Hurricane Katrina: GAO's Preliminary Observations Regarding Preparedness, Response, and Recovery
Published: 2006-03-08T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The size and strength of Hurricane Katrina resulted in one of the largest natural disasters in our nation's history. Hurricane Katrina raised major questions about our nation's readiness and ability to respond to catastrophic disasters. Hurricane Rita increased demands on an already stressed response and recovery effort by all levels of government. The two hurricanes provided a sobering picture of the overwhelming strains on response and recovery if there are back-to-back catastrophic disasters in the same area. GAO has a large body of ongoing work on a range of issues relating to all phases of the preparation, response, recovery, and rebuilding efforts related to Hurricanes Katrina and Rita.
section_title: What GAO Found
paragraphs: Significant government and private resources were mobilized to respond to the hurricanes. However, these capabilities were clearly overwhelmed and there was widespread dissatisfaction with the results. Many of the lessons emerging from Hurricanes Katrina and Rita are similar to those we identified more than a decade ago, in the aftermath of Hurricane Andrew in 1992, which leveled much of South Florida. Four major issues have emerged from our preliminary work. The preparation and response to Hurricane Katrina are similar to lessons learned from past catastrophic disasters. These include the critical importance of (1) clearly defining and communicating leadership roles, responsibilities, and lines of authority for catastrophic response in advance of such events, (2) clarifying the procedures for activating the National Response Plan and applying them to emerging catastrophic disasters, (3) conducting strong advance planning and robust training and exercise programs, and (4) strengthening response and recovery capabilities for a catastrophic disaster. A risk management decision making approach is vital to develop the nation's capabilities and expertise to respond to a catastrophic disaster. Given the likely costs, Congress should consider using such an approach in deciding how best to invest in specific capabilities for a catastrophic disaster. Because of FEMA's mission performance during Hurricane Katrina, concerns have been raised regarding the agency's organizational placement, including whether it should be disbanded and functions moved to other agencies, remain within the Department of Homeland Security, or become an independent agency. However, other factors such as leadership and resources may be more important to FEMA's future success than organizational placement. Lastly, the federal government will be a major partner in the longer-term rebuilding of the Gulf Coast, supporting state and local efforts. The federal role in rebuilding will be particularly important for transportation and health infrastructures and federal facilities. In addition, federal programs will face financial difficulties and there is uncertainty about catastrophic losses affecting the availability and affordability of insurance. Long term rebuilding raises issues concerning the need for consensus on what rebuilding should be done, who will pay for what, and what oversight is needed to ensure federal funds are spent for their intended purposes.

section_title: Letter
paragraphs: I appreciate the opportunity to participate in today’s hearing to discuss our  work stemming from the catastrophic hurricanes in the Gulf Coast last fall.  GAO has a large body of ongoing work on a range of issues relating to all  phases of the preparation, response, recovery, and rebuilding efforts  related to Hurricanes Katrina and Rita. We currently have nearly   40 different engagements underway. Consequently, my remarks today are  preliminary, but well grounded in the work we have done to-date as well  as our completed work on prior disasters and catastrophes. We also  recently provided to this committee a summary of the views of several  groups regarding potential changes to the national emergency response  system. In the coming months, we will provide Congress with more  detailed findings, and a comprehensive summary of what went well and  why, what did not go well and why, and what specific changes, if any, are  called for in this nation’s emergency preparedness, response, and recovery  system. In addition, based on the work reflected in our recent testimony  before the committee on fraud and abuse related to the Individuals and  Households Program, we plan to issue recommendations to FEMA  intended to strengthen fraud prevention controls over the process for  applying for disaster benefits, including validating an individual’s identity  and damaged property address.
Hurricane Katrina was one of the largest natural disasters in our nation’s  history; its size and strength will have long standing effects for years to  come. It exacted terrible human costs with the loss of significant numbers  of lives and resulted in billions of dollars in property damage. The fact that  Hurricane Rita followed closely on the heels of Hurricane Katrina only  added to the destruction and suffering. It also increased demands of an  already stressed response and recovery effort by all levels of government,  especially in Louisiana. Moreover, the two hurricanes provided a sobering  picture of the overwhelming strains on disaster response and recovery if  there are back-to-back catastrophic disasters in the same area.
Significant local, state, and federal resources were mobilized to respond to  the Hurricane Katrina disaster, along with significant participation from  charitable and private sector organizations. However, the capabilities of  several federal, state, and local agencies were clearly overwhelmed,  especially in Louisiana. Therefore, there was widespread dissatisfaction  with the level of preparedness and the collective response. As events  unfolded in the immediate aftermath and ensuing days after Hurricane  Katrina’s final landfall, responders at all levels of government—many  victims themselves—encountered significant breakdowns in vital areas  such as emergency communications as well as obtaining essential supplies  and equipment.
The causes of these breakdowns must be well understood and addressed  in order to strengthen the nation’s ability to prepare for, respond to, and  recover from major catastrophic events in the future—whether natural or  man-made. Unfortunately, many of the lessons emerging from Hurricanes  Katrina and Rita are similar to those we identified more than a decade ago,  in the aftermath of Hurricane Andrew in 1992, which leveled much of  South Florida. The experience of Hurricane Andrew raised questions  about whether and how national disaster response efforts had  incorporated lessons from experiences with Hurricane Hugo in 1989. All  critical players must do much more to learn from past mistakes and  actually implement recommendations that address prior deficiencies in  preparing for and responding to catastrophic disasters. However, these  actions will not be cost-free—posing a range of challenges in determining  the priority of various action steps and how they will be funded.
GAO staff have visited areas most affected by Hurricanes Katrina and  Rita—Alabama, Louisiana, Mississippi, and Texas. They have interviewed  officials and analyzed information from the various involved federal  agencies such as the Department of Homeland Security’s Federal  Emergency Management Agency (FEMA) and the Department of Defense  (DOD); state and local organizations, including state emergency  management agencies; state adjutant generals; local officials; and  representatives from nongovernmental agencies. I have personally toured  southern Mississippi, southern Louisiana, and the city of New Orleans. I  also have had discussions with many governmental and other officials,  including the governors of Alabama, Mississippi, Louisiana, and Texas; the  mayor of New Orleans; the principal federal official on the scene; the joint  task force commander of active duty forces, and the federal coordinator  for federal support for the Gulf Coast’s recovery and rebuilding.  Additionally, we have closely followed the hearings conducted by this  Committee, the House’s Select Committee to Investigate the Preparation  for and Response to Hurricane Katrina, and other Congressional  committees on Hurricane Katrina issues. We have studied the House  Select Committee report and are carefully reviewing the recently issued  White House report on lessons learned from the federal response to  Hurricane Katrina. Finally, we discussed our preliminary observations  with the Deputy Secretary of the Department of Homeland Security.
In addition, we have done a great deal of work on prior disasters. In 1993,  we conducted several reviews examining the federal response to  Hurricane Andrew. The reviews focused on the unique challenges involved  in responding to “catastrophic disasters.” These reviews defined  “catastrophic disasters” as a subset of other disasters requiring federal  assistance. Unlike the bulk of the disasters requiring FEMA to respond,  catastrophic disasters can overwhelm the ability of state, local and  voluntary agencies to adequately provide victims with essential services,  such as food and water, within 12 to 24 hours. These prior GAO reports  focused on improving the immediate response to catastrophic disasters,  and we made various recommendations within this context. We  recommended that, in a catastrophic disaster, (1) a single individual  directly responsible and accountable to the President should be  designated to act as the central focal point to lead and coordinate the  overall federal response when a catastrophic disaster has happened or is  imminent, (2) FEMA should immediately establish a disaster unit to  independently assess damage and estimate response needs following a  catastrophic disaster, and (3) FEMA should enhance the capacity of state  and local governments to respond to catastrophic disasters by   (a) continuing to give them increasing flexibility to match grant funding  with individual response needs, (b) upgrading training and exercises for  catastrophic disaster response, and (c) assessing each state’s  preparedness for catastrophic disaster response. We also recommended  that Congress should consider (1) giving FEMA and other federal agencies  explicit authority to take actions to prepare for catastrophic disasters  when there is warning and (2) removing statutory restrictions on DOD’s  authority to activate Reserve units for catastrophic disaster relief.
Unfortunately, some of these recommendations were not adopted or in  effect when Hurricane Katrina hit the Gulf Coast. We continue to believe,  for the most part, these recommendations are still viable, as we discuss  later in this testimony. For example, current DOD strategy calls for  reliance on the reserve components (National Guard and reserves) for  civil support missions. Modifying statutory restrictions to allow for the use  of the reserves for catastrophic disasters would provide greater access to  Reserve units in the event they are needed for future responses.
Other work we have conducted related to disaster preparedness and  management has involved programs to prevent or mitigate disasters or to  improve the capabilities and readiness of first responders. We have  identified needed improvements in a number of areas, including  preparedness for “all-hazards,” balancing efforts to prepare for emergency  incidents resulting from terrorism and natural disasters or man-made  accidents; support for training, exercises, evaluations, and disseminating  lessons learned to first responders; and interoperable communications for  first responders. Similarly, our work on response to disasters has  identified a number of problems, such as the lack of clarity of various  federal, state, and local roles in coordinating the response and medical and  public health response capabilities.
Today, I will cover several major areas based on our preliminary work  related to the 2005 hurricane season. In summary:    Four key themes underpin many of the challenges encountered in the  response to Hurricane Katrina and are similar to lessons learned from past  catastrophic disasters. These include the central importance of (1) clearly  defining and communicating leadership roles, responsibilities, and lines of  authority for response in advance of a catastrophic disaster, (2) clarifying  the procedures for activating the National Response Plan and applying  them to emerging catastrophic disasters, (3) conducting strong advance  planning and robust training and exercise programs, and (4) strengthening  response and recovery capabilities for a catastrophic disaster.
It is vital to have in place a risk management decision making approach to  develop federal capabilities and the expertise to use them to respond to a  catastrophic disaster. Given the likely costs, Congress should consider  using such an approach in deciding how best to invest in specific  capabilities for a catastrophic disaster.
Because of FEMA’s mission performance during Hurricane Katrina,  concerns have been raised regarding the agency’s organizational  placement, including whether it should be disbanded and functions moved  to other agencies, remain within the Department of Homeland Security, or  again become an independent agency. Importantly, other factors, such as  the experience and training of FEMA leadership and the adequacy of its  resources may be more important to FEMA’s future success than its  organizational placement.
Lastly, the federal government will be a major partner in the longer-term  rebuilding of the Gulf Coast because of the widespread damage and  economic impact. In support of state and local efforts, the federal role in  rebuilding will be particularly important for transportation and health care  infrastructures and federal facilities. In addition, federal programs will  face financial difficulties and there is uncertainty concerning the impact of  catastrophic disasters on the availability and affordability of insurance.  Long term rebuilding raises issues concerning the need for consensus on  what rebuilding should be done, where and based on what standards, who  will pay for what, and what oversight is needed to ensure federal funds are  spent prudently and for their intended purposes.
subsections: section_title: Background
paragraphs: There are several federal legislative and executive provisions that support  preparation for and response to emergency situations. The Robert T.  Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act)  primarily establishes the programs and processes for the federal  government to provide major disaster and emergency assistance to states,  local governments, tribal nations, individuals, and qualified private  nonprofit organizations. FEMA has responsibility for administering the  provisions of the Stafford Act.
