Corps should be a part of a very

comprehensive group is absolutely correct and sound. And Mr.

Voison?

Mr. VOISON. Voison.

Mr. GILCHREST. We have more sort of Anglo-Saxon Methodists in

my neck of the woods.

[Laughter.]

Mr. GILCHREST. To restore the oyster industry, it is just absolutely vital. That is sort of the canary in the coal mine.

I will ask you, how long do you think it will take? You mentioned

five years. Is that about the time frame to put this back together?

Mr. VOISON. Thank you, Mr. Gilchrest. I appreciate the taste of

Maryland oysters, second only to Louisiana oysters.
66

We actually have a plan. It is a pretty intensive plan, and Mr.

Boustany is right, I ran into him up here after Katrina, and part

of that plan included areas that he is the representative of, and

then of course, Rita came. But this year, we will produce 100 billion pounds of in-shell oysters. We produce 250 million annually

now. We will produce 100 million this year, we didn’t totally lose

everything. We had a hard right and a hard left, and there is still

a little bit there that we are going to be able to produce.

I would say year two, with good investment, the debris removal

that Mr. Boustany talked about, some of the cultch planting and

re-seeding from hatcheries, and your States, by the way, the East

Coast Shellfish Growers Association, has sent us tremendous support, has stood up and said we will do whatever we can, using the

hatcheries that are helping the Chesapeake rebuild at this point.

The Pacific Coast Shellfish Growers, I was out at a meeting a couple of weeks ago out in Portland, making a presentation about the

impacts of Katrina, only to fly home to Rita. They stand in support

of what we are trying to accomplish in our rebuilding. They can’t

support the whole market.

Year two we will produce about 50 percent. Year three, given

again the intensive efforts in year one, we will probably be at 75

percent, year four, year five, given the energies that I think will

be put forth, we will probably be at about 120 percent. You might

say, how can you get at 120 percent of where you were. Well, the

western part of Louisiana, Mr. Boustany’s district, was kind of an

underutilized part of our State. In some areas where there is substantial resource, the State wasn’t even testing those areas.

You might ask, somebody mentioned, I think Ms. Norton maybe,

about the safety of seafood. One of our challenges in Louisiana was

that the State lab was in New Orleans. The State lab was closed

down. Mr. Boustany’s area in Lake Charles was the secondary lab,

and it got shut down with Hurricane Rita. So the FDA has come

in and brought in some mobile laboratories and are now doing substantial testing.

The waters are all testing very well. Some of the oysters still

have some high bacterial levels. We expect openings relatively soon

relating to the hurricanes. But the damage done by hurricanes is

much greater than just the bacteria. It is the scouring of the reefs,

the sedimentation and the placement of marsh grass.

We are going to be back, in fact, Mr. Gilchrest, your constituents

will suffer as a result of Hurricane Katrina, because we won’t be

sending as many oysters up, not just for the ability to consume

them, but your processing plants this winter will be challenged as

well. We want to get back online as quickly as we can. We have

a five year plan to total recovery.

Mr. SHUSTER. I thank the gentleman. If you would care to go to

another question, we will go to Ms. Norton first.

But before I go to Ms. Norton, the question she asked Mr. St.

Julien, I was not quite sure of your answer. There are two parts

to the Ninth Ward, correct?

Mr. ST. JULIEN. Correct. I was responding to the statements, especially in the press, that characterized the entire neighborhood as

the lower Ninth Ward, which raises the issue, should we rebuild.

Well, because one area, or maybe one quadrant of the lower Ninth
67

Ward is very, very low, we can’t oversimplify and say the entire

area cannot be rebuilt.

Mr. SHUSTER. That is what I want to get. So there is part of the

Ninth Ward that is at higher risk for flooding, part of it.

Mr. ST. JULIEN. Correct.

Mr. SHUSTER. That is what I wasn’t quite sure of. There are

other parts of the Ninth Ward that did not flood or got little flooding, is that correct? Or was it pretty much all flooded?

Mr. ST. JULIEN. Everything was flooded, but there were different

degrees. The structure of the houses were quite different, therefore

it had a different impact.

Mr. SHUSTER. Okay. Now I will yield to Ms. Norton for another

five minute round.

