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56–420 PDF 2010

PRIORITIES FOR DISASTERS AND 

ECONOMIC DISRUPTION: THE 

PROPOSED FY2011 BUDGETS FOR 

FEMA AND EDA 

(111–111) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND 

EMERGENCY MANAGEMENT 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

May 6, 2010 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JAMES L. OBERSTAR, Minnesota, Chairman 

NICK J. RAHALL, II, West Virginia, Vice 

Chair 

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 

ELIJAH E. CUMMINGS, Maryland 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A. ARCURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

LAURA A. RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

SOLOMON P. ORTIZ, Texas 

PHIL HARE, Illinois 

JOHN A. BOCCIERI, Ohio 

MARK H. SCHAUER, Michigan 

BETSY MARKEY, Colorado 

MICHAEL E. MCMAHON, New York 

THOMAS S. P. PERRIELLO, Virginia 

DINA TITUS, Nevada 

HARRY TEAGUE, New Mexico 

JOHN GARAMENDI, California 

VACANCY 

JOHN L. MICA, Florida 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

VERNON J. EHLERS, Michigan 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

CONNIE MACK, Florida 

LYNN A WESTMORELAND, Georgia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

BRETT GUTHRIE, Kentucky 

ANH ‘‘JOSEPH’’ CAO, Louisiana 

AARON SCHOCK, Illinois 

PETE OLSON, Texas 

VACANCY 

(II) 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY

MANAGEMENT

ELEANOR HOLMES NORTON, District of Columbia, Chair 

BETSY MARKEY, Colorado 

MICHAEL H. MICHAUD, Maine 

HEATH SHULER, North Carolina 

RUSS CARNAHAN, Missouri 

TIMOTHY J. WALZ, Minnesota 

MICHAEL A. ARCURI, New York 

CHRISTOPHER P. CARNEY, Pennsylvania, 

Vice Chair 

DONNA F. EDWARDS, Maryland 

THOMAS S. P. PERRIELLO, Virginia 

JAMES L. OBERSTAR, Minnesota 

(Ex Officio) 

MARIO DIAZ-BALART, Florida 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

MARY FALLIN, Oklahoma 

BRETT GUTHRIE, Kentucky 

ANH ‘‘JOSEPH’’ CAO, Louisiana 

PETE OLSON, Texas 

(III) 

(V) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

Fernandez, Hon. John R., Assistant Secretary of Commerce for Economic 

Development, Economic Development Administration ..................................... 5 

Fugate, Hon. Craig, Administrator, Federal Emergency Management Agency . 5 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Norton, Hon. Eleanor Holmes, of the District of Columbia ................................. 28 

Oberstar, Hon. James L., of Minnesota ................................................................. 32 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Fernandez, Hon. John R. ........................................................................................ 38 

Fugate, Hon. Craig .................................................................................................. 60 

SUBMISSIONS FOR THE RECORD 

Fernandez, Hon. John R., Assistant Secretary of Commerce for Economic 

Development, Economic Development Administration, response to request 

for information from the Subcommittee ............................................................. 46 

Fugate, Hon. Craig, Administrator, Federal Emergency Management Agency, 

response to request for information from the Subcommittee ........................... 70 

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(1) 

HEARING ON PRIORITIES FOR DISASTERS 

AND ECONOMIC DISRUPTION: THE PROPOSED FISCAL YEAR 2011 BUDGETS FOR 

THE FEDERAL EMERGENCY MANAGEMENT 

AGENCY AND THE ECONOMIC DEVELOPMENT ADMINISTRATION 

Thursday, May 6, 2010 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC

BUILDINGS AND EMERGENCY MANAGEMENT, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in room 

2167, Rayburn House Office Building, the Honorable Eleanor 

Holmes Norton [Chairwoman of the Subcommittee] presiding. 

Ms. NORTON. The hearing will come to order. Before we begin, 

we note that Mr. Fugate is on his way to Tennessee because of the 

disaster there. I am going to do our opening statements, the Ranking Member and myself, go to Mr. Fugate and ask him questions 

first, before I go to Mr. Fernandez, in light of the Tennessee disaster, which, of course, is first priority. 

Good morning and welcome all, especially our witnesses, to today’s hearing, which will review the Administration’s proposed Fiscal Year 2011 budgets for the Federal Emergency Management 

Agency and the Economic Development Administration. 

The agencies before us today have much in common beyond the 

jurisdiction of this Subcommittee. FEMA is best known for providing assistance to citizens, States and communities in the aftermath of natural and man-made disasters. The Economic Development Administration, or EDA, provides assistance to communities 

around the Country facing economic distress from a number of different causes, including disasters. One merely needs to open the 

newspaper to see the critical need for the programs of these agencies, both of them, whether floods, tornadoes, or earthquakes that 

have struck this year or the effects of the so-called ‘‘Great Recession’’. 

While, for the most part, the Subcommittee agrees on a bipartisan basis with the policies and views of the agencies before us 

today, we are exercising our constitutional duty to provide the active and vigorous oversight that is always necessary. For Fiscal 

Year 2011, the President has requested $7.294 billion for FEMA, 

an increase of $186 million over last year. 

2 

We strongly support this necessary funding for FEMA. However, 

a more pressing budget issue for FEMA is the shortfall in the Disaster Relief Fund. In February, FEMA announced that it was limiting expenditures from the Disaster Relief Fund due to diminishing funds. According to FEMA, reimbursements for nearly a billion dollars in reconstruction and post-disaster mitigation projects 

are being held up pending additional appropriations into the fund. 

To address this shortfall, the President has requested a supple- mental appropriation of $5.1 billion for the Disaster Relief Fund. 

The Committee supports this request as indispensable to FEMA’S 

obligations. On March 24, 2010, the House passed H.R. 4899, the 

Disaster Relief and Summer Jobs Act of 2010, which would, I 

think, authorize the $5.1 billion sought by the President. Unfortunately, the Senate has not yet taken action on H.R 4899. Actually, 

it was an appropriation bill, but the Senate has not taken action 

on this bill. 

While we support much that is in FEMA’S budget request, there 

are a number of items we find troubling. Generally, the budget proposal seeks to move all-hazard programs, such as Emergency Management Performance Grants, Fire Grants and Safer Grants into 

the same budget account as the terrorism preparedness grants. In 

previous years, Congress has rejected this proposal, and the Committee recommends that Congress do so again. 

More troubling is the proposal to merge the all-hazard Citizen 

Corps program into the State Homeland Security Grant Program. 

By law, funds from the State Homeland Security Grant Program 

must be used specifically for terrorism preparedness. Citizen Corps 

is a community-based program that helps citizens and communities 

across the Country prepare for all hazards, not only terrorism hazards. 

And the hazard that Mr. Fugate is about to attend to is the far 

more difficult of what FEMA does, mercifully, because we, of 

course, don’t want terrorism hazards. The Committee previously 

asked FEMA staff how the all-hazards nature of Citizen Corps can 

be maintained if this program is merged into the State Homeland 

Security Grant program. Unfortunately, staff has not received a response, so we will address this question today. 

A recurring theme at our hearings on FEMA is the continued attempts by the Department of Homeland Security to appoint Principal Federal Officials, or PFOs, in major disasters and emergencies declared under the Stafford Act. The PFO is an administrative creation of DHS that duplicates the position of the Federal Coordinating Officer, which is a position appointed by the President 

and created by the Stafford Act. The confusion between these two 

positions was a factor in the failed response to Hurricane Katrina, 

and we are not going to continue to repeat any part of that failure 

through this official duplication. 

To avoid this problem in the future, Congress enacted a number 

of provisions to prevent PFOs from being appointed in major disasters and emergencies declared under the Stafford Act. Despite this 

clear congressional mandate for a number of years now, the concerns raised by local elected officials and State and local emergency 

managers, as well as the tragic lessons of Hurricane Katrina, despite all of that, the Administration’s 2011 budget proposal seeks 

3 

to remove the prohibition on appointing PFOs. We intend to pursue 

this matter further with Mr. Fugate at today’s hearing. 

Although small, relative to FEMA’S budget, EDA plays an outsized role in responding to disaster-stricken communities with 

grants and assistance to rebuild the economic infrastructure. Manmade or natural disasters alike, EDA’s important function is in 

helping communities to plan how best to deploy not only EDA funding, but funding from a variety of sources, both public and private, 

places EDA at the center of governmental response to any disaster. 

For reasons I hope witnesses are prepared to explain, the Presi- dent’s Fiscal Year 2011 budget requests only $286.1 million for 

EDA, an actual reduction of $6.8 million, at a time when this nation is responding to the most severe economic crisis in generations. Forgive me if I say, please! While this Subcommittee understands the request for greater flexibility in order to respond to a 

myriad of economic distress scenarios, we fail to understand how 

EDA intends to respond to a significant increase in demand for its 

programs during the Great Recession with fewer, albeit more flexible, resources. 

Again, during a period when national unemployment remains 

stubbornly high, reaching double digits in some communities, including my own district, which has segments in the poorest parts 

of the jurisdiction of unemployment rates above 20 percent, it is 

unclear why the Administration has reduced EDA’s budget. 

We will ask the appropriators to grant a clearly necessary increase for EDA. This hearing has intentionally brought EDA and 

FEMA here together to better understand how EDA’s experience in 

responding to disasters can be paired with the necessary response 

to an economic disaster, as I and many of my fellow Members 

would argue is the case in our respective districts. Many communities are experiencing levels of unemployment and poverty never 

experienced previously, at least in memory. 