Upon a governor’s request, the President can declare an “emergency” or a  “major disaster” under the Stafford Act, which triggers specific types of  federal relief. The Stafford Act defines an emergency as any occasion or  instance for which, in the determination of the President, federal  assistance is needed to supplement state and local efforts and capabilities  to save lives and to protect property and public health and safety, or to  lessen or avert the threat of a catastrophe in any part of the United States.  Under an emergency declaration, the federal government has authority to  engage in various emergency response activities, debris removal,  temporary housing assistance, and the distribution of medicine, food, and  other consumables. The Stafford Act places a $5 million limit on federal  emergency assistance, but the President may exceed the limit, followed by  a report to Congress.
The Stafford Act defines a “major disaster” as any natural catastrophe or,  regardless of cause, any fire, flood, or explosion, in any part of the United  States, which the President determines causes damage of sufficient  severity and magnitude to warrant major disaster assistance under the  Stafford Act to supplement the efforts and available resources of states,  local governments, and disaster relief organizations in alleviating damage,  loss, hardship, or suffering. Under a major disaster declaration, the federal  government has the authority to engage in the same activities authorized  under an emergency declaration, but without the $5 million ceiling. In  addition, major disaster assistance includes a variety of assistance not  available in the context of an emergency. For example, in a major disaster,  the federal government may provide unemployment assistance, food  coupons to low-income households, and repair, restoration and  replacement of certain damaged facilities, among other things.
For Hurricane Katrina, the President issued emergency declarations under  the Stafford Act for Louisiana on August 27, 2005 and Mississippi and  Alabama on August 28, 2005. The President made major disaster  declarations for Florida on August 28, 2005, and Louisiana, Mississippi,  and Alabama on August 29, 2005, the same day that Hurricane Katrina  made final landfall in the affected states.
The Homeland Security Act of 2002 required the newly established DHS to  develop a comprehensive National Incident Management System (NIMS)  and a comprehensive National Response Plan (NRP). NIMS is intended to  provide a consistent framework for incident management at all  jurisdictional levels regardless of the cause, size, or complexity of the  situation and to define the roles and responsibilities of federal, state, and  local governments, and various first responder disciplines at each level  during an emergency event. NIMS established the Incident Command  System (ICS) as a standard incident management organization with five  functional areas—command, operations, planning, logistics, and  finance/administration—for management of all major incidents. It also  prescribes interoperable communications systems and preparedness  before an incident happens, including planning, training, and exercises.
The Homeland Security Act of 2002 also required DHS to consolidate  existing federal government emergency response plans into a single,  coordinated national response plan. In December 2004, DHS issued the  National Response Plan (NRP), intended to be an all-discipline, all-hazards  plan establishing a single, comprehensive framework for the management  of domestic incidents where federal involvement is necessary. It is to  operate within the framework of NIMS. The NRP only applies to incidents  of national significance, defined as an actual or potential high-impact  event that requires a coordinated and effective response by an appropriate  combination of federal, state, local, tribal, nongovernmental, and/or  private-sector entities in order to save lives and minimize damage, and  provide the basis for long-term community recovery and mitigation  activities. The NRP does not apply to the majority of incidents occurring  each year that are handled by local jurisdictions or agencies through  established authorities and existing plans under the planning assumption  that incidents are typically managed at the lowest possible geographic,  organizational, and jurisdictional level.
The NRP states that the Secretary of Homeland Security, as the principal  federal official for domestic incident management, designates incidents of  national significance, pursuant to the criteria in Homeland Security  Presidential Directive 5 (HSPD-5). HSPD-5 requires one or more of the  following to qualify as an incident of national significance:   (1) a federal department or agency acting under its own authority has  requested the assistance of the Secretary of Homeland Security, (2) the  resources of state and local authorities are overwhelmed and federal  assistance has been requested by the appropriate state and local  authorities, (3) more than one federal department or agency has become  substantially involved in responding to an incident, or (4) the Secretary of  Homeland Security has been directed to assume responsibility for  managing a domestic incident by the President.
The Secretary of Homeland Security provides overall coordination for  incidents of national significance. Under the NRP, a principal federal  official (PFO) is to be personally designated by the Secretary of Homeland  Security for a particular incident and is to be the primary point of contact  and provide local situational awareness for the secretary. Under the NRP,  the PFO is to coordinate the activities of the senior federal law  enforcement official for the incident, the federal coordinating officer  (FCO) who manages and coordinates federal resource support activities  related to Stafford Act disasters and emergencies, and other federal  officials involved in incident management activities acting under their own  authorities. The PFO does not have directive authority over these officials,  but is to play a coordinating function under the NRP. The Stafford Act  requires that a FCO be appointed to coordinate relief for major disasters  and emergencies declared by the President. The FCO retains this  coordination authority notwithstanding the appointment of a PFO under  the NRP.
The NRP can be partially or fully implemented in anticipation of or in  response to an incident of national significance. The NRP base plan  includes planning assumptions, roles and responsibilities, concept of  operations, and incident management actions. Annexes (i.e. appendixes)  to the NRP provide more detailed information on emergency support  functions such as transportation and communications and functional  processes and administrative requirements such as financial management  and international coordination. Incident annexes address contingency or  hazard situations that require specialized application of the NRP for  incidents of national significance.
The Catastrophic Incident Annex of the NRP references “catastrophic  incidents.” The NRP defines a catastrophic incident as any natural or  manmade incident, including terrorism, resulting in extraordinary levels of  mass casualties, damage, or disruption severely affecting the population,  infrastructure, environment, economy, national morale, and/or  government functions. A catastrophic incident could result in sustained  national impacts over a prolonged period of time; almost immediately  exceeds resources normally available to state, local, tribal, and private- sector authorities in the impacted area; and significantly interrupts  governmental operations and emergency services to such an extent that  national security could be threatened.
The Catastrophic Incident Annex describes an accelerated, proactive  national response to catastrophic incidents. The annex establishes  protocols to pre-identify and rapidly deploy key essential resources that  are expected to be urgently needed or required to save lives and contain  incidents. Expedited assistance can be provided in one or more areas,  such as mass care, housing, human services, urban search and rescue, and  public health and medical support.
A draft of a more detailed and operationally specific Catastrophic Incident  Supplement for the NRP’s Catastrophic Incident Annex had not been  approved at the time of Hurricane Katrina, although the NRP’s 120-day  schedule for implementing the supplement had passed. The draft  supplement is intended to provide the operational framework for  implementing the annex. The draft supplement, for example, includes  operations to be carried out by local, state, and federal responders;  detailed execution schedules and implementation strategies; functional  capability overviews (such as coverage for transportation support); and  key responsibilities of federal departments and agencies. The draft  supplement language says it is designed for catastrophic incidents that  occur with little or no notice, without an opportunity for advance planning  and positioning of resources. The Secretary of Homeland Security is to  make a catastrophic incident designation to activate the provisions of the  Catastrophic Incident Annex. Otherwise, the basic provisions of the NRP  will apply to the incident. The Secretary of Homeland Security declared  Hurricane Katrina an incident of national significance on August 30, 2005,  but never declared it a catastrophic incident.
I will now turn to the four major topics I identified at the beginning of my  testimony.
section_title: Leadership, Planning, Exercises, and Capabilities Underpin Catastrophic Preparation, Response, and Recovery
paragraphs: Four key themes, based on our preliminary work, underpin many of the  challenges encountered in the response to Hurricane Katrina and reflect  certain lessons learned from past catastrophes. These are generally  consistent with the themes I highlighted in a statement to the House Select  Committee. They include the central importance of (1) clearly defining  and communicating leadership roles, responsibilities, and lines of  authority for the response at all levels in advance of a catastrophic  disaster, (2) clarifying the procedures for activating the National Response  Plan and applying them to emerging catastrophic disasters, (3) conducting  strong advance planning and robust training and exercise programs to test  these plans in advance of a real disaster, and (4) strengthening response  and recovery capabilities for a catastrophic disaster, including those such  as emergency communications, continuity of essential government  services, and logistics and distribution systems underpinning citizen safety  and security. They have been among the topics covered in this committee’s  hearings and were also highlighted among the many factors in the House  Select Committee report and the White House report.
subsections: section_title: Leadership Roles, Responsibilities, and Lines of Authority Must Be Clearly Defined and Communicated in Advance of Catastrophic Disasters
paragraphs: In the event of a catastrophic disaster, the leadership roles,  responsibilities, and lines of authority for the response at all levels must be  clearly defined and effectively communicated in order to facilitate rapid  and effective decision making, especially in preparing for and in the early  hours and days after the disaster. During incidents of national significance,  including catastrophic disasters, the overall coordination of federal  incident management activities is executed through the Secretary of  Homeland Security. Other federal departments and agencies are to  cooperate with the secretary in the secretary’s domestic incident  management role.
There are three key roles in the management of a catastrophic disaster.  First, the Secretary of Homeland Security provides strategic, national  leadership. The Secretary of Homeland Security is to act as a focal point  for natural and manmade crises and emergency planning under the  provisions of the Homeland Security Act. In addition, HSPD-5, signed by  the President, also names the secretary as the principal federal official for  domestic incident management. This is consistent with our  recommendation in 1993 that a single individual directly responsible and  accountable to the President should be designated to act as the central  focal point to lead and coordinate the overall federal response in the event  of a catastrophic disaster. At the time of our recommendation in 1993,  FEMA was an independent agency. President Clinton elevated the FEMA  director to cabinet status in 1996. Subsequent passage of the Homeland  Security Act established the DHS secretary as the cabinet-level focal point  for natural and manmade crises and emergency planning. We view this as  a strategic role to coordinate federal activities and policy from a national  standpoint and be directly responsible and accountable to the President.
The second key role is the principal federal official (PFO) whom the  Secretary of Homeland Security designates to be the secretary’s  representative under the NRP structure and to coordinate the federal  response at an operational level. The third role is that of a federal  coordinating officer (FCO) which, under the Stafford Act, is to coordinate  relief for major disasters and emergencies declared by the President.
The Secretary of Homeland Security initially designated the head of FEMA  as the PFO, who appointed separate FCOs for Alabama, Louisiana, and  Mississippi for Hurricane Katrina. However, it appeared there were  shifting roles and responsibilities of the players in all 3 of these roles. Our  initial field work indicated this resulted in disjointed efforts of many  federal agencies involved in the response, a myriad of approaches and  processes for requesting and providing assistance, and confusion about  who should be advised of requests and what resources would be provided  within specific time frames.
The House Select Committee also found difficulties with roles and  responsibilities, including federal officials’ unfamiliarity with their roles  and responsibilities under the NRP and NIMS. The White House has made  numerous recommendations, including revising the NRP to address  situations that render state and local governments incapable of an  effective response, giving the PFO the authority to execute responsibilities  and coordinate federal response assets, and requiring agencies to develop  integrated operational plans, procedures, and capabilities for their support  to the base NRP and the NRP’s emergency support functions and support  annexes.
