Hazard Mitigation: Proposed Changes to FEMA's Multihazard Mitigation Programs Present Challenges
Published: 2002-09-30T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: Over the past 12 years, federal disaster assistance costs have totaled more than $39 billion (in fiscal year 2001 dollars)--a nearly fivefold increase over the previous 12-year period--as a result of a series of unusually large and frequent disasters and an increasing federal role in assisting communities and individuals affected by disasters. The Federal Emergency Management Agency (FEMA), the lead agency for providing federal disaster relief, has provided the bulk of the assistance to help those in need respond to and recover from disasters. As the costs for disaster assistance have risen, FEMA has made disaster mitigation a primary goal in its efforts to reduce the long-term cost of disasters and has developed mitigation programs designed to minimize risk to property or individuals from natural or man-made hazards. FEMA's multihazard mitigation programs differ substantially in how they have sought to reduce the risks from hazards but each has features that the state emergency management community believes has been successful for mitigation. The Hazard Mitigation Grant Program (HMGP), FEMA's oldest multihazard mitigation programs, is a post disaster program that has provided the bulk of mitigation assistance to states and communities. State mitigation officials view the HMGP as a highly successful means for achieving mitigation because commitment to undertake mitigation efforts is greatest in the aftermath of a disaster, and the HMGP takes advantage of this "window of opportunity." FEMA has used its more recent and smaller predisaster Project Impact program to provide funding directly to communities in every state, regardless of whether the state had recently experienced a disaster. State and local officials said that Project Impact has been successful in increasing awareness of and community support for mitigation efforts due to its funding of these types of activities. The proposed new mitigation program would fundamentally change FEMA's approach by eliminating the postdisaster HMGP and by funding mitigation activities on a nationally competitive basis. The administration believes that the new program will ensure that mitigation funding remains stable from year to year and that the most cost-beneficial projects receive funding. The heightened focus on homeland security has raised several issues related to the conduct of hazard mitigation activities. Foremost among these issues is whether the increased emphasis on preventing and preparing for terrorist events will result in less focus on natural hazard mitigation concerns.

section_title: Letter
paragraphs: Over the past 12 years, federal disaster assistance costs have totaled more  than $39 billion (in fiscal year 2001 dollars)—a nearly fivefold increase over  the previous 12-year period—as a result of a series of unusually large and  frequent disasters and an increasing federal role in assisting communities  and individuals affected by disasters. This commitment to federal disaster  assistance is continuing, as $4 billion in disaster assistance costs are  expected for fiscal year 2002, in part due to the September 11, 2001,  terrorist attacks and their impact. The Federal Emergency Management  Agency (FEMA), the lead agency for providing federal disaster relief, has  provided the bulk of the assistance to help those in need respond to and  recover from disasters. As the costs for disaster assistance have risen,  FEMA has made disaster mitigation a primary goal in its efforts to reduce  the long-term cost of disasters and has developed mitigation programs  designed to minimize risk to property or individuals from natural or man- made hazards. The most significant of these mitigation programs are the  postdisaster Hazard Mitigation Grant Program (HMGP) and the predisaster  Project Impact program. These are FEMA’s sole multihazard programs  aimed at helping states and communities identify and address natural  hazard risks they deem most significant. From fiscal year 1996 through  2001, FEMA obligated about $2.3 billion for these programs.
Some criticism has emerged in recent years about the impact of these  FEMA programs. In response, the administration—in FEMA’s 2003 fiscal  year budget request—has proposed changes to the multihazard mitigation  programs that are intended to improve the effectiveness of mitigation  efforts. These changes would combine the programs into a single  predisaster mitigation program that awards grants for mitigation activities  on a nationwide, competitive basis. In addition, the recent proposals to  expand federal programs and funding to enhance national preparedness  and to create the Department of Homeland Security (DHS) and move  FEMA into the department may also affect the overall conduct and content  of disaster mitigation programs.
As agreed with your office, this report addresses the following objectives:  What are the characteristics of FEMA’s current multihazard mitigation  programs, and what do states perceive as these programs’ most  successful features?
How would the proposed program change FEMA’s current approach to  mitigation, and what are some of the concerns that have been raised  about this proposal?
What are the issues resulting from the increased federal focus on  homeland security on conducting hazard mitigation efforts?
