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[Senate Hearing 109-1099]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 109-1099
 
                      REVITALIZING THE ECONOMY OF
                    SOUTH LOUISIANA: EMPOWERING THE
                     REGION FOR RECOVERY AND GROWTH

=======================================================================

                             FIELD HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 7, 2005

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                     TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona                 DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana                    Chairman
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon              BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  BARBARA BOXER, California
GEORGE ALLEN, Virginia               BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
JIM DeMINT, South Carolina           FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana              E. BENJAMIN NELSON, Nebraska
                                     MARK PRYOR, Arkansas
             Lisa J. Sutherland, Republican Staff Director
        Christine Drager Kurth, Republican Deputy Staff Director
                David Russell, Republican Chief Counsel
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
   Samuel E. Whitehorn, Democratic Deputy Staff Director and General 
                                Counsel
             Lila Harper Helms, Democratic Policy Director

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 7, 2005.................................     1
Statement of Senator Stevens.....................................     1
Statement of Senator Vitter......................................     2

                               Witnesses

Coleman, Elaine, Commissioner, Downtown Development District.....    56
    Prepared statement...........................................    58
Drennen, Mark C., President/CEO, Greater New Orleans, 
  Incorporated; on behalf of the Southeast Louisiana Business 
  Coalition......................................................    24
    Prepared statement...........................................    27
Falgout, Ted M., Port Director, Port Fourchon....................    28
    Prepared statement...........................................    29
Francis, Dr. Norman C., President, Xavier University; Chair, 
  Louisiana Recovery Authority...................................    12
    Prepared statement...........................................    15
Guidry, David, President/CEO, Guico Machine Works Inc............    60
    Prepared statement...........................................    61
Kennedy, Hon. John, State Treasurer, Louisiana Department of the 
  Treasury.......................................................     5
LaGrange, Gary P., President/CEO, Port of New Orleans............    30
    Prepared statement...........................................    32
McDonald Jr., Alden J., President/Chairman, Liberty Bank and 
  Trust Company; Commissioner, Bring New Orleans Back............    17
    Prepared statement...........................................    19
Nagin, Hon. C. Ray, Mayor, City of New Orleans...................    48
Olivier, Michael J., Secretary, Louisiana Economic Development...     7
    Prepared statement...........................................     9
Perry, J. Stephen, President/CEO, New Orleans Metropolitan 
  Convention and Visitors Bureau.................................    49
    Prepared statement...........................................    52
Smith, Ewell, Executive Director, Louisiana Seafood Promotion and 
  Marketing Board................................................    34
    Prepared statement...........................................    37
Thomas, Hon. Craig, U.S. Senator from Wyoming....................     4

                                Appendix

Letter, dated November 7, 2005, from a group of commercial 
  fishermen and dock dealers to the Senators, Congressmen, and 
  State Officials of Louisiana...................................    69
Morris, Julie, Council Chairman, Gulf of Mexico Fishery 
  Management Council, letter with attachment dated October 7, 
  2005...........................................................    70

                      REVITALIZING THE ECONOMY OF
                    SOUTH LOUISIANA: EMPOWERING THE
                     REGION FOR RECOVERY AND GROWTH

                              ----------                              

                        MONDAY, NOVEMBER 7, 2005

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                   New Orleans, LA.
    The Committee met, pursuant to notice, at 9 a.m. in 
Louisiana Supreme Court Chambers, Hon. Ted Stevens, Chairman of 
the Committee, presiding.

            OPENING STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    The Chairman. Well, thank you very much. Let me thank, on 
behalf of the Senate, the Chief Justice Calogero, for allowing 
us to use this court room and for meeting with us this morning 
and we are indebted to our colleague and good friend, David 
Vitter, for the invitation to bring this committee down here to 
really inspect the damages and to determine what needs to be 
done for this area to recover. My thanks also to Senator Thomas 
of Wyoming, and Senator Brownback is expected any time now.
    Alaskans are not in a different situation. We have an 
abundance of wildlife and fishing and energy production, just 
as you do. We share, we literally have half the coastline in 
the United States. If it was only 90 degrees cooler here it 
would be as in my hometown today. As it happens you'd have to 
throw in a few mountains to keep us around. But we do enjoy 
being with you and have a chance to tour the area. The Lakeview 
areas at Ninth Ward, the levee breach on the Inner Harbor 
Canal.
    We've viewed the devastation to homes and talked to 
residents there about the challenge and uncertainties they face 
and we've listened to dozens of people on their thoughts about 
the actions that Congress should take to assist in the recovery 
of this area.
    Let me make one point very strongly, we're not here to tell 
you what to do. We're here to conduct a hearing, which we have 
called ``Empowering the Region for Recovery and Growth.'' We 
want to learn from you what you feel is required to reestablish 
a new and better New Orleans. We ask questions and if you 
misinterpret them, that is your problem, not mine. The 
newspaper did.
    Just last week, I worked with Senators Vitter and Landrieu, 
to include $1.2 billion for coastal disasters and hurricanes 
affecting the States in this area in our budget reconciliation 
bill. That was in addition to the $200 million we had already 
earmarked from the Commerce Committee. This portion of the bill 
was just an area affecting this committee, the Commerce 
Committee. But I do think your delegation is working very hard. 
They are making progress, there's a great deal to be done and 
I'm confident that your region will thrive again.
    We're here to hear from the witnesses. But first, let me 
see if Senator Vitter has some remarks to make this morning.

                STATEMENT OF HON. DAVID VITTER, 
                  U.S. SENATOR FROM LOUISIANA

    Senator Vitter. Thank you, very much, Mr. Chairman. I 
really do want to thank you and Senator Thomas, Senator 
Brownback, who will be with us later today, for recognizing the 
importance of being here today and for giving up a good part of 
your weekend to see firsthand, the devastation and the 
remaining challenges caused by Hurricane Katrina.
    As we saw yesterday, we've really moved beyond the 
emergency response phase, to rebuilding and recovering and 
that's what this hearing is about. The decisions we make now 
are the most important that we will make in our lifetime, in 
Louisiana, in terms of our future. And that's why I asked you 
to bring this hearing here, today. So, we can all hear ideas 
about how to empower our citizens and businesses, to once again 
have the economic security and certainty we all desire, so, 
that our economy can get back on track.
    I would tell everyone here, there is no one more 
appropriate or more useful to be here, than the Chairman. He is 
the Chairman of the Commerce Committee, President Pro Tem of 
the Senate, the most senior member of the majority party there 
and also a very high ranking member of the Appropriations 
Committee.
    And of course, I deeply appreciate Senator Thomas being 
here, as well.
    Before we get started, I would like to give a brief update 
on some of the actions we've already taken in Congress to move 
Louisiana forward, as a prelude, to where we need to go from 
here. First, we passed two emergency appropriation bills, 
totaling over $62 billion in emergency relief and recovery 
efforts for Hurricane Katrina.
    Today, over 1.2 million households have applied for 
individual assistance, and of course, all levels of government 
in the devastated area are taking advantage of public 
assistance.
    Second, I've worked with the White House to have 100 
percent of the costs of many disaster activities covered by the 
Federal Government for an extended period of time, the most 
extended period of time ever in history.
    Third, we enacted a $6.1 billion Katrina tax relief 
package, for virtually everyone affected by the storm, to give 
them some immediate individual tax relief.
    Fourth, we provided an additional $2 billion for the 
National Flood Insurance Program to ensure the money is there 
to pay out benefits under the current program.
    Fifth, we passed $300 million in additional funds for food 
and health benefits for those unable to afford those 
necessities.
    Sixth, students and those paying off student loans were 
given significant Pell Grant relief. That was important, we 
certainly need more relief for higher education in those 
students.
    Seventh, the President recently signed into law, my bill to 
provide $1 billion in assistance to parish and local 
governments to provide essential services. And as I committed 
on the Senate floor during the debate of that bill, we're going 
to work to ensure that these loans have the ability to be 
forgiven, if circumstances require that.
    The city of New Orleans for instance, had to lay off nearly 
one-half of its workforce and there are vital services that our 
parish and local governments must provide. So, we need to 
continue to work on that CDL program and improve it.
    Eighth, we work closely with the President to ensure that 
100 percent of the cost of restoring our hurricane protection 
system, to at least category three levels, to begin with. One 
hundred percent of that will be paid entirely by the Federal 
Government, which is unprecedented. This allows our state and 
local governments to focus the hundreds of millions of dollars 
that they would otherwise have to devote to their match, to 
other important recovery priorities. And of course, this 
category three protection is not enough. I'll be introducing a 
new program to provide an even greater level of hurricane 
protection, up to category 5, urging the Corps to form an 
integrated program for the entire region.
    Louisiana already receives more Corps of Engineers funds 
than any other state, despite our small size. So, we need to 
make sure these dollars and others are spent wisely, in terms 
of a fully integrated plan, moving forward.
    Ninth, as Senator Stevens mentioned, we just added $1.2 
billion to the already $200 million that his Commerce Committee 
included in the budget package, for help to coastal states 
dealing with coastal restoration and related issues. And as we 
heard in our Corps briefing this morning, that is directly 
related to hurricane protection. Very, very important.
    Tenth, in that same budget package passed through the 
Senate last week, there was a significant Medicaid piece, that 
will be very important, in terms of health care in Louisiana.
    Eleventh, in that same budget package, there was a very 
significant education piece, to fund the education of evacuee 
children, who have gone out of the New Orleans area to public 
and non-public school systems all over the state and even more 
broadly, all over the country, particularly, in states like 
Texas.
    And twelfth, the Senate has also passed hundreds of 
millions of dollars for housing assistance, education 
reimbursement, funds for the SBA, economic development 
administration and more.
    So, that's a lot of what we have done. Now, clearly, we 
must do more and we must march on from here with significant 
further action. But to allow us to do more in Congress and 
quite frankly, to build the consensus to allow us to do more, 
we also need to see important progress and vision, here on the 
ground in Louisiana and so many of our leaders who are 
providing that guidance and vision are here today.
    I really think the biggest challenge we face now, is 
convincing those in Washington, that we have a smart bold plan 
to rebuild in the right way and that we have the structure that 
can pull that rebuilding off. And I think, communicating that 
really involves two things. Number one, communicating that we 
are open to new ideas and bold proposals and in every area of 
the rebuilding. Whether it's hospitals or education or a new 
and improved flood and hurricane protection system. And number 
two, we also need to make sure we communicate that we are 
coming together with a single common vision, being developed on 
the ground in Louisiana.
    I think, there is more work to be done in that regard and I 
hope this hearing will help us pull together to do that. For 
instance, we have the Governor's Commission, the Mayor's 
Commission, numerous advisory boards at all levels. In 
addition, there are a number of not-for-profit commissions and 
many in the private sector who are holding forums and providing 
ideas.
    And just last week, the President announced a council to 
assist the new Federal coordinator in overseeing Federal 
operations here.
    I'm afraid we may be using a model I saw in the U.S. House 
of Representatives. There, we had so many committees, that we 
established a committee on committees. I'm not sure that's the 
model we want to follow on the ground in Louisiana and so, I 
think, a big part of our work now, is to pull all of this very 
important work and thinking together, to develop a truly common 
vision, to move forward.
    I hope that the President's recent appointment of a single 
Federal coordinator, Don Powell, will help us do that. In my 
hour and a half meeting with him, last week, I urged him to be 
a catalyst, to help bring everyone together on the ground, with 
that single unifying bold vision for rebuilding and 
reconstruction.
    So, Mr. Chairman, that's my hope and certainly, the 
witnesses you're going to hear from today, are a big part of 
developing that bold common, unifying vision. I thank you 
again, for allowing them to testify.
    The Chairman. Thank you very much.
    Senator Thomas, do you have comments to make?

                STATEMENT OF HON. CRAIG THOMAS, 
                   U.S. SENATOR FROM WYOMING

    Senator Thomas. Thank you, Mr. Chairman. Very briefly, I 
appreciate being part of this Senatorial visiting group. It's 
amazing to see, actually be on scene and the difference between 
what you hear in the news, of course and so on. But it's really 
been interesting and what a devastating thing it's been.
    I'm really pleased with the hospitality we've had and 
certainly, everyone has gone out of their way to show us what 
we need to see, and more importantly perhaps, talk about their 
plans and their ideas of what we can do about it. Everyone has 
great sympathy for the people of New Orleans, of course and of 
the Gulf area and we want to do whatever we can. I'm just 
hopeful that what we do and our plans can be based on the long 
term needs. That we simply don't get ourselves back in the same 
position we were in before, that rather, we have changes that 
will be important, in terms of avoiding the things that have 
happened here. I too, hope that we can have a balance between 
the role of the Federal Government, the state government, the 
local governments. This is not totally a function of the 
Federal Government, as you know, and so, we need to work out 
that.
    So, thank you very much for the opportunity to be here, Mr. 
Chairman. I look forward to hearing the participants.
    The Chairman. Well, thank you. We're going to have a series 
of witnesses now. Three different panels. I would ask the 
witnesses to limit their comments to, not more than 8 minutes, 
so we can listen to everyone and still make the helicopter tour 
we're going to take following this and we each might have a 
question or two. We're going to want to listen to all of the 
witnesses who have come to testify.
    Our first panelist is the Honorable John Kennedy, the State 
Treasurer for Louisiana; Secretary Michael Olivier, the 
Secretary of the Louisiana Department of Economic Development; 
Dr. Nolan Francis, President of Xavier University and also 
Commissioner of Louisiana Recovery Authority; and Walter 
McDonald, President of Liberty Bank and Trust, also, 
Commissioner of Bring New Orleans Back.
    We'll first listen to Treasurer John Kennedy and each of 
the witnesses in order and then ask questions after everyone 
has had an opportunity to speak. So, Mr. Kennedy?

  STATEMENT OF HON. JOHN KENNEDY, STATE TREASURER, LOUISIANA 
                   DEPARTMENT OF THE TREASURY

    Mr. Kennedy. Thank you, Mr. Chairman, members of the 
Committee and particularly our own U.S. Senator, Senator 
Vitter. I want to thank you for the opportunity to talk with 
you this morning. I want to thank you for your presence here 
today. I want to thank you for your past help.
    I had prepared, as you can see, a few remarks regarding 
infrastructure, regarding the levee system, regarding the Small 
Business Association. But I think in light of Senator Vitter's 
very eloquent and relevant remarks, I'm going to put my 
prepared remarks aside just for a moment and talk to you about 
what Louisiana is prepared to do to help itself.
    Let me talk about our budget first. We all know that 
Louisiana has experienced two natural disasters of epic 
proportions. It has had a dramatic impact on the tax base of 
our state. Both at the local government level, particularly at 
the local government level, but also, at the state level. 
Louisiana, if you add up all of our income, our salaries, our 
dividends, our interest every year, we have about $125 billion 
in state personal income. Which, in my judgment, is the best 
indicator of economic activity.
    In the area impacted by Katrina and the area impacted by 
Rita, between a third and forty percent of that area 
contributes this income. That's a $125 billion income. Roughly, 
$40-$45 billion of income is contributed to our $125 billion in 
gross state product. That will have an impact on our budget.
    Our budget is $19 billion. We are estimating an impact of 
between $1 and $2 billion, in terms of lost tax base. But I 
want to emphasize to you, that the impact will be bigger. 
Because, in addition to addressing a budget deficit of 
between--let's call it $1.5 billion, the State of Louisiana is 
prepared and indeed, must find additional fundings to help our 
local governments pay their bonded indebtedness, to help our 
local governments, particularly in Orleans and Saint Bernard 
and Cameron parishes, which have no tax base, and pay their 
operating expenses and Louisiana needs to find additional 
monies in its budget to help our businesses with bridge 
capital.
    Let me tell you how I hope we will proceed to do that. Our 
Legislature convened last night for a long overdue special 
session. I am hopeful that our Legislature will begin by 
looking at our budget. Not by making a 5 percent or a 10 
percent cut, but by looking at our budget line by line, item by 
item, project by project. And the question that we have to ask 
ourselves, is that after these storms of epic proportions, 
given the demands on state government, financial and otherwise, 
what are the core functions of government that Louisiana is 
prepared to fund and that the Louisiana citizens actually need 
at this point? That has got to be our starting point.
    We know we have to make structural changes in our budget 
and I hope and believe that our Legislature and our Governor 
are prepared to do that and I think they are and will. After we 
have made the necessary adjustments to our budget, we need to 
look at the other arsenals in the state's tools of economic 
possibilities. We need to look at advance refunding some of our 
State debt. Authority, that I believe, will be given to us by 
the U.S. Congress, that allows us to basically do what you do 
when you restructure the mortgage on your home. If you go from 
a 15-year mortgage on your home to a 30-year mortgage on your 
home, you lower your interest, principal and interest payments, 
your monthly payments, which freeze up cashflow.
    We need to look advance refunding our tobacco settlement 
debt. We need to look at accessing our rainy day trust fund. We 
need to look at securitizing the additional 40 percent of our 
tobacco settlement income streams. We do not need to look at 
raising taxes. Let me say that again. We do not need to look at 
raising taxes. Our people have suffered enough.
    If we do the things that I have mentioned, look at our 
budget line by line, item by item, project by project, and I 
believe our Legislature is prepared to do that and make the 
necessary adjustments, a small or more efficient state 
government. And then, we are willing to look and I think we 
are, at the other tools in our economic arsenal. Advance 
refunding of our debt, restructuring it. Our tobacco settlement 
revenue possibilities, the purpose of which, will be, to 
provide a pool of money, from which, local governments can 
borrow to pay their bonded indebtedness, from which, local 
governments can borrow to pay their operating expenses; and 
from which, our businesses, our small businesses, can borrow 
for bridge capital. Many of which, quite frankly and I say this 
respectfully, can't get an answer from the Small Business 
Administration. Thus, the State of Louisiana needs to step in 
and help them.
    I think, if we do that, the changes will be dramatic, in 
terms of Louisiana State Government. But the changes will be 
equally dramatic in terms of the help that we will provide to 
ourselves and to our people. After we do that, and I believe 
that our Legislature will do that, we respectfully ask you for 
your continued help. We thank you for your past help. But even 
with the dramatic measures that I have talked about, we cannot 
do it alone. We need your continued support.
    A person, much smarter than I am, once said that 
perseverance is not a long race. It's a series of small races, 
run one after the other.
    Thank you for being here with us today. We hope you'll join 
with us in running the race to rebuild Louisiana.

          STATEMENT OF MICHAEL J. OLIVIER, SECRETARY, 
                 LOUISIANA ECONOMIC DEVELOPMENT

    Mr. Olivier. Mr. Chairman and members of the Committee, 
thank you for this opportunity. Thank you very much for 
visiting our state. My name is Michael Olivier, I'm the 
Secretary of Economic Development for the State of Louisiana.
    Prior to Katrina and Rita, these storms that we've 
suffered, the main mission of my organization was to recruit 
new diversified businesses to our state to create quality jobs. 
And, more importantly, the retention of existing business and 
industry, because you have to keep what you've got and that's 
where we are now, trying to keep what we've got.
    Of course, our mission is still the same. New business 
recruitment, existing business and industry retention, but it's 
different. We've expanded because our role to respond to the 
needs of these impacted businesses require a different 
approach.
    Much of what we are going to be talking about today, is 
dealing with the impacted areas. We consider that there are 13 
parishes that are more dramatically impacted than the other 36 
or 37 that have been designated as impacted. Of course, they 
have a significant amount of impact all across the South 
Louisiana area, the Gulf of Mexico region. But more 
specifically, the most impacted parishes represent some 80,850 
businesses that have been in some state of cessation. This 
represents 90 percent of those of being small business and 
also, represents 41 percent of the entire business community in 
the State of Louisiana. We have about 197,400 businesses in our 
state. This 80,000, almost 81,000 represents 41 percent of all 
the businesses in our state.
    Three of our largest industries, oil and gas, and the 
petro-chem area, transportation and shipping, and agricultural 
commodities and timber, have been severely impacted, among 
others. In the oil and gas and petrochemical area, three major 
refineries are out-of-service through the New Year.
    Only now are we seeing, as our refineries come back online, 
our gasoline prices coming back to pre-Katrina rates. This is 
10 weeks later. It's interesting that some people would wonder, 
what is the impact of Louisiana and the Gulf of Mexico region 
and these states that have been impacted by these storms, on 
the national economy. I submit, this is one such impact.
    On the offshore oil and gas area, our pipelines are 
returning to operation. However, only 32 percent of daily oil 
production is back online, 45 percent of natural gas production 
is back and 27 percent of manned platforms remain evacuated. A 
lot of people do not realize that there are 40,000 miles of 
pipelines in and offshore Louisiana.
    In our ports and shipping and transportation segment, two 
of our deepwater ports suffered extensive damage and are not 
operating. Those are Plaquemines and St. Bernard, which, I 
know, you visited those areas. We don't know when, if ever, 
these ports will open. Later, you're going to hear more in 
detail about our other two ports that have been impacted in the 
immediate area from Gary LaGrange and Ted Falgout. In the 
agricultural area, this is truly a disturbing area, because, 
the total agricultural damage from both of the storms is over 
$1.6 billion. Timber, is where we suffered some of the greatest 
losses. Our combined timber losses, from both hurricanes, was 
$850 million.
    In Katrina alone, in three parishes, we call them parishes 
here, you call them counties, in three on the North Shore, we 
lost 3 billion feet of timber, equating to two times the annual 
harvest.
    For the houses that we've lost, we've lost some 205,000 
homes that have been destroyed and another 45,000 that have 
been severely damaged. It will take 5 billion board feet of 
timber to reconstruct these houses. So, you can see, just 
comparing that, the magnitude.
    Now, since this committee's topic is revitalization, I'll 
tell you something about the view of what can revitalize 
Louisiana. Right now, it's access to capital. In our 
businesses, if our businesses can have access to capital, we 
can rebuild not only the individual businesses, but the entire 
economy. If lack of access to capital continues, we're going to 
have difficulties and we will be facing the largest default 
rate since the Great Depression. Insolvency is going to be 
ramped.
    We ask that you help us with four critical recovery 
priorities, to provide immediate access to capital. Those are 
one, allocate $200 million from bridge loans to continue the 
Louisiana Bridge Loan program. Because of the need for cash 
infusion to our small businesses, especially, on October 17, 
Governor Blanco allowed for us to use a reallocated $10 million 
fund, that's a use for deal closing, for a Bridge Loan Program. 
This is patterned after what was done in Florida and patterned 
after what Congress provided Manhattan in the Economic Recovery 
Act of 2002. This is intended for helping businesses meet the 
immediate needs. It was only $25,000 per business, up to 
$25,000 per business. Doing the math, out of 81,000 businesses, 
we could only help 4,000 businesses. In 10 business days, we've 
loaned all the money out.
    We were hoping to be able to demonstrate to Congress, that 
we could manage such a fund. That we knew, that you gave these 
kinds of funds to New York State, lower Manhattan and it was 
managed in such a way in Florida, that over 80 percent of these 
funds, short term 180 day, no interest loan funds, were paid 
back. 80 percent were paid back.
    We're out of funds now. So, we're hopeful that Congress 
will, before the holiday session ends, we will be able to get 
some funding, just as you gave to New York State.
    Number two, direct the Small Business Administration to 
expedite loan processing. So far, we have received--the SBA 
from this area, have gotten over 136,000 loan applications. Of 
these, they had approved only 2,294 for $157 million. They've 
maintained over 90 percent rejection rate.
    Of the 157 million approved, only $1.5 million in business 
loans has been fully disbursed. Less than 1 percent has been 
disbursed. So, in other words, our business community is not 
getting access to capital. And this, I submit, is not 
acceptable.
    The Chairman. Which type of money is that?
    Mr. Olivier. That's Small Business Administration Disaster 
Loan Program.
    Priority number three for us, is provide $10 million for 
business grants that parallel those provided to the lower 
Manhattan businesses after 9/11. Like the 9/11 recovery grants 
for Manhattan, this request is provided for programs that need 
immediate relief. We have a great deal who are in our fishing 
industry who need relief. They probably won't be able to 
qualify for loans, we'll have to give them grants to get that 
industry sector cranked back up.
    Priority number four, $30 billion in tax exempt private 
activity bonds. Again, the same thing that would turn Liberty 
Bonds after 9/11, in the Economic Recovery Act of 2002, you 
gave them $8 billion for that 16-acre area to be rebuilt. Just 
after Katrina, we have 960 square miles, we submit that we 
could use and this is allowing for businesses to get to 
business by encouraging, not only redevelopment But new 
development and enhancement of new industry to come to the Gulf 
Coast region and we need the language. The language needs to be 
broadened. That would allow for the construction and 
reconstruction of rehabilitation of commercial property. Not 
only manufacturing property, refineries, ethanol refineries, 
residential property and residential rental property.
    Because in the New Orleans region alone, 60 percent of the 
people rented their homes or apartments.
    In addition to the capital request, we need for you to know 
that we're currently working to address our business needs, 
based on our capacity to address that. We started a campaign, 
which we call LED Forward, Louisiana Economic Development 
Forward, and we have moved forward on that, providing access to 
businesses.
    And the last thing I want to say to you, as our time is 
expiring, is that we're focused on getting Louisiana back to 
business. And we are doing a lot of things as our treasurer has 
outlined. And our people are very resilient, absolutely very 
resilient. And the help that you can provide, along with the 
help that we are providing to our businesses, will help give a 
lifeline for the businesses to survive, thrive, and later, 
prosper.
    And I can say this about the people of this area, they are 
very resilient. You'll see that and as you'll know, we've 
demonstrated that resilience in many, many years. In fact, 
we've been pulling for the Saints for 35 years, that's 
resilience.
    Thank you.
    [Laughter.]
    [The prepared statement of Mr. Olivier follows:]

         Prepared Statement of Michael J. Olivier, Secretary, 
                     Louisiana Economic Development
    Mr. Chairman and distinguished members of the Committee, thank you 
for the invitation to speak at this hearing. My name is Michael Olivier 
and I serve as the Secretary of Louisiana Economic Development, or as 
we call it, L.E.D.
    Prior to Katrina and Rita, LED's primary mission was recruitment of 
new businesses to Louisiana, as well as retention and expansion of 
existing Louisiana-based operations. In spite of the hurricanes, this 
is still our mission. However, we have expanded our role to respond to 
the needs of impacted businesses.
    LED is working to build a New Louisiana--a place where businesses 
can thrive and citizens willing to work can find quality jobs.
    This is no easy task.
    First, let me put the impact of both storms in perspective from a 
business standpoint. Many of the parishes in the Katrina and Rita 
impact zone are so dramatically affected they require substantial, 
sustained investment by Federal, State and local Governments and the 
private sector. In the 13 parishes most dramatically impacted by 
Katrina and Rita, before the storms there were 80,850 businesses. By 
comparison, the entire state economy had 197,446 registered businesses.
    Although only 13 of 64 parishes were severely impacted, they 
represent 41 percent of the state's total businesses--90 percent of 
which are small businesses.
    Let me also describe the damage to three of our largest industries 
- oil and gas/petrochemical, transportation and shipping and 
agribusiness which includes agricultural commodities and manufacturing 
and timber.
    In oil and gas/petrochemical, in the Katrina impacted area, three 
major facilities--Murphy Oil in Meraux, ConocoPhillips in Belle Chasse 
and ExxonMobil in Chalmette will remain out of service through the end 
of the year. In the Rita impacted area, the three Lake Charles 
facilities, Citgo, ConocoPhillips and Calcasieu Refining, are expected 
to be at full operation by mid-November--three months after Rita hit.
    On- and off-shore pipelines are reporting a return to operation 
following shut-downs from Katrina, Rita and Wilma. As of October 28, 
MMS reports:

