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63–021 PDF 2010

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 

( 

(II) 

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED NINTH CONGRESS 

FIRST SESSION 

TED STEVENS, Alaska, Chairman 

JOHN MCCAIN, Arizona 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

GORDON H. SMITH, Oregon 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

DANIEL K. INOUYE, Hawaii, Co-Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

BYRON L. DORGAN, North Dakota 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

FRANK R. LAUTENBERG, New Jersey 

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 

(III) 

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 

(1) 

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 

2 

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. 

3 

Seventh, the President recently signed into law, my bill to pro- vide $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 onehalf 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 

4 

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. 

5 

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 addiVerDate Nov 24 2008 07:01 Dec 16, 2010 Jkt 063021 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 S:\WPSHR\GPO\DOCS\63021.TXT SCOM1 PsN: JACKIE
6 

tional 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. 

7 

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-ofservice 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 

8 

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. 

9 

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. 

10 

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 shutdowns 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 

11 

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 

12 

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 

13 

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 

14 

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 longterm, 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 AfricanAmericans 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 

15 

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 

16 

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.’’ 

17 

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. 

18 

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 

19 

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 AfricanAmericans 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. 

20 

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. 

21 

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 

22 

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? 

23 

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 relook 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 

24 

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 Recov- ery 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 

25 

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. 

26 

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. 

27 

[The prepared statement of Mr. Drennen follows:] 

PREPARED STATEMENT OF MARK C. DRENNEN, PRESIDENT/CEO, GREATER NEW ORLE- ANS, 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. 

28 

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 longterm 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 

29 

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. 

30 

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 shutin, 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 

31 

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 manVerDate Nov 24 2008 07:01 Dec 16, 2010 Jkt 063021 PO 00000 Frm 00035 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\63021.TXT SCOM1 PsN: JACKIE
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power, 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, 

33 

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 

34 

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. 

35 

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 

36 

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 shutVerDate Nov 24 2008 07:01 Dec 16, 2010 Jkt 063021 PO 00000 Frm 00040 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\63021.TXT SCOM1 PsN: JACKIE
37 

* Finfish: tuna, shark, mullet, black drum, menhaden, snappers, groupers, etc. 

down, 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. 

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. 

38 

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. 

Category 

Potential direct loss 

of available resource 

(Hurricane Katrina) 

Potential direct loss 

of available resource 

(Hurricane Rita) 

Potential direct loss 

of available resource 

(Total) 

Crab N/A N/A N/A 

Freshwater Fish N/A N/A N/A 

Oysters* $ 206,811,000 $25,103,235 $231,914,235 

Saltwater Fish** N/A N/A N/A 

Shrimp N/A N/A N/A 

Wild Crawfish N/A N/A N/A 

Recreational Fisheries N/A N/A N/A 

Freshwater Fish Loss N/A $ 7,323,128 $7,323,128 

Total $206,811,000 $32,426,363 $239,237,363 

Category 

Potential production 

loss at dockside 

(Hurricane Katrina) 

Potential production 

loss at dockside 

(Hurricane Rita) 

Potential production 

loss at dockside 

(Total) 

Crab $12,297,617 $10,264,261 $22,561,878 

Freshwater Fish $189,019 $2,859,492 $3,048,511 

Oysters* $ 44,577,072 $12,374,438 $56,951,510 

Saltwater Fish** $ 25,887,471 $ 27,428,103 $53,315,574 

Shrimp $81,054,864 $57,198,057 $138,252,921 

Wild Crawfish N/A $4,166,514 $4,166,514 

Recreational Fisheries N/A N/A 0 

Freshwater Fish Loss N/A N/A 0 

Total $164,006,043 $114,290,865 $278,296,908 

39 

Category 

Potential production 

losses at retail level 

(Hurricane Katrina) 

Potential production 

losses at retail level 

(Hurricane Rita) 

Total potential 

production losses at 

retail level 

Crab $81,776,427 $68,255,059 $150,031,486 

Freshwater Fish $1,256,934 $19,014,988 $20,271,922 

Oysters* $296,427,648* $82,287,284 $378,714,932 

Saltwater Fish** $172,145,944** $182,390,804 $354,536,748 

Shrimp $538,996,879 $380,354,398 $919,351,277 

Wild Crawfish N/A $27,706,395 $33,691,720 

Recreational Fisheries $199,517,744 $221,383,678 $420,901,422 

Freshwater Fish Loss N/A N/A N/A 

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 

40 

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 benefitcost 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 bagless 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 

41 

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. 

42 

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 exVerDate Nov 24 2008 07:01 Dec 16, 2010 Jkt 063021 PO 00000 Frm 00046 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\63021.TXT SCOM1 PsN: JACKIE
43 

tremely 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. 

44 

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 

45 

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. 

46 

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. 

47 

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 catVerDate Nov 24 2008 07:01 Dec 16, 2010 Jkt 063021 PO 00000 Frm 00051 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\63021.TXT SCOM1 PsN: JACKIE
48 

egory 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 hisVerDate Nov 24 2008 07:01 Dec 16, 2010 Jkt 063021 PO 00000 Frm 00052 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\63021.TXT SCOM1 PsN: JACKIE
49 

tory 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 

50 

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. 

51 

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 

52 

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-AmerVerDate Nov 24 2008 07:01 Dec 16, 2010 Jkt 063021 PO 00000 Frm 00056 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\63021.TXT SCOM1 PsN: JACKIE
53 

ican 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 needed (anticipated revenue = 

$2,000,000) 

Total NOMCVB 

operating needs 

$9,000,000 (1 year) 

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 

54 

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. 

55 

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 cafeau-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. 

56 

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. 

57 

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 

58 

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 

59 

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, 

60 

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 

61 

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 

62 

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? 

63 

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. 

64 

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, 

65 

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? 

66 

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 

67 

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] 

(69) 

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. 

70 

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 extenVerDate Nov 24 2008 07:01 Dec 16, 2010 Jkt 063021 PO 00000 Frm 00074 Fmt 6601 Sfmt 6621 S:\WPSHR\GPO\DOCS\63021.TXT SCOM1 PsN: JACKIE
71 

sive 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 nelson@bwfa.org. 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 

72 

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 

73 

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.) 

Æ