To address these issues, we analyzed national HMGP and Project Impact  data, program guidance, and available studies that evaluated these  programs. Additionally, we discussed the current programs, as well as the  new mitigation program outlined in the fiscal year 2003 budget proposal,  with emergency management officials in FEMA’s headquarters and three  FEMA regional offices (Atlanta, Georgia; Chicago, Illinois; and Denver,  Colorado). In addition, we interviewed state hazard mitigation officials  from 24 states within 4 FEMA regions (Regions IV, V, VII, and VIII) to obtain  their perspectives on the current FEMA mitigation programs and on the  administration’s proposal for a new mitigation program. These states have  experienced a varied range of disasters; consequently, the state mitigation  officials represent a wide range of experience with federal hazard  mitigation programs. We also conducted site visits in Georgia, Florida, and  North Carolina because these states have a wide variety of pre- and  postdisaster mitigation projects and are very active in both the HMGP and  Project Impact program. Further, we examined and assessed information  on state and local preparedness, intergovernmental relations, and issues  associated with the establishment of DHS that was available through other  work we have recently conducted. See appendix I for more details on our  scope and methodology.
subsections: section_title: Background
paragraphs: Following a disaster, and upon the request of a state governor, the  President may issue a major disaster declaration that triggers a range of  assistance from federal agencies. Under the provisions of the Robert T.  Stafford Disaster Relief and Emergency Assistance Act, the federal  government will assist disaster-stricken states and communities in their  efforts to help those in need, remove debris, and rebuild damaged  structures, among other things. The costs for this federal disaster  assistance have grown significantly since the late 1980s. During the 12-year  period ending in 1989, the expenditures from FEMA’s disaster relief fund  totaled about $7 billion (in fiscal year 2001 dollars). However, during the  following 12-year period ending in 2001, as the number of large, costly  disasters has grown and the activities eligible for federal assistance have  increased, expenditures from the disaster relief fund increased nearly  fivefold to over $39 billion (in fiscal year 2001 dollars). Figure 1 shows the  annual amounts spent for disaster relief and the number of disasters from  fiscal years 1978 to 2001.
Disaster assistance costs are expected to remain high in 2002, in part as a  result of the September 11, 2001, terrorist attacks. According to FEMA’s  projections, disaster assistance expenditures from the disaster relief fund  in fiscal year 2002 will total more than $4 billion.
FEMA has been designated the lead agency for the nation’s emergency  management system, and traditionally the agency has directed its efforts  towards disaster response and recovery. It also helps state and local  governments prepare for possible disaster events. However, as costs for  disaster assistance have increased, the agency has placed increasing  emphasis on disaster mitigation, defined by FEMA as sustained action that  reduces or eliminates long-term risk to people and property from hazards  and their effects. In fact, FEMA has made disaster mitigation a primary goal  in its efforts to reduce the long-term cost of disasters. Among the most  significant of these programs are the HMGP and the Project Impact  program. These programs are FEMA’s sole multihazard mitigation  programs, helping states and communities address the natural hazards and  risks—such as earthquakes, floods, tornadoes, and hurricanes—they deem  most significant. Together, these programs represent FEMA’s most  substantial mitigation efforts in terms of expenditures, state and  community involvement, and scope of activities funded. Other mitigation  programs FEMA conducts, although not insignificant, address specific  concerns, such as dam safety, fires, and flooding, and are funded at  relatively low levels.
The Congress has also recognized the benefits of mitigation, and as  recently as 2000 passed legislation to establish a national mitigation  program. The Disaster Mitigation Act of 2000 sought to (1) reduce the loss  of life and property, economic disruption, and disaster assistance cost  resulting from natural disaster and (2) provide a source of predisaster  mitigation funding that will assist states and local governments in  implementing effective hazard mitigation measures. The act provided  authorization legislation for Project Impact’s predisaster mitigation  activities, and established a funding formula under which communities in  all states would participate and receive funding. The act also placed an  emphasis on mitigation planning: it authorized the use of HMGP funds for  planning purposes and increased by one-third the HMGP funding for states  that meet enhanced planning criteria.