Consistent with the provisions of the Homeland Security Act and the  Stafford Act, we recommend that DHS clarify and communicate the roles  of the secretary, the PFO, and the FCO. If legislative changes are  considered, the roles and responsibilities should be clarified accordingly.
section_title: Procedures for Activating the NRP and Applying It to Emerging Catastrophic Disasters Should Be Clarified
paragraphs: The NRP distinguishes between incidents that require DHS coordination,  termed Incidents of National Significance, and the majority of incidents  occurring each year, such as snow storms, that are handled by responsible  jurisdictions or agencies through other established authorities and plans.  However, the NRP is not clear regarding what triggers an incident of  national significance. To illustrate this ambiguity, the NRP’s Planning  Assumptions provide that “all presidentially-declared disasters and  emergencies under the Stafford Act are considered Incidents of National  Significance,” indicating that they do not need to be declared as such by  the Secretary of Homeland Security. Elsewhere, the NRP suggest that the  Secretary must formally declare an incident of national significance in  consultation with other department and agencies, as appropriate.
The question of how and when an event becomes an incident of national  significance was also raised in the White House report on the federal  response to Hurricane Katrina. According to the White House report, the  NRP did not make clear whether the secretary must formally declare an  incident of national significance or, alternatively, whether such an incident  is automatically triggered when one or more of the HSPD-5 criteria  (discussed on page 7) are satisfied, including when the President declares  a disaster or emergency under the Stafford Act. In addition, the White  House report questioned whether an event becomes an incident of  national significance simply by satisfying an HSPD-5 criterion, or whether  additional considerations apply. The White House report observed that  since the NRP was adopted in December 2004, many parts of the NRP had  been used to various degrees and magnitudes for thirty declared Stafford  Act events to coordinate Federal assistance. Yet, the Secretary of  Homeland Security had never formally declared an Incident of National  Significance until Tuesday, August 30, 2005, after Hurricane Katrina made  final landfall.
We agree that the process and operational consequences of declaring an  incident of national significance should be further defined and clarified.  Without such clarification of the NRP, confusion will persist regarding  DHS’s activation of the NRP. We therefore recommend that DHS clarify  the NRP regarding whether the Secretary of Homeland Security must  formally declare an incident of national significance to activate the NRP,  and, if not, whether the secretary must take any specific actions when the  President, in effect, activates the NRP by declaring a Stafford Act  emergency or major disaster.
In addition, we believe that the NRP’s provisions regarding the proactive  response of the federal government to emerging catastrophic incidents  should be clarified. As I stated earlier, the NRP includes a Catastrophic  Incident Annex that describes an accelerated, proactive national response  to catastrophic incidents and establishes protocols to pre-identify and  rapidly deploy essential resources that are expected to be urgently needed  to save lives and contain incidents. At the time of Hurricane Katrina, a  draft of a more detailed and operationally specific Catastrophic Incident  Supplement to the annex had not been approved. Under the language of  the draft supplement, the annex would only apply to no-notice or short- notice catastrophic incidents, not incidents that may evolve or mature to  catastrophic magnitude, which could be the case with strengthening  hurricanes.
Because it is possible to respond to incidents maturing to catastrophic  magnitude in a more proactive manner than surprise catastrophic  incidents, it does not make sense to exclude evolving catastrophic  incidents from the scope of the annex’s coverage. The White House report  on the federal response to Hurricane Katrina also questioned this  exclusion. As the White House report states, “Ultimately, when a  catastrophic incident occurs, regardless of whether the catastrophe has  been a warned or is a surprise event, the Federal government should not  rely on the traditional layered approach and instead should proactively  provide, or ‘push,’ its capabilities and assistance directly to those in need.”
A proactive approach to catastrophic disasters when there is warning is  also in keeping with recommendations we made in 1993 following  Hurricane Andrew. At that time, from an administrative perspective, we  recommended that FEMA improve its catastrophic disaster response  capability by using existing authority to aggressively respond to  catastrophic disasters, assessing the extent of the damage, and then  advising state and local officials of identified needs and the federal  resources available to address them. From a legislative standpoint, we  recommended that Congress should consider giving federal agencies  explicit authority to take actions to prepare for catastrophic disasters  when there is warning. We continue to believe that actions such as these  are warranted.
section_title: Planning, Training, and Exercises Can Aid Preparation for Catastrophic Disasters
paragraphs: Madame Chairman, to increase the ability of the nation to prepare for,  respond to, and recover from catastrophic disasters such as Hurricane  Katrina, there should be strong advance planning, both within and among  responder organizations, as well as robust training and exercise programs  to test these plans in advance of a real disaster. By their very nature,  catastrophic disasters involve extraordinary levels of mass casualties,  damage, or disruption that likely will immediately overwhelm state and  local responders, circumstances that make sound planning for  catastrophic events all the more crucial. Our previous work on Hurricane  Andrew highlighted the importance of such plans to focus specifically on  catastrophic disasters.
Our initial review of the NRP base plan and its supporting catastrophic  annex as well as lessons based on Hurricane Katrina suggest that planning  must be strengthened to implement their provisions. Therefore, we  recommend that these documents should be supported and supplemented  by more detailed and robust operational implementation plans. Such  operational plans should, for example, further define and leverage any  military capabilities as might be needed in a catastrophic disaster. Prior  catastrophic disasters and the actual experience of Hurricane Katrina  show that DOD is likely to contribute substantial support to state and local  authorities, including search and rescue assets, evacuation assistance,  provision of supplies, damage assessment assets, and possibly helping to  ensure public safety. More detailed planning would provide greater  visibility and understanding of the types of support DOD will be expected  to provide following a catastrophic event, including the types of assistance  and capabilities that might be provided, what might be done proactively  and in response to specific requests, and how the efforts of the active duty  and National Guard would be integrated. We will be making several  recommendations to DOD to enhance its planning and response for future  events, in the areas of identifying specific active duty and National Guard  capabilities that would likely be available to respond to a catastrophe, and  integrating the active duty and National Guard response including Guard  units within and outside of the affected state. Planning also must explicitly  consider the need for, and management of, the contractor community.
In addition, regular training and periodic exercises provide a valuable way  to test emergency management plans. In our previous work on Hurricanes  Andrew and Hugo, we identified the need for the federal government to  upgrade training and exercises for state and local governments specifically  geared towards catastrophic disaster response. Hurricane Katrina  demonstrated the potential benefits of applying lessons learned from  training exercises and experiences with actual hurricanes as well as the  dangers of ignoring them. During our initial fieldwork, we found examples  of how an incomplete understanding of NRP and NIMS roles and  responsibilities could lead to misunderstandings, problems, and delays.  For example, we were told in Louisiana that in one city there did not  appear to be clarity in roles and responsibilities, with officials not knowing  what federal agencies were responsible for. In one example in Mississippi,  we were told that county and city officials were not implementing NIMS  due to a lack of understanding of its provisions.
A November 2005 report by DHS’s Office of Inspector General (OIG) on  the April 2005 “Top Officials 3 Exercise” noted that the exercise  highlighted—at all levels of government—a fundamental lack of  understanding regarding the principles and protocols set forth in the NRP  and NIMS, including confusion over the different roles and responsibilities  performed by the PFO and FCO. The report recommended that DHS  continue to train and exercise NRP and NIMS at all levels of government  and develop operating procedures that clearly define individual and  organizational roles and responsibilities under the NRP. We would see this  training and exercising effort as recognizing the role of joint decision  making and not result in a centralized, top-down process.
The 2004 “Hurricane Pam” planning exercise illustrates the benefits and  consequences of applying and not applying lessons learned from training  exercises and experiences with actual hurricanes for future catastrophic  disasters. This catastrophic hurricane exercise, sponsored by FEMA, was  to develop a response and recovery plan for a major hurricane that floods  New Orleans and the surrounding parishes and to identify any issues that  could not be resolved based on current capabilities. The weather scenario  involved a slow moving category 3 hurricane sustaining 120 mph winds at  landfall and generating a storm surge that inundated New Orleans under  15 to 20 feet of water. In addition to widespread flooding, the exercise  posed impacts of extensive evacuations and the resulting need to shelter  thousands of individuals left homeless after the storm, disposing of tons of  debris, and recreating school systems. We were told in Louisiana that the  exercise anticipated many of the events transpiring as the result of  Hurricane Katrina. The Hurricane Pam exercise and other planning  activities resulted in some action, but others were incomplete. For  example, efforts to finalize agreements with hospital and university  officials to create temporary medical operations staging areas around the  state did occur. Louisiana revised its contraflow evacuation plan.  However, plans for evacuating those with special needs and post-landfall  care and evacuation had not been finalized by the time Hurricane Katrina  made landfall. The House Select Committee also noted that the Hurricane  Pam exercise reflected recognition by all levels of government of the  dangers of a category 4 or 5 hurricane striking New Orleans.
The White House has made several recommendations regarding planning  and exercises to improve the response to catastrophic disasters such as  Hurricane Katrina. For example, the White House recommends that all  federal departments and agencies should develop emergency plans and a  response capability. Other White House recommendations are intended to  strengthen training, exercises, and lessons learned. To illustrate,  recommendations cover (1) strengthening Homeland Security Council  coordination of federal emergency training, exercises, and lessons learned,  (2) DHS conducting state and local officials’ training and exercises, and  (3) DHS establishing a national exercise and evaluation program. The  White House also recommended development of a comprehensive  homeland security professional development and education program.
We recommend that DHS provide strong oversight of federal, state, and  local planning, training, and exercises to ensure such activities fully  support preparedness, response, and recovery responsibilities at a  jurisdictional and regional basis. This should also include applying lessons  learned from actual major and catastrophic disasters. We will soon be  starting work examining DHS’s catastrophic planning initiatives, including  Hurricane Pam, in order to help identify more specific recommendations.
section_title: Emergency Management Capabilities Require Greater Emphasis for Catastrophic Response and Recovery
paragraphs: The experience with Hurricanes Katrina and Rita highlights critical  emergency management capabilities that must be ramped up from normal  disaster management levels. Our preliminary work suggests that while  many organizations provided significant support in these areas during the  response and recovery efforts, several key capabilities were not available  when needed or with the quantity or quality needed. When catastrophic  disaster occurs, significantly more capabilities—in terms of quantity and  quality—are needed. Our work is beginning to identify many examples of  where the lack of additional response or recovery capabilities, or the delay  in getting these capabilities to where they were needed, caused extended  suffering.
I want to emphasize that across these capabilities, streamlining,  simplifying, and expediting decision making should quickly replace  “business as usual” and the unquestioned following of long-standing  policies and operating procedures. We were told of many examples where  quick action could not occur as agencies followed procedures that  required extensive, time-consuming processes, delaying the delivery of  vital supplies and other assistance. When there is a catastrophic disaster,  temporarily suspending certain rules and regulations may be necessary in  order to expedite relief and recovery of the affected area, even if such a  suspension requires legislation. The key is to recognize when flexibility is  needed to meet response and recovery needs in a catastrophic disaster.
Continuity of essential government operations: Hurricane Katrina  exposed difficulties in continuing essential government operations,  particularly at the local level. In the devastated areas, local government  infrastructure was destroyed and essential government employees,  including many first responders, were evacuated or victimized by the  storms. Local officials in Mississippi and Louisiana told us of cases where  there was limited continuity of operations for public safety and service  agencies because both structures and equipment were destroyed or too  damaged to use. For example, one Mississippi county lost all of its public  buildings located south of Interstate 10. We were also told criminal justice  facilities in New Orleans and St Bernard parishes were disabled as both  jurisdictions had to evacuate jails damaged by flood waters.