Last week, this Subcommittee held a hearing with testimony 

from the Regional Economic Development Commissions. In Appalachia, for example, job gains of the last decade were erased because of the loss of manufacturing industries, lack of investment 

capital, and population loss during the recession. Urban and suburban America, alike, are similarly affected by conditions such as the 

significant decline of auto manufacturing and its impact from Detroit to Fremont. 

Common both to FEMA and EDA is helping communities recover 

from disasters, especially in the long-term recovery. Both FEMA 

and EDA have specific statutory authority for long-term disaster 

recovery and have historically played important roles in long-term 

recovery. We were pleased to hear that the President is undertaking a review of long term recovery and we look forward to the 

President’s report, and we need that report very soon. That process 

is being lead by FEMA and the Department of Housing and Urban 

Development. 

Notwithstanding EDA’s specific statutory authority and history 

in providing assistance to communities in long-term recovery, it appears that EDA has been playing, at best, a minor role in this process. This Subcommittee wants to see EDA more closely involved 

with the long-term recovery plan that the President is now designVerDate Aug 31 2005 10:33 Aug 20, 2010 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 P:\DOCS\56420.0 KAYLA
4 

ing so that EDA’s experience can be brought to bear. We hope the 

witnesses can address this issue today and very much look forward 

to testimony from each of them. 

Ms. NORTON. I am pleased to ask our distinguished Ranking 

Member if he has any opening remarks. 

Mr. DIAZ-BALART. Thank you. First, let me thank you, Madam 

Chairwoman, again for having this hearing today on the priorities 

and the proposed fiscal year budgets for FEMA and EDA. The Administration’s fiscal year 2011 proposed budget is $246 million for 

EDA’s Assistance Program and the President’s budget also proposes $7.3 billion for FEMA, and $5.1 billion in supplemental appropriations has also been requested for the Disaster Relief Fund. 

EDA and FEMA both have missions that are clearly very, very 

important for our Country. Now, EDA, as we know, was established by Congress to leverage Federal funding to help areas that 

are severely economically struggling. FEMA’S mission, as we all 

know, is critically important to our Nation and the Administration 

is actually proposing a number of policy changes. 

Like with EDA, we must really evaluate proposals for changes in 

programs and policies to ensure that they are consistent with 

FEMA’S very critical role and very missions. For example, the Administration is proposing that the consolidation of FEMA’S State 

and local programs into the larger State Homeland Security Program. Combining programs that require a nexus to terrorism with 

those intended to be all-hazards, like Citizen Corps and others, is 

frankly likely to create confusion and add to the administrative 

burden on the States, rather than to streamline them. 

This Committee, the Subcommittee and the full Committee, the 

Chairman and the Ranking Member of the full Committee, as well 

as us believe that FEMA should be taken out, and the Administration seems to be going in the other direction, which I think we need 

to look at very carefully. In addition, it would obviously be important for this Subcommittee to understand the proposal to modify 

the predisaster mitigation to include a FEMA–HUD partnership on 

sustainable communities. 

Finally, Madam Chairwoman, I hope to hear from our witnesses 

today on other key issues related to the roles of FEMA and EDA 

on the work of the long-term recovery working group and any 

progress that FEMA has made on its review of regulations and 

policies to better prepare for the future and to respond to widespread disasters. Again, unfortunately, we have one—well, at least 

one—going on right now. 

I would also like to recognize the urgent need for Congress to approve the supplemental appropriations for the Disaster Relief 

Fund. With the ongoing recovery efforts in Louisiana, the recent 

flooding in parts of our Country—and I know that Director Fugate 

is going to be heading out there himself shortly—the beginning of 

hurricane season, the oil situation, we must ensure that the dwindling funds in the DRF are replenished. 

So with that, Madam Chairwoman, I look forward to hearing 

from our witnesses. Thank you very much. 

Ms. NORTON. Thank you, Mr. Diaz-Balart. 

Mr. Fugate of FEMA, the Administrator of FEMA. 

5 

TESTIMONY OF THE HONORABLE CRAIG FUGATE, ADMINISTRATOR, FEDERAL EMERGENCY MANAGEMENT AGENCY; 

THE HONORABLE JOHN R. FERNANDEZ, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT, 

ECONOMIC DEVELOPMENT ADMINISTRATION 

Mr. FUGATE. Well, thank you, Chairman Norton and Ranking 

Member Diaz-Balart, others Members of the Committee. I am going 

to keep my opening remarks short because I have submitted my 

written statement for the record, if that is acceptable, ma’am. 

And based upon your questions, I think that you raised many of 

the issues and you talked about the budget in general, so I am not 

going to repeat that as well. But on behalf of the President and on 

behalf of Secretary Napolitano, we were looking at this year’s budget the constraints of the current fiscal economic situation we are 

in to make our recommendations in that environment. 

It is our intention at FEMA that we are all-hazards and that the 

programs and funding levels recommended are a continuation of 

previous recommendations that this Administration has made, 

really, to a degree that were unprecedented previously, where 

many of these items were never recommended. So we continue that 

level of funding from our previous request. 

There are a couple of things I would like to draw attention to because they are not really all that—they don’t have a constituency 

that is going to speak to them, but I need to speak to them, and 

that is a request, and it is the one area that FEMA did request an 

enhancement in our management and administrative costs—these 

are our baseline costs of running FEMA itself—of $23.3 million for 

infrastructure and facilities. 

Many people are going to look at these requests in these times 

and question that priority and why I put that priority there, and 

it comes back to the people at FEMA. Congress blessed FEMA with 

tremendous authority and resources after Hurricane Katrina, almost doubling the size of the workforce. 

But in the regions and in many of the facilities we, no additional 

funding was provided for additional space; our maintenance repairs, in many cases, had been deferred from years to year; and I 

felt that it was important that we identify this one area as a priority, as the Administrator, to ensure that staff had the tools they 

need and the facilities to work from to do their primary job. 

Many of the other areas that you have raised I will be more than 

willing to answer in the question phase of this, but I thought it was 

important just to highlight that. When we talk about a lot of 

things, talking about facilities for staff doesn’t always get a lot of 

constituents interested, but on behalf of my staff, I am their constituent. I want to make sure that people that work at FEMA have 

the facilities they need to do their job. So that is why we did request a $23.3 million increase in the facilities and deferred maintenance to get caught up and provide that workspace. 

I think probably, due to time and the questions you asked, 

Madam Chairwoman, I am going to conclude my statement there. 

Again, we are committed to the all-hazards approach. The President, Secretary, and I do understand our role and are committed 

to carrying out the intentions of Congress. And, with that, I will 

stop. 

6 

Ms. NORTON. Thank you, Mr. Fugate. I am going to do questions 

for you, in light of your trip to Tennessee. Is there anything you 

can tell the Committee about the status, any update you can give 

us on recovery efforts from the floods and the tornadoes, for that 

matter, that struck the Gulf States last month or, for that matter, 

the oil spill? 

Mr. FUGATE. Well, in the last couple weeks we have had multiple 

States being impacted by severe weather, most notably, a couple 

weeks ago we had tornado outbreaks that struck Louisiana, notably, Mississippi with loss of life and Alabama with loss of life. Mississippi has received a declaration for the disastrous tornadoes; 

Alabama has received a disaster. 

The following weekend we had extensive flooding again with, I 

believe, now reported—I am not sure of the final tally, but it was 

being reported by the State of Tennessee over 29 fatalities in the 

State of Tennessee, with flooding in Kentucky. 

Based upon my trip there to meet with the governor’s team, the 

governor requested from the President a disaster declaration for 

the State of Tennessee. The President declared that Tuesday, and 

we have working with Tennessee to identify all of the communities 

that have been impacted and add those on to the declaration. 

So those areas in the Southeast, again, following on with flooding 

we have had in the Northeast, up in much of the New England 

States, as well as a water main that broke in Massachusetts with 

boiled water orders and an emergency declaration, ongoing disasters in North Dakota, Minnesota, South Dakota, we have been fairly active in a lot of disasters, many of which may not be receiving 

national attention, but we have been supporting those governors 

and local communities. 

Ms. NORTON. In light of those multiple disasters and the shortfall in the Disaster Relief Fund, can I ask you how much is left in 

the Disaster Relief Fund? 

Mr. FUGATE. The number I am going to give you is one that you 

probably wouldn’t expect, but it comes out of some work that has 

been done by FEMA as a result of our opportunity or our desire 

to close out disasters. We currently have been able to increase the 

amount of money in the Disaster Relief Fund. We are a little under 

$1 billion. Part of that has been due to the fact that we have been 

in immediate needs funding since February, so we have not been 

funding any permanent work, only emergency response. Part of 

that has been we have been aggressively closing out old disasters 

and de-obligating old disasters. 

The Inspector General report recently issued pointed out that 

FEMA did not have a formalized process of doing these things. Our 

staff have been working to address these concerns and our staff 

have been very successful in taking a lot of disasters that we had 

obligations for, but not had expended funds, and, working with the 

agencies that had been tasked, have been able to de-obligate and 

return back into the DRF funds. 

Our estimate now is that we will exceed the fund levels based, 

upon current response, sometime in June. Again, that still 

leaves—— 

Ms. NORTON. Some time in June what? I am sorry. 