Recently, however, proposals have been made that may significantly affect  the mitigation programs conducted by FEMA. The administration has  proposed a substantial change to FEMA’s multihazard mitigation programs.  The proposal, as contained in FEMA’s fiscal year 2003 budget request,  would eliminate the HMGP and establish a new $300 million program for  predisaster mitigation. The program would also award grants on a  nationwide, competitive basis that is significantly different from the  formula-based grant process in the existing programs. The House and  Senate have both proposed creating a Department of Homeland Security  that would subsume FEMA as a part of the department. If enacted as  currently proposed, all the activities of FEMA—both those that are security  related and those, such as natural hazard mitigation programs, which are  nonsecurity related—would transfer to the department. Further, the federal  government is taking a more expanded role in state and local government  disaster prevention and preparedness efforts, and it is initiating more  activities—and providing more funding—for predisaster assistance, with a  substantial focus on terrorism. In this regard, numerous legislative  proposals are being considered that increase planning requirements and  funding to prepare for and prevent future terrorist attacks.
section_title: FEMA’s Multihazard Mitigation Programs Differ Substantially and Both Are Seen to Have Many Successful Attributes
paragraphs: FEMA’s multihazard mitigation programs differ substantially and have  many successful attributes according to state and local officials. The  HMGP, FEMA’s oldest and largest multihazard mitigation program, is a  postdisaster program that has provided the bulk of mitigation assistance  provided to states and communities. Through the HMGP, states and  communities that have experienced a presidentially declared disaster  receive funds to implement cost-effective mitigation projects. States and  communities have used these funds primarily to implement “brick and  mortar” projects such as retrofitting structures or acquiring and relocating  structures from hazard-prone areas. The HMGP is viewed as highly  effective because it provides funding in the aftermath of a disaster—when  state and local governments as well as individuals have a heightened  interest in participating in mitigation activities. As a result, states and local  communities have been able to fund critical mitigation projects in these  periods. FEMA has used its more recent and smaller predisaster Project  Impact program to provide mitigation assistance directly to communities in  every state, regardless of whether the state had recently experienced a  disaster. Communities have used Project Impact in large measure on  planning and outreach activities designed to (1) help educate the public  and promote mitigation, (2) assess risks and identify potential mitigation  projects, and (3) build partnerships and leverage resources. State and local  officials also said that Project Impact has been successful in increasing  awareness of and community support for mitigation efforts due to its  funding of these types of activities.
subsections: section_title: HMGP Has Focused on Implementing “Brick and Mortar” Projects in the Aftermath of a Disaster
paragraphs: The HMGP was created in 1988 to assist states and communities in  implementing long-term hazard mitigation measures following a major  disaster declaration. The purpose of the program is to enable mitigation  measures to be implemented during the immediate recovery period  following a disaster so that future risk to lives and property from severe  natural hazards can be significantly reduced or permanently eliminated. To  accomplish this objective, the HMGP provides funding to states affected by  presidentially declared disasters to undertake mitigation activities  identified in state or local hazard mitigation plans.
FEMA has provided a significant amount of funds for mitigation activities  through the HMGP. During fiscal years 1996 through 2001, over $2.2 billion  from FEMA’s disaster relief fund was obligated to states for this program.  The maximum amount of HMGP funding available to any state following a  presidential disaster declaration had been up to 15 percent of the total  estimated amount of federal assistance provided on a declared disaster;  however, the Disaster Mitigation Act of 2000 increased this amount to 20  percent for states that meet enhanced planning criteria. Appendix II  contains a listing of HMGP obligations by year and state.
While FEMA provides the funding for the program, the responsibility for  administering the HMGP rests with states. To this end, states review,  prioritize, and select projects based upon state mitigation priorities and  available funds. State and local governments, Native American tribes, and  certain nonprofit organizations are eligible to develop project applications.  To be considered for selection by states, projects must meet minimum  eligibility requirements. For example, projects must conform to the state  hazard mitigation plan, comply with environmental laws and regulations,  and be cost-effective. FEMA will provide up to 75 percent of the cost of  mitigation projects selected under HMGP; applicants must provide the  remaining project costs. Further, while states are responsible for selecting  projects, FEMA conducts the final eligibility review of projects to ensure  they meet all program requirements.
HMGP funds have primarily been used by states and communities to  implement “brick and mortar” projects. These types of projects include the  following:  acquiring properties in hazard-prone areas and either demolishing the  associated structure or relocating the structure to a site outside the  hazard-prone area; performing modifications to structures, such as reinforcing roofs, walls,  and foundations, to protect them from floods, high winds, or other  natural hazards;  constructing new storm water drainage systems and other flood control   building protective structures, such as safe rooms inside schools in  tornado-prone areas, to better ensure the safety of individuals.