Emergency telecommunications: Agencies affected by a catastrophic  disaster must first be operable, with sufficient communications to meet  everyday internal and emergency communication requirements. Once  operable, they then should have communications interoperability whereby  public safety agencies (police, fire, EMS) and service agencies (public  works, transportation, hospitals, etc.) can communicate within and across  agencies and jurisdictions in real time. The storms significantly damaged  or destroyed communications infrastructure affecting public safety and  security in Louisiana, Mississippi, and Alabama. This is an area where  military capabilities can be utilized.
Our work on interoperable communications identified problem definition,  performance goals and standards, and defining the roles of federal, state,  local government and other entities as the three principal challenges to  achieving effective interoperable communications for first responders. The  single greatest barrier to addressing the decades-old problems of  interoperable communications has been the lack of effective,  collaborative, interdisciplinary, and intergovernmental planning. No one  first-responder group or governmental agency can “fix” the  interoperability problems that face the nation. We believe that our 2004  recommendations to the Secretary of DHS are still appropriate: (1) work  with the Federal Communications Commission to develop a nationwide  database of interoperable communications frequencies and a common  nomenclature so that first responders from different disciplines and  jurisdictions can quickly identify shared frequencies when arriving at the  scene of an incident; (2) establish interoperability requirements whose  achievement can be measured; and (3) through grants, encourage states to  establish statewide bodies that will develop a comprehensive statewide  interoperable communications plan and condition the purchase of new  equipment on the adoption of such a plan.
Damage and needs assessment: Damage and needs assessment is the  capability to immediately conduct damage assessments of infrastructure  and to estimate services needed by disaster victims. The scope of the  devastation and the flooding in the New Orleans area made a  comprehensive damage assessment and estimate of services victims might  need very difficult. Clearly, the military has significant capability through a  range of reconnaissance aircraft and satellite imagery. However, while  some capabilities were employed, there had been no advance planning  among federal, state, and local responders as to how DOD would provide  these capabilities in the event of a catastrophic disaster.
Logistics: Logistics is the capability to identify, dispatch, mobilize, and  demobilize and to accurately track and record available critical resources  throughout all incident management phases. Our early work indicates that  logistics systems were often totally overwhelmed by Hurricane Katrina.  The result was that critical resources apparently were not available,  properly distributed, or provided in a timely manner. In addition,  acquisition efforts, while noteworthy given the scope of Hurricane Katrina,  indicated agencies needed additional capabilities to (1) adequately  anticipate requirements for needed goods and services, (2) clearly  communicate responsibilities across agencies and jurisdictions, and   (3) deploy sufficient numbers of personnel to provide contractor  oversight.
Evacuation: This capability involves evacuation to areas of safe refuge in  response to a potential or actual dangerous environment. Our early work  indicated that some evacuations were considered successful, but others  encountered serious challenges, including evacuating special needs  populations. Evacuating those in hospitals and nursing homes due to  Hurricane Katrina posed a special challenge. For example, although the  National Disaster Medical System (NDMS) is a mechanism through which  the federal government can provide assistance with patient evacuations,  NDMS has agreements with hospitals only and does not address the needs  of nursing homes.
Search and rescue: Search and rescue is the capability to coordinate and  conduct urban search and rescue response efforts for all hazards. Search  and rescue also requires a seamless transition from rescue to safe shelter.  The Coast Guard, state and local agencies, and military assets rescued  thousands in the aftermath of Hurricane Katrina. However, particularly in  New Orleans, those rescued may have been taken to high ground where,  because of flooding or roadway blockage, they spent hours or days  without shelter, food, or water.
Mass care (housing and human services): This is the capability to  provide immediate shelter, feeding centers, basic first aid, bulk  distribution of needed items, and related services to persons affected by a  large-scale incident, including special needs populations such as those  with physical or mental disabilities that need additional attention.  Charities and other organizations such as government agencies that  provide human services, supported by various federal programs, helped  meet the mass care needs of the hundreds of thousands of evacuees.  However, because the American Red Cross does not establish shelters in  areas that might become flooded or in structures that could be  compromised by strong winds, some Gulf Coast areas did not have  sufficient shelter facilities.
Volunteer management and donations: Volunteer management and  donations is the capability to effectively manage and deploy volunteers  and unsolicited donations. Federal and charity organization officials we  spoke to indicated that because of the catastrophic nature of the storms,  volunteers and donations, in some cases, were not well integrated into  response and recovery activities. In addition, federal agencies involved in  managing the international assistance were not prepared to coordinate,  receive, distribute, or account for the assistance. Agency officials involved  in the cash and in-kind assistance told us the agencies were not prepared  to accept international assistance for use in the United States and,  therefore, developed ad hoc processes to address this scenario. We will be  making several recommendations to the Departments of Homeland  Security, Defense, and State to improve preparedness in these areas.
Restoration of lifelines: Restoration of lifelines is the capability to  manage clearing and restoration activities such as demolition, repair,  reconstruction, and restoration of essential gas, electric, oil,  communications, water, wastewater and sewer, transportation and  transportation infrastructure, and other utilities. Because of the mass  devastation, restoration is proceeding slowly.
Economic assistance and services: Economic assistance and services is  the capability to meet the demands for cash assistance, human services  programs, educational services, and family and child welfare services. Our  preliminary work indicated that a number of federal and state programs  provided assistance and services to eligible individuals and families before  the catastrophic disaster. Significant ongoing assistance after the  catastrophic disaster has also been required.
Secretary Chertoff has announced plans to emphasize several of these  capabilities in the near term. For example, DHS will acquire a hardened  set of communications capabilities, including equipment and specialized  reconnaissance teams to improve awareness about conditions and events  unfolding during a disaster. It was clear that DHS did not have adequate  situational awareness of how Hurricane Katrina-caused conditions were  worsening and thus required additional federal response. As was noted  during a hearing before this committee, technological advances should  provide the capability to prevent or significantly reduce “the fog of war”  during a catastrophe. The secretary also has announced plans for better  logistics and debris removal capabilities.
The House Select Committee had findings in several of these areas, such  as medical care and evacuations, communications, emergency shelter and  temporary housing, and logistics and contracting systems. The White  House devoted a large number of its recommendations to capabilities. For  example, White House recommendations cover (1) developing a National  Emergency Communications Strategy and a modern, flexible, and  transparent logistics system, (2) reviewing and revising the NRP to ensure  effective integration of all federal search and rescue assets during disaster  response, (3) strengthening public health and medical command for  federal disaster response, and (4) assigning responsibility for coordinating  the provision of human services during disasters to the Department of  Health and Human Services.
Addressing these four themes—leadership; the clarity of the NRP; advance  planning, training, and exercises; and strengthening capabilities for  catastrophic events—will require developing priorities and making trade- offs, given finite resources. A risk management framework could aid  agency and congressional decision making on these issues.
section_title: Planning for a Catastrophic Disaster Calls for a Risk Management Approach
paragraphs: It is vital to have in place a risk management decision making approach to  develop federal capabilities and the expertise to use them to respond to a  catastrophic disaster. Given the likely costs, Congress should consider  using such an approach in deciding whether and how to invest in specific  capabilities for a catastrophic disaster.
subsections: section_title: Risk Management Is A Continuous Process
paragraphs: We have advocated a comprehensive risk management approach as a  framework for decision making. Risk involves three elements: (1) threat,  the probability that a specific type of event will occur; (2) the vulnerability  of people and specific assets to that particular event; and (3) the adverse  consequences that would result from the particular event should it occur.  Another closely related element is criticality, that is, the relative  importance of the assets involved, such as equipment, facilities, and  operations.
We define risk management as a continuous process of assessing risks,  taking actions to reduce, where possible, the potential that an adverse  event will occur; reducing vulnerabilities as appropriate; and putting steps  in place to reduce the consequences of any event that does occur. Risk  management addresses risks before mitigating actions have been applied,  as well as risk that remains after countermeasures have been taken. A risk  management framework links strategic goals to plans and budgets,  assesses the value and risks of various courses of actions as a tool for  setting priorities and allocating resources, and provides for the use of  performance measures to assess outcomes and adjust future actions as  needed. The goal of risk management is to integrate systematic concern  for risk into the normal cycle of agency decision making and  implementation.
section_title: Risk Management Can Aid in Investment Decisions for a Catastrophic Disaster
paragraphs: Risk management can be central to assessing the risk for catastrophic  disasters. Our risk management framework calls for the management of  risk based on careful analysis of all available risk information,  identification of alternatives for reducing risks through preparation and  response, selection among those alternatives, implementing choices,  monitoring their implementation, and continually using new information  to adjust and revise the assessments and actions as needed, all within  available resources. As I mentioned earlier, we have identified several key  capabilities that may be needed in the event of a catastrophic disaster such  as emergency telecommunications, damage and needs assessment, and  logistics. Given that resources are finite, the administration and Congress  should consider using a risk management approach in deciding whether  and how to invest in specific capabilities for a catastrophic disaster.
Some of the changes that the government will need to prepare for  catastrophic disasters are relatively inexpensive. Establishing more robust  surveillance and warning mechanisms should build on existing systems,  with communication of known information a key feature. Developing  more detailed plans for ramping up from a “normal” disaster to a  catastrophic disaster where warranted will impose additional costs.  Providing the needed training to ensure the readiness of first responders  and exercising the catastrophic disaster plans are much more costly  endeavors, as well as increasing the quantity and quality of the federal  government’s preparedness and response capabilities.
A catastrophic disaster may be anticipated based on past history and the  expectation that there will be another catastrophic disaster. Expectations,  based on a risk management approach, would call for building basic  capabilities and contingency planning to leverage other resources in  anticipation of a likely event. For example, a major earthquake in a major  metropolitan area in California has occurred in the past, is expected to  occur at some point in the future, and is likely to cause significant loss of  life and extensive damage to critical infrastructure. Flooding along the  Mississippi River also has occurred and would similarly cause widespread  destruction and disrupt the transport of goods along this major waterway.  Man-made catastrophic disasters that involve, for example, a nuclear  power plant or liquefied natural gas installations could cause catastrophic  damage and deaths across a wide area.
section_title: Specific Capabilities Can Be Identified
paragraphs: Developing preparedness for large-scale disasters is part of an overall  national preparedness effort that should integrate and define what we  need to do, where and based on what standards, how we should do it, and  how well we should do it. DHS developed three documents to address  these needs. The National Response Plan was designed to identify what  needs to be done, the National Incident Management System describes  how to manage what needs to be done in response to an emergency  incident, and the National Preparedness Goal is designed to define how  well we should do what needs to be done. Hurricane Katrina was the first  major test of the NRP.
These three documents, considered as a group, can be one basis for risk  analyses to assess the most productive and urgent investments in  emergency preparedness and response capabilities. The National  Preparedness Goal, whose development was required by Homeland  Security Presidential Directive 8 (HSPD-8), is particularly important. DHS  issued an interim version of the goal in March 2005 and an expanded draft  in December 2005. The December 2005 draft National Preparedness Goal  defines both the 37 major capabilities that first responders should possess  to prevent, respond, and recover from a wide range of major emergency  incidents and the most critical tasks associated with these capabilities.  These critical tasks are appropriately considered in risk analysis. An  inability to effectively perform these tasks would, by definition, have a  detrimental impact on effective prevention, response, and recovery  capabilities.