7 

Mr. FUGATE. About June. We don’t have an exact date because, 

as this Tennessee disaster ramps up, there are going to be a lot of 

response costs here. But our projections are about June time frame 

we would potentially reach a zero fund balance, or close to a zero 

fund balance. 

Ms. NORTON. That would mean depletion of the fund. 

Mr. FUGATE. Yes, ma’am. 

Ms. NORTON. What would you do if the fund were depleted? 

Mr. FUGATE. At that point, we would be in a situation that 

FEMA could not reimburse or mission-assigned with reimbursement other Federal agencies. However, under the Stafford Act, the 

President does have the authority to mission-assign Federal agencies in response without reimbursement. So our ability to respond 

to the immediate emergency needs we believe we can continue. 

But, as you also pointed out, we are getting close to and will probably be over $1 billion shortly, and funding for permanent construction that we have on our books, that is not counting some outstanding projects still with the State of Louisiana, one being the recovery school district, which is a combination of all the school districts. That, in itself, is over $1 billion. So we are seeing considerable work that is not able to move forward and permanent work 

based upon open disasters and disasters that have just occurred. 

Ms. NORTON. Well, this Subcommittee and Committee are certainly pressing. The funding is in the supplemental, of course. 

Could I ask you the status—you spoke about multiple disasters. 

Well, Washington had a taste of what you go through throughout 

the Country this winter. What is the status of the presidential declaration? Have any funds been distributed to the affected areas in 

the National Capital region? 

Mr. FUGATE. Madam Chairwoman, I would have to respond back 

in writing. I am not sure how much we have dispersed to the District. They had two declarations for snow emergencies; I believe we 

had the one that was back-to-back, where we had the weekend-toweekend. I do not have at my disposal right now what those 

dispersals are, but—— 

Ms. NORTON. Could you, in seven days, in writing, send to the 

Subcommittee an accounting of how much of the status of the presidential disasters in the District of Columbia and the counties adjoining this capital that were affected, the status of the presidential 

declaration itself; whether the funds have been requested, that is, 

the paperwork done by the counties and localities; and what funds, 

if any, by amount, have been distributed, within seven days? We 

would appreciate that. 

The PFO, you know this is a craw in the throat of the Committee 

and the Subcommittee. We were shocked to find the new administration had funded a PFO. This is a duplicative officer not authorized by statute, despite bipartisan support here and in the Senate 

for one person held accountable. Can you assure us that this Administration will not support duplication of the person in charge of 

a Stafford Act disaster? 

Mr. FUGATE. Madam Chairman, I rarely read my notes, but I 

want to make sure I get this absolutely right, because I think the 

answer I am about to give has been the one that you have pressed 

us for, and it is the Administration has no objection to this restricVerDate Aug 31 2005 10:33 Aug 20, 2010 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 P:\DOCS\56420.0 KAYLA
8 

tion passed by Congress in reference to the Principal Federal Official. The Department has made a decision not to appoint PFOs for 

presidentially declared disasters under the Stafford Act, and we 

will be updating our planning and response documents, as necessary, to strike the reference of a Principal Federal Official in 

those disasters under a Stafford act. 

Ms. NORTON. We are very pleased to hear that response. We really would never like to have to raise that issue again. I think—and 

you are a long-term professional in the field, Mr. Fugate—that 

there is no difference among professionals in the field about one 

person accountable in a disaster, just like there is one general and 

one president. That is how it always goes in the chain of command. 

One more question before I go to my Ranking Member, and that 

is about the Citizen Corps and the all-hazards program being 

transferred to the State Homeland Security Grant Program, which 

has a very specific purpose. We don’t understand that switch and 

would like you to explain, and we can’t understand why FEMA has 

not responded to our request, because we regarded this as an urgent matter and wrote to FEMA concerning it sometime ago. So 

perhaps you would like to explain in person. 

Mr. FUGATE. Yes, Madam Chairwoman. The intention here is to 

streamline grant applications process, but I understand that there 

is an unintended consequence of doing that. And although we have 

made our recommendation, we will seek out and will follow the 

guidance Congress gives us on these programs. I understand the 

concerns. I am committed to being all-hazard. This is the unintended consequence, I believe, and us trying to streamline a grant 

process where each one of these grants right now is an individual—— 

Ms. NORTON. You can streamline the grant process to the point 

where somebody is applying for something he has no right to apply 

for. Now, Congress was very specific about the State Homeland Security Grant program and what it desired the program to be used 

for, and we are very much for efficiencies, but this efficiency tends 

to conflate purposes, and that is not the kind of efficiency we are 

after. So what would you do? Can we ask that the all-hazards program remain separate from the State Homeland Security Grant 

Program? 

Mr. FUGATE. We are committed to working with Congress and 

following the direction Congress gives us. These are the recommendations, but we understand the concerns and are committed 

to working with Congress on moving forward in our recommendations. 

Ms. NORTON. I appreciate that answer. I am going to ask, Mr. 

Fugate, that you have staff meet with our staff, our Committee 

staff within the next seven days to discuss this issue so that we 

can work together. I think we are both on the same page. 

And I am going to go to Mr. Diaz-Balart. 

Mr. DIAZ-BALART. Thank you very much, Madam Chairwoman. It 

is great to see that a lo of the issues that I wanted to bring up, 

you already brought up. 

Ms. NORTON. You and I have been on the same page about all 

of these. 

9 

Mr. DIAZ-BALART. We have been, and we continue to be, and I 

think it is important that this Committee continue to work as 

closely together. Madam Chairwoman, as you know, Mr. Fugate is 

exceedingly accessible. I have had the opportunity to speak to him 

on a number of issues. You call and he will immediately call you 

back. 

Since that, and since I know your schedule, I am just going to 

ask you a couple questions, Mr. Fugate. One is when do you expect 

FEMA’S review of the Public Assistance Program, the rules, to finally be completed? Do you have any idea of the status and any 

updates to tell us as to what you are finding? 

Mr. FUGATE. What I am finding is we need to follow the law and 

the rule. I will give you some examples. When Secretary 

Napolitano went down to New Orleans, at the direction of the 

President, to look at the recovery, we made a decision, or she made 

a decision at that time to change the leadership of what was then 

called the Long-Term Recovery Office. 

FEMA brought in a Federal Coordinating Officer, Tony Russell, 

to address that issue, and in less than a year’s time Tony was able 

to free up and move over $1 billion in funding that had been held 

up. One of the things that Tony Russell likes to point out is we did 

not change Stafford Act, we did not change the CFR that governed 

that, nor did we change out about 90 percent of the people. It was 

taking our program and focusing on the outcomes, and not the 

process. 

So what we are finding is that, as I testified all the way back 

from my confirmation, but before you as well, that the Stafford Act 

provides tremendous flexibility. Even the CFR, with its complexity, 

is a very robust tool, but we, in many cases, ourselves have limited 

our decision-making ability. So part of that first step is going back 

and dividing it into what does the law say, what does the rule say, 

and does our process provide the answers we need. 

That is an ongoing process. I don’t know if I ever will complete 

it, but it is our goal to make sure that we are focused on the outcomes and the intentions that Congress had in the Stafford Act 

and, within our CRF, identify those areas where we may have 

issues that require legislative remedies. But what I am finding, by 

and large, is it is the application of the programs, the process, not 

the law, that we have to work on and to streamline and clarify so 

that we are focused on outcomes. 

I will give you one example, sir: fire stations. We were hung up 

in Louisiana and New Orleans over fire stations because part of 

our process said we had to determine how much damages were due 

to deferred maintenance versus the storm itself. We required 

records to demonstrate that. Those records were in a building that 

was flooded. They could not produce those records; therefore, our 

process would not let us go forward with determining what was eligible for reimbursement. 

Tony Russell brought a very simple common sense approach it 

and said was it a fire station before the hurricane hit? Yes. Was 

the station destroyed? Yes. Then we are going to make the assumption that it is eligible to be replaced and move forward with the 

project. 

10 

Mr. DIAZ-BALART. Common sense. Well, we look forward to that 

continuing effort. 

Secondly, I want to bring up an issue of American Samoa, which 

is worrisome. The Office of the Inspector General’s report has some 

interesting observations. One of them is the issue about the housing. FEMA ordered, I guess to get started, provided $3.9 million to 

build eight homes. That is a heck of a lot of money when you look 

at the cost of housing in FEMA, and it seems that, when you are 

looking at homes that, potentially, brand new, spanking new there 

go for up to $100,000 and FEMA is providing way above that, there 

seems to be a serious, serious disconnect and there seems to be, obviously, a lack of—well, I mean, whatever you want to call it; I 

don’t want to put names on it. 

But have you had the opportunity to look at that? And it would 

be great if you could get back to us on that, because it seems, right 

there, that that is a ton of money that the taxpayer is sending, 

spending a lot more than should be spent for something that is 

needed, but that obviously is not being done efficiently. 

Mr. FUGATE. Congressman, this is an area that we knew that— 

you have to remember we are about half a year into this from 

when the tsunami hit. At the time the tsunami hit, the original estimates, working with the governor’s team, was they were going to 

need about 150 homes built. And looking at what tools we had 

available, we had a preexisting contractor that was already available, that had already been identified as a resource to start construction. 