   Only 32 percent of daily oil production is back online

   Only 45 percent of natural gas production is back online

   27 percent (224 of 819) manned platforms remain evacuated

    Ports, shipping and transportation is the lifeblood of this state. 
Louisiana's shipping activities are increasing:

   21 inland and shallow-water river ports remain fully 
        operational

   Eleven of twelve grain transit facilities are fully 
        functional

   The Louisiana Offshore Oil Port (LOOP) is unloading 
        supertankers at 70 percent capacity

    However, our deepwater ports are a different story. Two suffered 
extensive damage and are not operating, Plaquemines and St. Bernard. We 
don't know when, if ever, either of these ports will reopen. The Port 
of New Orleans is partially operational, but it will be another six 
months before fully operational. The infrastructure (roads, rail) 
leading to the terminals are 90 percent operational. You will hear from 
Gary LaGrange later, so I'll let him describe the port's condition in 
more detail. The Port of South Louisiana, which is the Nation's largest 
port by tonnage and essential to the Nation's agriculture exports, is 
100 percent operational. The Port of Lake Charles remained open during 
and after Katrina, however it sustained damages from Rita. It is again 
operational, but will require some reconstruction. The Port of Baton 
Rouge was the only Louisiana port to remain open through all of the 
storms and has been taking diverted cargo.
    However, by saying fully operational, does not mean that ports are 
fully functional. The combined damage to our ports is in the billions 
of dollars. To bring them back to the level of operation that the 
Nation relies on will require substantial investment from the Federal 
Government.
    Agriculture is where we've seen some of the greatest damage to 
business interests. In the area of commodities, according to estimates 
by the LSU AgCenter, Katrina's total agriculture products damages are 
approximately $1 billion, while Rita's are $569 million. For many 
commodities, the economic impact could potentially grow as delays in 
re-establishing infrastructure exist.
    While crop damage was significant on the manufacturing side, 
agribusiness manufacturing and processing is coming back online. Sugar 
and rice mills are all fully operational. Our pulp and paper mills are 
at 50 percent capacity. Food processing, which is mainly New Orleans-
based, is 50 percent online. Most processors have December start-up 
targets because of mechanical/electrical issues from water damage.
    Timber is where we suffered some of the greatest losses. Louisiana 
is a major timber supplier and manufacturer of wood products. The 
combined timber loss sustained by both hurricanes is estimated to be 
approximately $850 million. Katrina alone has total estimated losses of 
$612 million. In that storm alone, we lost over 3 billion feet of 
timber equating two times annual harvest amount.
    We estimate in Louisiana alone that there were 250,000 homes 
impacted by Katrina--meaning either totally lost or substantially 
damaged. To rebuild and repair these homes will require five billion 
board feet of lumber and three billion square feet of panel products. 
Rita's top commodity loss was timber at over $227 million in projected 
losses.
    Since this committee's topic is revitalization, let me tell you my 
view of the one thing we need to revitalize the economy--access to 
capital.
    If our businesses can have access to capital, we can rebuild not 
only the individual businesses, but the economy as a whole.
    If the lack of access to capital continues, we are facing the 
largest default rate for private and public entities--including local 
governments--since the Depression.
    LED is currently working to address our businesses needs in the 
ways we have capacity by:

        1. Connecting affected businesses with information and 
        resources
        2. Securing financial assistance for business recovery

Area 1: Connecting Affected Businesses With Information and Resources
    We started a campaign called ``LEDforward.'' Our goals were to 
register and assist impacted businesses, connect businesses with 
immediately available resources and facilitate on-going dialogue with 
business owners about recovery process. Elements of the campaign 
include a dedicated website, LEDforward.louisiana.gov, and a toll free 
call center--866-310-7617.
    Both provide access to LED personnel. At the toll-free number, 
callers make specific requests that are not addressed online. LED staff 
can track emerging and unmet needs, create business database for 
follow-up on emerging assistance and counsel business people about 
program opportunities.
    We have established business counseling centers across Rita and 
Katrina zones. The business counseling centers are funded through a $4 
million EDA grant. They are staffed by Federal and state government 
representatives, local economic development professionals and private 
volunteer consultants. Businesses do not receive general information, 
they receive specific program information that applies to their 
business and long-term business planning assistance.
    This is a prime example of the types of programs that LED will 
continue to initiate. We act as catalyst and lend expertise. We partner 
with local economic allies to deliver locally appropriate information. 
We recognize and appreciate all economic development is local.
    We have also expanded accesslouisiana.com, a web portal that 
enables businesses to: post capabilities for sub-contracting 
opportunities, search sub-contractors, and retrieve or post commercial 
property opportunities. LED utilizes this database to find qualified 
Louisiana-based businesses for the recovery work.
    This points to one of the biggest gaps in FEMA services. There must 
be opportunities to facilitate local work for Louisiana businesses and 
their workforce.
    Since the beginning of the reconstruction phase, LED staff have 
been working at FEMA's center in Baton Rouge to provide qualified sub-
contractors to prime contractors. As of October 20 (the last period we 
could get figures for), FEMA contracts had been awarded to Louisiana 
companies 25 percent of the time, but this only represented 4 percent 
of the actual dollars or $156 million of $3.7 billion awarded.
    Also as of that report, all other Federal agencies had awarded 
Louisiana companies 28 percent of the time, but only 18 percent of the 
dollars or $123 million of $675 million.
    We need your help to improve these numbers.
    Finally, LED has played an important role in returning businesses 
and their employees to work. Through November 3, LED coordinated 
delivery of 3,477 mobile housing units purchased by FEMA for displaced 
workers at/near their worksite. After a brief suspension of the program 
by FEMA, LED has resumed deploying units on an ongoing basis. The 
program initially worked in heavy industry sectors, but now supports 
small businesses and ``mom and pop shops.''

Area 2: Facilitating Small Business Aid
    Under Governor Blanco's direction, we have forwarded a 
comprehensive aid request for the impacted region both on the state and 
Federal level, as well as with private capital providers. We implore 
you to help us with four critical recovery priorities, we have to 
provide immediate access to capital for business recovery.

Priority 1: Allocate $200 Million for Bridge Loans to Continue Existing 
        Louisiana Bridge Loan Program
    Because of the desperate need for cash infusion, Louisiana 
reallocated its $10 million Rapid Response Fund--a fund set aside for 
business recruitment--to seed this program. This program provides 
$5,000 to $25,000 loans for up to 180 days at zero interest to 
businesses with more than two, but less than 100 employees. We work in 
partnership with 17 regional banks and the Louisiana Public Facilities 
Authority, under the trusteeship of JP Morgan, to administer the 
program.
    We allocated the $10 million seed proportionally by region. By the 
end of the first week, there were no funds left for the Rita area. 
Within the first two weeks of operation, the fund lent $8.8 million to 
467 businesses. We conservatively estimate a need for 8,000 more of 
these bridge loans.

Priority 2: Direct the Small Business Administration (SBA) to Expedite 
        Loan Processing
    Through November 3, SBA has received 136,086 loan applications. Of 
these, they had approved only 2,294 for $157 million. They had rejected 
11,703.
    They have maintained almost a 90 percent rejection rate.
    Of the 2,294 approved, only 282 for $19.8 million were either for 
businesses or economic injury. The others were home loans.
    Most disturbing, of the $157 million approved, only $1,518,000 are 
fully disbursed. We have no report from SBA whether any of the 
disbursements made to-date were to businesses.
    This is not acceptable.

Priority 3: Provide $10 Billion for Business Grants That Parallel Those 
        Provided to Lower-Manhattan Businesses After 9/11
    Like the 9/11 recovery grants for Manhattan, this request is for 
programs to provide much needed relief and enable recovery.
    9/11 programs included small business recovery grants (similar to 
business interruption insurance), large business retention grants, 
technical assistance programs and worker training programs.
    Like the 9/11 program, initiatives would be designed with business 
input with targeted growth/recovery goals.

Priority 4: Authorize $30 Billion for Tax Exempt-Private Activity 
        ``Hurricane Recovery Bonds''
    These bonds would be used to finance construction, reconstruction 
and rehabilitation of nonresidential (commercial) property, residential 
property and residential rental property.
    In conclusion, we want for you to understand that LED and the 
Blanco Administration is focused on ``Getting Louisiana Back to 
Business''--taking steps toward building a better and stronger economy. 
The greatest key to our businesses succeeding is access to capital. We 
need your help to continue to find grants, loans and other 
opportunities that will give all of our businesses the lifeline they 
need to survive, thrive and prosper.

     STATEMENT OF DR. NORMAN C. FRANCIS, PRESIDENT, XAVIER 
        UNIVERSITY; CHAIR, LOUISIANA RECOVERY AUTHORITY

    Dr. Francis. Good morning and thank you, Mr. Chairman and 
Mr. Thomas and Senator Vitter for being here. There's nothing 
like coming and seeing things for yourselves. The press and the 
pictures don't tell the whole story and we're most appreciative 
that you are here.
    I guess, I wear so many hats and I'm not too sure to which 
one I should be talking from. But let me start with the first 
one that I've just assumed--chairing the Louisiana Recovery 
Authority. Senator Vitter, you just covered almost all the 
major parties that we chose in our first meeting, and there are 
a number of others that we will be addressing.
    The authority, Mr. Chairman, is intending to try to pull 
together and coordinate all of the various activities that will 
help us recover in Louisiana, from coast-to-coast. This is not 
an easy job. We just had our first meeting, maybe came in a 
little late. But when you get hit with a hammer, as we did, 
before you get all the shock, you realize that you've got to 
start pulling things together and the one point I want to make 
is, that we are working together now, and we intend to continue 
to work together--and to work together with parish officials 
and city mayors and the like. To look at, what are the major 
areas of their concern, how can we pull this together and how 
can we bring the State's assistance, in a way that we speak at, 
Senator Vitter's saying, with one voice, so there's no 
confusion.
    I must say that there has been some confusion about what is 
in fact, our efforts and the like. I think, that should be 
considered, be behind us and we want that message to go through 
the Congress, as well. In particular, we chose the parties that 
everybody is talking about. And the first one, Senator Vitter 
covered, was coastal restoration and levees. Levees, levees, 
levees. We aren't going to get any money back, getting money to 
build, unless, we give that comfort level, that we have handled 
the levee system and that's going to take a while. But we know 
that we have to get the Category 5 and we are supporting that, 
in total.
    The same thing is true helping small and large companies 
and businesses and the Governor last night, talked about how 
the State will react to that in providing incentives and the 
like.
    We, also, are going to ask the Congress to make amendments 
to the Stafford Act, to provide, what we call appropriate 
support for state and local governments. I should say in my 
second half, that I'll talk to a minute, we certainly are very 
much into--in change of the Stafford Act, because apparently, 
some 5 years ago, the Congress took out nonprofit institutions 
and limited us to only the first two categories in the Act and 
if we had to get help, we had to go to SBA and then get turned 
down, then, go back to FEMA. We think that's unwise, we think 
it's somewhat unfair. So, we're going to ask that the Stafford 
Act be looked at again.
    Senator Vitter also covered some of the other parties that 
we have. Health care. The Medicare problems that we are going 
to face, and of course, we need to build our infrastructure and 
transportation. So, in covering this part of my role as the 
authority, I want the Congress to know, that we have a number 
of great people, now, about 24 people from around the State, in 
task forces, at least eight task forces, dealing with those, 
what we call quality of life issues that have been damaged and 
we have to recover. And not just recover, enhance in Louisiana. 
And one of the big ones, of course, is education. And the 
Governor now has the authority to take over the failing schools 
in New Orleans.
    Hopefully, in the response, that will come and with expert 
advice we will get from around the country. We're not seeking 
to do all of this ourselves. We have to bring people in, who 
have had the opportunity to face what we have faced and to 
rebuild in these various areas. So, we bring in that, the 
experts. Thursday and Friday and Saturday, we are bringing a 
conference where architects are going to come and talk about, 
how do you start from scratch and make this a better place. Not 
just recover, enhance. And so, we'll be meeting about that.
    The second half of what I would like to comment on, because 
it hasn't gotten as much attention, although Senator Vitter, 
I'm much pleased about the financial aid for students that will 
be coming forth--higher education. One of the jewels in 
Louisiana and this city, had been higher education. In this 
city alone, we have nine institutes of higher education and two 
centers for health care. I would suspect estimate it to be 
about $3 billion annually to this city, for what we employ and 
what we do from economic development in this city. And as we 
look to the future, sure that we have short-term concerns But 
we need to do the long-term. And the long-term, it's education 
from K-12 to higher education and higher education has to be, 
not only stabilized, it has to be enhanced, so that we can in 
fact, go the long ways. Mr. Thomas mentioned this, and I think 
that's critical for us.
    Now, I come here this morning as someone who has been in 
higher education for a long time. Mr. Chairman, I have been a 
president of a university for 38 years, Xavier University. I'm 
here as a displaced person. I'm here as a President of a 
university that was totally flooded and we expect to be back at 
business on January 17. Are we going to make it? I'm not sure. 
But I think we will and are going to make it because, it is 
important that we continue to serve this state and this region. 
We were founded to serve and develop leadership in the African-
American community. Our institution is totally diverse, totally 
integrated. But we have a distinction and I speak now, as a one 
part of the higher education system, but I speak because, it is 
important for, I think, the Nation, the Congress to understand, 
that we can't afford not to have quality education. From this 
small school that I happen to have the privilege of serving, we 
produce the largest number, number one producer of African-
Americans who are admitted to medical school and graduate from 
medical school.
    In the science area, we're the number one producer of 
African-Americans who major in the biological and the physical 
sciences. We're the number one producer of African-Americans 
who get doctor pharmacy degrees. We're the only College of 
Pharmacy in New Orleans. We are high in not only science, but 
in the health care side. And we are doing so in a population 
that has and needs more professionals, in a Nation that needs 
the care and counsel that we bring to the table.
    But we're here, asking for an investment in continuing what 
is important to the common good and general welfare of this 
country, not simply this region. But we're committed to this 
region and the question is always asked, what are you doing for 
yourself in this devastation? Well, I had the tough decision of 
laying off one-third of a faculty, fifty percent of the staff, 
cutting off athletics for the coming year, in order that we 
might be able to start back, trim and tight, and then we would 
be able to maintain our record of contributions.
    But more importantly about this, you know, in disasters, as 
you have seen, I have seen in the Lower Nine and St. Bernard 
Parish, unfortunate disasters impacting the people who could 
least afford to be hit. Not that anybody should be hit, but I'm 
in an institution where I have a $97 million budget and a $50 
million endowment and 75 percent of that endowment is 
restricted. So, I have little cash-flow.
    In the semester before Katrina, we had the largest 
enrollment in our history, in August 2005. Today, our 
institution has students and faculty scattered all over the 
place and we are rebuilding, trying to get back.
    What are we asking for from the Congress? Support and 
assistance and that is to help us maintain the faculty, 
maintain our structure. And we hope, that you will understand 
and help us, in that regard.
    Thank you for being here.
    [The prepared statement of Dr. Francis follows:]

Prepared Statement of Norman C. Francis, President, Xavier University; 
                  Chair, Louisiana Recovery Authority

    Mr. Chairman, Co-Chairman Inouye; distinguished members of this 
committee, and my Senators, the Honorable Mary Landrieu and Senator and 
committee member David Vitter:
    I thank you for the opportunity to appear before you this morning!
    I am here as a hurricane displaced person, no home to return to for 
months; a president of 38 years of a university severely damaged by 
wind and flooding, and chair of the Louisiana Recovery Authority, an 
individual like thousand of others who are working under unimaginable 
circumstances to rebuild our state and cities.
    In the precious minutes available before you, I will limit most of 
the broad concerns of the disaster recovery in this region--and these 
are real and daunting--but with your indulgence, I want to 
personalize--to put a face on our struggle. Yes, there are the 
frustrations. However, our commitment to rebuild is firm and 
unwavering.

Economic Development
    Louisiana and New Orleans, in particular, are witnessing the 
greatest challenges ever faced in the history of this Nation by a 
region. The devastation has impacted virtually every aspect of the 
quality of life measures for people, all of which adversities reduced 
resources and added enormous expenses to the public fisc. Louisiana's 
Governor Kathleen Blanco cut $315 million last night from her budget. 
The ultimate total will be $1 billion. To meet one of these challenges, 
to recover financially, we must continue to enhance our total 
educational system. To the state's credit, higher education has been 
one of this state's jewels, and a major economic provider, represented 
in New Orleans, alone by fourteen (14) institutions, including two 
Health Sciences Centers. All of these entities have been impacted by 
this large natural disaster in some way shape or form. And as it 
happens far too often in disasters, those least able to afford the 
impacts, are the ones which were hit the hardest. Three of the 
institutions including my own were totally flooded.
    What has happened to all of us is a horrific nightmare, but one 
very real. Let me now personalize this presentation as one example of 
what is being currently experienced by individuals and institutions in 
this state.

Pre-Katrina
    Post-secondary education was the largest employer in New Orleans--
$3 billion annually to the city--and largest intellectual importer 
providing the bulk of health care and the scientific professionals.
    Statewide we enrolled 244,608 students and today 83,821 are 
displaced (34 percent); with 15,163 displaced faculty.
    Xavier is an 80-year-old private, Catholic, historically Black 
institution, relatively small--4,000 students--serving a student body, 
85 percent of whom require financial assistance for a tuition that is 
1/3 less than the average cost of private institutions, nationally. 
Xavier is first in this Nation, however, graduating African-Americans:

   Who major in the natural and physical sciences (62 percent 
        of our enrollment major in the sciences)--1,100 biology majors;

   Number 1 for African-Americans who are admitted to medical 
        schools in the U.S., and the producer of 25 percent of African-
        American pharmacists in this country;

   Xavier is the only College of Pharmacy in this city and 
        southern region of the state.

    Like other higher education institutions, we are critically 
important to the city, state and Nation's scientific and health care 
industry; and our resources are limited.
    We have virtually no endowment, $50 million, for an annual $97 
million budget. Yet we have had no deficits in 40+ years. Like most 
Americans, we are prudent financially and fiscally responsible. 
Disasters exacerbate our financial challenges.
    When we opened in August 17, 2005, we had our largest student 
enrollment ever.
    On August 29, Katrina closed our institution; students, faculty and 
staff scattered to the four corners of this nation; our campus was 
flooded by 7 feet, wherein every building was impacted in some way; we 
lost virtually all income on a budget projected for the first semester 
and we are faced now with reconstructing and remediating physical 
structures and equipping laboratories, which, in the past 10 years, we 
had invested $100+ million to serve this high achieving student body.
    In the past 9 weeks, like thousands of citizens and businesses, we 
have been seeking resources to rebuild and thus far, in this transition 
period, the only support we have received has come from several 
concerned foundations and modest contributions from alumni and 
individuals, like the old lady in Salt Lake City who sent me $25 after 
my interview on NPR.
    Our recovery, like the two other flooded campuses--Dillard and 
Southern New Orleans, will be costly, and we have started; we could not 
wait. However, we have not received Federal dollars, as yet. Again like 
individuals, who have lost homes, including our faculty and students, 
our insurance coverages will not cover the cost to rebuild.
    What have we done?

        1. Reduced our faculty by 1/3 as we attempt gallantly to re-
        open in January 2006;

        2. Furloughed, without pay, 60 percent of our staff, awaiting 
        the enrollment numbers for January;

        3. Eliminated all athletic participation for the coming year;

        4. Sought Board permission to borrow from our small endowment 
        to meet cash calls on current remediation work by contractors;

        5. Sought funds to retain faculty, now and the future, to 
        maintain the high quality achievements of our institution's 
        legacy.

    What assistance and support are we asking of the executive and 
legislative branches of our government?

   Resources to retain our faculty to maintain our services to 
        this Nation;

   Immediate matching support to rebuild the capital 
        infrastructure of our campuses;

   Additional financial assistance to students who are further 
        impacted now by their families' economic circumstances;

   Amendments to the Stafford legislation which treats private, 
        nonprofit institutions different from our state supported 
        universities in disaster relief resources support;

   Support for housing needs of faculty, staff and students at 
        a time when many are virtually homeless;

   Eliminate the ``road blocks'' that use normal responses to 
        what are totally abnormal circumstances, today.

        Lastly, I would ask you, collectively and individually, to stay 
        with all of us in this Gulf Coast region as we work to rebuild 
        our communities, various institutions and economic development 
        efforts. Not one of us has gone untouched, and neither will 
        this nation be, ultimately, by this tragedy. The human 
        suffering and long lasting trauma are real and unimaginable. 
        This Nation has gone to the aid of countries around the world 
        in difficult circumstances. We are now in desperate need at 
        home.

    For us in Louisiana, it has not been easy or simple in these past 
difficult weeks to answer all the cries and pleadings for help, 
information and resources in an effective coordinated manner. This is 
not an excuse, but a fact brought about by the massiveness of the 
disaster. However, the efforts of working and coordinating together 
priorities are taking place, region and statewide.
    What I have tried to present to this committee is a microcosm, a 
model of the related challenges represented in our devastated region. 
If my colleagues, neighbors and other citizens were sitting in this 
chair their refrains would be the same. We are hardworking, 
compassionate, honest and committed people who have faith and courage 
that we will, indeed, rebuild and welcome back so many who have lost so 
much.
    Please do not be persuaded by those who would use excuses or 
distortions to abandon us in our time of need. When this country called 
us, we saluted and served this nation well over our long history. We 
are doing for ourselves, but we need your support! We entreat you to 
treat us with the same fairness and compassion shown to others. It is 
in this Nation's best interest to do so. It is the American way.
    We are comforted in these times by the spiritual, ``His eyes are on 
the sparrow and we know He watches over us.''
    Thank you for your indulgence and patience.

    The Chairman. Thank you very much.
    Mr. Alden McDonald, President of Liberty Bank and Trust.

        STATEMENT OF ALDEN J. McDONALD, JR., PRESIDENT/

              CEO, LIBERTY BANK AND TRUST COMPANY;

              COMMISSIONER, BRING NEW ORLEANS BACK

    Mr. McDonald. Good morning, Gentlemen, Mr. Chairman, 
members of the Committee and Senator Vitter. Thank you for 
being here today. We really appreciate you taking time out of 
your busy schedule to visit our city, firsthand.
    I will represent three hats, this morning. One, as 
President and CEO of Liberty Bank, which is a small community 
bank and we've been in business since 1972. The second hat I 
will wear, is Chair of the Board of Directors of the local 
Chamber of Commerce. And the third hat, would be a member of 
the Mayor's Rebuild Commission.
    I'd like to first, start off by giving you a feel for small 
business and what our small business, our small bank is going 
through with Hurricane Katrina. You have copies of this map in 
a packet that is presented. But if you just take a look at the 
green areas, these are the areas that include the water and you 
can see, by looking at the map, there was a significant amount 
of the water in the area, in which, we are located.
    Our businesses in New Orleans East, primarily servicing 
that particular part of the community. All of the individuals, 
all 100,000 of the individuals, had to relocate to other parts 
of the State and many other states. As a result of that, my 
35,000 customer base, primarily is gone out of state. This is 
an example of what has happened to the small business, as well, 
in that area. This is only 100,000 of an area that was flooded, 
that really affected close to 300,000 people, in the New 
Orleans area. So, if you just take that particular area and 
multiply it out, you can see the devastation.
    Our business lost all of our background files, all of our 
credit files, all of our collateral notes, all of the records 
of the institution, was lost in the storm. So, we have to start 
from the rebuild point of view, which we are in the process of 
doing and making pretty good progress.
    I also lost almost 50 percent of my staff, who cannot 
relocate, because of a lack of housing. This story doubles, for 
every small business in this particular area. We have the 
ability to really start the process and to really get the 
process going, if a number of things were to happen.
    I have basically, some short-term goals and some long-term 
goals, I would like to present to the Committee. One goal, 
would be for your committee to really have the insurance 
companies to become accountable. We have not received payment 
to people who paid for insurance coverage. The payment is very 
slow coming in. And I wear the Chamber hat, because a lot of 
these small businesses cannot function without the capital. 
This is--they are not asking for a handout here, they are 
asking for the protection that they've paid for and if we can 
get the insurance companies to step up the process and 
processing in paying these claims, we can get a lot of 
businesses restarted quickly.
    The Chairman. That business interruptions insurance, is 
that what you are talking about?
    Mr. McDonald. I'm just talking about, sir, the insurance, 
not only the business interruption insurance, but insurance 
claims that would pay to get the businesses rebuilt, that was 
damaged from the hurricane. We are talking about the inventory, 
we are talking about machinery, et cetera.
    The Chairman. Property damage and inventory insurance, is 
that what you are talking about?
    Mr. McDonald. Yes, sir.
    The Chairman. Would you furnish us the names of those 
insurance companies?
    Mr. McDonald. Yes, sir. The same thing exists with 
residents. The insurance companies are not sending the checks. 
A lot of claims have been taken, but payment on those claims 
are not occurring. And as a result of that, people cannot move 
forward in rebuilding their homes. Once we repopulate the 
homes, business can function. Once business functions, we have 
our economy going again.
    The second piece, which was already talked about, is the 
Chamber would like to endorse the concept of the $10 billion in 
business grants, similar to what was given for the 9/11 
recovery, that was already talked about earlier. So, I will not 
go over that again.
    The housing, for our area, is much needed. We have a lot of 
people who want to return, who can return for jobs. But because 
of a lack of housing at this particular time, they can't 
return. And I explained to you, that we also experience this in 
our business.
    To give you an example, we have opened two of our eight 
branches that were affected in New Orleans. We cannot bring 
more individuals back, because of a lack of housing, not being 
available to house the employees. We have businesses who are 
paying higher rate, higher wages, offering benefit packages, 
but again, they are operating with a skeleton staff and limited 
hours of operation, because of the need for employees.
    Under the long-term solutions we'd like to put on the 
table, infrastructure is very important. Dr. Francis spoke to 
one of the items that I was going to mention and that is 
education and our airport. Those are two main major factors 
that we need to really put in place. Because the airport, we 
need to get going again, because of our tourism base and our 
economy. We have to be able to get people in and out, in order 
to get things moving.
    And on the education level, the higher education level, we 
must get those universities back in commerce, as quickly as 
possible and we must do things, in order to help them attract 
the students, that they used to attract from other communities. 
The universities in this area provide a huge number of jobs and 
the much needed brain talent that's necessary, not only for our 
community, but for our country.
    The second long-term piece we would like to endorse, is 
that this community put together a very successful and unique 
bid, to help keep the military here and that was part of the 
Federal City for the BRAC Commission. If Congress or other 
powers to be were to bring that back to New Orleans, we could 
also, again, provide a number of long-term jobs. This year is 
very, very important to our community, and our city and our 
state agreed to fund the Federal City. So, we are trying to 
help ourselves and with an expedited piece for our BRAC 
Commission to look at, perhaps helping us to move that a lot 
faster.
    I see that my time has expired, but I have two other 
industries that I think are very important. We, in the city, we 
put together biotech district. One common piece, one small 
thing that we could do, is to have the Congress or our 
leadership, in our country to perhaps, invite the CEOs of 
pharmaceutical companies, our medical companies, to come for a 
one-day visioning to look at how they could tie in with our 
universities and look at the possibility of jump starting our 
biotech industry. Or, I should say, increasing our biotech 
industry. It will bring employees in, it will bring business in 
and it will help us in a lot of ways.
    The last piece would be tourism. Tourism is a major driver 
of our community and one small piece that could be done 
perhaps, in one of the grants and one of the economic pieces, 
would be to perhaps, give incentives to companies, to 
nonprofits, to associations to bring their conventions back to 
New Orleans, in an earlier way than our rebuilding process may 
call for.
    For example, over the next 24 months, if there is some type 
of incentive that can actually be put in place, that would be 
very beneficial to us.
    With that, Mr. Chairman, Senators, I appreciate you giving 
us the opportunity to talk with you, today and in my comments, 
I'll go into more detail.
    Thank you.
    [The prepared statement of Mr. McDonald follows:]

 Prepared Statement of Alden J. McDonald, Jr., President/CEO, Liberty 
      Bank and Trust Company; Commissioner, Bring New Orleans Back

    Allow me to introduce myself:
    I serve as President and CEO of Liberty Bank and Trust Company 
headquartered in New Orleans. Liberty Bank, founded in 1972, is the 
third largest African-American-owned banking institution in the United 
States with over 35,000 customers in both Louisiana and Mississippi.
    I am also here as the Chair of the Board of Directors of the New 
Orleans Chamber of Commerce whose membership employs approximately 
20,000 individuals in the metropolitan area.
    And finally, I am a member of the Mayor's rebuild commission . . . 
Bring New Orleans Back, serving on the Economic Development Committee, 
and chairing the Subcommittee on Federal/Military/Aerospace.
    New Orleans East, where I have raised my family and which is the 
headquarters of Liberty Bank, constitutes half of the land base for the 
City of New Orleans, population 96,400, with an average income of 
$42,000, and homes owned by African-Americans that exceed $1 million in 
value, as well as a significant Asian population, many of whom are 
small business owners.
    New Orleans East also includes some of our major industries. To 
name a few: Folger's coffee owned by Proctor & Gamble, Budweiser, 
Trinity Yachts, the Lakefront Airport, Northrop Grumman, and our 
Michoud facility that has been and continues to be central to building 
the rocket boosters for the NASA space program.
    New Orleans East is also a major tourist destination, containing 
the Six Flags amusement park, Bally's Casino, the Bayou Sauvage 
National Wildlife Refuge, the Audubon Institute Nature Center, swamp 
tours, fishing and Fort Pike.
    This is a city historically built and maintained by small to 
medium-sized businesses, whose ability to rebuild and to recover is 
being severely hampered by the magnitude of the disaster.
    Unlike 9/11, the Chicago fire or the earthquake in San Francisco, 
all of which affected a section of the city it was within, this 
devastation is total--throughout the region, affecting all of the 
surrounding ten parishes.
    Many business owners, myself included, took a double hit--our homes 
were destroyed and simultaneously our businesses. Municipalities are 
unable to provide basic services and are subject to bankruptcy. The tax 
base has been completely eroded. $4.2 billion in buying power has been 
lost among African-Americans in Orleans Parish alone. It is estimated 
that the current level of debris that the city has to contend with now 
is the equivalent of what would have been accumulated over the next ten 
years.
    In this midst of what is mind-boggling, we need fast action to 
address very targeted and specific needs. I have both short and long 
term recommendations:

Short-term

1) Our Small and Medium Sized Businesses in Particular Need an 
        Immediate 
        Response in the Form of Checks From the SBA, From FEMA and From 
        the 
        Insurance Industry
    This is proving to be an extremely slow and torturous process. Over 
71,000 businesses were affected in this area and we are subject to lose 
two-thirds of these in the next 30-60 days if they are unable to get 
immediate financial assistance. Many are surviving now literally out-
of-the pockets--committed owners who are dipping into savings and 
retirement to renovate their property, keep the employees they have, in 
many cases pay for housing for these employees, and build back 
inventories and customers.
    FEMA and SBA funds are available and need to be released without 
bureaucratic red tape. The insurance industry needs to be called to 
task and held accountable for releasing insurance claim money with all 
due haste, once the adjuster has filed a report. We understand 
insurance companies are sitting on reports filed weeks ago.