To identify the needed capabilities, DHS used 15 National Planning  Scenarios developed by the President’s Homeland Security Council that  included 12 terrorist attacks and 3 natural disasters—an earthquake, a  hurricane, and a pandemic influenza outbreak. According to DHS, the  planning scenarios are intended to illustrate the scope and magnitude of  large-scale, catastrophic emergency events for which the nation needs to  be prepared. Because no single jurisdiction or agency would be expected  to perform every preparedness task or have every capability to the same  degree, possession of critical capabilities could involve enhancing and  maintaining local resources, ensuring access to regional and federal  resources, or some combination of the two. Risk factors include  population and population density, the presence of critical infrastructure  and key resources, and location in high terrorist threat or high risk natural  disaster areas. The National Preparedness Goal includes seven national  priorities, including implementing the NIMS and NRP and expanding  regional collaboration. Those seven priorities are incorporated into DHS’s  fiscal year 2006 homeland security grant guidance. The guidance also adds  an eighth priority that emphasizes emergency operations and catastrophic  planning.
In earlier work on the National Preparedness Goal, we observed that if  properly planned and executed, the goal and its related products, such as  program implementation plans and requirements, may help guide the  development of realistic budget and resource plans for an all-hazards  national preparedness program. However, questions remain regarding  what should be expected in terms of basic capabilities for most disasters  compared to the expanded capabilities and mutual aid needed from other  jurisdictions to meet the demands of a catastrophic disaster.
HSPD-8 called for strengthening preparedness capabilities of federal, state,  and local entities. However, guidance on implementing the National  Preparedness Goal appears to have been targeted at state and urban area  jurisdictions. It does not appear that similar attention has been paid to  guidance for federal agencies and their progress in supporting the National  Preparedness Goal’s expectations. Consequently, we recommend that  DHS should take the lead in strengthening guidance for federal agencies  and monitoring their efforts to meet the National Preparedness Goal’s  provisions for federal agencies.
Our recommendation is consistent with those of the White House. The  White House has recommended that future preparedness of the federal,  state, and local authorities should be based on the risk, capabilities, and  needs structure of the National Preparedness Goal. More specifically, the  White House recommends that the National Preparedness Goal and its  target capabilities list should be used, for example, in (1) defining required  capabilities and what levels of those capabilities are needed, including  those within the purview of the federal government, (2) developing mutual  aid agreements and compacts informed by the National Preparedness  Goal’s requirements, and (3) developing strategies to meet required levels  of capabilities that prioritize investments on the basis of risk. We have  work underway to assess if the provisions of the National Preparedness  Goal will aid catastrophic disaster preparedness and NRP implementation.
section_title: A Focus on Assessing Planning and Capabilities Will Be Critical
paragraphs: In our work on the National Preparedness Goal, we also observed that  DHS’s assessment and reporting implementation plan, intended to  accurately identify the status of capabilities at the state, regional, and local  levels, is vital for establishing a baseline and providing an ongoing  feedback loop upon which decisions at multiple levels of government  about preparedness needs will rest. Assessment of catastrophic disaster  planning and capability needs will be a critical piece.
In the conference report to the Department of Homeland Security Fiscal  Year 2006 Appropriations Act, the conferees directed DHS to report on the  status of catastrophic planning, including mass evacuation planning in all  50 states and the 75 largest urban areas. In addition, the Safe,  Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for  Users required the Secretary of Transportation and the Secretary of  Homeland Security to jointly review and assess federal and state  evacuation plans for catastrophic hurricanes impacting the Gulf Coast  Region.
In response, DHS launched a nationwide review of state, territorial, and  urban area emergency and evacuation plans. In the first phase of the  review, each state and territory and urban area was to certify the status of  its emergency operations plans and identify when plans were last updated  and exercised. According to the DHS report on the first phase’s results, 56  states and territories and 72 urban areas responded. Fewer than half of  those reporting might have adequate planning for a catastrophic disaster.  Of those jurisdictions reporting that their base plan was consistent with  federal guidance and voluntary standards, 42 percent of the states and  territories and 36 percent of urban areas were confident that their plan  was adequate to manage a catastrophe. In a second phase of the review,  peer review teams are to validate the self-assessments, determine  requirements for planning assistance, collect best practices, and  recommend corrective actions. DHS plans to complete these peer reviews  by the end of April 2006 and report to the President and Congress before  June 1, 2006. The White House has recommended DHS establish a program  to measure and assess the effectiveness of preparedness capabilities on an  annual basis and recommend appropriate adjustments to the National  Preparedness Goal, capabilities, and yearly priorities for homeland  security grants. We are currently examining evacuation planning and  assistance, including the federal role in the emergency evacuation of  transportation-disadvantaged populations—including the elderly, disabled,  and low income individuals—and preparedness for the evacuation of  hospitals and nursing homes.
Similar to DHS’s overall national preparedness planning, no single state or  area should be expected to have the same capability to prepare for a  catastrophic disaster. The stand-up and sustaining of capabilities should  be based on a risk assessment that would call for examining what  vulnerabilities from a potential catastrophic disaster require attention and  how they should be addressed within available resources and with  contingency planning. Periodic assessments should determine if plans  remain viable, actual capabilities match planned capabilities, and if  contingency planning still is appropriate.
I would suggest that before the Congress and the Administration embark  on implementing the more expensive aspects of preparing for a  catastrophic disaster, policymakers should discuss in a timely fashion and  reach consensus on the following issues:    What is known about the likelihood of a catastrophic disaster occurrence  in specific areas of the nation? For example, what are the odds that more  category 4 and 5 hurricanes will strike specific areas of the Gulf and East  Coasts? How likely is it that California or other earthquake-prone areas  will experience “the big one?” What are the chances that a nuclear plant  will suffer an incident that results in massive radiation exposure?
How vulnerable are the areas that would be affected by these catastrophic  disasters and what would be the consequences, in terms of human life,  economic impact, and other generally accepted measures?
What are the costs and potential benefits of actions governments can take  to mitigate the occurrence and consequences of these disasters? For  example, in the case of catastrophic hurricanes, what are the costs and  benefits of greater and more precise early warnings, better resourced and  exercised evacuation plans, more pre-positioned equipment such as  generators and water, more designated shelters and medical care  resources, enhanced health care operations, and better mutual aid  planning and specific agreements?
Finally, based on all of the above, what are the most prudent courses of  action for various levels of government and their partners, such as private  industry and nongovernmental organizations, in preparing for and  responding to catastrophic disasters?
These are not easily answered questions. However, given the enormous  potential costs and the increasing demands on federal discretionary  funding, these are some of the questions that policymakers should  explicitly discuss, reach consensus, and periodically reassess as events  and considerations change. If federal funds will be used to increase first  responders’ capabilities for catastrophic disasters, we suggest that the  Congress require the use of risk management principles to assess state and  urban area investments in capabilities to respond to a catastrophic  disaster.
section_title: Organizational Placement Has Been Raised as a Key FEMA Performance Factor
paragraphs: Because of FEMA’s mission performance during Hurricane Katrina,  concerns have been raised regarding the agency’s organizational  placement, including whether it should be disbanded and functions moved  to other agencies, remain within the Department of Homeland Security, or  again become an independent agency. Importantly, other factors, such as  the experience of and training provided to FEMA leadership and adequacy  of resources may be more important to FEMA’s future success than its  organizational placement.
subsections: section_title: Factors Other Than Organizational Placement May Impact FEMA’s Performance
paragraphs: Organizational changes, such as separating FEMA from DHS, are often  viewed as a quick fix to address performance issues. Based on our  institutional knowledge regarding organizational performance factors,  organizational changes alone may not adequately address underlying  systemic conditions that result in an organization’s performance problem.  Conditions underlying FEMA’s performance during Hurricane Katrina  could involve the experience and training of DHS or FEMA leadership; the  clarity of FEMA’s mission and related responsibilities and authorities to  achieve mission performance expectations; the adequacy of its human,  financial, and technological resources; and the effectiveness of planning,  exercises, and related partnerships.
These factors have been highlighted, for example, by the House Select  Committee which noted (1) senior officials were ill prepared due to their  lack of experience and knowledge of the required roles and  responsibilities prescribed by the NRP, (2) DHS and FEMA lacked  adequately trained and experienced staff for the Katrina response,  observing that FEMA had lost, since 2002, a number of its top disaster  specialists, senior leaders, and experienced personnel, described as  “FEMA brain drain,” and that even before Hurricane Katrina, FEMA  suffered from a lack of sufficiently trained procurement professionals, and  (3) FEMA’s logistics systems were unable to support large-scale logistical  challenges. In addition, White House recommendations covered areas  such as DHS expertise and experience, development of a national crisis  communications system, and development of DHS regions that are fully  staffed, trained, and equipped to manage and coordinate all preparedness  activities and any emergency that may require a substantial federal  response.
Factors such as the experience and training of leadership and the  adequacy of resources can lead to performance difficulties pointed out in  the House Select Committee, the White House report, and in testimony  before this committee. These difficulties would not, we believe, be fixed  by simply moving FEMA to an independent status. Indeed, we know that  many of lessons learned from Hurricane Katrina were acted on for  Hurricane Rita, with a much better response effort, indicating that  organizational change is not the primary key to success. Such factors, we  believe, should be more carefully assessed and action taken where  appropriate to strengthen any weaknesses in FEMA’s leadership and  resources.
section_title: Certain Criteria Could Be Used if a Change in FEMA’s Organizational Placement is Considered
paragraphs: However, if an organizational change remains under consideration, our  past work could be helpful. Before the formation of DHS, I testified before  the House Select Committee on Homeland Security that reorganizations of  government agencies frequently encounter start-up problems and  unanticipated consequences and are unlikely to fully overcome obstacles  and challenges, and may require additional modifications in the future. I  also presented specific criteria to evaluate whether individual agencies or  programs should be included or excluded from the proposed department.  Those criteria included, for example, mission relevancy, similar goals and  objectives, leveraging the effectiveness of other agencies and programs or  the new department as a whole, and gains in efficiency and effectiveness  through eliminating duplications and overlaps. I also stated that Congress  should consider not only the mission and roles that agencies fulfill today,  but the mission and role that they should fulfill in the coming years.
Some of these criteria are appropriate today for discussing FEMA’s future,  and I would suggest that they might be useful if a change in FEMA’s  organizational placement is under consideration. For example, Congress  might consider whether or how moving FEMA out of DHS would impact  DHS’s mission, as stated in the Homeland Security Act of 2002, of acting as  a focal point for natural and manmade crises and emergency planning.  DHS’s Emergency Preparedness and Response Directorate—primarily  FEMA—was to help ensure the effectiveness of emergency response  providers to terrorist attacks, major disasters, and other emergencies.  Removing FEMA from DHS might impact the ability of the department and  its remaining components and FEMA itself in fully addressing the close  links between preparedness, prevention, response, and recovery for all  hazards.