Because, when we build a home, we have to deal with environmental review, archeological and a lot of things that the average 

homebuilder does not deal with, we did a pilot up to, but did not 

cost $3.9 million to start the construction on eight homes. Because 

this would require bringing materials in and other things, and 

there were a lot of unknown costs in starting this up, we provided 

this contract to begin the process. But the intention was not that 

eight homes would cost $3.9 million; it was up to $3.9 million. Part 

of that would be the initial construction so we could get a cost-perunit cost and see how to economize that. 

My Deputy Administrator, Rich Sereno, traveled to American 

Samoa several weeks ago, met with the folks on the ground, met 

with the community, and the situation has changed in that the 

original estimate of 150 homes has gone to 50 homes. We are working back through our acquisition staff to modify the scope of work 

and the contract. One of the things we want to do is, because we 

have fewer homes to be built, we want our contractor to work with 

local folks to employ them. We also want to look at available materials and other things. Plus, we found that we had some requirements in there that were not necessary that were raising the cost 

as well. 

So we are, again, going with the eight pilot homes. That cost will be contained, it will not be $3.9 million; that was just a maximum 

amount that we were going to commit to this initial 150 homes. We 

had some things that we had to look at as far as bringing materials 

there, bringing work crews, and, based upon 150 homes, we knew 

we were going to have to bring a lot of outside resources. With the 

number dropping down to 50 homes, we are going to work—and the 

11 

contractor is agreeing to this—redefine the scope of this, look at 

more local hires, and look at more local materials, which will bring 

that cost down. 

Mr. DIAZ-BALART. Well, again, I appreciate that. I know that is 

how you work, and you are a common sense person who solves 

problems. It would be great, though, if you could let us know, once 

you have an idea of how much we are spending per home, just to 

get us that information. 

Mr. FUGATE. Yes, sir. 

Mr. DIAZ-BALART. Madam Chairwoman, just on a lighter note, 

you know, we think so much alight, but I am even supporting your 

hairdo. 

[Laughter.] 

Mr. DIAZ-BALART. So thank you. 

Ms. NORTON. I did notice that, Mr. Chairman. I did notice that 

we were twins up here. It is getting hot. 

Mr. Fugate, I know that the Predisaster Mitigation Program has 

been an important program and it is a favorite of this Subcommittee. We authorized this program a year ago. It was just 

marked up in the Senate last week. That body moves slowly. It 

says deliberately; all we know is slowly. You are not supposed to 

libel the other body or even speak ill of your friends over there, but 

we do suffer some frustration when programs that are as important 

as this take as long as this one does, so there is going to be a whole 

rush, I am sure, to get some stuff here in the last several months. 

But what happens if this program is not reauthorized, does it go 

out of existence? 

Mr. FUGATE. It would go out of existence. That program is strictly a program that is tied to the authorization and the funds. Without funds, we would not be able to carry out mitigation projects. 

And probably the thing that would be of most concern to me is not 

only the mitigation projects, it is the fact that this provides planning dollars for States and local communities to get local mitigation. 

What I have found is, if you don’t have disasters, getting communities to really understand that in the process of applying for mitigation grants that—here is what will happen. Oftentimes communities will think about mitigation only when there is a disaster, not 

think about it ahead of time, and then oftentimes have no incentive 

to plan ahead that, if a disaster strikes, how to reduce future impacts. And the fact that this money is available to all States, irregardless of a disaster, keeps mitigation as a tool local and State 

emergency managers can constantly talk about because there are 

grant dollars available for communities. 

I think probably the most value to this may not be the actual 

projects, but the fact that, without a disaster, Congress has indicated that mitigation is important and that funds are available, 

and it gets communities thinking about mitigation that would otherwise not consider that because they haven’t had recent disasters. 

Ms. NORTON. It will be interesting to hear your report at some 

future date about whether mitigation played any role in the multiple disasters you are tending to now. 

Last year, in the fiscal year 2010 request, the Administration 

proposed changing the program, the Predisaster Mitigation ProVerDate Aug 31 2005 10:33 Aug 20, 2010 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 P:\DOCS\56420.0 KAYLA
12 

gram. Currently, it is a competitive program to a program distributed through a formula based on what we saw, and I think most 

agreed, was a flawed Homeland Security methodology. Congress 

strongly objected. Has this proposal been tabled? 

Mr. FUGATE. I would have to go back and research that. I think 

the intention here is, again, in doing a competitive process, not 

every State would get some base funding, and the intention here 

was, I think, to try to make sure that, as much as possible, as 

many States could receive at least some funding. And, again, the 

interest here was, if you could keep mitigation in front of policymakers and decision-makers, even if it is just in a grant program, 

it keeps the focus on mitigation as a future tool. 

Ms. NORTON. I understand that concern and goal. It is very hard 

to find, in the Federal system, a better way to distribute funds except competitive distribution. Yes, we do have distribution per capita. This little bit of money is not meant to be spread across the 

Country. We want to encourage mitigation activity improvement. 

And when people have to compete, that is what happens. This 

Committee strongly objected; Congress strongly objected. 

I am going to ask you, in seven days, to report to the Committee 

on whether the formula-based, based on a much disputed Homeland Security methodology approach, has been tabled. 

Mr. FUGATE. Yes, ma’am. 

Ms. NORTON. Seven days, please. 

We have now passed a landmark health care bill. We were chagrined, and have been chagrined in this Subcommittee, to note that 

temporary FEMA workers, DAEs, I guess they are called, were not 

guaranteed health care. Are they covered in some form or fashion 

by the new health care bill? 

Mr. FUGATE. I am not aware of that. It is something that we are 

looking at as well. One of the things that we did do that had not 

been done previously was, as Disaster Assistance Employees are 

actually working, previously they did not get sick time or vacation 

time. We have changed that so now that, when a Disaster Assistance Employee is actually working, they will incur sick time, and 

this allows us to do something we previously could not do. 

If you were at a deployed disaster and you got sick, our only previous alternative was actually take you off the clock or send you 

home while you were sick, particularly if you had just a minor illness that required a few days. And because you were oftentimes on 

per diem and travel, it became very much a management issue of 

how do you deal with somebody who has to be just only a couple 

days, don’t really need to go home, but the minute they are not 

working, they are not eligible for their travel and their per diem. 

So we have built in sick days; we have built in vacation leave 

that can be built up by DAEs, which was previously not offered; 

and we are looking at, with the Office of Personnel Management 

and others, what does the new health care bill look like when it 

comes to temporary employees under the DAE status and what 

programs will be available. 

Ms. NORTON. Staff informs me that in our Stafford Act bill, H.R. 

3377, the health care for the DAEs would be covered. They would 

have to be given the opportunity to go to the Federal employees 

health plan. What an embarrassment this is for the Government. 

13 

We go around trumpeting how everybody, ninety-some percent of 

Americans can have health care, except, of course, people who work 

for the Federal Government. That just cannot be. 

Now, what is the status of this bill? Our bill is expected to come 

to the Floor soon, so that would be mandated. I commend you for 

the improvements that you have noted, but nothing can take the 

place, as we have learned all too poignantly, of health care. 

Now, some of these people may have health care. It is just the 

opportunity; they would have to pay for it themselves. But without 

even the opportunity that is available for the average American 

now to buy on the exchanges and the rest, and if you are a Federal 

employee, of course, you have to come in to our own plan. Without 

that opportunity, we look like a bunch of hypocrites. 

So we have to deal with that this year, before the end of this fiscal year. And that should be done if H.R. 3377—I am going to ask 

staff to inform me what is keeping this bill from going to the Floor. 

Here, I have been criticizing the Senate. For goodness’ sake. Time 

is passing. 

Could I ask a question about the administrative law judges? Mr. 

Fugate, you may recall that we were so distressed with the hold 

up of billions of dollars in Louisiana that we worked on a plan that 

would get us beyond the stalemates that had accumulated in Louisiana, leaving that money on the table. Even as we were distributing stimulus money, there was billions of dollars on the table in 

Louisiana. The administrative law judges are in place. I understand they have had some effect on some projects. 

What is your view of the way that is working? I should tell you 

we are going to have a hearing on them at some point, but I would 

be very interested if you have any view of the administrative law 

judges in place. Not the judges themselves, but the mechanism. 

Mr. FUGATE. Well, as the Chairwoman knows, this was done specifically for the Katrina-Rita disasters, and we are, again, in arbitration on multiple projects, probably the most notable one was 

Charity, which we had reached an impasse. Arbitration actually 

ruled in favor of Charity Hospital. And in reviewing that, as well 

as others, as I said, part of this was to review what the arbitration 

panel would find and how they would rule, we actually took one of 

our projects that was going to arbitration and we settled. 

And, again, as I go through this, I find, in many cases, that I am 

not so sure the positions that FEMA took were defendable in the 

first place. The arbitration panel, in many cases, were quite vocal 

in that. So, again, that is being factored in to our process. Ideally, 

this is a symptom or a cure to a symptom that should not exist. 

Our process and our program should not be so difficult that we 

have to resort to arbitration to get to the answer. 

Ms. NORTON. Does the coming of arbitration—because you mentioned compromise or settlement—does it tend to bring on settlement as we move toward arbitration? Are we trying to do is—if the 

threat of arbitration can do that, then it has accomplished its purpose. 

Mr. FUGATE. Well, some of the projects we went through arbitration and we argued our position; the other side argued theirs; and 

in many cases the other side has prevailed. I think that there are 

fewer projects that went to arbitration than we thought initially, 

14 

and I think that goes back to the good work that was done by Tony 

Russell and his team in Louisiana. 