2) Interim Grants
    The New Orleans Chamber wholeheartedly endorses ``KEEP''--Katrina 
Emergency Employment Program, requesting that Congress authorize $10 
billion in business grants, similar to the recovery grants made 
available to businesses in New York after 9/11. This has been endorsed 
and recommended by the Southeast Louisiana Business Coalition that 
represents our major business organizations in the ten-parish area.
3) Housing and Transportation
    On equal status as the money that is needed to rebuild, we need 
housing and return transportation back to New Orleans for our employees 
that are currently evacuated to just about every state in the Nation. 
They took with them the institutional knowledge and the skills upon 
which our businesses operate.
    We want our citizens and our employees back.
    Our businesses that are open have jobs and are offering higher 
wages and benefit packages. They are operating with a skeleton staff 
and limited hours of operation. They have the ability to fully open, 
generate revenues and tax dollars, but they need employees.
    We have nowhere to house anybody. It is estimated that during the 
day the city's population is around 150,000 and at night we are at half 
of that. The traffic jams back to Baton Rouge and across the lake are 
testimony to the fact there is nowhere for anyone to stay within the 
City of New Orleans.
    The New Orleans Chamber and its sister Chambers through the Metro 
Chamber Alliance in this ten-parish area can coordinate this three-
prong approach:
    Job/Housing/Transportation
    The Chambers are the connection to the business community. We urge 
you to have FEMA work with and through these valuable organizations to 
expedite getting our residents and our employees, in essence our 
business families back. The New Orleans Chamber will gladly coordinate 
this effort.
Long term:

1) Infrastructure
    Louisiana, particularly this region, as the Nation has learned, is 
a significant contributor to the national and global economy. We have 
to be whole and functional to maintain our economic viability. To that 
end we need funding for our port, for the Louis Armstrong Airport, our 
highways, and our schools.

2) Federal City/BRAC Commission
    We have very successfully presented a unique concept to the Defense 
Department in order to retain our military bases. The military is a $10 
billion industry to the City of New Orleans. We are committed to 
Federal city, our city, and state role in creating a unique community 
for our military and enhancing our port activity.
    We ask, as a vote of confidence, that the Defense Department 
returns its military personnel, re-ignites the national call center in 
New Orleans and follows through on its commitment to work with our BRAC 
Commission in making that a reality. This in itself can serve as a 
catalyst to this economy by creating jobs, by expanding our economic 
base, and by creating what we would hope to be a permanent home for our 
military personnel in the area upon their retirement.

3) Biotech Industry
    Last year the business community in New Orleans, with the help of 
our legislative delegation and Mayor Nagin, successfully passed two 
significant pieces of legislation:
    The biotechnology district, which will enable our nationally 
recognized universities--Tulane University, Xavier University and 
Delgado Community College to partner with the business community for 
research and business creation in the biotech, pharmaceutical and 
medical industries. If we can create products here at our local 
universities then certainly we can manufacture and distribute them here 
also.
    We ask for your assistance in convening the top CEOs in these 
respective fields to come to New Orleans and to explore and invest in 
the possibilities. We believe the future of the biotech, pharmaceutical 
and medical fields are right here in our backyard, only steps away from 
downtown New Orleans.
    The second piece of legislation, a Senate resolution to explore the 
governance of Charity Hospital, has many more implications than just 
the governance of Charity in New Orleans. Our healthcare system 
statewide is outdated. Louisiana has the only charity hospital system 
in the Nation.
    We have been overly reliant, as with other states, on the Federal 
Medicare/Medicaid system to bail us out. We cannot continue as I am 
sure you would agree. Healthcare is already at a crisis in the City of 
New Orleans, and as we rebuild, we do not want to be constrained by an 
outdated system and a system that does specifically focus on the needs 
of citizens in New Orleans and surrounding parishes.
    Again, we would ask for seed money to objectively assess the 
healthcare system currently under the governance of Louisiana State 
University and for the Federal Government to provide some of their 
greatest minds to assist in restructuring healthcare in New Orleans 
into a model.

4) Last and Finally, Levee Protection and Coastal Restoration
    I would be remiss if as president of Liberty Bank, with six of our 
eight branches affected by the flood, and as chair of the New Orleans 
Chamber of Commerce, to not also emphasize, if not respectfully demand, 
that funds are made available to adequately safeguard southeast 
Louisiana by building a levee system that can withstand a category 5 
hurricane and restoring our coastline.
    Let's understand this is a national crisis, not just a local one.
    A category 5 levee system may end up being the eighth wonder of the 
world, but as other nations and civilizations have risen to the 
challenge, we would expect no less, from the United States of America, 
that one of its own, with a city that is renown worldwide, with 
historical connections that go back to the beginning of time, that was 
in fact one of the largest ports in the United States at one time, that 
the Federal Government, would not, as the world watches, safeguard one 
of its treasures for future generations to enjoy.

    The Chairman. Thank you very much. We appreciate all of 
your statements. Do you have any questions Senator?
    Senator Vitter. I just wanted to follow up, really, for 
your and Senator Thomas' information on three points that 
Secretary Olivier made.
    First of all, the SBA process being way too slow and 
unsuccessful, in terms of approving loans. That seems to be a 
fair and universal judgment, and in fact, Chairman Snowe is 
having a hearing because of that tomorrow morning. It is a very 
slow and frustrating process and I appreciate her leadership, 
pushing them. Hopefully, we'll see some results out of that 
discussion and that hearing.
    Second, bridge loans. Even if the SBA were working at a 
reasonable speed, there is really a gap, in terms of their 
normal menu and we need these additional bridge loans to help 
fill that gap. Again, Chairwoman Snowe has passed out of her 
committee, a small business package, including these business 
loans. In fact, we passed that package on to one of the 
appropriation bills on the Senate floor. So, I am hoping we can 
continue to advance that.
    And third, Liberty bonds. That is in both, the Senate 
finance package and the House Ways and Means package. Although, 
the House Ways and Means package is much more robust, in terms 
of allowing expanded uses of those Liberty bonds, as the 
Secretary discussed and I'd love for the Senate Finance 
Committee to follow suit.
    So, I just wanted to make those comments, flushing out 
those three ideas.
    Mr. McDonald. Mr. Chairman, if I might, also, one of the 
other issues that's really big and proven to be a benefit in 
the recovery for Manhattan, was the accelerated depreciation 
provision. That is something that would spur industrial and 
economic development in the impacted areas.
    The Chairman. Thank you.
    Senator Thomas?
    Senator Thomas. Just very briefly, I know you want to go 
on. Mr. Olivier, you mentioned $40 billion in commercial loans, 
is that what you suggested?
    Mr. Olivier. No, sir. We asked for $30 billion. What was 
approved in the Economic Recovery Act of 2002 was $8 billion 
for that 16-acre area of Manhattan. We have, just after 
Katrina, 960 square miles of economic impact. Over 81,000 
businesses in those 37 parishes, that are included in the 
impact area, so, we have a much larger--the magnitude is much 
greater. And so, the need is going to be much greater.
    These would be private activity bonds, that would be able 
to recover and encourage more business----
    Senator Thomas. What would be the cost to those, do you 
know?
    Mr. Olivier. No, sir. I do not know what the cost of those 
would be.
    Senator Thomas. Their bonds, I would presume there would 
be----
    Mr. Olivier. They would be tax exempt. That's correct, sir. 
They would be tax exempt, private activity bonds. It would be 
based on the full faith of credit of the company. Just as you 
have industrial revenue bonds today.
    Senator Thomas. Mr. McDonald, you mentioned $10 billion 
business grants?
    Mr. McDonald. Yes, sir. The $10 billion business grants, 
represents, I believe, the amount that was given for the 9/11 
recovery and we're suggesting that something similar to that 
recovery piece, be done for this impacted area. It would help 
jump start a lot of the small businesses.
    Senator Thomas. Do you have any idea, I mean, I understand 
your needs and so on. But on the other hand, you have to 
understand that we have to look a little bit at spending, as 
well. What would be, do you think, the total amount that you 
are going to--you have $60 billion already there. You're 
talking about $40 billion, you're talking about $40 billion, do 
you have any idea what the totals would be?
    Mr. McDonald. No, sir. I don't. But some of the same 
funding that I made reference to, in the $10 billion, which was 
the example for the 9/11 recovery, is some of the same money 
that Mr. Olivier is talking about, as well. It just so happened 
that my comments were overlapping.
    Senator Thomas. I understand. We need to be a little 
concise about it, as people hear about how much we are 
spending, so that there is some consolidation.
    I don't understand your comments about BRAC, what is that 
have to do with it?
    Mr. McDonald. OK, the BRAC Commission reviewed the base 
closing for this particular area.
    Senator Thomas. For all areas.
    Mr. McDonald. Yes, sir. The City of New Orleans and the 
surrounding parishes, put a committee together to fund a 
project called the Federal City, where the state, the city 
would put new infrastructure in for the military, if they were 
to bring back some of the cuts that they made, in the local 
military presence here, in New Orleans.
    My comment and my suggestion is, that perhaps, they could 
re-look at that and perhaps, return some of the military that 
was removed from this particular area, since this Federal City 
has already been committed and it would help our economy by 
moving more jobs into the community.
    Senator Thomas. I understand that. But you know, you need 
to understand that BRAC is to talk about the efficiency of the 
military. It's not an economic development activity.
    Mr. McDonald. Yes, sir?
    Senator Thomas. So, that's really the basis of it, yes.
    Senator Vitter. And just to further clarify, the BRAC 
Commission, in fact, recommended that a large portion of the 
Federal City proposal, be used. And so, in fact the Marine 
Reserve Command, will stay here under this Federal City 
concept. The BRAC Commission basically, adopted it. Assuming, 
the State meets its commitments to build out the Federal City.
    Senator Thomas. That's fine.
    Senator Vitter. It did not adopt the same recommendations 
with regard to the Naval Reserve Command. Which unfortunately, 
is still slated to get an offer.
    Senator Thomas. I understand that and that's fine. I just 
wanted to make the point that BRAC and the military 
reorganization, is not an economic development activity.
    The Chairman. We really got to move on now, I'm sorry, But 
I have one question. Are you talking about guaranteed loans or 
are you talking about direct loans from the Federal Government?
    Mr. Olivier. May I answer that? The loan program that was 
done for 9/11 was a short-term loan. This is not to supplant 
the SBA loans that are taking quite a long time. As a matter of 
fact, as was pointed out, less than 2 percent of the loans have 
been made--the loans applied for, have been made. And less than 
one percent have even been disbursed and this is in the 10 
weeks. So, obvious, that the SBA loan program, whether it's a 
disaster loan program or an economic injury loan program, they 
are not working fast enough. And we need a bridge loan program, 
just as was done in Manhattan and what we are asking for is a 
$200 million bridge loan program, which is comparable to the 
bridge loan program that was offered in New York State and 
managed by the Empire State Group and the Lower Manhattan 
Economic Development.
    The Chairman. You mentioned $10 billion?
    Mr. Olivier. No, sir. I don't think that figure is correct. 
The $10 billion that you are referring to, was in Mr. Alden 
McDonald's comments. I believe, that number is $500 million for 
grants. He was talking about a total package.
    There were $20 billion totally authorized by the Economic 
Recovery Act of 2002. $8 billion of it was private activity 
bonds, that were referred to as Liberty bonds, we're asking for 
$30 billion. Of that, about $500 million were used for grants.
    The Chairman. You know, we're also dealing with disasters 
in Mississippi, Alabama, Florida and Texas. Are you talking 
about authorization just for this area?
    Mr. Olivier. Yes, sir. $30 billion is what is requested for 
Louisiana. Mississippi is asking for $15 billion and the other 
two states are asking for smaller amounts.
    Senator Vitter. And again, just to clarify. Although there 
would clearly be cost to the Federal Government, it wouldn't be 
that whole amount.
    Mr. Olivier. No, sir.
    Senator Vitter. And the cost would be well below that. 
You're talking about the entire capacity for the bonding.
    Mr. Olivier. Correct, just as you have industrial revenue 
bonds, the cost to the----
    Senator Vitter. The cost would be the forgone revenue for 
basically, the----
    Mr. Olivier. Forgone revenue for the taxes, correct.
    The Chairman. All right, we appreciated very much your 
statement. We thank you for appearing, we're going to have 
another panel now and we'll take about a 5-minute recess to 
change and call Mark Drennen, the President and CEO of the 
Greater New Orleans Regional Business Organization, Ted 
Falgout, Director of the Port Fourchon, Gary LaGrange, 
President of the Port of New Orleans and Ewell Smith, President 
of Louisiana Seafood Promotion Board. Will you put the signs up 
please? Take about a 5-minute recess.
    [Recess].
    The Chairman. Thank you, very much. This panel, as I 
indicated, four additional people, we urge you to keep your eye 
on that clock, if you will. We've allotted 8 minutes for each 
witness.
    Mr. Drennen, Mark Drennen, President and CEO, Greater New 
Orleans, incorporated. We'd be pleased to have your statement.

         STATEMENT OF MARK C. DRENNEN, PRESIDENT/CEO, 
 GREATER NEW ORLEANS, INCORPORATED; ON BEHALF OF THE SOUTHEAST 
                  LOUISIANA BUSINESS COALITION

    Mr. Drennen. Yes, sir. Good morning, Mr. Chairman. I want 
to, like everyone else here, I want to truly thank you for 
taking the time out of your schedules to come and see this 
region. I grew up, unlike most of the panel people today, I am 
not a native of Louisiana. I grew up in upstate New York. I 
moved to Louisiana, some 30 years ago, for a job opportunity. I 
stayed in Louisiana because I fell in love with the people in 
the state and the community and all the--as you have probably 
seen already, in your short stay here, the wonderful people and 
customs that are here. So, I have made this my home.
    I've had an interesting career. I've worked both for the 
legislative branch here in Louisiana, I've worked for the 
executive branch and I've worked for the private sector. My 
current hat is with the private sector, running a newly formed, 
18 months ago, Regional Economical Development Agency. We 
started out with a goal of creating new jobs in the region, of 
establishing business plans on how we were going to accomplish 
that and in fact, have made a lot of progress. We, of course, 
like everyone else in the region, have had to change our focus 
and our focus now, is on bringing back the businesses that we 
had.
    In an effort to do that and hearing messages that we got 
from Senator Vitter and others in Washington, we wanted to do 
what we could as a regional group, to bring together the 
business community with a common message, to make it consistent 
with what others are talking about. We wanted you to know that 
at the Federal level, not only are we asking for some help and 
normally business is not asking government for help, we're 
normally saying, just let us do what we do best. But in this 
case, as you've seen the devastation, you know that we do need 
some help. Short-term help.
    You've heard already about a lot of the problems. We won't 
talk to you today about the SBA problems anymore, FEMA 
problems, our housing issues are severe. I want you to know, 
that we have set up a Regional Task Force and would like the 
opportunity to get back with you later, as we try to solve some 
issues with housing, that nobody in this country has ever, ever 
faced before and there aren't any good answers out there. 
You've heard about the devastation to our colleges and vo-tech 
schools.
    You have not heard so much about some of the other problems 
with our health care. Our health care system was severely 
damaged. Our hospitals, our teaching hospitals and others are 
hurting as we speak today, and those are other issues that 
we're going to have to work our way through.
    Tourism, you will hear in a little while from Mr. Steven 
Perry, head of the Tourism group. And you will recognize from 
his comments how serious the problems, and complicated the 
issues are. But tourism is extremely important to our recovery. 
In bringing together a Southeast Louisiana Business Coalition, 
though we wanted to make sure that our message to you was not 
only are we doing everything at home to help ourselves, but 
there are areas where we need help. You've already heard about 
two of them from Senator Vitter and others. Number 1, for every 
business leader, every small, medium and large business, is our 
levee system. We felt and we made plans for the success of our 
future, based on our belief that we had a category 3 level 
protection. It is now becoming evident as the Corps of 
Engineers know, they've studied the issues that we did not have 
category 3 protection. And we sincerely believe, as for us to 
be able to come back, that we're going to need that protection.
    In the long term, meeting with the Corps of Engineers we 
hope that you will be able to finance and find a way to finance 
category 5 hurricane protection.
    Number 2, is our coastal restoration. Louisiana has now 
been working with the Federal Government for decades, we have a 
plan, the scientific studies have been done. We know how to 
restore our coastal wetlands. And certainly the destruction 
that's been done over decades was partly responsible for 
Hurricane Katrina's devastation.
    Again working through our Senators, Senator Vitter and 
Senator Landrieu , there are a number of bills and issues 
before you and again we respectfully request your help in 
funding some of the restoration of our wetlands.
    It was also of course important in Florida, it's equally 
more important, we believe--equally or more important in 
Louisiana for coastal protection.
    Number 3 and 4 on our coalition of business leaders 
representing over 2,000 businesses that have come together are 
the issues as Secretary Olivier talked to you about, we like 
Secretary Olivier got with the Empire State Development 
Corporation to talk about what were the lessons learned after 
9/11. What was it that you folks used that most enabled you to 
bring your businesses back. And they told us three things.
    Number 1, it was paramount that their governor, their 
mayors, and local officials work together. That is our issue 
here, and that will happen. Number 2, they talked about the 
immediate need for some grants. We are asking for a 
proportionate response to Louisiana, as was done for New York 
City in 9/11 in the grant program. Quite frankly you've heard 
about the SBA loans, and the solution to some of our businesses 
coming back will not simply be borrowing more money. There are 
cases especially, mostly in the small and medium size 
businesses where there will have to be some bridge grants for 
them to come back. Their insurance is not going to cover their 
issues, and again borrowing more money won't solve all their 
problems. But they can come back with a little assistance.
    The other one Secretary Olivier talked about that was so 
important to New York's City recovery was the issue of the 
Liberty Loan Program. Those loans, low interest loans will also 
be important in our long term recovery. So, number 1, the 
levees; number 2, coastal restoration; and numbers 3 and 4 are 
those 9/11-type programs that were so helpful to New York City.
    And finally if I could conclude my comments by talking 
about Federal programs that were already in the New Orleans 
region. We have a service economy for example, our IT industry 
services a lot of the Federal programs. We respectfully ask 
that the Federal Government give us an opportunity to bring 
some of our infrastructure back, and not make any long term 
decisions about taking out Federal programs that are already in 
our region that have had to move because of some of the 
destruction, but we ask that those programs be returned to New 
Orleans as soon as possible.
    With that I conclude my comments Mr. Chairman, and again, 
we truly appreciate you taking the time to come visit us in the 
New Orleans region.
    [The prepared statement of Mr. Drennen follows:]

   Prepared Statement of Mark C. Drennen, President/CEO, Greater New 
 Orleans, Incorporated; on Behalf of the Southeast Louisiana Business 
                               Coalition

    Southeast Louisiana Business Coalition, a group of business leaders 
representing thousands of small, medium and large employers from the 
hardest hit areas of the New Orleans region have united for three 
primary purposes:

   to educate Congress and Federal agencies as to the vital 
        pre-Katrina national economic impact of the Southeast Louisiana 
        region.

   to alert Congress and Federal agencies about the severity of 
        the devastation to the regional economy.

   to propose a post-Katrina Congressional relief package.

    Critical to our message are some startling facts and figures. To 
date:

   80,000 businesses have been disrupted by the hurricane and 
        are in severe risk of failure.

   438,000 new claims for unemployment have been filed since 
        Hurricane Katrina.

   The State of Louisiana anticipates $1 billion in lost 
        revenue for Fiscal Year 2005/06.

   200,000 homes have been substantially damaged.

   basic infrastructure necessary for economic recovery, 
        including schools, hospitals, colleges and roads have been 
        severely damaged or destroyed.

   tax bases for governmental operations have been lost.

    The Southeast Louisiana Business Coalition representing businesses 
from a variety of sectors such as banking, law, information technology 
and telecommunications, and engineering are requesting critically 
needed help through appropriations requests, an economic stimulus 
package and a call for a federally appointed figure to direct recovery 
efforts.
    Appropriations requests include:

   (our top regional priority)---essential infrastructure help 
        on an aggressive schedule to rebuild the levees to real 
        Category 3 strength to provide disaster mitigation, structural 
        stability, and psychological reassurance for businesses and 
        residents to return to the area.

        In addition, we respectfully request long term funding to 
        implement plans developed by the Corp of Engineers and other 
        experts to protect the area from a Category 5 hurricane.

   (our second regional priority)--the allocation of 25 percent 
        of revenues derived from Louisiana offshore mineral production 
        to implement our already developed coastal restoration plan. A 
        significant contributor to the devastation caused by Katrina 
        was the previous loss of much of our coastal wetlands, which 
        are also vital to the national economy.

   a grant program to provide vital immediate cash for 
        businesses, similar to the recovery grants provided to 
        Manhattan businesses, by Congress, following the September 11th 
        disaster.

   low interest loan programs for commercial and residential 
        development similar to the post-9/11 plan for Manhattan.

   funding to repair damages to key infrastructure for our 
        ports, the airport and highways.

   a comprehensive economic stimulus package authorizing 
        various tax relief measures and incentives, including a 
        combination of

        --Relocation Tax Credits and Employment Credits targeted at 
        stimulating business re-entry into the market at pre-Katrina 
        employment levels.

        --Accelerated Depreciation and Tax Exempt Bonds to provide an 
        incentive for increased capital projects.

        --Personal Tax Relief and Tax Credits for those in the affected 
        region in order to entice back individuals, business owners and 
        corporate managers.

    The Southeast Louisiana Business Coalition has recommended that the 
President and Congress create a single regional board to be directed by 
a person of national prominence to coordinate the recovery and 
rebuilding efforts in Southeast Louisiana. The group believes that 
relief coordination must occur at the Federal, state and local levels 
in order to maximize resources, execute effective planning, and 
expedite implementation for post-Katrina recovery.
    We fully understand that Louisiana must take every action possible 
to help itself. With this in mind, our local governments are proceeding 
with the development of action plans for recovery of their respective 
areas. Parish presidents and mayors are including business leaders in 
their recovery plans. Outside expertise from national groups such as 
the International Economic Development Council (IEDC), the U.S. Chamber 
of Commerce and American Institute of Architects (AIA) are actively 
involved. Governor Blanco has convened a special session of the 
Louisiana legislature to address budget issues and state incentive 
programs as well as convened the Louisiana Recovery Authority to 
coordinate the state efforts.
    We have convened a regional housing task force group to devise 
short and long-term solutions to this severe problem. Without housing 
for our citizens, we will be unable to provide a workforce to re-open 
our businesses. As recommendations are developed, we will share them 
with Congress.
    In conclusion, time is of the essence for our successful recovery. 
We request your thoughtful consideration of our proposed solutions. 
With the temporary assistance of the citizens of the United States, we 
will be successful.

    The Chairman. Mr. Falgout. I'm not going to mispronounce 
that Port name again.
    Mr. Falgout. No, I'll say it for you.