The dispersion of responsibility for all hazards preparedness and response  across more than one federal agency was a problem we identified during  the formation of DHS. FEMA was established in 1979 to consolidate  federal emergency preparedness mitigation, and response in a single  federal agency. Its responsibilities were to include, among other things,  the coordination of civil defense and civil emergency planning and the  coordination of federal disaster relief. FEMA responded to a wide range of  disasters, including floods, hurricanes, earthquakes, hazardous material  accidents, nuclear accidents, and biological, chemical, and nuclear  attacks. However, when Congress created DHS, it separated FEMA’s  responsibilities for preparedness and response activities into two  directorates. Responsibility for preparedness for terrorism disasters was  placed in the department’s Border and Transportation Security  Directorate, which included FEMA’s Office of National Preparedness.  Other types of FEMA disaster preparedness and response efforts were  transferred to the department’s Emergency Preparedness and Response  Directorate. In January 2003, we observed that this organizational  arrangement would challenge FEMA in ensuring the effective coordination  of preparedness and response efforts and enhancing the provision and  management of disaster assistance for efficient and effective response.
A division of responsibility remains under the recent DHS reorganization  resulting from Secretary Chertoff’s Second Stage Review (2SR), with  preparedness efforts—including planning, training, exercising, and  funding—consolidated into a Preparedness Directorate. FEMA reports  directly to the Secretary of Homeland Security for response and recovery  missions. Secretary Chertoff has explained the reorganization would focus  FEMA on its historic mission of response and recovery.
If FEMA were to become independent of DHS, then a comprehensive  approach to preparedness, response, and recovery may become even more  difficult to maintain. The lack of a single department or agency with  responsibility for preparedness, response, and recovery also could  jeopardize clear federal leadership and assistance for state and local  governments. These entities would have two primary points of contact,  two points of guidance and regulation, two points of funding  opportunities, and two points of assistance and oversight.  Nongovernmental and private sector partners in all hazards preparedness  would be similarly affected.
Other organizational changes are also being considered. The White House  report on lessons learned from Hurricane Katrina recommended keeping  FEMA within DHS, but allows for other organizational changes, such as  creating new positions and offices within DHS and transferring the  National Disaster Medical System from DHS to the Department of Health  and Human Services.
Lastly, I believe we should bear in mind that the Department of Homeland  Security is only three years old this month. In my testimony on the  formation of DHS in 2002, I stated that often it has taken many years for  the consolidated functions in new departments to effectively build on their  combined strengths.
section_title: Long Term Rebuilding Efforts Raise Issues for Congressional Consideration
paragraphs: Madame Chairman, the federal government will be a major partner in the  longer-term rebuilding of the Gulf Coast because of the widespread  damage and economic impact. In support of state and local efforts, the  federal role in rebuilding will be particularly important for transportation  and health infrastructures and federal facilities. In addition, federal  programs will face financial difficulties and there is uncertainty  concerning the impact of catastrophic disasters on the availability and  affordability of insurance. Long term rebuilding raises issues concerning  the need for consensus on what rebuilding should be done, where and  based on what standards, who will pay for what, and what oversight is  needed to ensure federal funds are spent for their intended purposes.
subsections: section_title: The Hurricanes’ Destruction Resulted in Widespread Adverse Economic Disruptions
paragraphs: Hurricane Katrina destroyed considerable numbers of residential  structures; consumer durable goods, such as motor vehicles, household  furnishings, and appliances; and business structures and equipment,  particularly in the energy and petrochemical industries. Hurricane Rita  appears to have had a smaller impact on residential structures and  consumer durable goods, and its damage to the energy industry may be as  great as or greater than Hurricane Katrina’s.
Some federal agencies have developed programs to initially identify and  assess the recovery needs of the region. For example, the U.S.  Environmental Protection Agency (EPA) and the Centers for Disease  Control and Prevention (CDC), created the Environmental Health Needs  Assessment and Habitability Taskforce. This taskforce was charged with  identifying the overarching environmental health issues faced by New  Orleans to re-inhabit the city. According to the taskforce, the most striking  feature of the Hurricane Katrina catastrophic disaster in New Orleans is  the array of key environmental health and infrastructure factors affected  all at once. All key environmental health and related services are being  reestablished, and this work needs to be done in a very coordinated and  well-planned way. Full restoration of drinking water systems and  wastewater treatment systems will be delayed by the many disruptions in  the distribution and collection systems and by the need for upgrade and  repairs in older systems. The task force also noted timeline for debris  treatment, disposal, containment, and transport, as well as for the testing  of potentially contaminated soil, will also slow or accelerate the rate at  which New Orleans can be re-inhabited.
The task force found that restoration of the city’s housing infrastructure is  its most complex issue. Housing is likely the most critical issue in re- inhabiting the city because of factors such as the large percentage of city  housing that was flooded and may not be viable, as well as the large  proportion of the city population that is displaced with some residents a  significant distance away from New Orleans or not intending to return,  according to the task force. EPA and other federal partners are continuing  to assess and address environmental and health issues that will impact the  recovery and rebuilding of the Gulf Coast.
The ongoing progress of recovery and rebuilding is being studied by  several organizations. For example, the Brookings Institute created an  index of economic and social indicators measuring the impact of  rebuilding efforts in Orleans Parish, the New Orleans metropolitan area,  Louisiana, and Mississippi. Brookings’ February 1, 2006 report noted that  over five months since Hurricane Katrina made landfall, New Orleans  lacks enough essential services to support all of its returning residents and  the area continues to lose workers. More specifically, the report observed  that only 32 percent of the city’s hospitals are open. Only 15 percent of the  city’s schools have reopened and some of those are reporting difficulty  accommodating demand. Nearly 750,000 households remain displaced.  Mortgage delinquency rates rose between the second and third quarters of  2005. In the state of Louisiana, nearly 1 in 4 mortgages is 30 days or more  past due. Currently, the New Orleans metro area lost 42,000 people in its  labor force between November and December, while the state of Louisiana  lost over 100,000 people. Although the state of Louisiana created over  11,000 jobs between November and December, it lost over 100,000 people  in its labor force. Mississippi lost 2,000 jobs and about 2,000 of its labor  force. According to the Brookings’ analysis, the slow pace of recovery  strongly suggests that the city and state will be unable to restore essential  services on their own, and require direct federal assistance to do so.
section_title: Rebuilding Strategies Are Underway
paragraphs: In Louisiana and Mississippi, several efforts are underway to develop long- term rebuilding strategies in these states. In Louisiana, the governor and  the mayor of New Orleans have charged different groups with guiding  various aspects of the rebuilding efforts. Under the mayor, the Bring New  Orleans Back Commission is intended to help New Orleans develop a  “Master Plan” to include recommendations for rebuilding the city. The  commission has issued several final reports, including those on urban  planning, education, health and social services, and infrastructure. At the  state level, the Louisiana Recovery Authority is the planning and  coordinating body created by the Governor to assist in implementing the  state’s vision for the recovery of Louisiana. Working in collaboration with  local, state and federal agencies, the authority serves to address short-term  recovery needs and guide the long-term planning process.
In Mississippi, the Governor’s Commission on Recovery, Rebuilding and  Renewal was formed to develop a strategy for rebuilding the affected  areas of Mississippi. Developed as an advisory body, the commission is  intended to solicit the input of local leaders and facilitate decision making  in their regions. In early January the commission released a report with  numerous recommendations intended to guide Mississippi’s post-Katrina  rebuilding. The report recommends, for example, that local governments  immediately adopt revised flood maps and begin assessing and revising  their flood zone management ordinances and building requirements. In  addition, the report suggests ways communities can tap into federal, state,  and private funding sources to accomplish some of the report’s goals.
On November 1, 2005, the President issued Executive Order 13390, which  directed the creation of a central figure in the administration’s efforts to  support the Gulf Coast recovery and rebuilding phases. Specifically, the  President directed the Secretary of Homeland Security to establish within  the department the position of Coordinator of Federal Support for the  Recovery and Rebuilding of the Gulf Coast region. The federal  coordinator, Donald Powell, is responsible for developing principles and  goals and leading the development and monitoring of the implementation  of specific federal support. The coordinator also serves as the focal point  for managing information flow, requests for actions, and discussions with  the Congress, state and local governments, the private sector, and  community leaders.
Madame Chairman, we need to make sure that rebuilding in the Gulf Coast  should not replace that which was built in the past to 20th century  standards, but be built for the future and to 21st century standards. State  and local officials will have the lead on determining the future needs of the  Gulf Coast. However, the federal government should be a willing partner  in the rebuilding strategies so we build better than before and in  anticipation of future catastrophic events.
Now, I would like to turn to more specifically discuss rebuilding  transportation and health infrastructures and federal facilities.
section_title: Transportation Infrastructure Was Significantly Damaged and Poses Major Cost and Funding Concerns
paragraphs: Transportation infrastructure destruction will have a considerable impact  on federal programs. The hurricanes destroyed significant amounts of the  region’s transportation infrastructure. The largest transportation capital  costs will be associated with reconstruction of highways and bridges— Hurricanes Katrina, Rita, and Wilma resulted in about $2.7 billion in  needed repairs to roads on the federal-aid highway system. Hurricane  Katrina resulted in the bulk of this cost, with about $2.1 billion in highway  damage. Louisiana, Mississippi, and Florida suffered the vast majority of  the highway damage. Federal Highway Administration (FHWA) officials  said that because many roads have been submerged, determination of the  full extent of highway damage will depend on the results of testing.
FHWA works with the states to develop these estimates, and funding for  repair and reconstruction comes through FHWA’s Emergency Relief  Program. Under this program, states are reimbursed the cost of repairs  and reconstruction of the existing highway facilities, and improvements  are generally not allowed. However, bringing a facility up to current  highway design standards is allowed. Only roads on the federal-aid  highway system are eligible for funding. A large backlog of funding  requests to this program existed prior to the hurricanes, about   $650 million pre-Katrina, resulting in a total state demand for emergency  funds of about $2.85 billion. In its fiscal year 2006 Defense Appropriations  Act, Congress appropriated $2.75 billion to the FHWA Emergency Relief  Program. These funds are available for both the 2005 hurricanes and other  emergency projects. We plan to review the FHWA Emergency Relief  Program and related surface transportation financing issues that have  arisen as a result of the hurricanes.
Transit systems in the region sustained considerable damage, especially in  New Orleans, where most of the transit fleet was lost. This included three  bus garages, an operations and maintenance facility, much of the trolley  system, and a majority of the city’s bus fleet. In addition, the population of  Baton Rouge roughly doubled in a matter of days, which presented an  unprecedented transit problem for that city. While no transit program  comparable to the FHWA Emergency Relief Program exists, FEMA  provided $47 million under a mission assignment to help provide basic  transit services within and between Baton Rouge and New Orleans.
Ports in the region also suffered significant damage. The Port of New  Orleans estimated reconstruction and relocation needs of $435 million to  cover damages sustained from Hurricane Katrina, assuming $75 million  would be funded by insurance claims or FEMA reimbursements. The  remaining $360 million is unfunded. The Port of Gulfport was also hard hit,  and while it is still developing estimates, according to the port director,  reconstruction will likely total between $300 million and $400 million. Part  of these costs will be covered by insurance and revenues from resumed  port operations. According to officials from other ports in the region, they  also sustained damage, though not of this magnitude. For example, the  Port of Mobile sustained $28 million in damages, while other Louisiana  ports, such as Port Fourchon and the Port of South Louisiana, estimate  damages of $7 million and $2 million respectively. We have initiated a  review of how ports mitigate their vulnerability to natural disasters, what  lessons have been learned, and what the potential federal role may be in  mitigating port vulnerability.