You know, when we were originally looking at this, we thought 

this would be in the hundreds. It has not turned out to be that 

way. But some of those projects were so—I think had gotten to the 

point where we had gotten—we just weren’t able to get to an agreement, and there had to be a process that got it passed; and Charity, I think, was a good example. We had reached an impasse on 

both sides and it took that arbitration process to get an answer. 

Ms. NORTON. We have never used it before. We are just trying 

to find a way to get beyond stalemates that hurt both sides. And, 

yes, each side has a reason to husband the money of its side, but 

we have to break through that, especially given the delay and especially a disaster as huge as the Gulf Coast disaster was. 

Let me ask you about something else that came out of this that 

just shocked me, Mr. Fugate. We learned that in—leave aside arbitration. We learned that FEMA has a process by which FEMA gets 

an expert, the State gets an expert, and they dual it out. Nothing 

in the statute requires that. So you set up an adversary process 

from the beginning. So what I want to know is why can’t, whenever 

there is an expert needed on various aspects of recovery, whether 

it is a particular housing or construction or demolition, you name 

it, shouldn’t there be an agreement on both sides on one expert, so 

that we don’t set up an adversarial relationship right from the beginning? 

Mr. FUGATE. Well, Madam Chairwoman, I think you raised a 

point that our staff has concurred with, and that is in certain types 

of decisions, if you have a licensed professional who is making a 

definitive statement and is attesting to that, that both sides would 

agree to recognize that. In this case I am speaking to a licensed 

professional engineer, licensed in the State that they are in. If a 

local jurisdiction or State brings forth a finding that a licensed professional engineer has certified and attested to, we will take that 

at face value and not bring in a separate expert. 

Ms. NORTON. Are you doing that now, Mr. Fugate? 

Mr. FUGATE. That is how we are going forward. 

Ms. NORTON. Oh, you have my congratulations. The notion of 

saying let’s act like we are in court, when the Stafford Act doesn’t 

require that; the Stafford Act just requires you to get it done. This 

is such a common sense approach, for you to agree in the beginning. Then you don’t have, probably, the kind of adversarial process that builds up so that you are going to need arbitration for the 

final outcome because every step of the way you have built in an 

adversarial approach. We want to hear more about that as well at 

the hearing on the administrative law judges. 

We have been joined by Mr. Cao and Mr. Perriello. I will go to 

Mr. Cao next, then. 

Mr. CAO. Thank you, Madam Chair. 

First of all, I just want to thank Administrator Fugate for your 

quick response, or at least your staff’s quick response with respect 

to a couple of my inquiries when you were in the Homeland Security Committee a couple weeks ago, was it? 

Mr. FUGATE. Last week, sir. 

15 

Mr. CAO. Last week. So I thank you for your staff’s response on 

my questions concerning the CDL. I believe that you are working 

on that issue on a case-by-case basis. 

What I want to learn from you is when you look at the forgiveness application on a case-by-case basis, and let’s assume that you 

will receive about 15 to 20 applications that you deem to be not 

qualified under the rules as promulgated by FEMA, what would be 

your next step? 

Mr. FUGATE. We will go back to the applicants and go do we have 

more information. But if we get to the point where we are not able 

to go forward with that application on a full forgiveness or partial 

forgiveness, or how that would work, we are working that through 

our Regional Administrator, Tony Russell. And then as he identifies those and flags those, he sends them to headquarters to see 

what additional work we can do. 

Mr. CAO. Now, in our last meeting I asked you about the special 

CDL in connection with Oxner, and, as you know, Oxner, right 

after Katrina, signed an agreement with the State to treat the people who were uninsured because of Charity Hospital being damaged by Katrina, and under the special CDL program, funding is 

available to assist local governments in providing essential services 

to their communities. 

And under the implementing regulations promulgated by DHS 

and FEMA, private, non-profit hospitals such as Oxner are eligible 

for funding under the special CDL program. And this is your own 

explanation of the CDL regulations: FEMA specifically determined 

that if a local government deems it appropriate, it may provide proceeds from a loan under this special CDL program to an operator 

of a private, non-profit facility that provides the community essential services, such as a volunteer fire department, volunteer emergency medical provider, or a hospital. I just quoted verbatim from 

your own explanation. 

So, as you know, the delegation also wrote a letter to you to express their concern about this matter. My question here is what 

would be the specific and immediate action that FEMA will take 

to address this issue of the special CDL in regards to Oxner? 

Mr. FUGATE. Congressman, I am not as briefed on that as Tony 

Russell is, but I also know there were other challenges in that the 

original special CDL was made to the local government. They were 

willing to transfer some of that to Oxner and there were some additional issues that were brought up on our side in dealing with that. 

And I would have to defer back or respond back in writing as to 

the actions that the Regional Administrator is taking in that matter. 

Mr. CAO. Thank you. 

My next question is to Mr. Fernandez. As you know, Hurricane 

Katrina—— 

Ms. NORTON. We are waiting. Mr. Fernandez has not delivered 

his—— 

Mr. CAO. Oh, I am sorry. 

Ms. NORTON. Because Mr. Fugate is on his way to Tennessee. 

Mr. CAO. OK, that is fine. I will wait, then. Thanks. 

Ms. NORTON. Mr. Perriello is not here for the moment. 

16 

For your reference, Mr. Fugate, the discussion that led me to 

wonder, and I am so pleased with your response about having one 

expert, by the way, the absurdity of it was that apparently FEMA 

paid for both their expert and our expert, doubling the money for 

the taxpayers and creating on its own dime an adversarial process. 

So since we have to pay for them, let’s just pay for one. It was 

the people from St. Bernard Parish came in, it was very pitiful 

about mold consultants, and they needed an arbitrator, as it were, 

for these mold consultants, which gave me the notion that maybe 

one consultant would do it. But you are already there. 

Have there been other forms of dispute resolution. We are not 

wedded to arbitration. Have there been other forms of dispute resolution used during Katrina or since you have been Administrator 

that you would recommend so that we could short-circuit disputes? 

Mr. FUGATE. Well, one of the things that was done in New Orleans and Louisiana was providing higher level expertise in looking 

at some of the more complex projects, and by bringing in some staff 

to support the team there, we were able to clear the backlog of 

projects that would otherwise have probably gone to arbitration. 

And again it goes back to, in many cases, we had built a system 

that was delegating decision-making at the highest level, not where 

the work was being done. 

So you are trying to resolve an issue and work with the applicant; yet, if the solution has to go up through multiple layers back 

to headquarters for a decision, it loses something in translation. 

And what we found by bringing the people to the applicants and 

sitting down and going over them with these projects, we were able 

to clear a lot of backlog, but also resolve issues that made, as you 

point out, were common sense solutions within the law, within the 

rule, that the people that were the decision-makers were empowered to make those decisions at the point at the State level working 

in partnership, versus it coming all the way back to headquarters. 

And that is our intention with our regions. Part of the reason I am asking for that $23.3 million is we know 

that when we can get answers closest to where the problems are, 

we get better outcomes. And part of this is, again, supporting our 

regions and their need for additional facility support so that we can 

continue to bring FEMA to our customers, not make our customers 

come to FEMA. FEMA headquarters, by the way. 

Ms. NORTON. That is a very important moving the decision down. 

This has been one of the banes of our existence here and complaint 

about FEMA, that everything had to travel to headquarters, people 

far removed, and they have to get together, then they really have 

to go back down and talk to the people on the ground and really 

find out what to do. So that is another important common sense— 

I won’t even call it innovation, it is a way I think a field operation 

like FEMA ought to be operating. 

Look, you have been in office now about one year, Mr. Fugate. 

You have just discussed some significant changes. Perhaps you 

would like to discuss others. And I would like to ask you what 

changes do you still feel need to be made at FEMA. What was your 

biggest surprise? 

Mr. FUGATE. Well, probably my biggest surprise wasn’t my biggest surprise, but that was the fact that I was joining a lot of good 

17 

folks and a good team, and that in many cases, when I look back, 

I try to say what have I actually done, and I don’t have a whole 

lot to report for that, but the team has done a lot. And I think, if 

nothing else, was just recognizing, in many cases, that if I empower 

my staff and give them clear direction, I am going to get a much 

better outcome than if I am trying to do everything and direct everything. 

So for my first year I am very proud of the folks I have been able 

to join. I think we are making progress, but that progress is really 

being done by the staff themselves, and my role in that is to make 

sure we are going in the right direction, but empower staff and empower decision-makers where we can do the greatest good. 

So that is my commitment, to empower my regional administrators; that is my commitment to my team that we are not always 

going to be perfect, we are going to make mistakes. And I have told 

my staff if we make mistakes for the right reason and there is criticism, I will take the criticism. 

But I don’t want to be so afraid of doing the right thing that we 

do nothing for fear of making a mistake. So my first year here I 

am very proud of the folks I have been able to join and, if anything, 

being able to allow them to do their jobs more effectively. 

Ms. NORTON. I will ask the Ranking Member if he has anymore 

questions. 

Mr. DIAZ-BALART. No, thank you, Madam Chair. 

Ms. NORTON. Mr. Fugate, can I ask, on the Disaster Relief Fund, 

which is a subject of great worry to this Subcommittee, within 30 

days, can you provide us with a breakdown of the amounts in 

projects being held up by State? 