Figure 2 shows projects undertaken with HMGP funding.
section_title: State Officials Believe that HMGP Successfully Takes Advantage of Mitigation Opportunities in a Postdisaster Environment
paragraphs: Hazard mitigation officials from the 24 states we contacted said that the  HMGP has been effective in stimulating action to mitigate the impacts of  natural hazards, primarily because it takes advantage of a “window of  opportunity” that exists in the postdisaster environment. The state hazard  mitigation officials said that the states’ and localities’ commitment to fund  and implement mitigation measures is most likely to occur soon after they  have experienced the devastation caused by a major disaster. These  officials emphasized that states, local communities, and citizens affected  by a disaster recognize the need for effective mitigation and are willing to  share costs and take the steps necessary to remove themselves from harm’s  way in the immediate postdisaster environment; but as time passes they are  less willing to do so. Even officials from states that have traditionally  received little funding under this program, such as Wyoming and Utah,  expressed support for the program’s postdisaster approach to funding  mitigation activities.
Below are some examples of significant mitigation projects that states told  us they were able to undertake with HMGP funds because of the state,  local, and citizen support for mitigation that existed in the immediate  postdisaster environment.
Following the devastation of Hurricane Floyd in 1999, North Carolina  undertook a program to remove homes from flood-prone areas. In the  immediate aftermath of Floyd, the state legislature passed a disaster  recovery bill that not only provided $73.4 million in matching funds but  also an additional $160 million to buy out flood-prone properties. The  state used these funds, along with nearly $228 million in HMGP and  other federal postdisaster mitigation funds, to target 4,500 properties  whose owners were willing to accept buyouts. As of June 2002, the state  had completed 70 percent of these buyouts.
In the aftermath of the May 1999 tornadoes that damaged nearly 3,350  structures and left 6 people dead in the Wichita area, Kansas utilized  HMGP funding to make schools more tornado-resistant, a critical need  identified by the event. Inspections of damaged schools revealed that  some designated refuge areas had suffered significant damage and that  if children had been present, injuries would have likely occurred.  According to state officials, the event and the immediate availability of  HMGP funds were key in convincing local citizens and school district  officials to approve a school district bond that included funds to  construct tornado shelters inside schools. Funding from this bond  provided the local match needed to use HMGP funds to construct 24  shelters to protect approximately 7,800 students and staff.
In response to a 2000 tornado that left 1 dead, injured more than 100,  and damaged nearly 200 homes and businesses in the city of Xenia, the  state of Ohio utilized HMGP funding for the construction of safe rooms  in this tornado-prone community. Since 1900, Xenia has been hit by 6  tornadoes including a 1974 tornado that killed 26 people. In the wake of  the 2000 tornado’s devastation, the state and the community provided 3  times the required HMGP match to undertake the construction of  residential safe rooms in the homes of 50 families.
According to mitigation officials from these states, it is unlikely that these  mitigation projects would have been undertaken without the infusion of  HMGP funding in the postdisaster environment.
Studies that have examined community action after a disaster support state  officials’ claims that a window of opportunity exists and is critical for  accomplishing mitigation activities. For example, a 1997 university study  that examined public response after hurricanes and earthquakes found that  communities and local decision makers were more willing to undertake  mitigation soon after a disaster than at other times. Similarly, a FEMA  sponsored case study of natural disasters in South Florida noted that the  focus on mitigation dissipates after cleanup and recovery are completed as  public attention moves elsewhere. Further, according to the director of the  Natural Hazards Research and Applications Information Center located at  the University of Colorado, research generally suggests that local political  support for mitigation is strongest in the approximately 6 months following  a disaster, after which funding becomes more difficult to obtain as other  state and local issues take precedent. He added that research suggests that  public support for mitigation lasts for about 1 year, during which time  citizens are more willing to participate in mitigation activities.
section_title: Project Impact Has Focused on Developing Broad Community Support for Mitigation Activities before a Disaster Strikes
paragraphs: Whereas the HMGP has focused on implementing projects in a postdisaster  environment, the Project Impact program focused on developing broad  community support for mitigation activities before a disaster strikes. To  accomplish this end, the Project Impact program provided small, one-time  grants directly to communities, which, among other things, were designed  to develop mitigation plans, build effective partnerships, and encourage  private sector financial participation.