Ms. NORTON. Thank you very much, Mr. Chairman.

I think Mr. Voison testified that they will have a very substantial amount of their oyster crop ready and uncontaminated, ready

to ship this year. My concern about incrementalism may be satisfied by your answer.

My good friend from my region, that is a very nice conversation

we had. I am not sure he has been in competition with you on oysters, when you have 40 percent in the Country, second only to

Alaska in seafood. But I love to see that camaraderie here. I am

not sure if my concern to have seafood fixed in New Orleans is a

statement that gains interest, though, because I am in your region,

therefore I am not sure if I want to keep you at the head of the

competition.

Mr. GILCHREST. You can keep eating our oysters, but I will give

you this nutria, and a recipe book.

[Laughter.]

Ms. NORTON. I have a question based on the testimony from Mr.

LaGrange. I think that the Country has been impressed with understanding how important the port of New Orleans was. But I

really have to ask you, given how competitive our Country is, the

next question. Your testimony indicates your ports are used for

cargo for 28 States, it is hard to find an agricultural product that

does not use your port on the Mississippi or the Gulf ports, steel,

you are a transportation hub, your intermodal advantage.

Is there any indication that given the time it will take to get the

port back to where it was that you will lose some of this business?

In other words, how unique is the port? Can some of what you do

be essentially done by other ports? Is that what is likely to happen

in the interim when we are trying to get everything fixed, which

is of course a long term matter?

Mr. LAGRANGE. Yes, indeed, absolutely. The cargo, right now the

port of New Orleans is back up to about 38 or 40 percent of its capacity in terms of ship calls. Normally we have 40 to 50 ship calls

a week. Right now, this week we are going to see 18 or 19 ships

coming to the port.

So yes, they are going to Houston, they are going to Tampa, they

are going to Jacksonville, Port Everglades and Fort Lauderdale. We

are hoping, certainly, that they are going there temporarily. We are

in routine discussions almost on a daily basis with all of them, as

different terminals come back online, as the rails come back, as the
68

highways and the bridges tend to get repaired. That gets us that

access to mid-America and every other place that we need.

It is a unique situation, the Port of New Orleans, in that it is

the largest through-put port in the Country. Eighty percent of everything that comes into our port ends up in St. Louis, Memphis,

Chicago, Cincinnati, Pittsburgh, Tulsa. And 20 percent of that

product remains. Unlike, let’s say for example, Houston, because it

has a good consumer base, a bigger population, where 80 percent

of it remains to satisfy its market and the other 20 percent of it

is shipped out.

We think it is actually going to be every bit as good or even better. The reason I say that is because of a very unique opportunity,

and there aren’t a lot of opportunities these days that are being

presented to us. And that is over the next three to five years, all

of the relief aid that is coming into the port is causing us to create

distribution centers that we normally would not have had an opportunity to showcase the port and its other connectivity.

Three things that basically will bring a ship into a port, that is

the consumer base, number one, which we really don’t have, roughly a million people at best, metropolitan area. Number two is a distribution facility, and number three is that manufacturing base.

The only other exception to the case is what we have with the Mississippi River. We have to utilize that, that is our trump card.

But you are absolutely correct in your assumption that cargo will

be lost, at least in the interim, to other ports.

Ms. NORTON. I take it that when cargo goes to Houston or Tampa

or Jacksonville and the rest that they are going to a second best,

third best place that because of your intermodal advantages, because it looks like you serve a particular midwest part of our Country that they advantages of being less expensive, of having the

transportation hub would make it possible for you to lure back the

business that might otherwise be lost, and might otherwise cost the

consumer more in order to get it elsewhere.

Mr. LAGRANGE. You nailed it exactly. Two examples that were

given in our economic impact study of Katrina are steel. Again, all

that steel that comes into the Port of New Orleans is going to automotive plants, it is going to appliance manufacturing facilities.

That steel, the additional cost of shipping that steel if it goes to another alternate port is going to be on the average of $17 to $21 per

ton.

On the export side, 60 percent of all the grain that goes out of

the United States comes through the lower Mississippi River and

our port. The added cost to that grain is $15 to $18 per ton before

it departs to Asia. So just a couple of examples, you are right on

target with your analysis.

Mr. SHUSTER. And that is because you ship by water, which is

much cheaper than rail.