          STATEMENT OF TED M. FALGOUT, PORT DIRECTOR, 
                         PORT FOURCHON

    Mr. Falgout. Thank you Mr. Chairman, Senator Thomas, 
Senator Vitter. I am Port Director of Port Fourchon Louisiana. 
We are the southern most port on the Gulf, some 60 miles south 
of New Orleans. And perhaps you've never heard of this port, 
it's not that well known, but like Alaska, much of this country 
should think of us as they turn on their light switch each 
morning.
    It's by far this Nation's most significant energy port. 
Playing a key role in support of 18 percent of this country's 
oil supply. I've had the opportunity to testify before several 
committees and subcommittees over the years about the 
significance of coastal Louisiana, and I've generally told the 
same story. I'd like to read to you a closing statement I made 
in July 2004, to the Subcommittee on Water Resources and the 
Environment of the House Committee on Transportation and 
Infrastructure. The statement read like this.
    With the level of land loss that exists today, a well 
placed category 4 hurricane would cause the price of gasoline 
to go up a dollar, double the price of natural gas, cause huge 
loss of life, this would throw this country into an immediate 
recession, and its impacts would dwarf the cost of protection.
    I pray that the next time I testify it's not to say I told 
you so. Well, now I get to say it, I told you so, but what a 
hollow feeling. Unfortunately this country historically hasn't 
reacted until a crisis occurs, well we have our crisis, and 
now's the time for action.
    This is truly an issue of National significance. An 
astounding 87 percent of the oil, and 80 percent of the natural 
gas from Federal offshore waters is coming from offshore 
Louisiana. In additional LOOP this Nation's only offshore oil 
port which handles about 15 percent of this country's foreign 
oil and is connected to over 30 percent of U.S. total refining 
capacity sits just 18 miles offshore of Port Fourchon. 
Gentlemen, much of the support infrastructure for nearly a 
third of this country's oil and gas supply is located in the 
most rapidly deteriorating and vulnerable areas of the 
Louisiana coast.
    The recent storms have further exacerbated our 
vulnerability to a point of crisis. Today over half the oil and 
gas production in the Gulf of Mexico remains shut in as a 
result of Katrina and Rita. Over 1 million barrels of oil and 
5.6 billion cubic feet of natural gas per day. Since August 26, 
2005, over 75 million barrels of oil and 400 billion cubic feet 
of natural gas from the Gulf is unavailable to the U.S., that's 
almost $10 billion of product.
    By the end of the year, the Gulf's annual production could 
very well have been reduced by 25 percent. We should all be 
very thankful that Port Fourchon and New Orleans did not 
receive a direct hit from either storm. If either had just been 
a few miles closer, my dire projections of 2004 would have been 
grossly underestimated, and my recession prediction much closer 
to reality.
    I commend this committee's actions of last week, which 
amended the Budget Reconciliation Act, which could add $1.2 
billion to our coastal efforts. This is definitely a step in 
the right direction.
    The recent energy bill included a coastal impact assistance 
provision, which is a start, but fell short of direct offshore 
revenue sharing that is needed. We must approach a level of 
revenue sharing which is at, or near that which currently 
exists on Federal lands within a state.
    We have a plan to build a sustainable coast. It must 
include levee protection, coastal restoration, and critical 
energy infrastructure support. To fund one without the others 
will not yield the needed results.
    This plan could have been implemented at a fraction of what 
these storms have cost this country. Until this Nation truly 
comes to the realization of what's at stake here in coastal 
Louisiana, and makes the proper investment to sustain America's 
wetland, we will most likely remain on a collision course with 
an unprecedented energy shortage in this country.
    And my greatest hope is that I do not have to return and 
say I told you so. Thank you.
    [The prepared statement of Mr. Falgout follows:]

   Prepared Statement of Ted M. Falgout, Port Director, Port Fourchon

    Mr. Chairman and members of the Committee, I am Port Director of 
Port Fourchon, Louisiana's southern most port on the Gulf, some 60 
miles due south of New Orleans. Perhaps you have never heard of this 
Port; it's not well known, but believe me, you should think of us every 
time you turn on your lights. It is by far, this nation's most 
significant energy port, playing a key role in support of 18 percent of 
this country's oil supply.
    I have had the opportunity to testify before several committees and 
subcommittees over the years, and I have generally been telling the 
same story.
    I would like to read to you a closing statement I made in July 2004 
to the Subcommittee on Water Resources and the Environment of the House 
Committee on Transportation and Infrastructure. My closing statement of 
2004 read like this: With the level of land loss that exist today, a 
well placed Category 4 Hurricane would cause the price of gasoline to 
go up $1.00, double the price of natural gas, and cause huge loss of 
life. This would throw this country into an immediate recession and its 
impacts would dwarf the costs of protection. I pray that the next time 
I testify it is not to say, ``I told you so.''
    Well, now I get to say it, I told you so. What a hollow feeling!
    Unfortunately, this country historically hasn't reacted until a 
crisis occurs. Well, we have our crisis and now is the time for action. 
This is an issue of national significance.
    An astounding 87 percent of the oil and 80 percent of the natural 
gas from Federal offshore waters is coming from offshore Louisiana. In 
addition, LOOP, this nation's only offshore oil port which handles 
about 15 percent of this country's foreign oil and is connected to over 
30 percent of the U.S.'s total refining capacity, sits just 18 miles 
offshore of Port Fourchon.
    Much of the support infrastructure for nearly one-third of this 
country's oil and gas supply is located in the most rapidly 
deteriorating and vulnerable areas of the Louisiana coast. The recent 
storms have further exacerbated our vulnerability to a point of crisis.
    Today, over half the oil and gas production in the Gulf of Mexico 
remains shut-in, over 1 million bbls of oil and 5.6bcf of natural gas 
per day. Since August 26, 2005 over 75 million bbls of oil and 400bcf 
of natural gas was made unavailable to the U.S. That's almost $10 
billion of product. By the end of the year, Gulf's annual production 
could very well have been reduced by 25 percent.
    We should all be very thankful that Port Fourchon did not receive a 
direct hit from either storm. If either had been just a few miles 
closer, my dire projections of 2004 would have been grossly 
underestimated.
    I commend this committee's actions of last week which amended the 
Budget Reconciliation Act, which could add $1.2 billion to our coastal 
efforts. This is definitely a step in the right direction. The recent 
Energy Bill included a Coastal Impact Assistance provision which is a 
start, but fell far short of direct offshore revenue sharing that is 
needed. We must approach a level of sharing Federal OCS revenues which 
is at or near that which currently exists on Federal lands within a 
state.
    We have a plan to build a sustainable coast; it must include levee 
protection, coastal restoration, and critical energy infrastructure 
support. It could have been implemented at a fraction of what these 
storms have cost this country.
    Until this Nation truly comes to the realization of what's at stake 
here in coastal Louisiana, and makes the proper investment to sustain 
it, we will most likely remain on a collision course with an 
unprecedented energy shortage in this country.
    My greatest hope is that I do not have to return and say, ``I told 
you so.''

    The Chairman. You sound like me when it comes to drilling 
in the North country. Mr. LaGrange, President and CEO of the 
Port of New Orleans.

         STATEMENT OF GARY P. LaGRANGE, PRESIDENT/CEO, 
                      PORT OF NEW ORLEANS

    Mr. LaGrange. Thank you Mr. Chairman, and Senators Vitter 
and Thomas. Thank you for being here with us today, we truly 
appreciate it. I'm going to briefly wear a second hat, in 
addition to President of the Port of New Orleans is Immediate 
Past Chairman, of the American Association of Port Authorities, 
which is all the Ports of the Western Hemisphere. You know, 
Katrina and Rita together, actually a number that has not been 
talked about quite a bit, but 22 Ports on the Gulf coast were 
detrimentally affected by both of those storms.
    From the Golden Triangle area of southeast Texas, all the 
way across Louisiana, Mississippi, and over, including Mobile 
to some extent. So we thank you for all of your efforts to this 
point.
    The Port of New Orleans is not just a Louisiana Port, or 
it's not just the Port of New Orleans, and for that matter it's 
not even a Mississippi River Port, it's a national port. It's a 
port that services, 62 percent of the consumer spending public 
of America, and probably the most unique port in the United 
States, because it's connected directly to 15,000 miles of 
inland navigable waterways, including the Ohio, the Tennessee, 
the Missouri, the Mississippi, and so on and so forth.
    Ports like Pittsburgh, Memphis, St. Louis, Chicago, Little 
Rock, Tulsa, and Oklahoma, all are very very dependent on the 
products that come into the Port of New Orleans and the Lower 
Mississippi River, and on the export side, the opposite is very 
true as well.
    We want to look at a plan to redevelop Louisiana and we 
certainly propose and ask your cooperation and your assistance 
but not only from a navigation standpoint, as our other 
colleagues have mentioned here this morning, from a coastal 
restoration standpoint, and certainly from a flood protection 
standpoint, first and foremost.
    So we don't want to overlook the entire package. I talk 
about the inter-connectivity of the Port of New Orleans to the 
rest of America, you know and it's no wonder that the Port of 
New Orleans is the largest importer of steel, it's the largest 
importer of rubber, it's the largest importer of plywood and 
forest products. We're second now to New York, but we'll be 
first again next year in coffee imports. And we're the largest 
certified London metal exchange port for precious metals in the 
United States. And we're the largest exporter of poultry in the 
United States. All of that said, being located where we are in 
the lower Mississippi River, we also see over 60 percent of the 
grain exports from mid-America and America's bread basket come 
right through the lower Mississippi River and right through New 
Orleans and the other ports on the river as well, from the Port 
of South Louisiana.
    New Orleans also, according to the International Council of 
Cruise Lines, was the fastest growing cruise port in the world. 
In the world. And had Katrina not come along, we'd have gone 
90,000 passengers in 1993 to over 850,000 cruise passengers 
this year in 2005. That's all been put on hold now 
unfortunately.
    The Port of New Orleans sustains an employment nationally 
according to studies that were recently completed by Martin and 
Associates, 380,000 United States jobs are a result of the Port 
of New Orleans and the Louisiana purchase, 202 years ago. That 
accounts to roughly 28 states, as I said 62 percent of the 
consumer spending public of America. That's $37 billion 
annually in economic benefits and $2.8 billion annually in 
Federal income tax paid. All of this said, the Port in the 
storm itself sustained publicly and privately, a little over $1 
billion in damages. Thirty percent of the Port of New Orleans 
as we knew it on August 28, does not exist today. Thirty 
percent is gone. The public side of that number is roughly $275 
million of the little over $1 billion. So that to the Dock 
Board and to the Port of New Orleans, we are looking at 
relocation and rebuilding, not covered by insurance and not 
covered by FEMA our exposure is roughly $275 million. And quite 
honestly it's going to be a huge task and a huge chore. And 
somebody said earlier we need to think out of the box, I think 
we need to create a new box. And we certainly are going to need 
your help and your assistance, as I said it's not a local 
Louisiana, New Orleans thing, it's a national thing, it's a 
national situation.
    I think the long and the short of it all, is that we will 
bounce back, we are back at a 50 percent level roughly, almost 
approaching 50 percent today. The day after Katrina, we were 
told that it would be 6 months before a ship came back into the 
Port of New Orleans, in 8 days we off-loaded our first 
container ship, the Lykes Flyer, a CP and that was quite a 
memorable day. The three things that we knew we needed were 
electrical power, certainly manpower, and intermodal 
connectivity. The roads need to be rebuilt, the bridges needed 
to be rebuilt, but first and foremost was manpower. And I want 
to take my hat off to Secretary Minetta, and John Jamian of the 
Maritime Administration for in quick order deploying some of 
your ready deployment vessels to New Orleans, to serve as 
cranes to help us off-load cargo while our gantry cranes were 
down in those early days, to serve power while we had no power, 
while we had no generators, and more importantly to house port 
related personnel that we desperately needed to bus and truck 
back into the area, to work those ships so vital to America's 
economy.
    So we thank the Federal Government for moving 
expeditiously. I know we hear all too often about the 
complaints of somebody not moving fast enough. But this is 
certainly a case where we can fly the banner and we were 
really, really happy with that display and that effort.
    NOAA was great, the Corps of Engineers were great in 
getting the river opened up the day after the storm. Albeit 
with a curfew in one way, the Coast Guard was there, aids to 
navigation were put back into place quite quickly and quite 
readily. And we certainly appreciate all of those many, many 
fine efforts.
    The story certainly is a bleak one. But as I said we thank 
you, we'll persevere through the efforts of our Congressional 
Delegation, including Senator Vitter, we'll continue to put one 
foot in front of the other and we'll make this thing happen, 
and we'll bring New Orleans back to the level that it once was, 
and hopefully bigger and better, but not without your 
assistance gentlemen, thank you.
    [The prepared statement of Mr. LaGrange follows:]

        Prepared Statement of Gary P. LaGrange, President/CEO, 
                          Port of New Orleans

    My name is Gary P. LaGrange, President and Chief Executive Officer 
of the Port of New Orleans and immediate past Chairman of the American 
Association of Port Authorities (AAPA). I am grateful for the 
opportunity to appear before you today to discuss the future of New 
Orleans as a major port and transportation hub for our Nation.
    Within a one-month span, Hurricanes Katrina and Rita have impacted 
over twenty AAPA-member ports and many other private and public ports 
in the Gulf of Mexico region. The impact of these hurricanes has 
varied, with the largest impact on the ports of Louisiana, Texas, 
Alabama and Mississippi. For several ports, including New Orleans, the 
impact has been considerable; some port facilities may need to be 
relocated, and it will take months if not years to fully recover. 
Concerning the Port of New Orleans, that recovery process is underway--
the Port is now operational up to 40 percent of its full pre-Katrina 
capacity.
    Though I am here to specifically address issues and opportunities 
at the Port of New Orleans, I would like to note that the Port is 
working closely in a coordinately manner with interested stakeholders 
to convey a united vision for the restoration of coastal Louisiana. To 
that end, the Port strongly shares the view that the future of 
Louisiana is absolutely dependent upon the proper and immediate 
execution of a coordinated program that enhances navigation, coastal 
restoration, and flood protection measures.
Value of Maritime Trade to This Nation
    The business and economic health of this Nation is heavily 
dependent on maritime trade. America's ports are our gateways to the 
world and a critical component in the Nation's economic health and 
national defense. When ports are impacted, there is a quick and sizable 
ripple effect throughout the economy. U.S. ports and waterways handle 
over 2 billion tons of cargo annually. Much of that commerce flows 
through the impacted ports in Louisiana, Texas, Alabama and 
Mississippi. These ports are heavily linked to this Nation's petroleum, 
grain and farm products, fruit, poultry, coffee, chemical and steel 
trades. Through its critical location on the inland waterways system, 
the Port of New Orleans alone serves as the focal point for waterborne 
transportation of cargo to 28 states. That cargo activity supported $37 
billion in economic benefits to the country and generated $2.8 billion 
in Federal tax revenue.
    In the post-Katrina environment, examples of affected cargo 
activity include the following:

        Agricultural products from 17 midwestern states flow through 
        the Mississippi River. Over half of the grain exports for this 
        Nation depart from ports impacted by Katrina. Oil, agriculture 
        and chemicals rely heavily on the infrastructure provided in 
        these port areas.

        Gulf ports serve as one of the Nation's largest gateways for 
        poultry exports, and the inability to handle frozen poultry 
        products through unique dockside facilities would affect the 
        industry worldwide. Estimates for the Port of New Orleans show 
        that relying on less efficient means to transport these 
        products would increase costs by $7-$8/ton, thus making U.S. 
        poultry products extremely noncompetitive in the international 
        marketplace.

        Steel is another critical commodity handled by the Port of New 
        Orleans. The cost of diverting steel imports from New Orleans 
        would increase the cost of such products by an estimated $80-
        $90/metric ton because of reduced access to inland barge and 
        rail transportation systems and associated delay costs.

        Disruptions in the delivery of natural rubber products through 
        the Port of New Orleans are creating raw material distribution 
        and supply problems for tire manufacturing facilities in the 
        U.S.

        Passenger cruise operations are also an important economic 
        component at many U.S. ports, including the Port of New 
        Orleans. Prior to Katrina, the Port of New Orleans was the 
        fastest growing cruise port in the world. Cruises provide 
        significant tourist trade, jobs and income for New Orleans and 
        the region, and the rebound of passenger cruise operations will 
        depend heavily on the ability of New Orleans to rebuild.

    Should Port of New Orleans services not be completely restored, any 
rerouting of traditional port cargoes would increase related supply 
chain costs, including those associated with trucking and rail 
services, barging, distribution and warehousing, and ocean freight.
Importance of Federal Assistance
    Catastrophic events, whether natural or man-made, can greatly 
impact maritime trade. Hurricanes are especially dangerous and are the 
most frequent threat since ports are located in affected coastal areas. 
Ports also are impacted by other disasters such as earthquakes and 
terrorist events. The impact on New Orleans from Hurricanes Katrina and 
Rita has been considerable. There are several key actions that are 
important to the port's recovery: quickly reopening and maintaining 
shipping channels; restoring communications, electrical power and other 
utility services; obtaining a readily available workforce; and 
repairing facilities and intermodal connections (reliable truck and 
rail services).
    Concerning Federal assistance provided to the Port of New Orleans, 
the Maritime Administration (MarAd) is to be especially commended for 
its efforts. The agency took the historic step of diverting military 
ready reserve ships to help ports quickly reopen. MarAd provided a 
vessel in New Orleans for use as housing for Port workers. The vessel 
also had cranes for recovery and cargo operations and provided the 
ability to generate power for the Port.
    Several other Federal agencies stepped in quickly to help out 
affected ports, and were critical to the ports' ability to reopen 
quickly. The Coast Guard, the Army Corps of Engineers, and the National 
Oceanic and Atmospheric Administration should especially be commended 
for their vital and timely assistance provided to ports by surveying 
channels, identifying any obstructions, reinstalling aids to 
navigation, and providing emergency dredging. These agencies worked 
quickly and cooperatively to reopen the shipping channels.
    FEMA has also been an important partner. It has directed many of 
the Federal recovery activities for the Port and is helping to 
facilitate rebuilding activities.
Future of New Orleans as a Transportation Center
    It is clear that the Port of New Orleans serves as one of the 
Nation's key intermodal gateways for domestic and international trade. 
The very geographic proximity of the Port to the Gulf of Mexico and the 
mouth of the Mississippi River makes it the ideal and central location 
for the inbound and outbound shipment of cargo. As a key transportation 
focal point on the Mississippi River, the Port of New Orleans serves as 
the primary hub for the shipment of cargo on the Nation's inland 
waterways system. Given the regional access to major road systems, 
including Interstates I-10, I-55 and I-59, the Port is perfectly 
situated to facilitate the highway transport of goods flowing through 
the New Orleans port region. Finally, the Port of New Orleans provides 
immediate rail access for six major national railroads, namely Union 
Pacific, Burlington Northern/Santa Fe, Kansas City Southern, Norfolk 
Southern, Canadian National, and CSX. No port in the Nation is more 
ideally located for the intermodal inbound and outbound movement of 
domestic and international cargo by ocean-going vessels, trucks, 
railroads, or barges. That is why the Port of New Orleans is so vital 
to the business and economic health of the region and our Nation. The 
operations of the Port must be fully restored in order to continue to 
reap the trade and other vital economic benefits that accrue from such 
operations.
Katrina Impact and Recovery
    Hurricane Katrina completely shut down the Port of New Orleans. The 
Port is only now beginning to restore full electricity, water, sewage 
and other services, and its terminals and facilities were severely 
damaged by both storms and subsequent flooding. The total closure of 
the Port not only affected the economy of Southeast Louisiana, but also 
the entire Nation. In 2004 alone, more than 380,000 jobs in the U.S. 
were dependent on the cargo activity at the Port.
    In the immediate aftermath of Hurricane Katrina and Rita, the Port 
of New Orleans has been working non-stop to restore its facilities and 
services. As noted above, the Port is currently operating at only 40 
percent of its pre-Katrina level. The Port of New Orleans is still 
struggling with a limited workforce and the ability to move the cargo 
in and out of the Port. Damaged terminal, warehouse and other Port 
facilities need to be repaired and/or replaced. Mississippi and some 
Texas ports face similar problems. Intermodal connections, such as 
truck and train, are still a challenge. Highways and rail tracks need 
to be repaired and/or rebuilt, and workers need basic housing in order 
to continue any long-term employment. The recovery of the Port of New 
Orleans is tied to the problems of restoring the entire city. Without 
adequate infrastructure for longer term housing and family needs, 
workers will not be able to return. Cruises will wait to return until 
hotels and tourist attractions are restored.
    The Port is a major economic engine for New Orleans and the region. 
Quickly restoring the Port to full operation will help return economic 
vibrancy to the area. The Port will also be a critical part of 
rebuilding the city. It can provide a means of bringing in the 
materials needed for the major repair and reconstruction efforts.
    Based upon post-Katrina engineering and other studies, the Port of 
New Orleans estimates that funding of approximately $275,000,000 for 
unrecoverable damages will be required to rehabilitate Port facilities 
damaged or affected by Hurricanes Katrina and Rita. Other ports in 
Louisiana, Alabama, Texas and Mississippi also will incur costs to 
repair facilities. If the Port returns to full operation, the New 
Orleans region will soon follow. With repaired port and intermodal 
infrastructure and a return of the workforce, the Port will be a major 
factor in the business and economic revitalization so desperately 
required for the Gulf Coast region and our Nation.
Conclusion
    I thank you again for the opportunity to address this committee 
today. I look forward to working with you and your fellow committee 
members on the recovery of the Port of New Orleans and other affected 
Gulf Coast ports.

    The Chairman. Thank you very much. And thank you for this 
comprehensive statement. We're going to print all the 
statements that were presented to us in the record, fully as 
though read. I do appreciate your comments. Now Mr. Ewell 
Smith, please.

STATEMENT OF EWELL SMITH, EXECUTIVE DIRECTOR, LOUISIANA SEAFOOD 
                 PROMOTION AND MARKETING BOARD

    Mr. Smith. Thank you Mr. Chairman, I want to thank you, 
Senator Vitter, Senator Thomas and the other members of the 
Committee. As a child growing up New Orleans, my mom made 
crawfish etouffe and shrimp etouffe just about every other day 
it seemed like. It was so special cooking that and trout 
almondine. It's something we take for granted in New Orleans, 
and the rest of the country comes to New Orleans to enjoy it 
and hopefully while you're all here, you'll get to enjoy some 
of our seafood, and understand the importance of our natural 
resource.
    I serve as Executive Director of the Louisiana Seafood 
Promotion and Marketing Board. We represent over 16,000 
commercial fishermen, and the board markets the state's 
commercial seafood products, both to consumer and to trade.
    Louisiana seafood industry is primarily made up of five 
different sectors: shrimp, oysters, crawfish, blue crabs, and 
finfish. Louisiana is second only to Alaska in total seafood 
landings, while we lead the Nation in shrimp, oysters and 
crawfish production. Louisiana's seafood industry is the fuel 
that drives our restaurant and tourism industries with over 
$2.8 billion in retail sales. Prior to Hurricanes Katrina and 
Rita, our seafood industry was struggling with high fuel prices 
and imports.
    Hurricanes Katrina and Rita have impacted our industry in 
ways unimaginable. Three of the six largest docks in the U.S. 
by landings are in Louisiana: Empire, Venice and Cameron. The 
infrastructure in these areas are completely destroyed. As a 
whole, our fishing communities east of the Mississippi River 
are out of business. There are no docks to land the product, no 
lighthouses, no fuel, no electricity, no cold storage, no 
marinas, no bait and tackle shops, no communities, meaning no 
welders, no mechanics, no deck hands, and on. West of the 
Mississippi, our shrimping industry has lost 2 of its largest 
shrimping docks which land about 30 percent of all our product. 
Seventy percent of our wholesale retail dealers, licensed in 
Louisiana, based in the parishes impacted by Hurricanes Katrina 
and Rita. Our oyster industry is operating at a fraction of 40 
percent, the crops for finfish, shrimp and crabs, just like you 
would see in the movie Forest Gump after the storm. However 
current estimates are approximately 15 to 25 percent of our 
fishermen are actually out there fishing. Over 3,000 of our 
commercial vehicles are on land where they don't belong. Even 
though the resource is strong, this may be a false positive.
    The marshes washed away during the hurricanes released some 
nutrients which helped the crops to flourish, so those who can 
fish right now are doing well. But next year will be uncertain, 
for 100 square miles of our marshes have been lost. Areas that 
are needed for resources to grow.
    Between Katrina and Rita, we lost more marshland in less 
than a month, than we were projected to lose over the next 45 
years. We have also what I call a crisis on top of a crisis.
    More than likely you saw the dewatering of New Orleans on 
television and the press labeled our waters as toxic soup, 
killing seafood sales across the board. We have fought this 
battle vigorously working with the Department of Health and 
Hospitals, Department of Environmental Quality, LSU Food 
Science, the FDA and NOAA, and the good news is there are no 
toxins in the water. And the seafood is safe to consume.
    However the damage is done, we will fight this seafood 
safety challenge for the foreseeable future. The double whammy 
for our industry is that Wildlife and Fisheries has already 
estimated a loss of over $2.2 billion in retail sales just from 
the damage of the hurricanes, much less the perception 
challenge we have.
    If you look out these windows, about seven or eight blocks 
is one of the biggest shrimp processors in our state, and 
probably in our country. The biggest challenge they're going to 
have--they were severely damaged during the hurricane not by 
the hurricane itself, but by looters.
    Looters got into their facility, destroyed their 
administrative offices, some of their equipment and ripped the 
doors off of their freezer coolers destroying over 2 million 
pounds of product. But that's the short term challenge for 
them. The long term challenge for them is going to be getting 
labor. Right now labor in Lakeview, the area where you may have 
visited yesterday, are getting paid up to $15 to $20 an hour to 
tear our sheetrock. Burger King's paying $8.50 an hour and a 
$6,000 signing bonus, and our processing plants are losing 
their laborers that they have right now, and having a hard time 
replacing them. This gentlemen, Paul Piazz and Sons, six or 
seven blocks over is going to have a difficult time come May 
season.
    So, where do we begin? The first issue is the fishermen, 
without our fisherman, nothing else matters. We need to provide 
the funds necessary for the fishermen to get up and going, the 
seafood vessels and the oyster farmers. We need to help the 
fishermen get their boats back in the water as soon as possible 
and put them back to work cleaning the water of debris. We need 
to rebuild the infrastructure as soon as possible. That means 
boats, docks, fuel, ice houses, cold storages, marinas, bait 
and tackle shops, oyster reefs and on. We need to rebuild the 
markets lost through marketing and promotions. If you ask any 
of the seafood dealers around town, or around the state, if 
they've lost market share, they will tell you ,yes. We've lost 
we estimate $2.2 billion in sales this coming year. Those 
markets losses are probably gone.
    As you know our shrimping industry alone, 10 percent of the 
shrimp consumed in the United States is imported. We've given--
these hurricanes have given those industries a perfect 
opportunity to slip into our shoes. Into our markets that we 
had. Rebuilding those markets will be critical. And of course, 
you've heard we need to rebuild our coastlines, not only to 
save the lives of the people of our state and in New Orleans, 
but we also need that habitat for our natural resource for our 
seafood.
    In closing, it's my understanding that you all will be 
doing a helicopter tour today. We--this past Friday, my 
Louisiana Seafood Board organized an event that took our 
Natural Resource Committee down to Lower Plaquemine's Parish. 
Now I grew up in Lakeview, around the corner here, and I've 
helped gut a few houses, and I thought that area looked bad 
until I went to Lower Plaquemine's Parish. Lower Plaquemine's 
Parish makes Lakeview look like paradise. The challenges there 
are great. Lower Plaquemine's Parish is home to two of our 
biggest fishing communities and symbolic of the rest of our 
coastal communities around the state.
    Hurricane Katrina was the right hook, and Rita was the left 
hook. Every part of coastal community has been affected. Never 
in the history has the entire oyster industry been completely 
shutdown, as it has been for the passed few months. It just 
recently opened up. The thing that I want to leave you with is 
this.
    When we visit with our fishermen in these coastal 
communities, they've been knocked down before, they're used to 
it. They're not a city boy like me, they can--they're used to 
fighting back very quickly and getting up on their feet again. 
They need assistance. That is for certain. They need that 
bridge to get them going. They are ready to rebuild their 
lives, they are ready to get back to work. They're not looking 
for handouts, they do need assistance, but they need the help, 
and they need help soon. They're dying down there and there's a 
world hurt.
    And they're ready to help rebuild Louisiana. So there is a 
sense of hope among them and it inspires me, and we just need 
your help and we appreciate you all coming down. Thank you very 
much.
    [The prepared statement of Mr. Smith follows:]

        Prepared Statement of Ewell Smith, Executive Director, 
            Louisiana Seafood Promotion and Marketing Board

    I am Ewell Smith and serve as Executive Director of the Louisiana 
Seafood Promotion and Marketing Board. Representing over 16,000 
commercial fishermen, the Board markets the state's commercial seafood 
products both to consumer and trade.
    Louisiana seafood industry primarily is made up of five different 
sectors: shrimp, oysters, crawfish, blue crabs and finfish. * Louisiana 
is second only to Alaska in total seafood landings, while we lead the 
Nation in shrimp, oysters and crawfish production. Louisiana's seafood 
industry is the fuel that drives the restaurant and tourism industries 
with over $2.8 billion in retail sales.
---------------------------------------------------------------------------
    * Finfish: tuna, shark, mullet, black drum, menhaden, snappers, 
groupers, etc.
---------------------------------------------------------------------------
    Prior to Hurricanes Katrina and Rita, our seafood industry was 
struggling with high fuel prices and imported products being dumped in 
our marketplace.
    Hurricanes Katrina and Rita have impacted our industry in ways 
unimaginable. Three of the six largest docks in the U.S. by landings 
are in Louisiana: Empire, Venice, and Cameron; the infrastructure in 
these areas is completely destroyed.
    As a whole, our fishing communities east of the Mississippi River 
are out of business. There are no docks to land the product, no ice 
houses, no fuel, no electricity, no cold storage, no marinas, no bait 
and tackle shops, no communities meaning no welders, no mechanics, no 
deckhands and on. West of the Mississippi our shrimping industry lost 
its two largest shrimp docks.
    Seventy percent of the Wholesale/Retail Seafood Dealers licensed in 
Louisiana are based in the parishes impacted by Hurricanes Katrina and 
Rita. Our oyster industry is at 40 percent. The crops for finfish, 
shrimp, and crabs are strong; however current estimates are 
approximately 15 to 25 percent of our fleet across the state is 
actually fishing--over 3,000 commercial vessels are on land where they 
don't belong. Even though the resource is strong, this may be a false 
positive. The marshes wash away during the hurricanes releasing 
nutrients which help the crops flourish so for those few who can fish 
now are doing well; but next year will be uncertain for 100 square 
miles of our marshes have been lost--areas that are needed for our 
resources to grow. Between Katrina and Rita, we lost more marshland in 
less than a month than we were projected to lose over the next 45 
years.
    We have also what I call the crisis on top of the crisis. More than 
likely you saw the ``dewatering of New Orleans'' on TV, and the press 
labeled our waters ``Toxic Soup'' killing seafood sales across the 
board. We have fought this battle vigorously working with DHH, DEQ, LSU 
Food Science, FDA, and NOAA and the good news is there are no toxins in 
the water; the seafood is safe to consume. However, the damage is done; 
we will fight this seafood safety challenge for the foreseeable future. 
The double whammy for our industry is that wildlife and fisheries had 
already estimated a loss of over $2.2 billion in retail sales just from 
of the damage of the hurricanes much less the perception challenge.JLW
    One final issue our industry is dealing with is labor shortages. 
Existing labor is going to relief workers making $15 an hour cash or 
you may have heard that Burger King was paying $8.50 an hour plus a 
$6,000 dollar signing bonus. Processing plants are losing the workers 
they did have to these wages and can't find other to fill in.
    So where do we begin?