During fiscal years 1997 through 2001, Project Impact provided a total of  $77 million to communities within every state and certain U.S. territories.  Unlike the HMGP, the amount of Project Impact funding available to  communities within a state was not predicated upon the occurrence of a  disaster; in fact, the program was structured so that under its funding  formula, communities in every state participated in the program. By 2001,  there were nearly 250 communities participating in the program, with  Project Impact communities receiving grants between $60,000 and  $1,000,000. Appendix III lists Project Impact grants by year and community.  While states selected which communities received Project Impact grants,  communities were responsible for selecting the mitigation measures to  fund with these grants. Similar to the HMGP, however, communities were  required to provide 25 percent of the costs for the mitigation measures.
While the mitigation measures could be “brick and mortar” projects, they  could also fund other activities such as establishing community  partnerships, supporting public awareness of mitigation, identifying  hazards, and conducting risk assessments. Additionally, Project Impact  funds could be used to promote the concept of personal and community  responsibility for mitigation measures. For example, FEMA encouraged  communities to establish committees composed of local officials, business  professionals, and other stakeholders to develop and implement mitigation  activities of importance to the community.
Figure 3 shows projects undertaken with Project Impact.
section_title: State Officials Identify Project Impact’s Focus on Planning and Partnerships As Successful Features That Help Communities Implement Mitigation Measures
paragraphs: The state emergency management officials from the 24 states, as well as  the Project Impact communities we visited, believe Project Impact has also  been successful in improving mitigation efforts throughout the country.  They stated that the program’s focus on planning and developing broad  community support for mitigation in a predisaster environment has been  very beneficial in building grass root support for mitigation. The state  officials identified four specific features of the Project Impact program as  being most beneficial, namely the program’s funding of mitigation planning  activities, development of partnerships to address mitigation needs,  providing “seed money” to attract additional funding, and heightening of  mitigation awareness resulting from education and outreach activities.
A primary benefit of Project Impact was its emphasis on developing private  and public sector partnerships as a means for communities to address their  mitigation needs. According to state and community officials, effective  hazard mitigation requires the involvement of not only governments but  also of the private sector—both business and individuals—to fully identify  and address concerns. They stated that Project Impact had been very  successful in creating partnerships that identify, and in most cases fund,  mitigation activities. For example, a major corporation in Deerfield Beach,  Florida, became a Project Impact partner and, at its own expense, installed  impact resistance glass and concrete roofs in all of its structures to make  them more disaster resistant. This corporation also donated shutters for  the homes of some low-income, elderly residents. Similarly, in Wilmington,  North Carolina, a local home improvement store used its facilities to  distribute hurricane preparedness and mitigation brochures and was a  major financial contributor to the local Hurricane Preparedness Expo that  featured speakers and demonstrations to assist residents with their  mitigation efforts.
A second benefit of Project Impact was its focus on planning as a critical  phase in implementing mitigation projects. According to state and local  mitigation officials, Project Impact assisted communities in identifying  vulnerabilities, assessing risks, and developing and prioritizing mitigation  projects to address their needs. Some states and communities pointed out  that the development of the mitigation plan would not have been done  without Project Impact funding. For example, Chattooga County, Georgia,  hazard mitigation officials stated that the Project Impact program provided  funding and technical assistance that enabled them to assess their risks and  develop a local mitigation plan that prioritized projects to address these  risks. As a result, the community is developing a project to connect six  separate water systems within the county to address their drought risk.
Third, Project Impact was important for obtaining additional funding from  the private sector to promote and implement mitigation. State and  community officials pointed out that they utilized their Project Impact  grant as “seed money” to attract additional funding from businesses,  nonprofits and other government agencies. For example, Centerville, Utah,  received $500,000 in Project Impact funds in 1998 that it utilized in part to  host several meetings and outreach sessions with local businesses and  government officials to solicit additional funding. The outreach effort  allowed them to leverage an additional $2,134,447 through partnerships  with the private and public sector. This additional funding enabled the city  to address many of its mitigation needs such as upgrading the city’s storm  drainage system, constructing a debris basin to eliminate the downstream  flood hazard, and retrofitting buildings to better stabilize them against  earthquakes.