Mr. LAGRANGE. Exactly. Barge. Much cheaper to ship by barge.

In other instances, the alternative would be to land bridge it by

rail to the west coast, and of course that ups your rate.

Mr. SHUSTER. Mr. Boustany?

Mr. BOUSTANY. Thank you, Mr. Chairman.
69

Mr. LaGrange, I want to commend you on your efforts at the

port. You have done a great job. We read about some of the ports

early on and how quickly you were able to get things ramped up.

I understand from your testimony, you said the estimated costs to repair the damage is about $1 billion.

Mr. LAGRANGE. Yes. Not all of that is the public port authority,

though. That’s total. That’s everything. And some of that could be

achieved, we could relieve some of that with possibly some of the

tax incentive plans that have been proposed by Congress that you

all have been talking about. We have seen some draft bills that

have been prepared. That is about $350 million, $380 million. That

would come in rebuilding and relocating seven or nine of our major

customers from one point in the port to another location in the

port.

Mr. BOUSTANY. That gets to my question about private sources

and discussions you have had with businesses on the ground and

what they are willing to do to help pay for some of this recovery.

I take you are already in those conversations?

Mr. LAGRANGE. We are in the process right now. We are talking

to them, we are just beginning that process because we really, we

don’t want to be too premature, but we have to be prepared. We

are really not sure what is going to come out of Congress. So again,

would you do this, what are the different scenarios is what we are

trying to find out right now. What are your alternatives and what

are your options if this or this happens or this or this happens. It

really gets fairly complex as we talk to each and every one of them.

We know one of them is going to divert 50 percent of its containerized cargo to another port in another State, and they are going

to maintain a base of 50 or 60 percent in New Orleans. We may

never get that back.

Mr. BOUSTANY. Is that because they can’t get work force back on

the ground?

Mr. LAGRANGE. That is part of it, yes. The other part of it is that

it is going to take us, to build the new facilities, 18 months to 3

years, as we build new facilities, to relocate the ones that have

been totally devastated that are not there any more, by the way.

So that 18 months to 36 months period, needless to say, in the interim, we have a—we are probably going to get up to 70 or 80 percent within 6 months, but it is going to be really hard to ever

achieve 100 percent before 3 years.

Mr. BOUSTANY. Thank you very much.

Mr. SHUSTER. Mr. Farmer, exactly now how are you guys, your

association working with the State of Louisiana and New Orleans?

I’m not quite clear. I guess my concern is, are you supplementing

or are you going to be conflicting with the planning process that

is going on with the governmental planners?

Mr. FARMER. We are very much supplementing and coordinating

with. Nothing we are doing is any way going to replace. We

wouldn’t do that. We have members there, members of the New Orleans city planning department, for example, are members of our

organization.

We are looking to bring in expertise from around the Country,

New Orleans is going to be going through a period of development

of the type they haven’t seen in decades. So we have some mem-
70

bers who come from jurisdictions around the Country where more

rapid growth is sort of normal, so we will be assisting New Orleans

with how to handle that. We will be assisting the Mayor and his

various task forces with some of the other associations. You may

have heard, the Urban Land Institute, the American Institute of

Architects, we are collaborating with all of those again to make

sure that we are not in any way kind of stumbling over each other

or replacing any of those efforts.

Mr. SHUSTER. So you are doing it as a they are a member of your

association?

Mr. FARMER. Exactly. We are a membership association and we

provide a variety of books and workshops and the like. So we are

doing that collaboratively with our members in Mississippi and

Louisiana.

Mr. SHUSTER. Pre-Katrina, how would you assess the planning

capability infrastructure of New Orleans? I know they are members.

Mr. FARMER. I will give you a quantitative statistic. If we look

at members, and we do a certification process, also, nationwide, we

are the entity that certifies planners nationwide, New Orleans, or

Louisiana and Mississippi both are on sort of the low side of the

50 States when you look at per capita number of certified planners.

Colorado, for example, is at the high end.

As I said, it is my home State, I think it is fair that there has

not been a strong culture of planning or a strong culture of, in

many ways, governmental programs in the States. So I think that

is—because I understand it, for example, the disaster mitigation

plans that were required by Congress in the Act of 2000, what I

have been told by FEMA is that only 7 of the parishes of Louisiana

had those completed, only 3 counties in Mississippi had them completed. There are many States that have 100 percent completed.