   The first issue is the fishermen!

   Rebuild fishing communities! Without them nothing else 
        matters!! Provide funds to fishermen, seafood vessel owners, 
        oyster farmers.

   Help the fishermen get their boats back in the water as soon 
        as possible and put them to work clearing the waters of debris.

   We need to rebuild the infrastructure as soon as possible 
        (boats, docks, fuel, icehouses, cold storage, marinas, bait and 
        tackle shops, oyster reefs and on).

   We need to rebuild markets lost through marketing and 
        promotions.

   Rebuild our coastlines to save lives.

    In closing it is my understanding that this committee will be 
taking a helicopter tour today. Seeing the damage from the air will not 
suffice and I urge you to land in the affected areas and see up close 
and personal the devastation. Once you see this devastation you will 
understand the funds requested outlined in the full written testimony 
are just enough to get the industry going on the path to recover. I 
would like to thank all of you for taking the time to understand our 
challenges and opportunities.
    Next is information provided by the Louisiana Department of 
Wildlife and Fisheries.
    The Louisiana Department of Wildlife and Fisheries estimates that 
storm -related fisheries losses at the retail level could exceed $2 
billion over the next year. The latest estimates combine $981 million 
in production losses for parishes affected by Hurricane Rita with the 
$1.29 billion losses projected for areas damaged by Hurricane Katrina 
for a total of $2.27 billion. That number represents 80 percent of the 
total commercial and recreational retail harvest values in 2003, based 
on sales levels of $2.85 billion.

   Summary: Preliminary Louisiana fishery losses caused by  Hurricanes
                      Katrina and Rita (10/12/2005)

Hurricane Katrina affected Orleans, Jefferson, St. Bernard, Plaquemines,
 St. Tammany, Tangipahoa, Livingston, Ascension, St. James, St. John the
         Baptist, St. Charles, and \1/2\ of Lafourche parishes.
Hurricane Rita affected \1/2\ of Lafourche, Terrebonne St. Martin (for 6
  month each), Assumption, Iberville, Point Coupee, St. Landry, Acadia,
 Avoyelles, St. Mary, Iberia, Jefferson Davis, Vermilion, Calcasieu, and
                 Cameron (for 12 months each) parishes.
------------------------------------------------------------------------
             Potential direct     Potential direct
            loss of available    loss of available     Potential direct
 Category  resource (Hurricane  resource (Hurricane   loss of available
                 Katrina)              Rita)           resource (Total)
------------------------------------------------------------------------
Crab                      N/A                  N/A                  N/A
Freshwate                 N/A                  N/A                  N/A
 r Fish
Oysters*        $ 206,811,000          $25,103,235         $231,914,235
Saltwater                 N/A                  N/A                  N/A
 Fish**
Shrimp                    N/A                  N/A                  N/A
Wild                      N/A                  N/A                  N/A
 Crawfish
Recreatio                 N/A                  N/A                  N/A
 nal
 Fisherie
 s
Freshwate                 N/A          $ 7,323,128           $7,323,128
 r Fish
 Loss
------------------------------------------------------------------------
    Total        $206,811,000          $32,426,363         $239,237,363
------------------------------------------------------------------------

------------------------------------------------------------------------
                Potential            Potential
            production loss at   production loss at       Potential
 Category        dockside             dockside        production loss at
           (Hurricane Katrina)    (Hurricane Rita)     dockside (Total)
------------------------------------------------------------------------
Crab              $12,297,617          $10,264,261          $22,561,878
Freshwate            $189,019           $2,859,492           $3,048,511
 r Fish
Oysters*         $ 44,577,072          $12,374,438          $56,951,510
Saltwater        $ 25,887,471         $ 27,428,103          $53,315,574
 Fish**
Shrimp            $81,054,864          $57,198,057         $138,252,921
Wild                      N/A           $4,166,514           $4,166,514
 Crawfish
Recreatio                 N/A                  N/A                    0
 nal
 Fisherie
 s
Freshwate                 N/A                  N/A                    0
 r Fish
 Loss
------------------------------------------------------------------------
    Total        $164,006,043         $114,290,865         $278,296,908
------------------------------------------------------------------------

------------------------------------------------------------------------
                Potential            Potential
            production losses    production losses     Total potential
 Category    at retail level      at retail level     production losses
           (Hurricane Katrina)    (Hurricane Rita)     at retail level
------------------------------------------------------------------------
Crab              $81,776,427          $68,255,059         $150,031,486
Freshwate          $1,256,934          $19,014,988          $20,271,922
 r Fish
Oysters*        $296,427,648*          $82,287,284         $378,714,932
Saltwater      $172,145,944**         $182,390,804         $354,536,748
 Fish**
Shrimp           $538,996,879         $380,354,398         $919,351,277
Wild                      N/A          $27,706,395          $33,691,720
 Crawfish
Recreatio        $199,517,744         $221,383,678         $420,901,422
 nal
 Fisherie
 s
Freshwate                 N/A                  N/A                  N/A
 r Fish
 Loss
------------------------------------------------------------------------
    Total      $1,290,121,576         $981,392,606       $2,271,514,182
------------------------------------------------------------------------
* Oyster losses are for two (2) years.
** Includes Gulf Menhaden.

                 S. 1765 Federal Appropriation Request
Rationale and Recovery Implementation Summary

    Fisheries Disaster Assistance--Hurricane Katrina: $134 million; 
Hurricane Rita: $114 million.

    This request is based upon the estimated production loss in terms 
of dockside value for crabs, shrimp and saltwater fish excluding 
menhaden for a twelve month period and oyster production over a twenty-
four-month period. This estimate uses LDWF trip ticket landings and 
value data averaged over the past five years (2000-2004) from the 
impacted parishes. In consideration of the damages and loss of 
infrastructure supporting these fisheries, we have estimated a minimum 
of one year for most coastal areas before significant harvest resumes.
    Since 1999, the LDWF has maintained trip ticket report records 
which in addition to dealer and fisherman names and license numbers, 
transaction date, area fished, trip length, etc., capture information 
on the species, amount and value of seafood products landed and sold to 
wholesale/retail seafood dealers and retailed to the public by 
individual fishermen. With the support of the Louisiana shrimp 
industry, the LDWF has successfully used its trip ticket data to 
identify and qualify shrimp fishers for direct financial assistance 
payments under U.S. Department of Commerce NOAA Grant NA03NMF4520310, 
administered by the LDWF. Trip ticket data could be again used to 
identify eligible fishers and vessel owners for potential distribution 
of replacement dockside values.
    Under direct lump-sum grants, the LDWF could use trip ticket data 
to form the basis of identifying and certifying Louisiana harvesters 
and vessel owners qualified to receive potential direct grants. The 
database could be used to partition these grants into tiers or levels 
linked to reported individual landings histories. Grants to harvesters 
and vessel owners could be used as direct assistance for personal needs 
or to repair and/or replace damaged vessels, fishing and navigational 
equipment.

    Menhaden Fisheries Recovery--Hurricane Katrina: $14 million; 
Hurricane Rita: no separate request for menhaden.

    This request represents 30 percent of the average annual dockside 
value of the Gulf menhaden landings over the last 5 years. A menhaden 
plant in Plaquemines Parish was severely impacted by Hurricane Katrina. 
They report that they land about 30 percent of the total Gulf menhaden 
landings. Using information from a recent LDWF economic impact study, 
they estimate that their total economic benefit to Louisiana is $155 
million, with $116 million in retail sales, $25 million in wages and 
earnings, $17 million in total landings. The plant was flooded with 
several feet of water, and the fleet of 11 boats was beached. Based on 
a report published by the company, they employ approximately 270 
personnel, mainly in Plaquemines Parish.
    Funding could be applied toward uninsured losses of the facility, 
vessels or fishing equipment. It could also be used to support 
personnel and infrastructure needs while harvest vessels boats and 
processing plant were refurbished.

    Fisheries Infrastructure Recovery--Hurricane Katrina: $154 million; 
Hurricane Rita: $114 million

    This request is based on the average annual (2000-2004) dockside 
value of all commercial species harvested within the affected parishes 
and the estimated costs to replace boat launching facilities in these 
areas. The infrastructure within the impacted area appears to have been 
totally destroyed. We estimate that there will at minimum be a need for 
investing at least one year of dockside value into rebuilding at least 
some infrastructure components. Infrastructure losses include lost or 
damaged vessels, docks, ice plants and processing facilities but also 
include cold storage facilities, boat ramps, launches, marinas, bait 
and tackle shops. Seventy percent of the Wholesale/Retail Seafood 
Dealers licensed in Louisiana are based in the parishes impacted by 
Hurricanes Katrina and Rita, as are 79 percent of the licensed 
commercial fishers.
    Funding could be used by NOAA to fund grants that help local 
governments who own ramp facilities restore them. In the same way, 
monies may also be used to help local governments and private interests 
provide emergency services to set up temporary dock facilities 
including fuel and ice docks, unloading facilities, and fishing 
equipment and supply stores which will enable local fishers to begin 
landing their catches as soon as they are able to fish again.
    The Department maintains a directory of Louisiana licensed charter 
vessels used to conduct dockside and telephone interviews and develop 
estimates of fishing effort and recreational harvest from that sector. 
The granting process would use the data in the directory to identify 
vessel owners/operators who would be potentially eligible to receive 
direct grants for losses of vessels and other facilities. Other 
facilities could include live bait holding tanks, land-based or 
houseboat overnight accommodations for clients and possibly other land-
based infrastructure necessary for the rehabilitation of the charter 
industry in the affected parishes.

    Louisiana Oyster Recovery--Hurricane Katrina: $94.25 million; 
Hurricane Rita: $10 million

    The reef rehabilitation request was derived from estimates of the 
value of lost reef habitat using pre-storm and post-storm surveys of 
oyster mortality and the benefit to costs ratios of past rehabilitation 
projects using Federal grant funding in response to past hurricanes by 
combining estimates of oyster reef acreage from both the public oyster 
seed grounds and private oyster leases.
    The LDWF would utilize rehabilitation funding to enhance oyster 
habitat by contracting and planting cultch material such as limestone, 
recycled oyster shell, or crushed concrete over suitable supporting 
bottom substrates within the impacted public seed grounds. Based upon 
the percentage difference between impacted oyster reefs on the public 
seed grounds and private oyster leases, approximately $29.5 million of 
the $104.25 million requested for reef rehabilitation would fund rehab 
efforts on the public seed grounds with $66.2 million used to fund 
rehab efforts on private leases. Using Federal grant funding, the LDWF 
has completed a number of projects such as these and all have proven to 
be highly successful with benefit to cost ratios ranging as high 
as16:1, but averaging around 10:1. The value of lost reef habitat was 
estimated at nearly $960 million following Hurricane Katrina. With a 
benefit-cost ratio of 10:1, it is estimated to take a 10 percent 
rehabilitation effort to replace the value of the lost habitat. 
Therefore, the $96 million used to rehabilitate reef habitat on both 
public grounds and private leases is anticipated to yield a future 
return of the $960 million worth of reef habitat lost to the storm. 
Private oyster lease holders could employ similar habitat enhancement 
efforts but may choose to use funding to cleanse their reefs by towing 
sediment removal devices such as bag-less oyster dredges over them. 
Federal funds were used following Hurricane Andrew to compensate oyster 
lease holders for expenses associated with cleansing their own oyster 
leases. Funding would also be used to resurvey and mark all oyster 
leases within the impacted area. In addition, funds would be used to 
replace an existing oyster hatchery which was located on Grand Isle and 
totally destroyed by Hurricane Katrina and to repair, replace and 
modernize LDWF oyster lease survey equipment and facilities, allowing 
more efficient services to this user group.

    Louisiana Marine Research Recovery--Hurricane Katrina: $14 million; 
Hurricane Rita: $0.4 million

    The Marine Fisheries Division suffered losses or damage at most of 
its coastal facilities:

   The Slidell field facility was totally destroyed as it was 
        in the path of hurricane force winds. The structure, boats, and 
        equipment were destroyed.

   The New Orleans leased office is located in the Central 
        Business District, near the interstate. The offices were not 
        flooded beyond the first floor, however, floors above that 
        lacked power for a month and records, equipment, and office 
        equipment were damaged by heat, humidity, and mold and the 
        building still remained closed as of November 7th.

   The field facility at Pointe a la Hache was totally 
        destroyed, as were the vessels and equipment stored there.

   Most buildings at the Marine Laboratory on Grand Terre 
        Island were destroyed.

   The field facility at Sister Lake, a designated public 
        oyster seed ground was damaged by Hurricane Rita.

    Monies appropriated would be used to replace and repair these 
coastal facilities. All of Louisiana's fisheries require intensive 
monitoring and assessment to ensure that management programs and 
practices are effective in ensuring recovery.

    Seafood Marketing--$35 million

    As a result of extensive media coverage of the aftermath of the 
flooding of New Orleans following Hurricane Katrina, public perception 
about the wholesome nature of seafood from the affected areas has been 
damaged. Although no additional fishery closures beyond the 
precautionary closure of oyster growing areas have been implemented, 
and although ongoing tissue assays of fish and crustaceans taken from 
area waters have shown no levels of concern for potential contaminants; 
local, regional and national markets for Louisiana seafood have been 
severely impacted by both product availability and public perceptions 
concerning seafood safety. These monies would be spent on promotional 
and marketing campaigns aimed at recapturing lost and developing new 
markets, enhancing quality assurance and certification standards and 
assuring national confidence in the continued safety of Louisiana 
seafood.

    Louisiana License Renewal--Hurricane Katrina: $14 million; 
Hurricane Rita: $2.5 million

    This request is based upon the costs of recreational and commercial 
fishing licenses purchased within the impacted area for a two-year 
period, oyster lease rental fees over a two-year period and oyster 
lease renewal fees over the full renewal period. One way for the state 
to keep the public engaged in fishing, both commercial and 
recreational, is to forgive fees for licenses for two years. Seventy-
nine percent of commercial fishing licenses were issued in the parishes 
impacted by Hurricanes Katrina and Rita. In addition, about 369,500 
recreational licenses were sold in those parishes, and all of the 
state's privately held oyster leases are also located in those impacted 
parishes. This appropriation would provide licenses and leases to 
affected fishers and lessees for two years. The state has approximately 
400,000 acres of water bottoms under private lease for oyster 
cultivation. The monies would cover the annual lease rental for 2 years 
and associated costs of oyster lease renewals.

    Fisheries Habitat--Hurricane Katrina: $5 million; Hurricane Rita: 
$5 million

    Nursery habitats include coastal wetlands, grass beds and beach 
foreshores. Monies could be expended as grants to survey, assess 
damage, and rehabilitate these habitats in the affected areas. Addition 
of hard structures may provide important habitat for some species. 
Additional funds could be used to coordinate Department priorities for 
fish and wildlife resources with other State and Federal priorities 
regarding coastal restoration such as flood protection and navigation.
Subtitle L--Department of the Interior.

    Freshwater Fisheries Recovery--Hurricane Katrina: $2 million; 
Hurricane Rita: $5.3 million

    Numerous freshwater water bodies in southeast Louisiana experienced 
fish kills due to saltwater intrusion and poor water quality. 
Additionally, most of the water bodies designated as Gulf Sturgeon (a 
federally-listed fish) critical habitat in Louisiana were significantly 
impacted by Hurricane Katrina. The Mermentau River, prime paddlefish 
habitat, also experienced fish kills following Hurricane Rita. Another 
species of fish, the Rio Grand Cichlid, is an exotic, invasive species 
of fish that can replace native fish. Although its range was slightly 
expanding each year, it was limited to only several water bodies. 
Katrina may have further expanded the range of this fish. The 
Department's fish hatcheries near Lacombe, Woodworth, and facilities 
near Beechwood were damaged by the hurricane and the fish in the ponds 
were lost. Hurricane Rita spread common Salvinia and possibly giant 
Salvinia to areas throughout coastal Louisiana. Additional spray 
efforts with relative expensive herbicides will be made in an effort to 
control it. Boating access has been greatly reduced in the impacted 
areas due to downed trees, residential debris and the spread of aquatic 
vegetation.
    The Department proposes designing and implementing monitoring 
programs to determine the impact to freshwater fish, including Gulf 
Sturgeon, paddlefish, and the spread of Rio Grand Cichlids. Results 
from these studies will assist the Department in determining what 
management options may be necessary. Options may include habitat 
modifications, fish stocking, fish eradication (for exotic species) and 
management regulations. Boating access in rivers will be improved by 
removing fallen trees and other debris. We will expand our spraying 
activities in impacted areas to reduce nuisance aquatic vegetation.
USGS Reports Preliminary Wetland Loss Estimates for Southeastern 
        Louisiana From Hurricanes Katrina and Rita
    Hurricanes Katrina and Rita transformed some 100 square miles of 
marsh to open water in southeastern Louisiana, according to preliminary 
estimates by U.S. Geological Survey (USGS) based on an analysis of 
Landsat satellite data from September and October.
    Future observations of Landsat imagery over the upcoming year will 
allow scientists at the USGS National Wetlands Research Center (NWRC) 
in Baton Rouge and Lafayette, Louisiana, to determine how much of the 
loss is permanent and how the marsh recovers. Although this early 
analysis of wetlands does not take into account some marsh recovery, 
indications are that much of the loss may be permanent. Some of the new 
areas of open water will likely become new lakes.
    Most of the loss east of the Mississippi River is attributed to the 
effects of Hurricane Katrina's storm surge, although Hurricane Rita's 
surge appears to have rearranged some of the wrack, or marsh debris, 
left behind by Hurricane Katrina in the upper Breton Sound area.
    Substantial marsh loss, primarily from Katrina, occurred east of 
the Mississippi River in St. Bernard and Plaquemines parishes. 
Approximately 39 square miles of marsh around the upper and central 
portions of Breton Sound were converted to open water by ripping of the 
marsh or by marsh submergence. Large compressed marsh features several 
thousand feet long are evident in Breton Sound. Most of the loss was 
concentrated in an area bounded by the Mississippi River levee to the 
west, the Delacroix Ridge to the east, and State Highway 300 to the 
north. Follow-up imagery and aerial photography will be used to 
determine if some of the submerged marshes reemerge over time.
    An additional 47 square miles of marsh were lost throughout the 
Pontchartrain, Pearl River, Barataria, and Terrebonne basins. The 
active Mississippi Delta also incurred approximately 14 square miles of 
loss. The lower Pearl River basin contains numerous marsh rips south of 
Highway 90.
    Direct impacts from Hurricane Rita were not as severe as Hurricane 
Katrina's impacts in southeastern Louisiana. For example, rips in 
marshes from Rita were not nearly the size of rips from Katrina in 
upper Breton Sound although they are noticeable in the Barataria and 
Terrebonne basins. Rita's surge caused new tears in fresh and 
intermediate marshes within Barataria and Terrebonne basins and 
reactivated older hurricane scars attributable to Hurricane Lili (2002) 
in western Terrebonne and the East Cote Blanche Bay area.
    Rita's surge caused detectable marsh loss west of the Mississippi 
River to the Texas border that could not be attributable to Katrina 
based on analysis of satellite imagery obtained a week after Katrina's 
landfall, but prior to Rita's landfall.
    Now that the compounded effects of the storms on Southeastern 
Louisiana have been analyzed, NWRC scientists are analyzing Landsat 
imagery to quantify Rita's impacts in southwestern Louisiana.
    To perform satellite analysis, USGS scientists in Louisiana used 
remote sensing technologies and geographic information systems. They 
compared land and water areas identified by using Landsat 5 Thematic 
Mapper satellite imagery. Landsat data from November 11, 2004 were 
compared to data acquired on September 7, 2005, September 16, 2005, 
October 9, 2005, October 18, 2005, and October 25, 2005 to identify 
potential wetland loss.
    The imagery was collected by the USGS National Center for Earth 
Resources Observation and Science in Sioux Falls, South Dakota.
    The USGS serves the Nation by providing reliable scientific 
information to describe and understand the Earth; minimize loss of life 
and property from natural disasters; manage water, biological, energy, 
and mineral resources; and enhance and protect our quality of life.