Lastly, the state and community mitigation officials also stated that the  education and outreach aspects of the program were instrumental in  prompting the public and private sector to undertake mitigation activities.  They told us that this was one of the strongest points of the program, as it  increased the public’s awareness and concern about mitigation and in the  view of some officials, became an impetus for achieving mitigation efforts  without requiring government funding. For instance, according to  information provided by Deerfield Beach, Florida, one citizen credited the  outreach efforts of the local Project Impact program for motivating him to  utilize his own funds to construct Marina One, a disaster-resistant structure  for housing boats.
section_title: Proposed Program to Eliminate HMGP and Make Grants Nationally Competitive Has Raised Participation and Implementation Concerns
paragraphs: FEMA’s fiscal year 2003 budget request proposes eliminating the HMGP and  establishing a new $300 million program for predisaster mitigation. This  proposed program would award mitigation grants on a competitive basis— instead of the current formula-based awards—to better ensure that funding  goes to the most cost-beneficial projects. The proposal has raised  concerns, however, about whether participation in mitigation activities  might decrease and about how FEMA might implement the program.
subsections: section_title: Proposed Program Would Eliminate HMGP and Award Predisaster Mitigation Grants on a Nationally Competitive Basis
paragraphs: Concerns have been raised about demonstrating the cost-effectiveness of  some mitigation projects. For example, in August 1999, we reported that  although established procedures existed for selecting HMGP projects,  FEMA exempted four categories of projects from benefit-cost analysis,  including the purchase of substantially damaged properties in 100-year  floodplains. These projects were exempt because program officials believe  that, in the case of damaged properties in the floodplains, they were being  consistent with the policies of the National Flood Insurance Program that  allows the purchase of damaged properties in floodplains without benefit- cost analysis, or in the other cases because determination of benefits was  difficult. Nevertheless, for these categories of projects—the number of  which FEMA could not identify—the cost-effectiveness was unknown.  Similarly, FEMA’s Office of Inspector General reported in March 1998 and  again in February 2001 concerns about the cost-effectiveness of mitigation  projects. The office pointed out that analyses had often not been done and  techniques for conducting them were poorly understood. The Inspector  General’s office also reported that many projects had been exempted from  analysis.
The administration has also had concerns about the cost-effectiveness of  mitigation projects, and in FEMA’s fiscal year 2003 budget request,  proposes eliminating the HMGP and establishing a $300 million predisaster  mitigation program that would award grants on a nationally competitive  basis. According to the budget request, the administration has concluded  that 45 percent of HMGP projects undertaken from 1993 to 2000 were  either minimally cost effective or not cost effective at all. Consequently, the  administration proposed substantial changes to FEMA’s multihazard  mitigation programs. Under the proposed new program, mitigation grants  would be awarded on a nationally competitive basis—instead of the  current formula-based awards—to better ensure that funding goes to the  most cost-beneficial projects. According to Office of Management and  Budget officials, future mitigation efforts funded by the federal government  need to be those that provide the most benefit from a nationwide  perspective and to not be limited primarily to states affected by disasters.  The officials said that only through a program that does not allocate funds  in any formula—but is instead based on objective criteria such as  cost-effectiveness—can the government be best assured that it maximizes  the value of its mitigation program funding.
The administration stated that the program would ensure more stability to  disaster mitigation efforts since a consistent level of mitigation assistance  would be available to states and communities, and they would no longer be  dependent on disaster declarations to obtain mitigation grants. Further,  according to the administration, a consistent level of funding would allow  states and communities to develop more comprehensive proposals and  projects to reduce their overall risks, consistent with state and local  mitigation plans and would also strengthen states’ capability to pursue  their mitigation priorities.
section_title: Proposed Program Has Raised Participation and Implementation Concerns
paragraphs: From our analysis of the proposed program and discussions with FEMA  and state hazard mitigation officials, concerns have been raised about  whether participation in mitigation activities might decrease and about  how FEMA might implement the program. Specifically, there are concerns  that (1) FEMA and states may not be able to take advantage of interest in  participating in mitigation activities that often emerges after a disaster has  struck; (2) some states might be entirely excluded from mitigation funding;  (3) outreach and planning activities that help increase participation in  mitigation might be curtailed; and (4) FEMA might face challenges, such as  establishing a process for comparing the costs and benefits of projects, in  implementing the new program.