Mr. FUGATE. Yes, ma’am. In fact, I believe we could probably be 

faster than that based upon our current accounting. 

But I want to come back to something, and that is the support 

of you and Chairman Oberstar and this Committee in supporting 

us, and the letters you have written and the support you have 

given to us for that DRF. You know, we are able to continue our 

immediate response, but we are seeing an increasing backlog of 

construction, and in some of our States, like the Dakotas, they 

have a season that they can only do construction during the summer and early fall months. 

So, again, there is an urgency there. The flooding that took place 

over a year ago, as they get back into the time frame where they 

can actually begin construction, they are not able to move forward 

and they will not be able to do construction once winter sets back 

in. 

So the urgency here, as you have expressed, as Chairman Oberstar has expressed, as Congressman Diaz-Balart has expressed, 

and your support I think goes a long way in helping us make the 

case that this is something we need action on and we do support 

the letters, the statements, and the commitment to allow FEMA to 

do the job you expect of us, and that is to support our State and 

local governments in response but, most importantly, in recovery 

and mitigation of past disasters. 

Ms. NORTON. Well, disaster relief is automatic stimulus today, 

especially when that is work that has to be done. Let’s get it done 

now. 

18 

Let me just ask you a final question on Katrina recovery. Since 

the new Administration came into office, we have seen measurable 

progress in moving forward on recovery from Hurricane Katrina. 

You have discussed some of that. Can you give us an update on the 

status of public assistance and mitigation projects for Hurricane 

Katrina? 

Mr. FUGATE. In general, I know that we have been able to, I be- lieve it totals a little over $1 billion right now that we have moved 

in the past year. Several big projects, though, are in the final 

stages. One of the things is the recovery school district, which is 

the ability to take all of the impacted schools and do one project, 

versus individual projects. That is moving through the system. 

That is going to be a very large project, but it will give, as far as 

the repair and the replacement of schools, a huge amount of infusion of local construction in those areas. 

Mitigation and other projects are moving through. I had the opportunity to be in Louisiana several weeks ago at the invitation of 

the governor and Homeland Security Emergency Management Director, Mark Cooper, and, in meeting with many of the parish 

presidents, it was heartening to hear that they felt that FEMA was 

being responsive, was moving all these projects. In fact, the biggest 

thing that I hear is not really a complaint, it is a plea: it is don’t 

go back to what we used to do; keep doing what you are doing. 

And one of the most important things was we will agree to disagree, but what we cannot do is to stop communicating. And that 

is the situation that, in many cases, we found that, in working with 

our partners at the State and local level in dealing with the recovery from Katrina, we had literally stopped talking; we were passing 

paper and became dysfunctional. 

So we have agreed that there are going to be times when people 

want to do things that the Stafford Act will not allow us to do, and 

we will agree to disagree. But we are not going to stop communication and working as a team. And I think when you do that, that 

brings about the need for arbitration and other processes. 

But when you can continue to work, communicate, and tell people up front what we can and cannot do as the Federal Government, and be consistent in that message, local officials have told 

me that is one of the most important things that FEMA can do, is 

be consistent. And if the answer is no, give them that answer so 

they know what the next steps are going to be, but don’t string this 

process along or don’t change decisions arbitrarily or because of 

changing staffs, because that is the most difficult part for local officials as they try to plan their recoveries. 

Ms. NORTON. You have shown flexibility in understanding your 

mandate under the Stafford Act. One of the concerns of the Subcommittee was the rigidity with which the Act was being administered; so rigid that we had to pass a law essentially telling FEMA 

to do what FEMA already could do. Could we ask that, if you are 

ever in doubt about the Stafford Act, instead of going by the book 

just because some lawyer at FEMA does his job, and their jobs are 

to read statutes narrowly, this is not a narrowly worded statute, 

it is a remedial statute, and the final authority would be the Subcommittee and the Committee. So we ask, when in doubt, instead 

of having back and forth disputes with local jurisdictions, if you 

19 

would refer the matter to the Subcommittee, we would be pleased 

to be of assistance. 

Mr. FUGATE. We will do that, Madam Chair. 

Ms. NORTON. Mr. Fugate, we have been pleased with your startup year. We are very pleased to see that you are going to be on 

the ground in Tennessee, so you are excused at that point to go 

tend to what we regard as even higher priority duty than even 

being here this morning. Thank you, sir. 

Mr. FUGATE. Thank you, Madam Chairman. 

Ms. NORTON. Mr. Fernandez, we apologize. We usually let both 

of our witnesses testify and then ask questions seriatim of each, 

but felt we had, this time, to, in light of the emergency, let Mr. 

Fugate go first. I know you, as a disaster expert yourself, would be 

the first to understand that. 

We are pleased to receive your testimony at this time. John 

Fernandez, Assistant Secretary of Commerce, Economic Development Administration. 

Mr. FERNANDEZ. Thank you, Chairwoman Norton and Ranking 

Member Diaz-Balart. I guess it is only appropriate that we would 

go second because, certainly in the context of disaster relief, we 

view ourselves as a second responder. 

This hearing is extremely timely, as we are responding to two 

disasters, one natural and one man-made; and though not a first 

responder, EDA has a long history of promoting economic recovery 

following disasters and is already mobilizing staff to assist communities reeling from these catastrophic events. 

In response to a string of devastating natural disasters in 2008, Congress appropriated $500 million in disaster supplemental funds 

to our Economic Adjustment Assistance program. Here is one example of what we did following the Midwest floods. Those floods 

destroyed the city-central, coal-fired boilers that provided steam 

heat and hot water for St. Luke’s Hospital and Coe College in 

Cedar Rapids, Iowa. 

When the utility company announced its plans not to rebuild its 

boiler facility, the hospital and the college were left without permanent heating capacity. Both institutions could not continue to operate without an affordable and reliable energy supply. 

The college estimated that their energy costs would quadruple 

and the 540-bed hospital faced cutting services vital to the community. EDA invested $4.65 million in disaster supplemental funds to 

help construct and install an upgraded energy-efficient system. 

EDA’s assistance was critical to helping the hospital and the college keep their doors open, saving approximately 3,150 jobs. 

EDA’s investments stem beyond rebuilding in the wake of disasters. We strive to simultaneously create new economic opportunities. For example, EDA invested $10 million in disaster supplemental funds to renovate and expand the Center for Technology 

and Workforce Development, a biotech business incubator on the 

campus of the University of Texas Medical Branch at Galveston. 

This project will not only allow the 14 companies that were displaced by Hurricane Ike to return to the incubator, but will expand 

the facility’s capacity to add 24 additional biotech companies. 

Economic disasters, whether caused by forces of nature or be 

they man-made, bring their own unique set of challenges. EDA’s 

20 

Economic Adjustment Assistance Program is the key to our success 

in responding quickly and effectively. This program allows for a 

wide range of technical, planning, financing, and infrastructure assistance. Moreover, this investment program can be multifaceted, 

which allows us to develop an integrated response. 

Perhaps the best example of this integrated approach is occurring right now in Moraine, Ohio. In June of 2008, GM announced 

its plans to close it Moraine assembly plant, eliminating 5,000 direct jobs and thousands more indirectly. Within two weeks of GM’s 

announced, EDA’s Chicago staff began working with local and 

State officials to develop a strategic response to the plant closure. 

To guide recovery efforts, EDA subsidized the development of a 

comprehensive economic development strategy for the greater Dayton region. With the strategy in place, EDA staff continues to provide technical assistance on implementation measures, including 

working with the Moraine officials on alternatives for redeveloping 

the former GM site. Additionally, EDA funded a revolving loan 

fund to provide capital to support existing businesses, while encouraging the development of new businesses to spur job creation. 

For fiscal year 2011, EDA has requested $246 million for its Economic Development Assistance Programs. While this figure is on 

par with EDA’s fiscal year 2010 appropriation, the agency’s request 

includes a significant shift of resources within EDA’s seven programs. EDA has asked that the largest percentage of our funds, or 

$125 million, be allocated to the Economic Adjustment Assistance 

Program. 

While the Public Works Program remains an extremely useful 

tool, as EDA’s most flexible program, the Economic Adjustment Assistance Program is critical to our ability to effectively respond in 

real-time to economic dislocations. 

Madam Chairwoman, Ranking Member Diaz-Balart, and Members of the Subcommittee, I want to thank you for the opportunity 

to testify today. I especially want to thank you for your consistent 

and incredibly strong support for this agency, and I know on behalf 

of all my colleagues at EDA, we truly appreciate that, and I look 

forward to any questions you have. 

Ms. NORTON. Thank you, Mr. Fernandez. Your budget before us 

now proposes a reduction in funding from the Public Works Grant 

account to the Economic Adjustment Grant account. Do you envision doing a similar number of infrastructure-related projects even 

with an $86 million reduction in public works funding? 

Mr. FERNANDEZ. Madam Chairwoman, the vast majority of our 

economic adjustment funds in fact go to capital projects as well, 

nearly 60 percent. What we do believe is that, with the Economic 

Adjustment Fund flexibility, it gives us the ability to be more creative, provide more integrated responses, and, as we are experiencing right now with multiple disasters prior to any additional 

supplemental appropriations, we have more flexibility with those 

economic adjustment of funds to give the kind of soft infrastructure 

support that is critically needed immediately after an economic disruption, whether it is man-made or a natural disaster. So we would 

continue to certainly invest in a lot of capital projects; it is just 

having that flexibility we believe is very important. 