A number of railroads suffered damage from Hurricane Katrina. The large  railroads have nearly completed repairs to their systems, while a number  of smaller short lines are in the process of repairing lines. These costs are  currently borne by the railroads themselves, and the Department of  Transportation does not have estimates of the damages. However, a  financial statement from the CSX railroad estimated damages from  Hurricane Katrina to that railroad’s assets at over $40 million.
Numerous airports in the region were affected by the hurricanes. The  Federal Aviation Administration (FAA) estimates that about $100 million  will be needed from the Airport Improvement Program to pay for damage.
In addition, FAA estimated that its facilities sustained about $41 million in  damage, for a total of $141 million.
section_title: Health Care Infrastructure Was Significantly Damaged
paragraphs: The health care infrastructure in the New Orleans area, including  emergency, hospital and clinic facilities, was significantly damaged by  Hurricane Katrina. The city is struggling to restore some capacity to meet  the immediate needs of the population currently there. Moreover,  numerous decisions that will need to be made on how to rebuild the health  care system. The decisions are complicated by several factors, including  the need to improve efficiency by moving away from New Orleans  hospital-centric system and uncertainty about how many people will  return to New Orleans and where they will settle.
The damage inflicted by Hurricane Katrina on the New Orleans health  system was severe. In particular, the Medical Center of Louisiana at New  Orleans (MCLNO), which included Charity and University Hospitals, was  forced to close its doors. MCLNO operated the only Level I trauma unit  along the Gulf Coast. With its closure, the closest Level I trauma units are  in Shreveport, Louisiana, Houston, Texas, and Birmingham, Alabama. In  addition, MCLNO provided more than 25,000 inpatient admissions, over  300,000 clinic visits and 135,000 emergency visits in fiscal year 2004. It was  the primary safety net hospital for many local residents, and about half of  its patients were uninsured and about one-third were covered by Medicaid.  Under the Stafford Act, Charity Hospital is eligible for federal funds to  repair Hurricane Katrina related damage. These funds, administered under  FEMA’s Public Assistance Program, would be available to defray a portion  of the cost to rebuild or repair Charity Hospital. FEMA and Louisiana State  University, which owns Charity Hospital, have prepared estimates of the  cost to repair the hospital that differ considerably in their assumptions and  conclusions, and no decision has been made as to whether to rebuild or  repair the facility.
Other health services in New Orleans were also severely damaged,  including hospitals, emergency services, and safety net clinics.
Hospitals: The number of staffed hospital beds in the City of New  Orleans was about 80 percent less in February 2006 than before  Hurricane Katrina, according to figures submitted daily by  hospitals to an internet database about their bed capacity. Of the  nine acute care hospitals in the city prior to Katrina, only 3 had re- opened at a capacity of approximately 456 staffed beds as of  February 22, 2006.
Emergency Care: Increasing demand has been reported at the  open emergency departments and has led to slow unloading of  patients from ambulances and to patients being housed in the  emergency department because beds were not available. For  example, according to data reported by hospitals on February 22,  2006, wait times for emergency medical services (EMS) vehicles to  offload stable patients into emergency departments varied from no  wait to as long as 2 hours at two facilities, and 38 patients had been  admitted and were housed in the emergency department.
Safety Net Clinics: More than three-fourths of the safety net  clinics in the New Orleans area were closed, and many of those  that were open had limited capacity, according to data gathered by  officials at the Louisiana Department of Health and Hospitals  (DHH). For example, prior to Katrina, 90 clinics were in operation,  including 70 various clinics run by MCLNO, with the remainder  federally qualified health centers, mental health or addictive  disorder clinics, or other specialty clinics. Post-hurricane,   19 clinics were operating according to DHH figures, generally  operating at less than 50 percent of pre-Katrina capacity.
In addition to the severe damage sustained by health facilities, maintaining  and attracting the workforce is also a serious issue for local officials. An  estimated 3,200 physicians lived in the metropolitan area before Hurricane  Katrina, with 2,664 of those physicians residing in New Orleans itself,  according to DHH figures. We were unable to obtain an estimate of how  many physicians are currently in New Orleans. Hospital officials said they  faced a shortage of support staff, such as food service or janitorial  workers, who were unable to return due to a lack of housing or were being  offered higher wages at hotels and restaurants.
As the city struggles to restore the health system in New Orleans, long- term decisions on how to rebuild it are affected by questions about  whether the health system should be rebuilt to its pre-Katrina  configuration and uncertainties about the returning population. Some  health policy researchers have noted that the pre-Katrina health system in  New Orleans needed improvement. Some local officials have also  suggested that the health care situation prior to the hurricane was less  than ideal and the city has a chance to rebuild a better system. Also,  uncertainty about how quickly the population would return to New  Orleans, as well as who would return and where people will settle, poses  difficult challenges for local officials to plan the restoration of health  services, such as how much capacity will be required and where to locate  services.
Over the long term, building a new health care system will be vital to  attract people back to New Orleans and ensure its recovery. State, local  and federal governments all have important roles to play in the recovery  process. At the state and local levels, commissions to plan for the future  health care system have been established, and one has completed its work.  The Bring New Orleans Back Commission issued recommendations  shifting the focus, to the degree possible, toward ambulatory care,  wellness and preventive medicine, health promotion and chronic disease  prevention and away from institutional care; maintaining a university  teaching hospital in New Orleans; and building capacity for electronic  medical records. The commission also noted the difficulty of doing  effective planning without reliable information on the population and what  segments of the population will return. The Louisiana Recovery Authority  included one task force dedicated to health care issues. The NRP also  gives the Department of Health and Human Services a support role under  long-term community recovery and mitigation to enable community  recovery from the long-term consequences of a large-scale incident. We  will be following HHS’ efforts to fulfill this role in the coming months.
section_title: Federal Facilities Were Damaged or Destroyed
paragraphs: Several federal agencies had their facilities damaged or destroyed by the  hurricanes and may face significant costs to repair or replace them,  although these costs are relatively small in relation to those I just  discussed. The Department of Veterans Affairs (VA) estimated damage to  its medical centers in New Orleans and Biloxi at $170 million and   $50.7 million respectively. VA’s Gulfport hospital complex suffered  catastrophic damage and will not be rebuilt since VA had already planned  to close it. The National Aeronautics and Space Administration estimated  the cost of facility repair at the Stennis Space Center in Mississippi and  Michoud Assembly Facility in New Orleans at $84 million and $69 million  respectively. The General Services Administration estimated the cost of  repairing its owned and leased facilities and leasing alternative space at  $60 million. The U.S. Postal Service estimated the cost of facility repair  from Hurricane Katrina at $57 million. The Department of Interior  estimated damage to facilities, which includes damages to buildings,  phone systems, electrical systems, and information technology systems  among other things, at about $41 million. In addition, there was damage to  military bases and to shipyard repair facilities.
section_title: Federal Flood Insurance Program Faces Record Claims and Financial Difficulties
paragraphs: The federal flood insurance program faces major financial difficulties  challenges as the Gulf Coast recovers. The program is essentially  bankrupt. FEMA officials estimate that Hurricanes Katrina and Rita will  result in flood insurance claims of about $23 billion, far surpassing the  total amount of claims paid in the entire history of the National Flood  Insurance Program (NFIP) through 2004.
These storms have presented, among other challenges for the NFIP, the  need to adjust a record number of claims, many for properties that were  inaccessible for weeks after the flooding occurred, and the need to borrow  funds from the U.S. Treasury to pay the settlements due to policyholders.  Almost 87,000 loss claims totaling over $8 billion were paid for Hurricane  Katrina claims in Alabama, Florida, Mississippi, and Louisiana through  November 30, 2005. By comparison, in 2004, the previous record year, the  NFIP paid about $1.95 billion in claims on flood events, including  Hurricanes Charley, Frances, Ivan, and Jeanne that caused major damage  in Florida and other East Coast and Gulf Coast states. Though numbers  are not finalized, a FEMA official said that by the end of December, 2005,  more than 70 percent of claims for Hurricanes Katrina, Rita, and Wilma  had been paid totaling more than $11 billion.
The amount paid per claim for flood damage in Hurricane Katrina ranged  from a high of $130,281 in Mississippi to a low of $17,727 per claim in  Florida. In Louisiana, where more than three fourths of the claims were  filed, the average amount paid per claim was $92,549. A FEMA official  noted that claims for total losses were paid quickly, so the average amount  paid per claim may be less when all claims are settled. The average  amount paid per claim for damage from Hurricane Rita was $52,185 in  Louisiana and $24,489 in Texas.
The magnitude and severity of the flood losses from Hurricanes Katrina  and Rita overwhelmed the ability of the NFIP to absorb the costs of paying  claims, providing an illustration of the extent to which the federal  government is exposed to claims coverage in catastrophic loss years. As of  March 1, 2006, FEMA’s authority to borrow from the U.S. Treasury was  increased from $1.5 billion prior to the 2004 hurricane season to   $18.5 billion through fiscal year 2008. While no determinations have been  made about whether the NFIP will repay any of the debt, it is unlikely that  the program could generate sufficient revenues to cover the enormous  losses.
Until the 2004 hurricane season, FEMA had exercised its borrowing  authority three times in the last decade when losses exceeded available  fund balances. In each instance, FEMA repaid the funds with interest.  According to FEMA officials, as of August 31, 2005, FEMA had outstanding  borrowing of $225 million with cash on hand totaling $289 million. FEMA  had substantially repaid the borrowing it had undertaken to pay losses  incurred for the 2004 hurricane season that, until Hurricane Katrina  struck, was the worst hurricane season on record for the NFIP. FEMA’s  current debt with the U.S. Treasury is almost entirely for payment from  flood events that occurred in 2005. We currently have work underway  examining the challenges facing the NFIP and options for improving the  program.
Flood maps are the foundation of the NFIP. They identify the areas at risk  of flooding, and accurate, updated flood maps are a critical component for  devastated communities in Mississippi and Louisiana, in particular, for  making decisions about where and how to rebuild. Thus, new maps for  these areas need to be expedited and completed as soon as possible.
As of January 2006, FEMA had not yet fully implemented provisions of the  Flood Insurance Reform Act of 2004, including establishing a regulatory  appeals process for claimants and establishing minimum education and  training requirements for insurance agents who sell NFIP policies. These  reforms should also be completed expeditiously, and we have  recommended that FEMA develop documented plans with milestones for  implementing the reforms required by the 2004 legislation.
section_title: The Small Business Administration’s Disaster Loan Program Also Faces Financial Concerns
paragraphs: We have initiated work to identify and assess the factors that have affected  the Small Business Administration’s (SBA) ability to respond to disaster  victims through its disaster loan program in a timely manner. As the  primary federal lender to disaster victims, including individual  homeowners, renters, and businesses, SBA’s ability to process and  disburse loans in a timely manner is critical to the recovery of the Gulf  Coast region. As of February 25, 2006, SBA had mailed out more than 1.6  million loan applications, received over 337,800 completed applications,  processed more than 230,900 applications, and disbursed about $426.8  million in disaster loan funds. Although SBA’s current goal is to process  loan applications within seven to 21 days, as of February 25, 2006, SBA  faced a backlog of about 103,300 applications in loan processing pending a  final decision, and the average age of these applications is about 94 days.  At the average rate SBA processed loans during the past month, it will take  the agency 51 days to process its current backlog. However, this figure will  be further affected by the number of new loan applications that are being  received daily. SBA also faces a backlog of more than 37,100 loan  applications that have been approved but have not been closed or fully  disbursed. As a result, disaster victims in the Gulf Region have not been  receiving timely assistance in recovering from this disaster and rebuilding  their lives.