subsections: section_title: Lessened Ability to Take Advantage of Mitigation Opportunities
paragraphs: The proposed program may limit the ability of emergency management  officials to take advantage of mitigation opportunities. State officials with  whom we spoke maintained that the postdisaster environment is the most  conducive for implementing mitigation efforts, and that it can be difficult to  maintain public or private sector support for mitigation in a predisaster  environment. To illustrate this point, officials from Ohio noted how the  public interest in constructing safe rooms has diminished since a tornado  struck the community of Xenia in 2000. Despite the current availability of  predisaster funds, businesses that expressed interest in constructing public  safe rooms in the immediate aftermath of the disaster have now, 2 years  later, shown little interest in doing so. Similarly, North Carolina officials  noted how state support for mitigation has diminished since the  devastation of Hurricane Floyd in 1999. In June 2002, in an attempt to  address serious budgetary issues, the state legislature began an effort to  reallocate some of the funds that had already been obligated to mitigation  after Floyd. As a result, the remaining 30 percent of the planned buyouts  are in jeopardy, according to state officials. The National Emergency Management Association (NEMA) has expressed similar views. Its official  position paper on the budget proposal notes, “in the tight fiscal  environment that states and communities are facing, the commitment of  funding is most likely to occur only shortly after they have experienced  devastation.”
section_title: Some States Might Be Excluded From Mitigation Funding
paragraphs: All states might not participate in mitigation activities under the new  proposal. Many states rely on federal funding to support their mitigation  programs, and without the current formula-based programs to provide a  minimal level of funding support, their mitigation programs may not  continue. According to NEMA, at least 10 states derive all funding for  managing the state’s hazard mitigation program from the current federal  mitigation programs, and officials from other states told us that state  legislatures that currently provide mitigation program funding often require  a track record of federal funding for a program before they will provide  additional or continual funding for staff working on such programs. State  officials said that without a base level of support from the federal  government, a number of state mitigation programs will no longer exist,  because the states will no longer employ the staff needed to implement and  support a competitive program. Several state officials said that such  diminished funding will not achieve the new program’s objectives of  developing better projects or strengthening their ability to pursue  mitigation priorities. Moreover, they added that this deviates from the  manner in which the Congress recently mandated that predisaster funds be  allocated, as the Disaster Mitigation Act of 2000 directed a program for  predisaster mitigation that involved all states.
section_title: Outreach and Planning Activities May Be Curtailed
paragraphs: The public outreach and planning activities that were widely conducted  under the Project Impact program may be jeopardized under a competitive  predisaster mitigation program. Both FEMA and state officials said that  such activities are essential to creating a positive environment for  mitigation, because these activities create grassroot support and interest in  conducting mitigation. However, both groups stated that establishing the  financial benefit of these activities is difficult. For example, North Carolina  officials pointed to the Project Impact efforts in Wilmington that involved  distributing hurricane maps to all schoolchildren showing flood and storm  surge areas, hurricane preparedness actions, and possible mitigation  measures. The officials said this activity is very beneficial in building  support for mitigation—and ultimately persuading communities and  individuals to give high priority to mitigation and to make their own  investments in mitigation measures—but that it would be extremely  difficult to demonstrate a financial benefit commensurate with the cost.  Concerns also exist about whether mitigation planning might decrease  under the proposed program. According to state and local mitigation  officials, Project Impact’s emphasis on planning assisted communities in  identifying vulnerabilities, assessing risks, and developing and prioritizing  mitigation projects to address their needs. Some state and community  officials pointed out that the development of the mitigation plan would not  have been done without Project Impact funding. FEMA had permitted  Project Impact to be used to develop and update plans; state and local  officials are concerned that with the new nationally competitive program,  such support may diminish.
section_title: FEMA May Face Difficulties in Implementing Program
paragraphs: FEMA may face challenges in designing and implementing the proposed  program, particularly in selecting projects on a competitive, nationwide  basis. Most significantly, FEMA has not yet established a viable process for  comparing the relative costs and benefits of competing mitigation projects.  The current benefit-cost analysis model does not fully measure the indirect  benefits associated with projects. FEMA has acknowledged that its current  benefit-cost analysis model does not capture all the indirect benefits of  projects, such as environmental and social benefits, or mitigation activities  such as outreach and planning. In this regard, FEMA is funding a study that  examines the benefits of mitigation and which will, in part, address the  issue of measuring the benefits of outreach, planning, and other activities  that have benefits that are hard to quantify. However, FEMA does not  expect this study to be completed and possibly used to improve benefit- cost analyses until 2004 at the earliest.
State mitigation officials agreed that FEMA would have difficulty in  applying benefit-cost analyses to mitigation projects in a competitive  program. They said that not only is it difficult to demonstrate the benefits  of certain projects and the indirect benefits of others, but that the current  analyses are difficult to do and are used primarily for determining project  eligibility rather than on determining the full project benefits. In this  regard, they said that in doing these analyses under the HMGP, they  frequently discontinued additional analysis of the benefit of a project once  the ratio of benefits to cost were equal—which meets the minimum  program requirements. The officials said that this is the primary reason  why the administration views many projects as only minimally cost  effective.