21 

Ms. NORTON. Well, you have used your flexibility very well, and 

I defer to your expertise there; it certainly sounds reasonable. 

What has been the response, though, of the economic development 

districts to this shift? 

Mr. FERNANDEZ. Well, I won’t speak for them. The response to 

the direction we are trying to take EDA I think I can confidently 

say has been very positive. We have been engaged with stakeholders aggressively since I came on board in September; we are 

working closely with them. We appreciate their input and we can’t 

do our job without them. So I have met with many of the representatives of the economic development districts and I think I 

can say safely that they are generally happy with the direction we 

are going. 

Ms. NORTON. Has there been any upward spike in grant applications this fiscal year? 

Mr. FERNANDEZ. Yes. I can tell you last year’s numbers we had 

for the Economic Development Adjustment Programs themselves, 

north of a billion dollars worth of requests. 

Ms. NORTON. I am sorry, I can’t hear you. Would you speak more 

directly into the microphone? 

Mr. FERNANDEZ. We had north of a billion dollars in requests last 

year. 

Ms. NORTON. A billion dollars as opposed to what last year? 

Mr. FERNANDEZ. That was last year. We had $1.2 billion. To date 

I couldn’t tell you the exact number, but I think we are north of— 

we are almost at the $500 million mark already this year. So, yes, 

there is a lot of demand. 

I can give you realtime numbers on the Community Trade Adjustments Program, which I think is a reflection of demand as well. 

That program that Congress created included a little over $36 million in funding, which is very similar in its applications to the Economic Adjustment Program. I think we had 131 applications for 

north of $100 million in requests. So, yes, there is certainly a demand for programs. 

Ms. NORTON. Would you, within 30 days, submit to this Subcommittee a list of grant applications this year relative to the same 

time period last year? 

Mr. FERNANDEZ. Absolutely. 

Ms. NORTON. You will note that we put both you and Mr. Fugate 

on the same panel because we are trying to create greater synergy 

between the two of you because we believe it is already there; you 

just don’t have the kind of funding that would enable you to pick 

it up as easily. Now, you know, you have some recent disasters 

going on. Absent an emergency supplemental appropriation, would 

EDA just be left out of responding to some of the disasters going 

on now, like the oil spill and the floods in Tennessee? 

Mr. FERNANDEZ. Not completely, Madam Chairwoman. I mean, 

we are in fact engaged today. Shortly after the oil spill, for example, our office staff, our regional staff in Atlanta and Austin both 

became engaged with their local and State economic development 

counterparts. They actually deployed to the regions and met with 

officials. Today, in fact, Secretary Locke, along with our Deputy Assistant Secretary are in Biloxi, Mississippi, and going over to PenVerDate Aug 31 2005 10:33 Aug 20, 2010 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 P:\DOCS\56420.0 KAYLA
22 

sacola, Florida, as well. So we are able to use our economic development representatives to provide technical assistance. 

Where we are hamstrung, candidly, is to deploy significant resources in the short-term for things like additional disaster coordinators and some of the softer technical support that is available 

through our economic adjustment program. For our Atlanta region 

and our Austin region, their pipeline for fiscal year 2010 Economic 

Adjustment Assistance funding is taxed. 

It would be very difficult to squeeze out additional resources. We 

will do everything we can, obviously, but that is one of the reasons 

why we think the flexibility of the Economic Adjustment Program 

is so important, and that is why we would like to see a higher percentage of our funds in it, so that we can respond quickly to these 

kinds of sudden economic disruptions, whether they are natural or 

man-made. 

Ms. NORTON. I am going to ask the Ranking Member if he has 

any questions at this time. 

Mr. DIAZ-BALART. Not at this time, Madam Chairwoman. 

Ms. NORTON. Thank you, Mr. Diaz-Balart. 

I just have a few more questions. We were very intrigued last 

week at the hearing—it was the Economic Development Commissions—to hear how the Delta Regional Commission does its grant 

programs with the provision of their grant agreements that requires a payback by the applicant if they do not generate the number of jobs promised originally. Apparently, it is working. People 

know you don’t play with the Delta Regional Commission. 

Does EDA operate its programs with similar provisions? If not, 

would you consider doing so? 

Mr. FERNANDEZ. Well, when I was mayor, those type of clawback 

provisions were very important. We certainly have accountability 

measures that we follow in regard to our grantees. One of the distinctions, however, between their work and ours is that they are 

making their grants directly to a recipient with the expectation of 

them creating the jobs. We work through intermediaries. So it is 

not that it can’t be done—and we certainly want to hold people accountable—it is just that we don’t give the assistance directly to a 

company who is creating those, where we can hold them as directly 

accountable. 

Ms. NORTON. But you give the assistance in fact to who? 

Mr. FERNANDEZ. Typically, it is the city, a town, a county, a public—— 

Ms. NORTON. Who, of course, depend your expertise and advice 

and counsel. 

Mr. FERNANDEZ. Correct. 

Ms. NORTON. So I recognize the difference. It is an important difference. Would you be willing to at least try this out in an appropriate circumstance to see whether it would work and save the taxpayers money? 

Mr. FERNANDEZ. Sure. And I think there are instances where our 

support is much more direct; and in those cases it would be totally 

appropriate. 

Ms. NORTON. The Committee would very much be interested in 

hearing from you in writing any circumstances where you think 

this might be tried out. We cross-examined the Delta Commission 

23 

very closely, and they are headed by a former auditor. They know 

how to account for circumstances beyond the control of the grantee, 

and they know how to negotiate in advance. I don’t know what 

your record is or whether you know what the record is in, in fact, 

producing jobs promised from EDA seed money. Have you any 

sense of the regularity with which commitments are in fact kept to 

produce jobs by the numbers? 

Mr. FERNANDEZ. I can recall that within the last couple of years 

that Grant Thornton did an extensive study. We used a third-party 

company to actually evaluate the track record of EDA, and they reported back that, in fact, the actual job numbers and private sector 

leverage was very consistent with the grantee estimates. And that 

actually validated even an earlier study by Rutgers University. So 

I think our track record is very strong. If anything, we take great 

pains to be extremely conservative in our projections. 

Ms. NORTON. Well, you have a great deal of credibility with us 

in that regard; that is why we are at pains to understand why 

there would be any reduction in funding. Why was there a reduction in funding for EDA? 

Mr. FERNANDEZ. Well, there are two things to consider here. One 

is that EDA is one of the agencies trying to address the broader 

economic challenges our Country faces. And in the President’s 

budget there are substantial new investments, for example, in infrastructure; there are substantial new investments in education; 

there are substantial new investments in research and development, all of which are incredibly important pillars to a framework 

for sustainable economic growth. EDA is focused on building globally competitive communities. We are one piece of that overall 

framework. So in the context of the entire budget, there is great 

emphasis on rebuilding and building a stronger economy for our 

Country. 

The recommendation for more funding in economic adjustment, 

frankly, is in line with that broader administrative framework. 

Ms. NORTON. Well, we don’t understand that at all. We don’t understand the reduction in the budget of the agency. Now, we understand the Economic Adjustment Grant account flexibility, but we 

have made no objection to that. We don’t understand how the agency’s mission in a time of recession is aided by an absolute reduction 

in its budget as opposed to last year. What was the rationale given 

to you for that? We understand you are not the OMB. 

Mr. FERNANDEZ. Well, our proposal is exactly in line with what 

we proposed in fiscal year 2010, and we certainly appreciate the 

additional support that Congress provided us. 

Ms. NORTON. So you are saying that this year’s budget is the 

same budget? 

Mr. FERNANDEZ. It is, but for the $2.1 million adjustment on the 

salaries and expenses for—— 

Ms. NORTON. So any adjustment you got last year came from the 

Congress, you are saying? 

Mr. FERNANDEZ. It did, and we certainly appreciate that. 

Ms. NORTON. So we don’t really have support in this Administration for EDA; they leave it to the Congress every year to come forward and give EDA more money. 

24 

Mr. FERNANDEZ. Well, you know, in light of the discretionary 

freeze that was in place for agencies throughout the Government, 

the fact that we were not reduced I think is an expression of that 

support. And I don’t want to sugar-coat this, and I absolutely appreciate and respect the support that this Committee provides 

EDA, but in many instances it is the technical assistance, the strategic engagement, it is the leveraging of other resources—— 

Ms. NORTON. That takes money too, Mr. Fernandez. 

Mr. FERNANDEZ. It does, but it doesn’t take as much as some of 

the large, complex infrastructure—— 

Ms. NORTON. It certainly isn’t helped by an $86 million reduction. I don’t expect you to defend—I put you between a rock and 

a hard place. You are supposed to defend the President’s budget, 

not ask for more money, so I understand, and we don’t want to put 

you in an untenable position. 

Mr. Cao? 

Mr. CAO. Thank you, Madam Chair. 

Mr. Fernandez, I have two questions to ask you. The first one 

concerns the Port of New Orleans. Hurricane Katrina, as you already know, caused severe damage to the Mississippi Gulf Coast 

Outlet, we call MRGO, and rendered it unusable for most shipping 

activity. 

In fact, the waterway was closed by the Army Corps of Engineers 

by the WRDA Act of 2007. Now, with the closure of the MRGO 

Federal funding of approximately $16.5 million is required to relocate port terminals that were dependent upon the navigability of 

MRGO for ports and maritime operations to address these relocation funding needs. 