Based on our preliminary analysis of SBA’s disaster loan origination  process, we have identified several factors that have affected SBA’s ability  to provide a timely response to Gulf Coast disaster victims. First, the  volume of loan applications SBA mailed out and received has far exceeded  any previous disaster. Compared with the Florida hurricanes of 2004 or  the 1994 Northridge earthquake, the hurricanes that hit the Gulf Coast in  2005 resulted in roughly 2 to 3 times as many loan applications issued.  Second, although SBA’s new disaster loan processing system provides  opportunities to streamline the loan origination process, it has  experienced numerous outages and slow response times in accessing  information. However, we have not yet determined the duration and  impact of these outages on processing. SBA officials have attributed many  of these problems to a combination of hardware and telecommunications  capacity limitations as well as the level of service SBA has received from  its contractors. Third, SBA’s planning efforts to address a disaster of this  magnitude appear to have been inadequate. Although SBA’s disaster  planning efforts focused primarily on responding to a disaster the size of  the Northridge earthquake, SBA officials said that it initially lacked the  critical resources such as office space, staff, phones, computers, and other  resources to process loans for this disaster. SBA has participated in  disaster simulations only on a limited basis and it is unclear whether  previous disaster simulations of category 4 hurricanes hitting the New  Orleans area were considered.
We are also assessing other factors that have affected SBA’s ability to  provide timely loans to the disaster victims in the Gulf region including  workforce transformation, exercising its regulatory authority to streamline  program requirements and delivery to meet the needs of disaster victims,  coordination with state and local government agencies, SBA’s efforts to  publicize the benefits offered by the disaster loan program, and the limits  that exist on the use of disaster loan funds.
section_title: Uncertainty About Catastrophic Disasters Affects the Availability and Affordability of Insurance
paragraphs: The magnitude and severity of Hurricane Katrina and other recent  catastrophes also impacted the insurance industry’s willingness and ability  to provide insurance protection for catastrophic disasters. A crucial aspect  of being able to successfully provide such coverage is the ability to obtain  what the industry refers to as credible “vulnerability assessments” or risk  assessments. To be useful, a risk assessment must be able to estimate both  the likely “frequency” and “severity” of catastrophic events— two key  characteristics that insurance companies need to assess the probability  and financial significance of a loss. In addition, based on credible  information, insurers must be able to estimate both their “probable  maximum loss (PML),” an estimate of the maximum dollar value that can  be lost under realistic conditions, and their “maximum foreseeable loss  (MFL),” an estimate of the maximum dollar loss under a worst-case  scenario. Risk assessments can be used to provide a basis for making loss  projections for catastrophes such as hurricanes or earthquakes, although  the projections may not be accurate. Insurance companies use these  estimates to determine the amount of coverage and the price at which to  offer coverage within a geographic area. Potential losses are acceptable if  the probability that they may occur is understood and companies can set  prices that fully reflect the consequences of a specific risk. When  projections fail to anticipate an event, such as an earthquake, or  underestimate the severity of an event, such as Hurricane Katrina,  insurance companies may become insolvent, as happened in the aftermath  of Hurricane Andrew, or may choose to reduce the amount of coverage  offered in a given area, as happened for wind losses in Florida and for  earthquakes in California.
While the practice of risk assessment has become more sophisticated in  recent years, the ability of such assessments to estimate losses remains  inexact, particularly for many potential catastrophes. These assessments  are typically undertaken by risk modeling companies that assist clients,  such as insurance companies, with predicting and managing the financial  impact of catastrophes and weather. In addition, as demonstrated by  Hurricane Katrina, estimating the amount of losses that insurers could pay  for an event is also contingent on unforeseen circumstances, such as the  unusual magnitude and consequences of the Hurricane Katrina storm  surge. In addition, as a result of Hurricane Katrina, hundreds of thousands  of buildings may have suffered damage from both the hurricane’s winds  and the storm surge. Because determining which factor caused the  damage to a given structure is difficult and sometimes contentious,  estimates of the amount that private insurers ultimately will pay to cover  the costs of Hurricane Katrina are still very preliminary.
Because catastrophic disasters are likely to occur in the future, and  because forecasting their probability and severity is an inexact science,  state insurance regulators have recommended that the federal government  provide a final layer of insurance protection in the event of a “mega- catastrophe.” The National Association of Insurance Commissioners  (NAIC) is considering a broad national plan that would create a  mechanism to handle disasters, especially those larger than Hurricane  Katrina. The plan proposes a public-private partnership that would reward  hazard mitigation and spread catastrophic risk broadly among individual  insureds, insurers, reinsurers, state reinsurance funds, and the federal  government, according to NAIC. The federal government could provide a  top layer of protection by acting as a reinsurer of last resort or,  alternatively, by providing financial capacity to a multi-state risk pooling  mechanism that could borrow from the federal government should  catastrophic losses exceed the pool’s accumulated funds. This plan is  similar in scope to the Terrorism Risk Insurance Act (TRIA), which  Congress enacted to create a program of shared public and private  compensation for insured losses attributable to acts of terrorism. Under  the NAIC plan, however, taxpayers would presumably not have to pay for  losses. Furthermore, the NAIC plan asserts that if state and federal  governments insured the top layers of catastrophe risk, private insurers  would continue to insure the initial layer of risk that they might otherwise  not insure.
However, some in the insurance industry oppose additional government  involvement and others have set forth alternative proposals. Some  insurance company representatives believe that the private market for  catastrophic coverage for natural events continues to exist and that  insurance costs should be based upon free market principles. Still others  have proposed that insurance companies be permitted to set aside  additional catastrophic disaster reserves on a pre-tax basis. Supporters of  tax-deductible reserves argue that the tax-free status would give insurers a  financial incentive to increase their reserves and expand insurers’ capacity  to cover catastrophic risks and avoid insolvency.
We anticipate undertaking work that would examine the merits of  involving federal and state governments in alternative methods of insuring  against catastrophic disasters—for example, by acting in a reinsurance  capacity. We will continue to monitor legislation and proposals aimed at  the long-term restoration of the Gulf Coast, such as the recently passed  Gulf Opportunity Zone Act of 2005, which contains a variety of tax-related  incentives designed to encourage rehabilitation in the region.
section_title: The Federal Role and Involvement Will Raise Ongoing Issues
paragraphs: As we move forward, long-term rebuilding in the Gulf Coast raises issues  concerning the need for consensus on what rebuilding should be done,  where and based on what standards, who will pay for what, and what  oversight is needed to ensure federal funds are spent for their intended  purposes. Over 20 years ago, we issued a report describing the U.S.  government’s involvement and experience in four large-scale assistance  programs (Conrail, Lockheed, New York City, and Chrysler) and suggested  guidelines for future programs in helping other failing firms or  municipalities. That report described four conditions that we suggested  the Congress could use as a framework of ideas about how to structure  future financial assistance programs and what program requirements to  include to achieve Congressional goals and objectives while minimizing  the risk of financial loss to the government. Congress might consider such  guidelines as it considers federal assistance to the Gulf Coast for  restoration:    The scope of the problem should be identified, such as if the problem  reflects broader industry-wide or regional economic conditions. For the  Gulf Coast, this would involve financial and economic analyses, perhaps  utilizing current studies of prior conditions and the ongoing progress of  recovery and rebuilding.
The effect of the problem on the national interest should be clearly  established, for example, whether the problem presents potentially large  economy-wide or regional consequences. For example, in the Gulf Coast,  Congress might consider the costs of municipal and corporate collapse  and the challenges associated with providing assistance.
The legislative goals and objectives associated with the response should  be clear, concise, and consistent. For example, in the Gulf Coast, goals and  objectives for rebuilding should be clearly stated, working with the state  and local groups already tasked with recovery planning and with the  Administration’s Coordinator of Federal Support for the Recovery and  Rebuilding of the Gulf Coast region.
Lastly, the government’s financial interest should be protected. In the Gulf  Coast, controls might be put in place so there is review of the most  important financial and operating plans.
section_title: Concluding Observations
paragraphs: Madame Chairman and members of the committee, the past several weeks  have provided significant insights into the Hurricane Katrina catastrophic  disaster with the release of the House Select Committee report, the White  House report on the federal response, and the testimony provided to this  committee. Secretary Chertoff has announced immediate actions in  preparation for the upcoming hurricane season and plans to work with the  White House and the Homeland Security Council to assess and address the  White House recommendations. Findings, lessons learned, and  observations all paint a complex mosaic of challenges the federal, state,  and local governments face in preparing for, responding to, and recovering  from catastrophic disasters. This committee’s report as well as GAO’s  work will add to the understanding of what happened and what needs to  be done.
Moving forward, the challenge will be to determine if the  recommendations and initial and longer-term actions will truly close the  gap in needed preparedness or add to the problem through additional  bureaucracy, complex processes, and inflexible policies. Also, the key  question remains if the revised policies and procedures, even if sound, will  be effectively implemented. Will they join those past recommendations  that were not implemented, resulted in actions that were not sustained, or  proved to be inadequate? We look forward to working with this committee  and others to focus our work on these key issues.
This concludes my statement. I would be pleased to respond to any  questions that you or other members of the committee may have at this  time.
section_title: GAO Contacts
paragraphs: Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this statement. For further  information about this testimony, please contact Norman Rabkin at   (202)-512-8777 or at rabkinn@gao.gov.
section_title: Appendix I: Recent GAO Products Concerning Hurricanes Katrina and Rita
paragraphs: Emergency Preparedness and Response: Some Issues and Challenges  Associated with Major Emergency Incidents. GAO-06-467T. Washington:  D.C.: February 23, 2006.
Disaster Preparedness: Preliminary Observations on the Evacuation of  Hospitals and Nursing Homes Due to Hurricanes. GAO-06-443R.  Washington: D.C.: February 16, 2006.
Investigation: Military Meals, Ready-To-Eat Sold on eBay. GAO-06-410R.  Washington: D.C.: February 13, 2006.
Expedited Assistance for Victims of Hurricanes Katrina and Rita:  FEMA’s Control Weaknesses Exposed the Government to Significant  Fraud and Abuse. GAO-06-403T. Washington: D.C.: February 13, 2006.
Statement by Comptroller General David M. Walker on GAO’s  Preliminary Observations Regarding Preparedness and Response to  Hurricanes Katrina and Rita. GAO-06-365R. Washington, D.C.: February  1, 2006.
Federal Emergency Management Agency: Challenges for the National  Flood Insurance Program. GAO-06-335T. Washington, D.C.: January 25,  2006.
Hurricane Protection: Statutory and Regulatory Framework for Levee  Maintenance and Emergency Response for the Lake Pontchartrain  Project. GAO-06-322T. Washington, D.C.: December 15, 2005.
Hurricanes Katrina and Rita: Provision of Charitable Assistance. GAO- 06-297T. Washington, D.C.: December 13, 2005.
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