    The Chairman. Thank you very much. You know your group has 
probably the most independent people, individually owned boats 
in you know really, it's a different part of the economy. We're 
extremely interested in trying to help you restore that fishing 
community. And we'll be very much open to suggestion about how 
to have some sort of a conference with NOAA and your state 
people and your business associations and your Senators, but I 
think we've got some ideas up our way about how to help 
fishermen, and we've used them in the past. We'd like to--
really like to explore that, because this is going to be the 
toughest area. The rest of the people have more infrastructure 
to support them to start with, but fishermen by definition are 
solo operations and--but they all collectively come back to 
your ports, and this is a tremendous problem here in terms of 
how to make sure those fisheries can--the species themselves 
can be restored after the damage that's has been reported to 
us.
    So I want to urge you to contact our people, and let's see 
if we can get some meetings here before we close down this 
year, make sure we understand where there are any gaps in 
existing law that would prevent us from helping your area.
    As I said all your statements will appear in the record. 
I'm at a loss on one thing. Mr. Falgout, what's the income 
stream to your area from all the products that are coming down 
and leave through your port.
    Mr. Falgout. The income stream directly through our port, 
or----
    The Chairman. You and Mr. LaGrange both point out how much 
comes down through mid-continent and comes through and leaves 
through your port here. Your ports, more than one port. But to 
what extent? Is there any income stream there that comes to you 
now?
    Mr. Falgout. Business coming through coastal Louisiana is a 
$100 billion business, and am I answering you?
    The Chairman. That's products coming in, I understand that.
    Senator Vitter. I think what the Senator is saying, if we 
don't get any significant cut of royalties, then what if any 
income do we get from that activity?
    Mr. Falgout. On shore and out the three miles, of course 
the state gets a share, but offshore of that, outside of six 
miles, we get zero. We do not receive any of the offshore 
revenue sharing. Prior to the last 5 years, it was not that 
significant because most--the state was producing considerable 
amount of oil and gas on its own lands offshore. And the deep 
water Gulf of Mexico has not yet developed. But now the shift 
has gone to deep water Gulf of Mexico. The overwhelming 
majority of production now is coming from Federal OCS lands, 
the state is carrying the burden of infrastructure and 
supporting that without any revenues coming back from that. And 
the state revenues have dwindled because the production is now 
in deep water.
    The Chairman. You may be interested to know that twice the 
Senate passed a bill to give coastal communities a revenue 
sharing. And twice the House has refused to pass it. We're 
still trying to work with your Senators and Congressional 
Delegation again, but the difficulty is, had we passed those 
bills, they were back in the 1970s and 1980s, all of the wells 
that have been drilled since then you would have had a revenue 
base from.
    Mr. Falgout. Had you passed that, we'd have golden highway 
down to Port Fourchon, because we'd be sharing in about $2.5 
billion a year in revenues from that, and we would have built 
the levies ourselves and more than likely restored Coastal 
Louisiana.
    The Chairman. But we have the same problem. There are nine 
villages that were destroyed in October of 2004, they're still 
waiting for even Environmental Impact Statements to be 
completed on how to help them. Because we don't have the 
revenue share coming back from the activities either, so we 
share your point of view on that.
    I do think though that the question now is how we look to 
some of these structures. It's been mentioned about the money 
that went to New York, the Liberty Bonds were a product of the 
state and City of New York, not the Federal Government. The 
Federal Government made a $10 billion grant to the whole area, 
and turned over $10 billion to the National Administration to 
help. But as a practical matter, the Liberty Bonds as I 
understand were a product of the monies that were granted to 
the City and the State of New York to recover from that 
incident.
    We may have to look to a similar process here, to determine 
priorities as to where money goes after we do get the support 
to get additional monies to come your way.
    Senator Vitter.
    Senator Vitter. First, just a comment, I want to point out. 
I want to thank Mr. Smith from the Louisiana Seafood Promotion 
and Marketing Board. He helps represent the commercial fishing 
industry. In addition, there's a very important, very vibrant 
recreational fishing industry. And certainly in future hearings 
and meetings, particularly as we lead up to the reauthorization 
of the Magnuson-Stevens bill, we're going to include the CCA 
and other recreational fishing groups as well as the commercial 
side.
    So, I just wanted to point that out. In terms of this 
discussion of revenue sharing from offshore production, I would 
also note that this not a one-way street in terms of it 
representing Federal loss, but revenue loss to the Feds, this 
could avoid a lot of what would otherwise be an up-front 
payment directly from the Feds in terms of investment in both 
hurricane and flood protection, and coastal restoration.
    So, if we had a fair long-term revenue share, this would 
avoid a significant amount of up-front costs from the Feds in 
terms of those projects. So, it would be a very significant and 
in some ways attractive tradeoff for the Feds as well 
particularly, now that we have this obvious need. And with 
that, Mark Drennen was real good at identifying top four or so 
things to do. I'd like to ask each of you if you would 
identify, three top priority actions for Congress to take.
    Mr. Falgout. In general, of course the restoration of our 
levee system, upgraded to a category 5 is paramount. And you 
know how to fund all that. As you just said, if we could share 
close to 50 percent as state's inland share with the Federal 
Government on Federal lands, on mineral production, we could 
get there. The wetland restoration, we have to attain a 
sustainable coast, it will not be the coast you saw before 
Katrina, it won't be the coast you saw after Katrina and Rita, 
but at some level we can sustain coastal Louisiana.
    Third, outside of that there will be some areas south such 
as Port Fourchon, such as Venice, such as areas in St. Bernard 
that can sustain themselves. There are sediments available and 
the interior area between that site and the mainland is not 
sustainable, and you're going to have to have support 
infrastructure that connects you to the mainland, whether that 
be an elevated highway, a bridge for instance, that will allow 
these areas to continue to produce the Nation's energy. You 
cannot move that infrastructure farther inland, because you'll 
be moving 200 large vessels a day, you'll be moving thousands 
of people inland each day, causing huge amounts of energy usage 
and environmental impact, instead of having them on the best 
place as they should be on the coast, but you're going to have 
to build a bridge to get there unfortunately.
    Mr. LaGrange. Well, I would hate to be redundant, but Ted's 
absolutely correct, category 5 level protection first and 
foremost. And I lump coastal restoration in with that because 
the two are directly related. Second, is infrastructure 
rehabilitation and relocation. And I'm thinking specifically in 
terms of the Port of New Orleans, in that 30 percent part of 
the infrastructure that we totally lost. That's an absolute 
must. And we can't do that fast enough if we're going to 
maintain the competitive rates that we have on an international 
trade level, with the importation and the exportation of 
products that we were alluding to.
    And the third one, thank you. You're already doing it quite 
nicely, and that's a navigation maintenance through the Army 
Corps of Engineers, we appreciate that.
    Senator Vitter. And Ewell, from the seafood perspective, 
what are the top three tasks?
    Mr. Smith. I asked that same question to our fishermen and 
processors when he had them on this tour this past Friday. And 
the first thing is to get the help to the fishermen.
    Second, is to get the infrastructure up and going. And I'm 
being redundant as well. And third, is to have the funds to 
market and promote our product so we can get our market share 
back and these guys get their lives back in order.
    The Chairman. I got severely criticized for such a fund for 
Alaska, but it has worked out, and it has increased the market 
share for Alaska products, and I think you're right. It's one 
thing to get the business going, but you have to recover this 
market share now with aggressive action of those foreign 
nations that are producing particularly the farm-raised fish. 
It's very difficult to compete with them to begin with. But we 
have to get the American product out there and emphasize what 
it means.
    We've utilized the activities of Dr. Wile, the 
nutritionist, trying to keep people informed, really a quality 
concept of American fish as opposed to farm-raised foreign 
fish. But we'll work with you on that too. I look forward to 
that.
    Anything further, Senator Thomas?
    Senator Thomas. Very briefly.
    The Chairman. He doesn't have much fishing in his area.
    Senator Thomas. I was going to say, we need to get our 
share of that fish promotion in Wyoming. Oysters particularly, 
we need.
    I was going to ask Mr. Falgout, do you ever talk about 
the--we hear a lot about the over concentration of energy 
facilities, particularly refining here. Does that ever occur, 
that maybe there's some reason not to continue to have such a 
concentration of refining in a territory that's subject to this 
sort of storm.
    Mr. Falgout. Well, the last time I checked, there was 
nobody waiting to take Louisiana's role in the oil and gas 
business. Florida and California would be the most likely 
candidates and have production off their coasts, certainly----
    Senator Thomas. I'm not talking about production. I 
understand that. But I must tell you there is a good deal of 
talk about offshore production now in the Atlantic Coast. Not 
Florida, but the others.
    But you can move products you know, you don't have to 
refine them right on the coast.
    Mr. Falgout. Correct.
    Senator Thomas. They have pipelines they're called.
    Mr. Falgout. And specifically, my comments on Port 
Fourchon. Port Fourchon has no refinery, and that should not be 
on the Gulf of Mexico, those should be protected farther 
inland, and certainly we ought to look at moving our refining 
capabilities into very well protected areas. But the support 
services that are essential for turning on the oil fields after 
a hurricane, for the daily movement of cargo to support this 
activity, need to be on the Gulf of Mexico.
    Senator Thomas. Very quickly, because I know you talked 
about the royalty costs, and I understand and that's a big 
issue. But when you bring oil products through your port, if 
there's a cost to you, as there obviously is, why doesn't that 
product pay for the cost?
    Mr. Falgout. I don't know if I follow that question. But I 
mean we are unable to assess a tax.
    Senator Thomas. I'm not talking about a tax, I'm talking 
about a commercial charge. If you're going to handle a product, 
all these ships and all that sort of stuff, why isn't there 
just a charge then to support your port?
    Mr. Falgout. Of course the port does charge, it does very 
well, OK. But when you're talking about moving much of the 
product through this coast by pipeline, we are not able to 
charge a tax on the commodities coming in by pipeline. And we 
don't specifically need that amount of money.
    Senator Thomas. No, you don't.
    Mr. Falgout. It needs to be--go to the State of Louisiana 
to make those improvements.
    Senator Thomas. And I think you have to keep in mind at 
some point there is a limit to how far the jurisdiction goes 
out in the ocean are you going to be out a 150 miles, I don't 
think so.
    So you're going to have to be a little careful about how 
far you go, you already can go out six miles.
    Mr. Falgout. No, we only are allowed three miles in 
Louisiana, and we share out to six miles a lesser percentage 
than----
    Senator Thomas. No, I understand, but it's not just a clear 
cut issue I'm afraid, and it needs to be talked about, the 
royalty thing.
    Mr. LaGrange, just one final question. I misunderstood you. 
You were talking about the cost to your--the cost to be 
maintained by your port.
    Mr. LaGrange. The $275 million figure?
    Senator Thomas. Million, was it million?
    Mr. LaGrange. Million with an M, yes sir. It's a little 
over a billion public and private.
    Senator Thomas. I thought you said B, and I was a little 
surprised.
    Mr. LaGrange. No sir, it's $275 million for the Public Port 
Authority.
    Senator Thomas. I understand. Thank you, sir.
    The Chairman. I don't want to belabor it, but the real 
problem here is that we're reaching a 60 percent importation 
right now for foreign oil. That oil doesn't have any sharing of 
anything. And it comes in, and the price is set by foreign 
producer. And we've tried to put some level of import duty, or 
whatever you want to call it on it. I really think we should. 
But it's been very difficult to do.
    Senator Thomas. Mr. Chairman, I wasn't talking about that. 
I was talking about the cost that he's seeing going to the 
port, and I'm saying those costs incurred can be charged 
commercially.
    The Chairman. Well, that's true. But here they've got one 
of the major offshore ports for imported oil, and it's not 
contributing at all to the economy. But--and that's a national 
problem I think. I do think what we ought to put on table and 
start thinking about--and I think that's where the Senator from 
Wyoming is going. We're committed to do everything we can to 
restore this area, but the problem is--the probabilities of 
another Katrina are pretty great. We ought to start thinking 
about establishing funds and reserves so that you don't really 
have to have you know, massive change, and a loss to take care 
should it happen again, God forbid.
    But you know there is a--when I was in the State 
Legislature I helped create a disaster fund after our 1964 
earthquake, and that has been--we pay into that disaster fund 
on an annual basis. And it's been used because of disaster that 
have come along.
    I think we all have to start thinking about how do we treat 
disasters, and where do we get the revenue flow into that fund 
that will continue to build and be available for disasters 
nationally. There's a serious problem here about that, as far 
as I'm concerned.
    Senator Vitter. Chairman, if I could----
    The Chairman. Yes sir.
    Senator Vitter.--make just three other comments responding 
to some of the discussions, in terms of refining capacity, 
which Senator Thomas brought up. We have a desperate need in 
this country for additional refining capacity, but we need to 
do that, not to move the capacity out of here, we just need to 
do it, to add capacity to what we have nationally. Because we 
are topping out right now, in terms of refinery capacity, and 
reaching a real crisis level.
    So we really need to do both, we need to maintain and grow 
what we have here, but we need to grow it in addition anywhere 
we can, around the country. And I'm afraid we've built up over 
the last 30 years a regulatory environment that makes it 
virtually impossible to open a new refinery in this country.
    So that's a real national priority that I think we share. 
Second, in terms of your comment about a disaster fund, I agree 
with you completely. In terms of future disasters in this area 
though, the best fund and the best investment in my opinion is 
heightened category 5-type protection. Because that's what's 
going to avoid another $100 billion event in the future, or in 
inflated dollars, who knows what it would be in 10 or 20 years, 
$200, $300 billion event.
    If we're really going to be fiscally responsible about 
this, the first thing I hope we're going to do is make sure 
that hit to the national economy and the national taxpayer 
never happens again. And when you talk about the investment 
needed to avoid that, it dwarfs the loss and the expense of 
having another one of these over $100 billion events.
    The Chairman. Any other comments gentlemen?
    Very well. We do thank you all very much for your 
contribution, all of these hearings will be printed and will be 
available to the Members of the Senate and the public 
obviously. I do think we've just got a lot of questions to ask. 
And, again as I opened, I would say unfortunately people take 
too many inferences from the questions we ask.
    We'll call the next panel after a 5-minute break.
    I see that Mayor Nagin is here.
    I'm glad to give you a seat at the table and listen to your 
comments if you'd like to give them.
    Mr. Mayor, would you like to make comments on the record 
here this morning?
    Mr. Nagin. I will do whatever the Committee would like me 
to do.
    The Chairman. I could tell a joke I heard once but it's not 
the time for it. But this is professional courtesy Mr. Mayor.

            STATEMENT OF HON. C. RAY NAGIN, MAYOR, 
                      CITY OF NEW ORLEANS

    Mr. Nagin. Well, I appreciate that members of this 
committee and you know it's a pleasure to see you in the 
wonderful city of New Orleans, I hope that you are getting a 
good feel for some of the challenges that we have in this 
wonderful city.
    I think when you come down and you see exactly what has 
happened, and our opportunities, I think it gives you a 
different perspective.
    I've been on--in D.C. on a regular basis talking with many 
Members of Congress, trying to make sure that we put our best 
foot forward in getting people to understand exactly the need 
to rebuild New Orleans. I know there is a lot of debate going 
on right now, about whether we should or should not do it. 
There's no doubt in my mind we should rebuild New Orleans. When 
you look back at the history of this country and you look at 
the incredible land deal that this country made to buy 
Louisiana, and at the center of that land deal was New Orleans, 
the access of the port. And it was one of the most incredible 
land deals that this country has ever undertaken.
    As you look at how important New Orleans is to the country, 
you look at our oil and gas productions, I don't think this 
country could do without that. If you look at the Port of New 
Orleans, that has six class A rail lines. I don't think the 
country could do without that. And you also look at what New 
Orleans has done culturally for this country. The President of 
the United States basically said he couldn't imagine America 
without New Orleans. We have a history of great music, great 
food, great fun, but in the middle of all that you have people, 
wonderful American people. They're the essence of what this 
country is all about. We were a very diverse city, we will 
continue to be a very diverse city. We are a city that is going 
to come back, and if I could express any, the top three things 
that I think that we need to come back, from this committee and 
from Congress. We need comfort and verification on the levee 
systems. We need to know the city of New Orleans, the residents 
of New Orleans need to know and have comfort that we're going 
to rebuild the levee system to the category level, hopefully 
category 5, that will protect us from another Katrina.
    Second, the City of New Orleans is cash strapped right now, 
we basically are without any incoming revenues, and we need 
support to allow us to continue to operate over the next 6 to 
12 months.
    And then finally, we need some unique incentives to attract 
both people and businesses back to this area. We don't want to 
be a burden to the country's treasury, but we do think the 
country should support us as we continue to rebuild.
    So, I'm happy to have you here, I hope that you have a 
productive meeting, and anything I can do to help, just let me 
know. Thank you.
    The Chairman. Well, thank you very much Mr. Mayor. We've 
appreciated having Don Hutchinson, your Economic Development 
Advisor with us on this trip. He'll continue to be with us, so 
I appreciate your stopping by.
    Mr. Nagin. Thank you.
    The Chairman. Any questions, any gentlemen? We do thank you 
for joining us. And now to Mr. Steve Perry, President and CEO, 
New Orleans Convention and Visitors Bureau.
    Mr. Perry.

       STATEMENT OF J. STEPHEN PERRY, PRESIDENT/CEO, NEW 
         ORLEANS METROPOLITAN CONVENTION AND VISITORS 
                             BUREAU

    Mr. Perry. Mr. Chairman, thank you very much. Senator 
Thomas, Senator Vitter. We--I am here representing New Orleans 
largest industry. We are by far the largest economic sector in 
the city of New Orleans and we are by far the largest employer. 
Over 85,000 people in a city of less than 500,000 people work 
in our industry. In fact, it's often said that the New Orleans 
tourism industry in Louisiana is third Fortune 500 Company.
    We are in arguably the most famous mid-sized city in the 
world. And it is famous because of its tourism. Because of 
those things that we're known for so much nationally and 
internationally, nine Super Bowls, more than any other City, 
more Final Fours, the greatest Jazz and Heritage Festival on 
the earth. But the creator of the most famous indigenous form 
of American music, jazz, and of course, culinary arts. There's 
no place like New Orleans.
    It's also the place where more than half of its city is 
comprised of an historic district. And that means something, 
because this is a place truly different. And it's a place that 
has been preserved. But we've got real challenges ahead of us. 
And what we're here today to talk to you about, is literally 
the economics of our industry. To give you a report on how that 
largest industry faired, what our challenges are, and to offer 
you, we hope, some opportunity for investment, that are far 
smaller than many of the numbers that you're hearing about, but 
they can in fact, help rebuild the Federal Treasury, the State 
Treasury and the economics of this city.
    I said we're a $5 to $8 billion industry, that really only 
scratches the surface. Five billion dollars of visitor spending 
comes in here every year. It fuels the jobs of 85,000 people. 
In many ways we're a lot like the fisheries industry, because 
we're comprised of a lot of small business people. And those 
small business people are incredibly damaged right now. What 
are the kinds of things that we need to get going you know, and 
you saw on television through the MSNBC reports, and CNN, you 
saw the graphic nature of the images here in the two weeks 
after the storm. That's had a powerful impact on our market 
share in American tourism. One of the top four markets in the 
United States, we're sitting right in the heart of New Orleans, 
in the French Quarter, yet we were damaged unbelievably by 
those graphic images, and we're going to need marketing help to 
rebuild. It is extremely hard for us to appear before committee 
of the U.S. Senate or any other governmental entity, and ask 
for dollars, we don't do that. We're private sector businesses, 
we have flourished for many years and built tens of thousands 
of jobs on our own.
    But we need a little bit of help right now, to get back 
going. And it's not hundreds of billions of dollars that we 
need, it's tens of millions of dollars. We are very 
appreciative of the fact that Senator Vitter and Senator 
Landrieu have worked so hard on behalf of our industry. 
Lieutenant Governor Landrieu has helped bring our whole 
industry together over the last few weeks, and in fact we're 
probably the most organized business sector in the State of 
Louisiana right now, and have been since two weeks after the 
storm.
    What is it that we need, and what help do we need to get 
back? We could literally bring with small amounts of investment 
over $5 billion back into the economy in the next 12 months. 
The Mayor has laid off over half his city's workforce because 
we are the largest contributor to the city's revenue base of 
any group in the City of New Orleans. The same is true for the 
State of Louisiana. And frankly, the course of last resort for 
us would have been the U.S. Senate, and the U.S. Congress. It 
pains us to be here to talk about this and to ask you for help, 
but where we are now, is we've got tremendous needs in the 
areas of marketing. Recapturing market share for us, literally 
just over the next 24 months, will be critical to the 
repopulation of New Orleans, to the building back of tens of 
thousands of jobs and of thousands of businesses. Now, how does 
it work and what kind of money are we talking about? The little 
company that I lead, a 501(c)6 corporation, the New Orleans 
Convention and Visitors Bureau is a non-profit private sector. 
But we are the official entity for the marketing, and the 
branding and the re-imaging of New Orleans, as it relates to 
the business side, and corporate meetings, associations and our 
general tourism marketplace.
    Right now, we have no other source to go to. Our funding is 
basically completely eliminated. The hotel tax has been 
destroyed here this fall, and our revenue base of all the small 
businesses that comprise us, has been decimated.
    What does it take to rebuild $5 billion? For us, it's $10 
million to help with a Convention and Visitor Bureau to go 
forward as the City and the state's official entity which works 
nationally with associations, corporations, to bring meetings 
here.
    But what we need in addition to that is $10 million in 
incentive--in convention marketing, and convention incentive 
revolving fund that will allow us to take some of the concerns 
out from our meeting customers.
    As you can imagine many of the images that were seen around 
the United States here in September has had a real impact on 
our clients. We've had a lot of our customers who have said you 
know what, we're ready to come back and come back right now. 
Many of the major Washington Associations, and Chicago 
Associations, are already telling us they want to come back, 
but many of them are not sure they're ready to come back yet. 
And it could be 3 years from now, it could be 4 years from now, 
and if that's the case, we're going to lose tens of thousands 
of jobs that will make the repopulation of New Orleans, and the 
regeneration of our tax base extremely difficult.
    We need some marketing help now. And we have no other 
source to go to. So what we're asking is that $10 million of 
convention marketing, but $40 million of leisure side tourism 
marketing. This really serves multiple purposes. Not only would 
it bring $5 billion of visitor spending back, but it will 
recharge the tax base of the City of New Orleans, and help the 
repopulation of this city, because it will bring back the 
85,000 working men and women of the City of New Orleans.
    As you all know, people have real challenges to come here. 
And they've got to have two things. They've got to have a job, 
and they've got to have a place to live. And other people will 
testify and work with you on how we do the rebuilding of our 
neighborhoods and communities. But the ability to rebuild our 
jobs and to give our small businesses the ability to move 
forward is critical.
    Louisiana Rebirth, the Restoration of the Soul of America, 
a program put together by many of the top national business 
leaders in our industry under the direction of our Lieutenant 
Governor has effectively provided some solutions and some 
opportunities for Congress to step in and help us help 
ourselves.
    We're looking, as Mr. McDonald said, the Chairman of the 
Chamber of Commerce, and Mark Drennen, President and CEO, 
Greater New Orleans Inc. Tourism is critical here. Because it's 
critical not only to one of the Nation's foremost powerful 
tourism meetings and convention businesses, but it's critical 
to the future of people wanting to come home. New Orleans is 
not a rich community, and because of the power of tourism, we 
have the restaurant quality, the museums, the art galleries, 
the parks, the recreational opportunities that are critical to 
creating the quality of life that makes business want to be 
here.
    Without tourism, we won't have the individuals who are the 
depositors in the banks, who buy the automobiles from the car 
dealers. We will not have those 85,000 people who buy goods at 
retail.
    The future of this city depends on the quick restoration of 
its tourism industry because it drives not only the economics 
of the city, and the jobs of the working people here, but it 
affects the quality of life, and it will determine whether many 
of our businesses that are not part of tourism chose to come 
home.
    So what we're asking for, I think this past week, Senator 
Vitter, and Senator Landrieu sent a letter to the 
Appropriations Committee, and also have worked to pair down and 
to hone not in requesting the billions, but a request of less 
than $700 million for the entire State of Louisiana, and here 
in the City of New Orleans, for the Convention Center, and it's 
less than $100 million of damage and needs. Our marketing 
efforts of $60 million and help for the airport to get 
reestablished as the core of commerce.
    We have the ability to make money for you, and many of the 
requests you're getting the money flows out, but doesn't flow 
back in. The small dollars that we're asking for will make 
money for the Federal Treasury, will reduce Federal dependence 
on those tens of thousands of workers, and will provide you an 
opportunity to help restore the economics of this city in a way 
that gives you great return on the investment.
    We thank you very much for being here, and we're sorry we 
can't show you the kind of hospitality we have in a normal 
month, but we're honored to have you here.
    The Chairman. Did you say $100 million to repair the 
Convention Center?
    Mr. Perry. Sir, we have close to $100 million in actual 
damages. Fortunately we had $500 million of private insurance 
on the Center which is a state building. We'll have 
approximately $25-$35 million in gap on the deductibles. We 
believe that in fact those dollars could be applied against the 
$52 billion that Congress already authorized, and that in fact, 
we could get that repaired and up very quickly without having 
another appropriation, so we're asking for assistance there. We 
have another--here in the French Quarter, and I think as you 
walked around, you've probably seen the military vehicles, the 
recovery vehicles, the generators, and water tankers have done 
a lot of damage to the sidewalks in the Quarter.
    We need about $17 million, and that's all. Really between 
$17-$35 million to repair sidewalks and curbs here in the 
Quarter, because the city won't have the ability to do that. 
And the state won't have it. And this is our economic front 
door of the world. And we believe that that money could well 
come without another appropriation if it was authorized to come 
within the $52 billion already awarded for the initial 
recovery. So past that, we honestly believe that the newly 
appropriated dollars will have to--can be fairly small. And 
that is the $60 million of marketing, and the money for the 
airport contained in Senator Vitter and Senator Landrieu's 
proposal in tourism.
    [The prepared statement of Mr. Perry follows:]

        Prepared Statement of J. Stephen Perry, President/CEO, 
        New Orleans Metropolitan Convention and Visitors Bureau
Overview
    The primary catalyst and driver of the New Orleans economy is the 
tourism industry, comprised of large and small scale association and 
corporate meetings and conventions, rotations of most of the major 
national sporting championships, a vast leisure and family destination, 
large packaged tour series, a popular foreign traveler destination, and 
many of the most important special events in the Nation such as Mardi 
Gras, the Essence Festival (the world's most important annual African-
American culture and music festival), the New Orleans Jazz and Heritage 
Festival, the French Quarter Festival, Satchmo Fest, the Sugar Bowl and 
many, many more.
    The industry is served by more than 2,500 companies and employs 
85,000 people in a parish (county) of less than 500,000 persons. The 
entire retail, banking, professional and services industries depend on 
the more than 85 billion of annual direct visitor spending and 
additional several billion dollars of spinoff impact. Not only is the 
impact direct through visitor spending, but the 85,000 workers employed 
in the industry are the primary depositors in banks, purchasers of the 
largest segment of retail goods, and generally drive the overall health 
of the economy and the success of its large and small businesses.
    The return of the tourism industry will determine the very survival 
of the New Orleans economy not only from the corporation and tax 
generation perspective, but will be the primary determinant of whether 
the working people of New Orleans are able to return to the city, 
reestablish their lives, and bring their families home to live and 
repopulate the city.
Immediate Budgetary Needs
New Orleans Metropolitan Convention and Visitors Bureau
    The New Orleans Metropolitan Convention and Visitors Bureau 
(NOMCVB) is the primary catalyst and sales, marketing, and branding arm 
of New Orleans largest industry, tourism. It is a private sector 
501(c)(6) company governed by a private board of directors and serves 
as the statutorily authorized entity in Louisiana to manage and market 
tourism in New Orleans and is the recipient of state authorized hotel 
tax funding. It thus performs a vital public function, though a private 
entity. The city's economy depends on its effective operation.
    The NOMCVB is the sole link of the city's largest industry to the 
international tourism markets, wholesalers, packagers, brokers, tour 
series operators, travel agents, national and international 
conventions, meetings, special events, and sporting events representing 
$5 to $8 billion of annual economic impact and resulting in the 
employment of 85,000 New Orleanians. Most of these employees are in 
those entertainment and commercial enterprises which brand New Orleans 
internationally in hotels, food, music, and entertainment and drive its 
economy.
    The NOMCVB is funded by a hotel tax that has now been obliterated 
and by a member dues base that will be non-existent for at least two 
years.
    The NOMCVB operation must be sustained because its sales manager 
base has all of the data and relationships to all of the worldwide 
convention and meeting planning and travel professional community. This 
is an industry that is primarily relationship driven, particularly on 
the convention and meeting side. If those employees are laid off and 
hired elsewhere, billions of dollars of competitive information and 
data would leave Louisiana, crippling the entire rebuilding process of 
New Orleans' largest industry. It would likely be a death knell for the 
city's economy and the early return of its citizens if our employees 
were lost to competitors.

                    Operational Shortfalls and Needs
    2005            The NOMCVB has reserves to
                     carry it until March 1,
                     2006
    2006            $9,000,000 annual operating  (anticipated revenue =
                     needed                       $2,000,000)
    Total NOMCVB                                 $9,000,000 (1 year)
     operating
     needs

Marketing and Incentives
Operation REBIRTH Marketing Fund
    Essential marketing dollars for the NOMCVB and its sister the New 
Orleans Tourism Marketing Corporation to re-image and remarket New 
Orleans leisure side tourism in light of the catastrophic events . . . 
the primary key to rebuilding the 10,000,000 visitors and $4 billion of 
combined leisure impact:

        2006      $40,000,000
        2007      $25,000,000

NOMCVB Convention Marketing Fund
    To rebuild the image of the Convention Center and remarket 
following the devastating events and national images.

        2006      $5,000,000
        2007      $5,000,000

NOMCVB Convention Incentive/Indemnification Fund
    To provide incentives and guarantees to major associations to 
remain in or book major conventions in New Orleans.

        2006      $5,000,000
        2007      $5,000,000

    Timeline: Emergency operational funding to the NOMCVB of $6,000,000 
is needed on March 1, 2006. The second $3,000,000 is needed on July 1, 
2006. Without these dollars, the city's largest economic driver will 
lay off all of its employees and close its doors, effectively ending 
economic recovery.
    The NOMCVB Convention Marketing Fund of $5,000,000 is needed by 
January 15, 2006, if the multi-billion dollar base of convention 
business is to be preserved and recaptured.
    The NOMCVB Convention Incentive Fund of $5,000,000 is needed by 
January 31, 2006, if the multi-billion dollar base of convention 
business is to be preserved and rebuilt.
    The Operation REBIRTH marketing fund of $40,000,000 for the NOMCVB 
and its sister the New Orleans Tourism Marketing Organization is needed 
for January 15, 2006. The 2007 dollars are needed for January 1, 2007.
Ernest N. Morial Convention Center
Capital Construction Needs
    Repair and renovation of the Ernest N. Morial Convention Center.