In order to prevent further economic devastation to the port and 

the greater New Orleans region, Section 3082 of WRDA 2007 authorizes such funding by the EDA for the relocation of port facilities affected by the closure of the MRGO. However, based on what 

I have been hearing so far, the Port of New Orleans has been unsuccessful in its efforts to obtain the requested funding from the 

EDA. 

Can you describe to me the immediate actions, if there are any, 

that are being taken by the EDA to assist the Port of New Orleans 

in this matter and to utilized unobligated or other EDA funds for 

the necessary relocation of port facilities? 

Mr. FERNANDEZ. Congressman Cao, honestly, I will respond to 

that formally, as soon as I can get you that information after this 

hearing. I don’t know, off the top of my head, what the status or 

the process was by which they made those requests. I known that, 

post-Katrina, EDA has invested over $41 million in the region, but 

I don’t know what the status of any specific requests might have 

been related to those port facilities. But I will get you that information. 

Mr. CAO. OK. Well, it is Section 3082 of WRDA 2007. If you can 

look into that. 

And my next question to you concerns the oil spill. As you know, 

the oil spill will impact and possibly devastate the economic conditions, as well as the livelihoods of fishermen. I know that there is 

a $1 billion fund that was established by the Federal Government 

25 

to address some of those needs. Are there any programs that you 

might have that individuals and businesses can possibly tap into? 

Mr. FERNANDEZ. I would say, first and foremost, we believe that 

the responsibility lies squarely with BP, and I think the Administration is extremely committed to ensuring that British Petroleum 

fully compensates the communities and the individuals and businesses directly impacted by that spill. So, first and foremost, we believe that is where the responsibility lies. 

As I mentioned earlier, we are certainly providing technical assistance. We are engaged actively, communicating with our partners in the region to help sort through what some of these recovery 

actions may require. But we believe the responsibility clearly lies 

with BP. 

Mr. CAO. But, in the meantime, while we are—or at least while 

the people try to get BP to pay up its obligation, do you have any 

programs available possibly that people, during the interim, can 

tap into? 

Mr. FERNANDEZ. Well, certainly, our existing Economic Development Adjustment Programs, in most instances, would be a source 

of potential support. As I mentioned earlier, our account for the 

Economic Adjustment Assistance Program is very reduced. There 

certainly are some funds in the Public Works budget that might be 

available. 

Mr. CAO. Well, if you can, can you ask one of your staff members 

can they provide us with very specific programs in writing so that 

we can provide the information to our people down there in the 2nd 

District? 

Mr. FERNANDEZ. Absolutely. We would be happy to do that. 

Mr. CAO. Thank you. And what do you predict as the short-term 

and long-term effects with respect to economic development in the 

region? 

Mr. FERNANDEZ. As impacted by the oil spill? It is hard to predict 

exactly because of the uncertainty regarding the continual oil spill, 

but there is certainly the capacity to have a very dramatic impact 

on the region. As you know better than I, there are parts of the 

economy that have not fully recovered from Katrina, so that really 

complicates even the existing recovery efforts. So the magnitude, 

while I can’t give you a specific number, there is no question it 

could be devastating for the region and beyond. 

Mr. CAO. And assuming that it could be devastating and assuming that BP would be liable for most of it, do you anticipate your 

department to be somehow involved in this recovery process also? 

And if you do anticipate your agency to be involved, what concrete 

plans do you have, if any? 

Mr. FERNANDEZ. Well, as I mentioned, we are engaged working 

with the local officials now, helping to develop strategies to recovery. I mean, that work usually includes a range of activities: interim, immediate support for disaster coordinators to help get more 

boots on the ground; it involves doing assessments in partnership 

with FEMA. 

Often, they will, in essence, contract with the EDA to do the economic impact assessments. We can begin with Revolving Loan 

Funds to stabilize some of the financial hits that many of the businesses are taking. And then certainly we can begin to actually fund 

26 

recovery strategies, whether they are repairs of existing facilities or 

constructions of new investments that help rebuild and regain economic activity. 

Mr. CAO. Madam Chair, if you could allow me one last question? 

Ms. NORTON. Certainly so, Mr. Cao. 

Mr. CAO. Thank you very much. 

Mr. Fernandez, can you tell me what lessons have you and your 

agency learned from Katrina and the oil spill, and what plans do 

you have in place or what plans are you presently discussing to 

better address and to better help the people in devastated areas for 

future emergencies like the oil spill or Katrina? 

Mr. FERNANDEZ. Yes. As Chairwoman Norton and Mr. Fugate 

discussed, the Administration has learned many lessons from 

Katrina. The coordination, the communication, breakdowns were a 

real problem, so there is a tremendous amount of work going on 

with the ongoing integration of missions between the different Federal agencies. The President has a long-term recovery framework 

working group that is very active and hopefully will have a final 

report to the President shortly. I can tell you in the context of that 

planning, the Economic Development Administration is co-leading 

the Department of Commerce participation in that new framework, 

along with our colleagues at NOAA, and we have taken a lead role 

on the community recovery elements of that plan. 

I think that while there were many problems, to put it mildly, 

in response to Katrina, I can say that I think the collaboration between the local economic development partners and EDA were 

pretty solid. We worked with our existing economic development 

districts, we worked with representatives from the International 

Economic Development Council and others to give the kind of essential technical assistance, planning assistance to help build strategies for long-term recovery. There is always room for improvement, and we are certainly open to doing that. 

Mr. CAO. Thank you. I yield back. 

Ms. NORTON. Thank you, Mr. Cao. 

Just a few more questions, Mr. Fernandez. The Subcommittee is 

pleased with EDA’s focus on regionalism. We wonder, though, 

whether or not this will have an impact, perhaps unintended, on 

rural areas which don’t have access to universities or to high-tech 

industries. 

Mr. FERNANDEZ. It is a very good question and it is one that we 

get asked often. If you look at the investment history of EDA, and 

even in the most recent year, the majority of our funding has gone 

to what would be defined as rural areas, and the way we look at 

the regional strategies is to actually connect many of those smaller 

towns or rural areas that may lack a university or other similar 

institutions to the broader regional economy, and the goal is to provide a bridge between communities, not to perpetuate a divide. 

Ms. NORTON. We have many calls for regional commissions, and 

we have created some regional commissions. I wonder if that is a 

reflection on EDA. Does it mean that EDA is spread too thinly and 

not able to assist many regions of the Country? 

Mr. FERNANDEZ. From my perspective, that is not the case. I 

can’t say with certainty what the legislative intent has always been 

behind the establishment of these broader commissions. They cerVerDate Aug 31 2005 10:33 Aug 20, 2010 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 P:\DOCS\56420.0 KAYLA
27 

tainly are diverse in their size and scope, and in their operations, 

as well. I believe that our regional offices have coverage. 

One of the things we are working on that I know the Committee 

would be interested in is seriously looking at our processes so that 

we can actually free up personnel to do more of the high touch external work, rather than process. So we have engaged in a very extensive review of our grant application process with a goal of having a more effective, transparent, and accessible system, but one 

that also enables us to deploy more resources out in the field, meeting with our stakeholders and helping to engage in these kind of 

collaborative economic development projects. 

Ms. NORTON. You expeditiously set about your stimulus spending. Would you explain some of the job creation activities that have 

resulted from EDA’s stimulus spending? 

Mr. FERNANDEZ. Yes. And I think at a previous hearing I believe 

we gave you a detailed summary of all of the projects. 

Ms. NORTON. I am looking now for the kinds of jobs that were 

created. 

Mr. FERNANDEZ. There is a range of them. In Minnesota we invested in a project is going to facilitate the investment of a new 

steel plant, so those will be solid manufacturing jobs. We have invested in—unfortunately, I have drawn a blank. I know in Indiana 

we invested in a high-tech training facility to foster more job creation in the information technology sector. Unfortunately, I am 

kind of drawing a blank on some of the other projects, but it has 

been a wide range of investments, from more research-oriented positions to manufacturing positions to small businesses. 

Ms. NORTON. Finally, Mr. Fernandez, you will recall my question 

to Mr. Fugate on this White House long-term disaster recovery 

working group. We are trying to figure out just where you figure 

in this. Are you at the table at all, sir? After all, long-term recovery 

is about economic development. 

Mr. FERNANDEZ. It is. And, as I mentioned, we are at the table 

and EDA was tasked, along with NOAA, to co-lead the Department 

of Commerce’s participation—— 

Ms. NORTON. To do what? 

Mr. FERNANDEZ. We are co-leading the Department of Commerce 

engagement in that working group. 

Ms. NORTON. What does that mean, please? 

Mr. FERNANDEZ. We are representing EDA, as well as other 

agencies throughout the Department of Commerce, as part of the 

working group. So we are heavily engaged in that process. 

Ms. NORTON. Do you believe you are as engaged as FEMA and 

HUD are with this process? 

Mr. FERNANDEZ. I believe so. 

Ms. NORTON. Well, we are going to look for your fingerprints on 

this project as well, Mr. Fernandez. We very much appreciate your 

very important testimony here today. Thank you. 

Mr. FERNANDEZ. Thank you. 

Ms. NORTON. This hearing is adjourned. 

[Whereupon, at 11:45 a.m., the Subcommittee was adjourned.] 

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