Alabama had all but three counties completed.

So that gives you some idea, I think, of the planning capacity

issues before Katrina.

Mr. SHUSTER. Thank you.

Mr. Perry, you made the comment that the least affected industry in New Orleans was the tourism industry. Why is that?

Mr. PERRY. The least impacted infrastructure. The areas of the

French Quarter, the riverfront, the warehouse and arts district and

uptown of the Garden District had virtually no flooding, the most

easily recovered, the less building damage. We will have 95 percent

of the hotels back up and fully remediated and open by the first

week of January.

Mr. SHUSTER. Is that because they are above sea level or high

levels?

Mr. PERRY. It is slightly higher areas of the city. They were the

original areas that were settled, they were slightly higher. Part of

Canal Street got some water, the famous Boulevard, but it stopped

as it came about halfway down. The French Quarter only got a

very minor amount of water that cleared very quickly and had

none of the environmental issues that we had in some of the other

unfortunate neighborhood areas.

Mr. SHUSTER. I have read about four or five feet above sea level

is what the French Quarter is?
71

Mr. PERRY. That is correct.

Mr. SHUSTER. What about the buildings? When they built those

hotels, the ones that maybe did take water, were they in a better

situation because they planned, they built, they did the things necessary to avoid that type of damage?

Mr. PERRY. Most of the hotels actually came out very well, with

a couple of exceptions. The Hyatt, which you have seen on television, is closed down for a year. We have two other properties that

will be closed until next summer. But the rest of them really had

very little water damage. Mostly it was some windblown rain and

normal storm damage. You are looking at 30 to 45 days of basic

repairs.

Mr. SHUSTER. If the Hyatt would have built differently, could

they have prevented that?

Mr. PERRY. You know, it was interesting, in many of the newer

buildings, many of the newer high rises, you had more window explosions from pressure than you did, for example, I live in a warehouse in the arts district, in a building that was built in the 1870s.

It was an old harness and saddlemaking—we didn’t lose one window pane. Yet brand new buildings had windows exploding all

over. So it was kind of interesting.

And of course, the French Quarter, with 250 year old, 150 year

old and older structures that appeared very fragile, the grillwork,

all of the famous French and Spanish grillwork, it all survived

beautifully.

Mr. SHUSTER. And the Convention Center didn’t take any water,

is that correct?

Mr. PERRY. The Convention Center was high and dry the whole

time. The damage that it took was from the wind, with some real

damage to the roof. We had some windblown rain damage and a

lot of glass damage. But a lot of the problems that we suffered

were from the very unfortunate human misery that was suffered

there when about 15,000 people were basically abandoned, because

the Convention Center was not a site, an official site for a shelter.

Mr. SHUSTER. Do you know why that was? Was it above sea level

or below sea level?

Mr. PERRY. Yes, the area along the riverfront is actually higher.

So all the way uptown, along the waterfront in the downtown area,

they did the best in terms of flooding.

Mr. SHUSTER. I have heard reports, I haven’t had this verified,

that actually the SuperDome, the first 10 or 15 rows are below sea

level, is that accurate?

Mr. PERRY. Because it is actually dug down into the ground, the

playing surface is below the ground. The arena next door where the

New Orleans Hornets and the NBA team plays took about two feet

of water. That has all been pumped out now, and that facility will

be back online by the end of February.

Mr. SHUSTER. All right. I appreciate everybody coming up here,

having made the trip up here, thank you very much. This Committee, as well as other subcommittees within the full Committee, will

be relying on your expert testimony. Hopefully we will get to talk

to you from time to time to get further information.

As I said, your full testimony will be in the record. I ask unanimous consent that the record remain open for such time as nec-
72

essary for witnesses to submit written responses to questions for

the record. I know we have a couple of members who came in here

and wanted to submit some questions. I am not sure exactly who

to, but they will be forthcoming.

So again, thank you all very much. It was very enlightening, and

we look forward to seeing you and working with you. The Committee is adjourned.

[Whereupon, at 1:45 p.m., the subcommittee was adjourned.]
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Æ