        Total $100,000,000
        Minimum Insurance Gap of $25-35,000,000

    Structural repairs, Halls A and B, major roofing repairs, all 
equipment, interior surfaces, signage, environmental decontamination.
    Timeline: All repairs and renovations must be executed and the 
building ready to open by late spring 2006. Insurance coverage will be 
deducted when determined. Funding needed ASAP.
    It is anticipated that the combination of deductibles and gaps in 
sub-policy coverage will result in a funding gap of at least $25-35 
million.
Convention Center Operating Needs

        Operating Shortfall for 2005      $15,000,000
        Operating Shortfall for 2006      $26,000,000
        Operating Shortfall for 2007      $25,000,000

    Debt service shortfalls due to loss of multiple hotel, occupancy, 
tour, and f & b taxes.

        2006      $34,000,000
        2007      $30,000,000

    Timeline: Debt service issues must be addressed immediately. 
Operating shortfall for 2005 needed immediately due to loss of rental 
and other self generated income. Calendar year 2006 funding needed in 
Quarter 1. Total need in Q1 is $100,000,000.
French Quarter Infrastructure Rebuild
    The French Quarter has sustained serious infrastructure damage to 
its streets, sidewalks and curbing system. The introduction of large 
trucks, emergency vehicles, military equipment, water tankers, 
generator systems, and the parking of emergency and police vehicles on 
the sidewalks and fragile streets has resulted in serious degradation 
of the area's infrastructure. The Nation's largest and most important 
historic district and mixed use commercial/residential neighborhood has 
sustained highly problematic damage. It is also the key to recovery of 
the multi-billion dollar tourism industry. This rebuild must commence 
in early 2006 to facilitate tourism rebound.

        Capital Construction      $17,000,000

Priority Keys to Immediate Rebuilding
    Federal funding to jumpstart New Orleans' largest industry and 
employer is critical to accelerate recovery, allow the return of our 
citizens and rejuvenate tax flow.
                     Funding Needs Timeline (2006)
    New Orleans CVB (NOMCVB)

    Operations                                                $9,000,000
    Convention Marketing Fund                                 $5,000,000
    Convention Incentive Fund                                 $5,000,000
    NOMCVB/NOTMC Leisure Marketing                           $40,000,000

    Ernest N. Morial Convention Center

    Operations losses 2005-2006                              $41,000,000
    Debt Service shortfall                                   $34,000,000
    Repairs Insurance shortfall                           $25-35,000,000

    French Quarter Infrastructure Rebuild

    $17,000,000

Summary
    America's most romantic, walkable, historic city took quite a blow. 
But we believe it will only be for a matter of a very few months. Only 
time will tell the duration. The birthplace of jazz, home of unique 
French and Spanish architecture, and the originator of the most 
renowned cuisine on the planet has truly suffered. But its government, 
business and tourism industry leaders are pledging that beginning over 
the next few months the city will begin its efforts to be reborn better 
than ever.
    The tourism leadership is committed to helping lead the greatest 
urban rebuilding project in our Nation's history. We have a historic 
opportunity to be a living laboratory for taking disaster, 
infrastructure degradation, and social ills and rebuilding a new city 
that remains historic and unique, but is a model for rebirth socially, 
culturally, and structurally.
    The historic French Quarter and nearly all of the hospitality 
infrastructure survived, though battered. The amazing historic texture 
and fabric of this unique city . . . all of those things that draw 
millions of visitors from around the world resiliently remain.
    Though we will be down for a period, there is a sense already 
forming among our leaders and the people that we will successfully be 
able to preserve all of those things which have made us world famous, 
and that we will be able to rebuild an even more welcoming vibrant city 
in which to live, work and do business. It will require all of us to 
unite. The work will be hard but gratifying. The challenges are 
immense. We are up to the task.
    It may be quite a while . . . but one day the riffs of jazz 
trumpets, the indescribable tempting smells wafting from the kitchens 
of our great chefs, the aroma of cafe-au-lait and beignets, the buzz of 
great conventions. that foot-wide magnetic smile of the front bellman, 
and the romantic strolls through the Quarter will be commonplace again. 
The spirit of the multicultural people of New Orleans is indefatigable, 
and though we may be bowed and emotionally stretched. we cannot be 
defeated and cannot wait to rebuild the world's most authentic city.
    All that is needed to regenerate an annual $8 billion, 85,000 
employee industry, is an investment this January by the Federal 
Government of $159 million of funding for the Convention and Visitors 
Bureau, the marketing and promotion and re-imaging of the city, and the 
Convention Center. A stunning return on investment and one that will 
reap billions of dollars year after year. Without this funding the 
industry will wither and atrophy.
    Another $17,000,000 is needed to rebuild America's most famous 
historic and commercial district, the French Quarter.
    A small part of a $200 billion recovery, but one that has the most 
business and human impact of all.

    The Chairman. Thank you very much. Our next witness is 
Elaine Coleman, Commissioner of the Downtown Development 
District.

STATEMENT OF ELAINE COLEMAN, COMMISSIONER, DOWNTOWN DEVELOPMENT 
                            DISTRICT

    Ms. Coleman. Thank you very much Chairman Stevens, and 
Senators Vitter and Thomas. I really do appreciate you inviting 
me here today to speak.
    I am a life-long Louisianian. Born and raised in Louisiana, 
but I've made New Orleans my adopted home. I've been here for 
the past 24 years, and for the last 20 years, I have spent 
working in downtown New Orleans. After 30 years with Entergy 
Corporation, I took early retirement last year and I've spent a 
lot of my time doing volunteer work, and I was immediate past 
Chair of the Downtown Development District. I'll be speaking 
this morning, honing in on downtown, but certainly anything I 
will say today, will be in essence throughout the entire region 
that I speak.
    But I do want to focus on downtown. The Downtown 
Development District was chartered in 1974 by the State of 
Louisiana, and we're responsible for physical and economic 
development of downtown. We accomplish this by providing 
strategic planning and professional economic development 
services, by helping to fund capital improvements such as a $17 
million Canal Street revitalization project that was ongoing 
when Katrina hit.
    We also do enhanced public services downtown such as 
sidewalk cleaning, and enhance public safety. The DDD is 
acutely aware of the devastating economic and social cost of 
Hurricane Katrina. Our own downtown offices were flooded, 
equipment and documents were lost and our staff were displaced.
    We have also had to downsize by cutting 50 percent of our 
staff members because we're bracing for a projected 50 percent 
reduction in property revenue, property tax revenue in 2006.
    And all this is happening at the time that the DDD is 
needed more than ever. Downtown and the French Quarter for many 
years, have been the most important economic generators in the 
city of New Orleans. We are the center of the city's 
hospitality and tourism industry. As Mr. Perry just stated, 
with 25,000 of the region's 38,000 hotel rooms, we're the 
center of medical research and clinical care, home to both the 
Tulane and LSU Medical Science Centers. Our office and service 
center sectors employed about 70,000 people in other key 
industries such as oil and gas when Katrina hit. And downtown, 
unlike most of our counterparts across the country, we continue 
to be a major tourist and shopping destination. Downtown can be 
again the economic engine that revives New Orleans, but there 
are some things that need to happen and we're asking for your 
help.
    First, local government and agencies such as Downtown 
Development District, must receive short-term alternative 
funding to allow us to continue to operate. The DDD is applying 
for a Federal Community Disaster Loan and we're grateful for 
these funds. Yet the maximum loan limit of 25 percent of one 
year's operating expenses will not come close to making the DDD 
whole as we're trying to respond to one of the most enormous 
challenges our lifetime.
    We need Federal grants to the city of New Orleans, to the 
DDD, and similar agencies in the disaster zone so that we will 
have the financial resources to get the job done.
    The DDD also adds its voice to the litany for those calling 
for a Federal commitment to build a levee system capable of 
withstanding a category 5 hurricane, and to make coastal 
restoration a top priority.
    And fixing the levee system is closely linked with another 
DDD concern. Keeping the insurance claims process fair and 
rates affordable for those who do business and live in the 
devastated area.
    The DDD calls for the Federal Government to do all that it 
can to eliminate red lining, and keep insurers rates 
reasonable. If casualty and liability insurance are not 
available in New Orleans, or they're unnecessarily, or 
unusually, or if they are highly priced, it will spell disaster 
for our economy.
    Business cannot thrive without insurance or with uneconomic 
cost structures. We ask the Federal Government to intervene if 
necessary to ensure fair and reasonable treatment of businesses 
and residents along the entire Gulf coast.
    And speaking of uneconomic cost structure, I would be 
remiss after spending 30 years with Entergy if I didn't mention 
that Federal grants are needed to assist electric and gas 
companies to pay for the restoration of their devastated 
systems. This is essential because if customers are asked to 
pay for these enormous restoration costs, rates would 
skyrocket. Remaining customers would have difficulty paying 
such bills and economic development recovery efforts would be 
stifled, not only downtown, but for the entire region. 
Therefore, Federal intervention such as the precedent set 
following the 9/11 terrorist attacks, when Con Edison was 
provided with Federal funds is crucial to this city's recovery.
    In addition, small business who are hurting and can't meet 
payroll, or can't meet mortgages, so we indeed need your help 
there as well. We've already heard about temporary housing 
which is also a major concern. And we've also heard about the 
Liberty Bond Program after 9/11 and I know Chairman Stevens 
corrected us and helped us to understand that a little bit 
more. But we do indeed need that program as a way of helping 
for long-term housing. And the Federal Government can also 
assist in returning residents and businesses to New Orleans by 
providing a tax credit to residents and businesses displaced by 
Katrina.
    It is a fact that every family and business that have been 
displaced, have incurred unforeseen costs related to 
transportation, to temporary lodging and facilities, replacing 
personal properties and so on. Families and businesses wishing 
to return to New Orleans will face additional costs. The 
Federal Government can help remove this disincentive by 
creating tax credits for businesses and families who've been 
displaced and who return to the affected area. This would help 
downtown to retain many firms in key industries such as oil and 
gas by encouraging them to return from their temporary 
facilities elsewhere without paying a penalty to do so.
    And lastly, the Downtown Development asks that the Federal 
Government commit itself to maintaining Federal agencies and 
contracts and services in New Orleans. That has been talked 
about already, so I won't go into any additional detail about 
it. But it's especially important for downtown in this area of 
health sciences which is so important to downtown's success. 
Please assure us that the National Institutes of Health and 
other agencies do not give up on the many scientists and 
clinicians working in New Orleans that impact the entire 
country.
    In closing, I thank you for visiting us here in New 
Orleans. It's important that you're actually here, on the 
ground. And I know that Senator Vitter and Senator Landrieu 
have worked very hard along with the rest of the delegation to 
get you all here, and I know that you've seen the devastation, 
and we're living it everyday. And we're simply asking you not 
for a handout, but simply a hand up as we rebuild the city. 
We're committed to rebuilding. We're not asking you to do 
everything, but we do know that without the Federal 
Government's help it will be much more difficult. So we're 
simply asking you for assistance at this time. Thank you very 
much.
    [The prepared statement of Ms. Coleman follows:]

          Prepared Statement of Elaine Coleman, Commissioner, 
                     Downtown Development District

    Good Morning Senators. I am Elaine Coleman, a life-long resident of 
Louisiana, with 24 years residing in the New Orleans area, and over 20 
of those years spent working in downtown New Orleans. After 30 years 
with Entergy Corp. I retired last year and continued my volunteer 
services as a Commissioner on the Downtown Development District.
    Thank you for allowing me to speak to you today on behalf of the 
New Orleans Downtown Development District . . . or DDD for short--which 
is the oldest business improvement district in the U.S., funded by a 
special taxing district established by the property owners of downtown 
and city voters.
    Chartered in 1974 as a political subdivision of the State of 
Louisiana, the DDD is responsible for the physical and economic 
development of downtown New Orleans. We accomplish this by: (1) 
facilitating and expediting private real estate and business 
development, (2) by helping to fund capital improvements such as the 
$17 million Canal Street Revitalization Project, which was under 
construction when Katrina hit, (3) by development planning, and (4) by 
providing enhanced public services downtown, such as sidewalk cleaning 
and enhanced public safety.
    The DDD is acutely aware of the devastating economic and social 
costs of Hurricane Katrina. Our own offices downtown were flooded by 18 
to 24 inches of water, destroying documents and equipment and 
displacing our staff. Our full-time staff has dwindled from 14 down to 
7 due to layoffs and resignations caused by the relocation of staff 
members to other parts of the country. The DDD has downsized staff and 
programs in order to brace for a projected 50 percent reduction in 
property tax revenue in 2006.
    All this happens at a time when the services of the DDD are more 
necessary than ever.
    Downtown and the French Quarter for many years have been the most 
important economic generators in the City of New Orleans:

   We are the center of the city's hospitality and tourism 
        industry, with 25,000 of the region's 38,000 hotel rooms.

   We are a center for medical research and clinical care--home 
        to both the Tulane and LSU health science centers.

   Our office and business service sectors employed about 
        70,000 people in other key industries, such as oil and gas, 
        when Katrina hit.

   And downtown, unlike many counterparts across the country, 
        continues to be a major tourist and retail shopping 
        destination. With three major shopping malls and hundreds of 
        thousands of square feet of street-level retail, downtown has 
        served--and can continue to serve--as the city's main source of 
        retail goods and services.

    Downtown can be, once again, the economic engine that revives New 
Orleans. But several things must happen for downtown to revive:
    First, local governments, and agencies such as the Downtown 
Development District, must receive alternative funding to allow us to 
devote every bit of our professional expertise and local knowledge base 
to overcoming downtown's challenges. The DDD is applying for a Federal 
Community Disaster Loan, and we are grateful for these funds. Yet the 
maximum loan limit--25 percent of one year's operating expenses--will 
not come close to making the DDD whole, and capable of responding 
sufficiently to the enormous challenges we face downtown. We need 
Federal grants to the City of New Orleans, DDD and similar agencies in 
the disaster zone so we have the financial resources to do the good 
work we are capable of.
    The Downtown Development District also adds its voice to the litany 
calling for an immediate Federal commitment to build a levee system 
capable of withstanding a Category 5 hurricane and to make coastal 
restoration a top priority. Working on the ground with downtown 
businesses and property owners, we know that this is foremost on our 
constituents' minds. It's about more than peace of mind. It is a 
critical economic issue that will stall reinvestment until it is dealt 
with.
    Fixing the levee system is closely linked with another DDD concern: 
Keeping the insurance claims process fair and rates affordable for 
those who do business and live in the devastated area. The DDD calls 
for the Federal Government to do all it can to eliminate redlining, and 
to keep insurance rates reasonable. If casualty and liability insurance 
were not available in New Orleans, or were unreasonably priced, it 
would spell disaster for our recovery. Business cannot thrive without 
insurance or with an uneconomic cost structure. We ask the Federal 
Government to intervene if necessary to ensure fair and reasonable 
treatment of businesses and residents along the Gulf Coast.
    Speaking of an uneconomic cost structure, I would be remiss, if 
after spending 30 years employed by Entergy, if I did not mention the 
need for Federal grants to assist private electric and gas companies to 
pay for the restoration of their devastated systems. This is essential 
because if customers are asked to pay for these enormous restoration 
costs, rates would skyrocket. Remaining customers would have difficulty 
paying such bills and economic development recovery efforts would be 
stifled, not only downtown, but in the rest of the region. Therefore, 
Federal intervention such as the precedent set following the 9/11 
terrorist attack; where Con-Edison was provided with Federal funds, is 
crucial to this city's recovery.
    In addition, small businesses are also hurting. Getting Small 
Business Administration (SBA) loan funds immediately into the hands of 
downtown and other businesses is crucial. Many small businesses have 
little or no reserves to tide them through disasters of this magnitude. 
They are losing talented human resources to other parts of the country 
because they cannot afford to pay staff; they will soon lose leases or 
mortgages if they do not resume payments; and many cannot resume 
operations to pay for these things because they have lost equipment and 
inventory, but they do not have the funds to replace them.
    Well over 100,000 businesses have applied for loans and are still 
waiting for assistance. And every day more businesses go under because 
they have not been given this critical lifeline to success. Please help 
our small businesses to succeed by expediting the SBA process and 
taking into consideration the unique circumstances caused by Katrina, 
whereby many have lost all financial and other records.
    The DDD also calls on the Federal Government to do all it can to 
help us house our New Orleans workforce. It's impossible to overstate 
how critical this is to reviving downtown businesses. Many hospitality 
businesses have lost 80 percent of their workforce due to the 
dispersion of New Orleanians across the country. Many employees who 
would like to live and work in New Orleans once again cannot, because 
there is not enough housing to support the number of jobs that are left 
in the city. This is a rare problem to have: too many jobs and not 
enough workers, but this is what is occurring downtown and in other re-
opened parts of the city. It is clear though, that the jobs will not 
wait forever for workers to fill them. If we do not react quickly, jobs 
and businesses in the ``dry'' parts of New Orleans will be the next 
victim of Katrina. The DDD asks that the Federal Government step-up its 
deployment of trailers and other forms of temporary housing in order to 
meet the short-term housing crisis.
    To address longer-term housing needs, the DDD requests that the 
Federal Government institute a low-interest loan program for commercial 
and residential development in the disaster area, similar to the 
Liberty Bond Program after 9/11. Downtown is already home to several 
historic and emerging neighborhoods, and we see ourselves as a haven 
for many displaced New Orleanians in future years. We need to get 
moving now, though, to develop more mixed-use--and mixed-income--
residential developments downtown. The real estate market, however, is 
in a wait-and-see mode right now. Developers and investors need the 
strong vote of confidence that a Federal low-interest loan program 
would signify. With this in place, the high ground of downtown can be 
home to many more New Orleanians in safe, attractive, and inviting 
medium and high density housing downtown.
    The Federal Government can also assist in returning residents and 
businesses to New Orleans by providing a tax credit to residents and 
businesses displaced by Katrina. It's a fact that every family and 
business that has been displaced has incurred unforeseen costs related 
to transportation, temporary lodging and facilities, replacing personal 
property, and so on. Families and businesses wishing to return to New 
Orleans will face additional costs. The Federal Government can help to 
remove this disincentive to return by creating tax credits for 
businesses and families who have been displaced and who return to the 
affected region. This would help downtown to retain many small- and 
medium-sized firms in key industries like oil and gas, by encouraging 
them to return from temporary facilities elsewhere without paying a 
penalty to do so.
    Lastly, the Downtown Development District asks that the Federal 
Government commit itself to maintaining Federal agency offices and 
contracts for services in New Orleans. Unfortunately, despite the best 
efforts of local, State, and Federal Governments, New Orleans will lose 
many private employers in the wake of Katrina. We at the DDD hope that 
the Federal Government will send a strong signal of its confidence in 
the future of New Orleans by committing itself to the City--by 
maintaining job sites and contracts, and looking for opportunities to 
expand Federal contracting in the region where practical. This is 
especially important for downtown in the area of the health sciences, 
which are so important to downtown's success. Please assure that the 
National Institutes of Health and other agencies do not give up on the 
many great scientists and clinicians working in New Orleans on behalf 
of the Nation.
    In closing, I thank you for visiting us here in New Orleans. It is 
important that you are here, on the ground, so that you can see the 
devastation for yourselves. I trust you have found that--even after the 
devastation of Katrina--New Orleans' warm and generous hospitality is 
still evident. We appreciate your visit and commit to work hard with 
the Downtown Development District to make New Orleans an even better 
version of itself in the future. We are committed to doing our part. We 
know, though, that we cannot fully recover without the assistance of 
the Federal Government. Thank you.

    The Chairman. Thank you very much. Our last witness is 
going to be David Guidry.
    Mr. Guidry. A good Irish name from the Bayou, sir.
    The Chairman. Guico is your company.
    Mr. Guidry. Yes sir.
    The Chairman. I apologize.

           STATEMENT OF DAVID GUIDRY, PRESIDENT/CEO, 
                    GUICO MACHINE WORKS INC.

    Mr. Guidry. Thank you. Chairman Stevens, Senator Vitter, 
Senator Thomas, I appreciate the opportunity to be able to 
stand before you today to share with you our experience. We're 
an oil and gas equipment manufacturer, pre-Katrina we had 60 
employees turning our well heads in our factory across the 
river. We've been impacted many ways by the storm.
    Our current workforce is now down to about 20 employees, up 
from 12 about a week ago. Our insurance claim is in limbo, our 
bank, or the U.S. mail service held up any payments to our 
company for nearly 7 weeks, inhibiting our ability to make 
payroll. Suppliers have put us on COD and the rumors are 
rampant that Guico Machine Works will go bankrupt. But when I 
listen to the problems of the gentleman talking about the 
fisheries, I have to tell you, my problems pale in contrast.
    When I was sitting down, I was thinking about the damage 
that was being done to me. And I decided to deviate from my 
testimony to share with you something different. All my life I 
have been taught to believe in the American Dream and the 
American institutions. When I was 24 years old, I decided to 
pursue the dream of owning my own business. I was surprised to 
find that America thought it was so important that they had 
created an institution called the Small Business 
Administration, and it was as if they had created it just for 
me. When I went there, when no one would loan me a dime, it was 
the SBA that helped us to secure a $210,000 loan that started 
my business. From that, we grew it and we grew it, and 10 years 
ago when we needed to build a new factory, we went back to the 
SBA and we explained to them what our vision was, and they 
anted up $1.3 million for us to be able to build that factory.
    And a cash crunch came about maybe 4 years later, they came 
back and we were able to borrow another $300,000. I believe in 
the SBA, they have been there for me. But what's happening now 
is quite different. Six weeks after we have applied for a loan, 
we have to ask these questions. Why has no one from SBA even 
contacted us to say they've actually received our loan package? 
Why has no one visited my site even to verify that I'm a 
legitimate business? Whether I need sustaining money, or 
whether I need rebuilding money? Why is it that the local 
office isn't even included in the loop? When we talk to them, 
they said everything has gone to Washington D.C. Why is my 
local banker not included in the process? He has been doing 
business with me for over 10 years and knows all of the 
components. My credit, my character, and all of the things that 
are used to judge me in being able to my validity in being able 
to survive as a business.
    And then finally, from the technology side, why can't I 
even go online to look at where the status of my loan is? When 
I listen to all the statistics that everyone said here today, I 
may be one that has already been approved. I may be one that 
has been rejected. But the thing of it is that I have no idea. 
Now I have to tell you with all of my heart, I believe that the 
SBA is going to be there for me, because they always have. The 
question I have for you guys today is this. Will they be there 
in time?
    I appreciate the opportunity to visit with you this 
morning, thank you all for listening to what I had to say.
    [The prepared statement of Mr. Guidry follows:]

          Prepared Statement of David Guidry, President/CEO, 
                        Guico Machine Works Inc.

    We are an oil and gas equipment manufacturer who was in the middle 
of the best sales year in our twenty-three year history. Our company 
had sixty employees churning out wellheads and related products in our 
plant located on the Harvey Canal in Jefferson Parish. Pre-Katrina our 
business had accounts receivable of nearly $1,000,000 from sales of 
$400,000 per month. However, after Katrina hit, our sales in September 
dropped to zero. In October, sales were $80,000. The problem for my 
business is that for six weeks, the mail delivered no checks and while 
our customers are still giving us orders, we have no shop employees to 
fill them. We are down from 60 employees to 12 because we are having 
trouble making payroll. However, we have a facility full of materials 
and machinery that is sitting idle.
    Suppliers put us on COD, core management employees had to be paid, 
and loan relationships had to be met. Deferments were later offered, 
but the auto drafts had already been taken. My community bank was 
underwater and is in no better shape than my business. The Small 
Business Administration (SBA) and its disaster loan program is our only 
way out of this situation. Three weeks after Katrina hit, our business 
attended a seminar at Southeastern University regarding the disaster 
procedure process. Our application for SBA disaster assistance went out 
one week later. Other than the reports we hear from SBA representatives 
at small business gatherings, we have heard nothing back from them. I 
have had three different prior loan relationships with the SBA and 
could not have built my company without their help. Their thoroughness 
and due diligence is to be applauded as a government agency really 
helping businesses in normal times. However, Katrina is anything but 
normal times. I have applied and been approved for normal SBA loans and 
they do a good job on those, but in this emergency situation, the SBA 
is failing me and my business.
    I am an active member of several business organizations and have 
chaired several of them in the region. I cannot tell you how many 
struggling businesses are counting on ``the Cavalry'' to arrive in time 
and help us. But, rather than seeing ``the Cavalry'' come down here and 
help, instead the running joke is that SBA disaster funded loans are 
like UFO's. Everyone knows that they are out there and there have been 
sightings of some, but I do not know anyone who has actually seen one. 
That is why I was happy Louisiana started their bridge loan program. 
Although I have heard nothing back from the SBA for over a month, I 
applied for a bridge loan through the State of Louisiana program and 
got it within seven days. This program goes through local banks, so I 
just went into my local bank, a bank that knows my business and already 
has my credit history, and they got me a response quickly. That is how 
things should work, businesses need immediate capital to make repairs, 
make payroll and get back on their feet--in two to three months many of 
these businesses will be gone, maybe forever.
    Let me contrast my experience with the Louisiana bridge loan 
program with my experience with the SBA disaster loan program. To date, 
we have received no acknowledgment that the SBA is even in receipt of 
my loan package, not to mention any word back as to when I can expect 
to get any funding. We knew to send our loan package certified mail, 
but how many business knew this? At a minimum, for the sake of customer 
service, the SBA should have an acknowledgment sharing some idea of the 
process and the length of time should have occurred. Perhaps, after 
receipt of a loan package, the SBA could arrange a timely site visit. 
This way they could have proof of a storefront to slow fraudulent 
claims, and then they could give an assessment of whether a re-building 
loan or life sustaining loan is needed.
    Also, perhaps the SBA could allow businesses to use present banking 
relationships to help in the underwriting of the loan. Along the same 
lines, I suggest they use the local SBA office for greater input, as 
they know the local business and local landscape. Maybe they could form 
an ``express line'' process for prior SBA customers. You already know 
these guys so maybe that could help in the future to get businesses 
with a history with the SBA to process their loans quicker. For the 
next disaster, this would help out affected communities. If some 
businesses get loans, this would help other businesses in the area 
while they are waiting for their loans to come through.
    Another suggestion that I have is to provide online tracking of the 
status of your loan. This way you could track when it is received, when 
it is being processed, and when you could expect to hear something 
back. They have online banking, online package tracking, the SBA should 
allow businesses to track the process online as well. The current 
system is not providing us with any information, and more importantly 
any certainty. Our business is making day-to-day decisions based on the 
availability of funds. I applied for $1,500,000 and need some 
certainty. I have no idea if I will receive that amount or if I will 
get nothing. But at this point, given how things are going, I have to 
plan as if it will be nothing so my business, my family and my 
employees can get by. I do not have a clue on when the money is coming, 
if it's coming, so I cannot plan and cannot spend a dime. If I had some 
certainty, I could make a business plan but this is just crazy not 
having funds and any certainty as to how/when I can expect to hear 
back!
    Thank you.

    The Chairman. Well, thank you very much. Mr. Perry, what 
you're seeking is promotion dollars really, right? In 
connection with your association?
    Mr. Perry. Yes sir, on behalf of all the businesses in New 
Orleans, yes.
    The Chairman. I'm--I've got to tell you, I'm not an expert 
in this area. Someone previously testified that nonprofits are 
not eligible for disaster grants. Is that your understanding?
    Mr. Perry. We believe that that is correct, but in working 
through the office of the Lieutenant Governor here, which is 
statutorily charged with the oversight of the tourism industry, 
there are mechanisms for us to work in partnership to do that.
    The Chairman. Well, what's your suggestion, as to who 
should get the money?
    Mr. Perry. We believe that the most appropriate so that it 
would be fully audited by the Louisiana auditors and by Federal 
auditors, would be to flow through the office of the Lieutenant 
Governor, because then you'll have all the checks and balances 
that would be appropriate to see where the marketing dollars 
were spent and for what purposes.
    The Chairman. I see. Are you satisfied that the Convention 
Center will be restored in time for these conventions if we can 
assist you in getting them back?
    Mr. Perry. Sir, we believe sir. We are working on a very 
tight timeframe right now. We've lost over $2 billion of 
business during this period. We're shooting to open June 1st of 
next year with the American Library Association, a 21,000 
member organization, to kick off the new season. But we've lost 
many of our--we've lost many of our customers obviously as you 
can imagine over the next year. If we are able to get these 
dollars in for the Convention Center, we'll be able to have it 
opened, and fully restored and renovated, and the impact of 
that in the next 24 months probably is in the $5-$6 billion 
range, just on having the facility back online. Tremendous 
impact. And for the Mayor, what's so problematic for him is 
with our industry effectively shutdown right now, his entire 
revenue base is damaged. And that's why he's had to lay off so 
many people and can't provide the basic city services.
    We're trying to find a way to pay for it ourselves. And so 
that's why we're asking for that amount of Federal assistance.
    The Chairman. Thank you very much. Mr. Coleman, we all 
appreciate your statement, DDD is obviously very lucky to have 
your experience. I did not know that CON ED had gotten money 
directly. My staff has looked this up and we find that there 
was money provided to--we appropriated funds to Housing and 
Urban Development for the Lower Manhattan Development 
Corporation, which was to reimburse the utility companies for 
what you suggested, uncompensated costs associated with 
restoring services. The amount of money involved in that was 
$250 million. Have you an estimate through DDD of how much 
money would be needed here?
    Ms. Coleman. Are you asking specifically about the utility 
company?
    The Chairman. The utility companies, yes ma'am.
    Ms. Coleman. Right, I'm wearing two hats. Regarding 
Entergy, what I have seen, what has been asked for. I have 
retired, so I'm not as close, but I do talk with them all the 
time. I believe they are asking for a little over $400 million 
for the restoration. When you look at what's happened in the 
City of New Orleans, it's the entire customer base of Entergy 
New Orleans that was impacted. Not a portion of it, but the 
entire customer base lost. The company lost approximately 70 
percent of its customers. And we're working to restore those 
that are able to take service. But the restoration costs are 
enormous and that's why the company is asking that there be 
some type of Federal relief so that customers will not have to 
bear that burden. It would be very uneconomic, we could not try 
to bring business here if we didn't have a rate structure that 
was competitive.
    The Chairman. I think you're right, there's a substantial 
precedent there in terms of the New York action, and we'll look 
into that, and hopefully be successful in assisting you. 
Senator Vitter.
    Senator Vitter. I wanted to ask Steve Perry. Steve, we're 
talking a lot about the 9/11 comparison, what precisely was 
done for New York tourism, marketing, and branding after 9/11 
and in what amounts? And I want you to specifically exclude the 
National Airline piece, which I would put in a different 
category to make the comparison a little fairer, but what was 
done for New York tourism, marketing and branding after 9/11?
    Mr. Perry. It was virtually the identical $40 million for 
the marketing and branding side that we are asking for, it's 
even more critical here, as you know Senator Vitter, because 
tourism is important in New York, but it's just a tiny piece of 
their economy. Here it's disproportionately large. $40 million 
came from the Federal Government on a series of grants through 
both the City and the State entities that were received in 
through the Empire State Organization. And frankly, that 
combined with Mayor Guiliani's pitches helped restore tourism 
very very quickly to New York City, and in fact, New York 
City's tourism base right now is the strongest it has been in 
probably 25 years. Here it's disproportionately critical, 
because so many of the employees in our tax base depend upon it 
and because so many of our customers are literally in here this 
month making decisions as to whether to come next fall, or even 
the spring of 2007. So, the tide is going to turn in the next 
90 to 100 days and that's why it's so important for us to get 
this money for assistance as soon as possible.
    Senator Vitter. In the New York case after 9/11, were they 
also helped by any donated air time, or other in kind 
contributions that went toward a national marketing campaign, 
and if so, is that same sort of private sector contribution 
available here?
    Mr. Perry. It is, we have already begun exploring. I'll 
give you an example. The New Jersey Association of 
Broadcasters, I mean how far away could that be from Louisiana, 
have offered to give us $250,000 of free radio time in the 
State of New Jersey. We're doing this in nearly every state. 
We're going--we're doing everything we can to help ourselves 
right now. We're going to every other--everyone of our peers in 
other states and cities. We're going to every national trade 
organization in our business. We're going to all of our 
national customer bases. Those associations that meet here 
regularly. And Senator Vitter, we are asking for every 
contribution we possibly can to help re-image and re-brand us.
    Senator Vitter. So therefore it's fair to say, any Federal 
dollars could be leveraged significantly and used as a base on 
which to add on these sorts of private sector contributions.
    Mr. Perry. We have a multiplier effect, and when you think 
about the $40 to $60 million that we're talking about, just for 
New Orleans alone, there are not many times the Federal 
Government can think of investing $40 to $60 million and 
getting $5 billion of economic impact in return. And for us 
it's the life and breath of our businesses now.
    Senator Vitter. David Guidry, I really appreciate your 
comments about the SBA because that has been a big focus, and 
quite frankly, a huge frustration of mine. And we've heard that 
from you, unfortunately we've heard it from a whole lot of 
business folks. I just want to repeat that tomorrow morning, 
the Senate Chair of the Small Business Committee is having a 
hearing exactly about the frustrations you're talking about: 
Slow time line, lack of approved loans, et cetera, so I'm 
certainly hopeful we're going to begin to get SBA's attention. 
But could you also speak to this proposal for bridge loans, 
because it's my understanding that even if the SBA were working 
in a very timely manner, their normal menu of loans and options 
would have some gaps in it. In terms of the current needs of 
small business on the ground here, and that's what this bridge 
loan proposal is designed to fill in, could you speak to that a 
little bit.
    Mr. Guidry. Yes sir. The uncertainty. And guys, I want you 
to walk in my shoes for a second. OK. I'm trying to plan the 
destination of a company that employs 60 people. And we need to 
figure how we're going to be able to make it through what we 
consider this next 6 months. And obviously, the choices that 
we're going to make will have a lot to do on the amount of 
capital we will have available to us. The 90-day suspension of 
payments that nearly every long term creditor we have will run 
out, in the end of December.
    We have those immediate needs of maintaining what we call 
our intellectual capital. The top people in the company that 
keep us running. Then the second component is incentives to 
help to lure our people back. We have some folks that are in 
Houston that will be lured back via housing, lured back via 
some economic incentives, and even our ability to be able to 
compete with what has just become this wild wage scale that has 
occurred inside New Orleans. So a bridge loan that would help 
us to be able to stem the tide of the bleeding that occurring 
in the company right now, knowing that the cavalry will come in 
90 days, 180 days. Or even if I just know that the cavalry 
won't come. It will allow our decision process to make our 
company survive. Because we--I'm an entrepreneur, I will 
survive. I'm not interested in business grant. I'm a for profit 
operation. OK. Whether--if I could get a loan from the bank 
that would be fine. It's just that SBA has always marketed 
itself as having this disaster loan component. A safety net 
that we just always felt that we could count on.
    Well, we've done our part in the disaster side, OK. It is 
now--to like this safety net was going to kick in for us. And 
so it's the uncertainty. The bridge loan, speedy, it involved 
people in the process who know me. It was done via our bank 
which made it a lot simpler. And I've got to tell you our bank 
knows which--our banks here in the area know how to perform 
what we call battlefield triage. Which companies are savable. 
Which companies need working capital to exist just 90 days, 
which companies need it for 180 days. And everybody's not going 
to survive and the local banking industry knows that. And the 
SBA has done itself a disservice by not employing that 
institution.
    Senator Vitter. Do you have any particular insight to why 
the SBA has been so slow moving on this, is it just being 
purely overwhelmed by the numbers not having the people, or 
what's going on?
    Mr. Guidry. I don't know, you know. The running joke on the 
SBA funded disaster loans is like UFOs, we all believe they're 
out there. There have been even sightings of some. But I don't 
know a soul who's ever seen one. And so we--I can't speculate 
on it Senator, it's kind of mind boggling to be honest.
    The Chairman. Mr. Guidry, I was in Alaska at the time, the 
1964 earthquake, and had a small business, a law firm, and the 
house was substantially damaged. I applied to the SBA and for 
each--for a loan for each operation and was turned down. And a 
little while later, well they got it back--I petitioned for a 
review they got back to looking at it. And it was the sheer 
number of people involved. So I hope you don't lose hope, I 
didn't. And I went back again and got my loans and survived 
obviously. But these people are now dealing with a disaster 
area from Mississippi, Louisiana, Florida, Texas, and Alabama. 
All these disaster areas all at the same time. So it's a 
massive problem to deal with individual applications. And I 
learned that it's a problem waiting. So I hope you not lose 
heart. And I hope that they will come around. We're going to 
have that hearing tonight. But very clearly, the numbers 
involved in these disasters now, are the greatest in history. I 
hope we all keep in mind that there are human beings at SBA 
too, and they are just overwhelmed.
    Senator Thomas?
    Senator Thomas. Mr. Chairman, thank you so much for 
allowing us to come and be here. This has been an excellent 
experience for us. We've heard a lot about the problem, and of 
course, we have some in our states, not nearly the size of this 
one, so it's an experience. And you've done a great job in 
helping us understand it. I appreciate your comments about SBA. 
I hope we can move along with these kinds of things. Mr. Perry, 
tourism is a major thing in my state. It's one of our three 
highest things, so I understand what you're saying. So I'm 
going to go back and feel very strongly about assistance here 
and doing the things that we can do to be helpful, and I think 
most people do.
    Senator Vitter has done a great job, and Senator Landrieu 
also, in promoting what needs to be done here and helping us to 
understand it.
    Just for your own information, you need to understand as we 
go back, it's not going to be as easy a job as you might think. 
I mean take a look at what we're doing now, we're talking about 
the highest deficit we've had in this country for a very long 
time. We're talking about that we just last week reduced 
spending by $35 billion, and so we're trying to keep a hold of 
spending and we should. We have to do that. We're trying to 
keep the economy strong by not raising taxes and so on to do 
that. So we're looking at health care costs that are going to 
be going up. So all I'm saying to you is, I think that we're 
committed, but it isn't going to be the easiest thing in the 
world to be able to do this. And when we do it, we will provide 
these things basically that you're talking about here. I think 
we have to have accountable spending, we need to know where 
that money's going, who's responsible for it. We've had some 
experience in these kinds of places where the spending has not 
been watched. And I think that's very important, people feel 
strongly about that. We need to make the best choices for 
spending so that what's spent here, and you're going to be very 
key to that, as to what's most effective for now and for the 
future. And there has to be leadership in this process so that 
somebody is accountable and somebody is responsible. And from 
our standpoint, one of the keys is going to be accountability 
and what the Federal Government's doing. That's part of our job 
as well.
    So you know, I see it kind of like a family or a business. 
When you have an emergency you have to deal with it, and take 
care of it. At the same time you have to take care of your 
family and then you have to start looking for ways to offset 
those costs. And those are kind of the challenges that we're 
going to have. So I just want to thank you all for what you've 
provided for us, I feel much more comfortable, as I go back and 
working with Senator Vitter, to work forward to trying to give 
some assistance to you all to get your economy back in place.
    Thank you so much for your efforts to help enlighten us.
    The Chairman. I also want to thank the court system for 
allowing us again, to use this room for our hearing. We'll be 
leaving here in a few minutes and take our helicopter trip and 
see more of the damage. I said yesterday, I've seen typhoons 
and hurricanes, and earthquakes, and tsunamis and great fires 
that covered million of acres. But I've never seen anything 
like that devastation we saw yesterday.
    So we'll be working with you, but I don't know how to say 
this, but Rome wasn't built in a day, and you can't rebuild New 
Orleans in a day either. It's going to be a long haul, but we 
will be with you all the way. Thank you very much.
    [Applause].
    [Whereupon the hearing was adjourned]

                            A P P E N D I X

                  Gulf of Mexico Fishery Management Council
                                         Tampa, FL, October 7, 2005
Hon. Thad Cochran,
Chair,
Senate Committee on Appropriations,
Washington, DC.

Hon. Trent Lott,
Member,
Senate Committee on Finance,
Washington, DC.

Dear Senator Cochran and Senator Lott,

    Thank you for your letter asking the Gulf of Mexico Fishery 
Management Council to recommend projects to rebuild fisheries and their 
associated infrastructure in the Northern Gulf of Mexico.
    At our October meeting in St. Petersburg, Florida, the Council 
discussed your request and developed the attached list of 
recommendations. All three Council members from Mississippi attended 
the meeting, and our discussion was greatly informed by their 
experiences.
    The Gulf of Mexico Fishery Management Council is taking deliberate 
action to address overcapitalization and overfishing in several Gulf 
fisheries. Shrimp and red snapper are overcapitalized. Red snapper is 
also overfished. In addition, the charterboat sector is 
overcapitalized, targeting reef fish and mackerel. Inventories are 
incomplete, but many vessels in these three fisheries have been damaged 
or lost in the northern Gulf. A voluntary buyout of vessels and permits 
in these fisheries would help fishermen who choose to exit the fishery 
following the storms, and, at the same time, would reduce 
overcapitalization and support recovery of overfished reef fish.
    The storms damaged trawling gear, and a replacement program 
providing nets with the most effective turtle excluder devices (TEDs) 
and bycatch reduction devices (BRDs) will reduce bycatch in the shrimp 
fishery.
    Docks, fish houses, ice plants, and freezers have been lost and 
damaged, and fishermen are scrambling to find places to land their 
fish. Federal relief funds could fill the gap between insured losses 
and the funds needed to rebuild docks and high quality handling 
facilities that will bring Gulf seafood to customers.
    Over the next months, fishermen could be employed to work with NOAA 
and the Coast Guard to locate and remove hurricane debris from state 
and Federal waters and conduct research on the effects of the storms. 
Longer term, fishermen can work as observers, collecting crucial data 
to improve fishery management.
    The Council has identified vessel monitoring systems, electronic 
logbooks, and improved bycatch reduction devices, as important tools 
for responsible, science based management of the shrimp and reef fish 
fisheries in the Gulf of Mexico. Our management plans call for vessel 
owners to purchase these tools, which will be difficult for fishermen 
in financial crisis. We also have a strong need for observer data in 
these two fisheries, and have asked NOAA to fund observers. 
Congressional funding of these management tools would be a tremendous 
boost for sustainable fishery management in the Gulf of Mexico.
    Thank you again for considering the attached recommendations, and, 
thank you for your leadership on these issues at this moment of crisis. 
Our Gulf Council and NMFS staffs can provide rough estimates of costs 
for many of these recommendations, and I encourage you to work with 
them as your committee explores way to restore and recover Gulf of 
Mexico Fishery Infrastructure.
            Sincerely,
                                              Julie Morris,
                                                  Council Chairman.

   Recommendations to Congress on Gulf of Mexico Fishery Restoration 
   Projects--Endorsed by Gulf of Mexico Fishery Management Council, 
                              Oct. 6, 2005
    Overall goals: Compassionate relief response; restore fishing 
infrastructure; address overcapacity and overfishing through voluntary 
buyouts and gear improvements; employ fishermen in clean-up and 
research; provide retraining for fishermen leaving the fishery; add 
improved management tools to the fishery.
Restoration and Recovery of Fishing Infrastructure
    1. Fully fund a voluntary buy-back program for vessels and permits 
in federally managed Gulf fisheries with limited entry. Vessels bought-
back would be scrapped and permits would be permanently retired. The 
Council's first priority is for shrimp vessels and permits, second 
priority is for red snapper vessels and permits, and third priority is 
for charterboat vessels and permits. (Shrimp Amendment 13, currently 
under Secretarial review, will limit entry by a moratorium on permits, 
but implementing rules will not be effective until 2006. Congress may 
need to expedite the moratorium.)
    2. Provide funds for replacement of hurricane damaged gear (not 
including vessels) with best available gear to reduce bycatch and 
minimize habitat damage (turtle excluder devices)--TEDs--and bycatch 
reduction devices--BRDs, etc.).
    3. Provide funding to dealers/processors to cover the gap between 
insurance payouts and the cost of rebuilding damaged and destroyed fish 
houses, freezers, and related infrastructure using best available 
technology to improve handling and processing of Gulf seafood. Ensure 
that fishery infrastructure persists in strategic geographic areas to 
support the managed Federal fisheries in the northern Gulf.
    4. Provide funding to NOAA for a two-year sonar project to map 
hangs and locations of hurricane debris. Also provide funding to 
contract with fishing vessels to remove hurricane debris from state and 
Federal waters. Finally, provide funding to remove damaged and 
destroyed fishing vessels, with special attention to fire and 
environmental hazards from vessel fuel leaks.
    5. Provide job retraining for fishermen who want to voluntarily 
leave the Gulf fishery.
    6. Provide funding to the southeast Cooperative Research Program to 
support research carried out over the next three years by commercial 
vessels.
    7. Waive cost recovery in red snapper IFQ for three years by 
providing direct allocation to NMFS for administering the program.
    8. Waive minimum income requirement to renew permits for three 
years for fishermen whose vessels or fish houses were damaged or 
destroyed.
Rebuilding for Sustainable Fisheries Management
    1. Provide funds to pay for VMS for all federally permitted 
commercial reef fish vessels.
    2. Provide funds to pay for VMS for all federally permitted shrimp 
vessels.
    3. Pay for three-year observer programs in the Gulf EEZ commercial 
shrimp fishery and commercial reef fish fishery.
    4. Provide funding to train shrimp fishery observers and reef 
fishery observers.
    5. Provide funding to speed the implementation of the red snapper 
IFQ and the grouper IFQ.
    6. Provide funds for replacement of all shrimp trawling gear in the 
fleet with best available gear to reduce bycatch and minimize habitat 
damage (TEDs and BRDs, etc.).
    Additional comments: Many Gulf fish stocks depend on northern Gulf 
coastal habitats. A comprehensive program of habitat restoration, 
particularly restoration of vegetated wetlands and barrier islands, 
will be important. In addition, seafood consumers need to be reassured 
that the majority of Gulf seafood is unaffected by Hurricanes Katrina 
and Rita--the seafood reaching markets has been tested and is safe for 
consumption.
                                 ______
                                 
                                                   November 7, 2005

Dear Louisiana Senators, Congressmen and State Officials:

    We are writing to you as a group of tuna/swordfish fishermen with 
homeports in Dulac, Leeville, and Venice comprising a total of about 40 
commercial fishing vessels, our dock dealers and related businesses. 
Venice is essentially ``wiped out'' from Katrina as far as fishing is 
concerned now. While the damage in Leeville is extensive from both 
Katrina and Rita, Dulac was horrendously flooded with 4 to 5 feet of 
water from Rita.
    Prior to Hurricane Rita's arrival, Dulac was officially declared a 
mandatory evacuation town where the majority of the fishing boats dock. 
And sure enough, local officials were correct 100 percent. While a mass 
evacuation puts extensive responsibilities on elected officials such as 
providing the means to get the community out both safely and timely, 
the right decision saved many lives, as we all know from Katrina.
    Lives are saved, but many businesses are not.
    The financial impact of these two monsters on our businesses is 
exponential. We know that the budget situation is very tight and that 
you are doing everything that you can to help Louisiana in the face of 
this. But we are not asking for every dollar we have lost. We are 
writing to you today as boat owners, deckhands, dock dealers, trucking 
companies, and others desperately seeking whatever immediate financial 
assistance you can find to help us rebuild our lives. Through our 
fisheries association, we know you have been working hard on this and 
we are very thankful for your kind efforts. We just want to make sure 
you are aware of our particular fishery's situation.
    We, as Louisiana fishermen, supply more domestic fish from tuna/
swordfish longline fishing boats to seafood wholesalers around the 
country than any other Gulf State. Our Louisiana fleet comprises at 
least half of the overall U.S. Atlantic tuna/swordfish fleet. Our 
captains and crews are scattered around in evacuation centers 
throughout the Gulf States, primarily in Houston. Those who have 
returned cannot go fishing until their families have shelter. Some 
await insurance surveys before they can return to work. Because their 
New Orleans homes were destroyed or rendered uninhabitable, they have 
no opportunity to return to fishing without abandoning their families. 
As a major fish-supplying region, Louisiana cannot afford to lose these 
hard working fishermen.
    As Louisiana fish dealers, our fish houses have had nearly no 
production for over three months. Insurance will not cover our losses 
because our buildings remain intact. But no production is still out of 
business.
    As seafood truckers and related service and supplier businesses, we 
need the boats to go back fishing and the fish houses return to 
activity.

   We desperately need immediate mobile trailers so our 
        captains, crew and families can return home and to work. If 
        necessary, such trailers can be placed on existing dock dealer 
        properties in Dulac and Houma.

   We desperately need the necessary insurance surveys of our 
        New Orleans homes completed as quickly as possible. Some 
        captains and crews are forced to remain onshore just in case 
        the surveyor arrives.

   We desperately need at least temporary relief from 
        restrictive fisheries regulations such as the restriction on 
        using live bait, incidental swordfish trip limits and closures 
        to protect what is now a fully recovered swordfish stock. These 
        restrictions are unnecessary while we strive to rebuild our 
        lives and businesses.

    Just like the shrimpers and oyster boats, we also have a lot to 
recover and we know that it involves a lot of work ahead from us. 
Please don't let anyone forget about our longline fishery including the 
Louisiana Seafood Promotion Board. We are a very important fishery and 
we are also working very hard. But we desperately need your help to 
provide us with the means to recover. We heard that the Commerce 
Department declared our fishery as a disaster so we could receive help 
but we haven't heard anything from them since.
    We are also proud members of the Blue Water Fishermen's Association 
who continue to work hard to represent our interests to you. If you 
need more information, please contact the Executive Director, Nelson 
Beideman at 609-361-9229, P.O. Box 398 Barnegat Light, NJ 08006, e-mail 
[email protected]. If he cannot answer your questions, he can make direct 
contact with any of us.
    We thank you so . . . so very much for thinking of us during this 
difficult time.
        Respectfully,

        Dock Dealers

          Ken Trinh, Jensen Tuna, Inc., Dulac/Houma, LA
          Vinh Tran, St. Vicent Seafood, Inc., Leeville, LA
          Tuan/Khai Nguyen, Sharko Seafood Int'l, Venice, LA
          Steven Le, Steven's Seafood, Inc., Dulac, LA
          Steven Loga, Warehouse Food Group, Dulac/Gretna, LA
          Larry Loga, Tuna Fresh, Inc., Venice, LA
          Michael Nguyen, TUNACO, INC., Dulac, LA
          Archie Dantin, Griffin's Seafood, Leeville, LA

        Boat Owners

          Mien Nguyen, F/V Night Star II, New Orleans, LA
          Peter Tran, F/V Queen Mary, New Orleans, LA
          Tuc V. Nguyen, F/V Red Fin, Gretna, LA
          Tung ``Jim'' Nguyen, F/V Peaceful Lady-Red, Chalmette, LA
          Han Nuoi, F/V Master Ray, Chalmette, LA
          Duong Nguyen, F/V St. Joseph & Peter, New Orleans, LA
          John Le, F/V Sea Queen III, Houma, LA
          Tom Huynh, F/V Morning Star, New Orleans, LA
          Michael Pham, F/V Thuan Loi, New Orleans, LA
          Cuc Huynh, F/V Kim Thanh II, New Orleans, LA
          Peter Nguyen, F/V Blue Sea I, Kenner, LA
          Suong Tran, F/V Tran Brothers, Gretna, LA
          Phan Nuoi, F/V Kim Nhi, New Orleans, LA
          Loi Nguyen, F/V Capt. Robinson, Cut Off, LA
          Thien Nguyen, F/V Queensland, New Orleans, LA
          Anna Biu, F/V Lillian, New Orleans, LA
          Khanh Huynh, F/V Miss Lena, New Orleans, LA
          Andy Nguyen, F/V Capt. David, Kenner, LA
          Diem Le, F/V Victoria, New Orleans, LA
          Ban Van Nguyen, F/V Cecilia II, New Orleans, LA
          Tu Le, F/V Sea Queen, Houma, LA
          Hoa Nguyen, F/V St. Maria, New Orleans, LA
          Lan Tran Nguyen, F/V Our Lady of Lavang, New Orleans, LA
          Suong Quang, F/V St. Peter, Gretna, LA
          Hung Viet Tran, F/V DeQueen, New Orleans, LA
          Phuc Truong, F/V Kim Thanh-PN, New Orleans, LA
          Luu Nguyen, F/V Capt. Luu, Dulac, LA
          Dong Tran, F/V Kenny Boy, New Orleans, LA
          Kinh Tran, F/V Capt. Michael, Dulac, LA
          Thien Nguyen, F/V St. Joseph, New Orleans, LA
          Tony Nguyen, F/V St. Benedict, Houma, LA
          Hanh Tran, F/V Alexander, New Orleans, LA
          Ba Truong, F/V Capt. Mike, Houma, LA
          Kinh Tran, F/V Capt. Johnny, New Orleans, LA
          Phuong Nguyen, F/V Lien Hiep, Woodlawn, LA
          Trinh Nguyen, F/V Star Sea, Woodlawn, LA
          Minh Dinh Nguyen, F/V Captain Paul, New Orleans, LA

        Trucking Companies

          Terry Gold, Panda Trucking Express, Houma, LA
          JJ Conway, Seacap Trucking, Inc., Jessup, MD
          Meade/Harry Amory Trucking Hampton, VA

        Diesel Fuel Suppliers

          Al Waguespack, Waguespack Oil Co., Thibodaux, LA
          Jean Lamont, Tri-State Oil Co., Belle Chasse, LA

        Diesel Fuel Services

          Tien Le, LL & T Ice & Fuel, Dulac, LA
          Electronics Supplier/Services
          Ron, EMT Electronics, Inc., Houma, LA

        Mechanics

          Richie/Joe, S & H Diesel, Inc., Houma, LA
          Robert Lirette, Lirette's Diesel Service, Chauvin, LA
          Gary, Diesel Tech, Inc., Houma, LA

        Diving Service

          Timmy Price, Diving Service, Chauvin, LA
          Scott Diaz, Scott's Diving Service, Dulac, LA

        Drydock and Shipyard

          Donald Bourg, Bourg Marine Services, Dulac, LA
          Steven, Bayou Grand Marine, Dulac, LA
        Hardware Supplier

          Sandy/Chris, Bayou Hardware, Inc., Dulac, LA

        Generator and Parts Supplier
          Dave Landry, M & L Engines, Inc., Houma, LA

        Fishing and Tackle Supplier

          Eva, Alario Brothers Marine Supply, Inc., Westwego, LA

        Foam Insulation

          Charlie LeCompte, LeCompte Insulation, Inc., Houma, LA

        (Also there are numerous Deckhands, out of state Tuna vessels 
        who use Louisiana ports, and many additional tuna boat service/
        supply companies in Louisiana and out of state, whose names can 
        be provided upon request.)

                                  
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