Further, FEMA faces challenges in staffing and operating a nationally  competitive mitigation program. Both FEMA and state officials said that  states currently perform most of the analysis and selection of projects,  while FEMA provides final approval. However, under a nationally  competitive program, they said that FEMA will be required to play a greater  role in order to administer a fair and effective competition, and will need  additional staffing. FEMA mitigation officials expect that a minimum of 41  permanent employees will be needed to staff a new competitive predisaster  mitigation program. Additionally, the officials said that FEMA would need  budget authority to fund the new positions because they are prohibited  from using the disaster relief fund—currently used to fund temporary  employees to conduct the HMGP—for predisaster activities.
FEMA officials are aware of concerns about the proposed predisaster  mitigation program and plan to address these concerns if legislation  creating the new program is enacted. Moreover, FEMA has already  provided some indications of how it might implement the program.  Regarding concerns about the elimination of the HMGP, the FEMA Director  acknowledged, in response to questions raised during appropriation  hearings this year, that unique opportunities for mitigation exist in the  immediate aftermath of a disaster and agreed that the HMGP has been  effective in enabling states and communities to complete critical mitigation  work during this period. Consequently, he stated there is a need for both  pre- and postdisaster mitigation efforts and that if the Congress adopts the  proposal in its current form, FEMA would attempt to design the program  with sufficient flexibility to assist communities with postdisaster mitigation  activities.
FEMA officials also said that they agree with states that a base level of  funding for all states will better enable mitigation programs to succeed.  They told us that this funding would be essential for states to enable them  to participate in the proposed competitive program. However, as discussed  earlier, the proposal, as currently written, would appear to prohibit FEMA  from providing this guaranteed base. FEMA officials stated that they would  attempt to work with states as well as OMB to develop a funding  mechanism that would ensure that all states maintain a mitigation program.
Regarding the challenges that FEMA might face in implementing a  competitive evaluation and selection process, FEMA has emphasized that it  will collaborate with its state partners and other stakeholders in defining  the competitive grant program and policy. This effort would include  developing a fair, reasonable, and appropriate means for competitive  review and selection of grant proposals. For example, FEMA officials  stated that they would like to base their decisions on more than just cost- effectiveness and that they currently envision criteria that would focus on  the quality of the proposed projects and the ability of the projects to  address state and community mitigation priorities, as well as cost- effectiveness.
FEMA recently asked for input on how to best address these challenges. On  August 6, 2002, it issued a notice in the Federal Register soliciting  comments and ideas from interested parties on the process for  implementing the mitigation grant program on a competitive basis. FEMA  requested responses on specific concerns, which among other things  included (1) how applications should be evaluated to ensure that the most  cost-beneficial projects are funded, (2) the type of activities that should be  funded, (3) whether funds should be set aside for states to maintain a level  of mitigation capability, and (4) whether funds should be set aside for  planning in addition to competitive grants. FEMA expects to begin  consideration of the comments it receives in the fall if the proposed  predisaster mitigation grant program is included in its fiscal year 2003  appropriations.
section_title: Heightened Homeland Security Concerns Present Challenges for Conducting Hazard Mitigation Activities
paragraphs: The events of September 11, 2001, demonstrated the vulnerability of our  nation to terrorist attack, and subsequent efforts have been initiated to  strengthen the nation’s homeland security. These events, as well as the  proposal to establish a Department of Homeland Security, represent a  substantially changed environment under which FEMA and its hazard  mitigation programs operate now and will operate in the future. As a result,  in addition to the proposal to change the multihazard mitigation programs,  a number of broader issues face hazard mitigation efforts. These issues  include the following:  The potential that an emphasis on terrorism efforts may result in a  decrease in natural hazard mitigation activities.
The proliferation and overlap of plans and programs that address  mitigation-related concerns that may cause duplication of effort and  confusion.
The effective use of HMGP mitigation funds to reduce the risk of  terrorism damage and associated hardship, loss, and suffering is not  clear.
subsections: section_title: Emphasis on Terrorism May Result in Less Focus on Natural Hazards
paragraphs: The proposed placement of FEMA within the DHS places functions that  have traditionally not been security related, such as hazard mitigation, into  a department whose primary mission will be to provide a secure national  environment, including actions to prevent and prepare for possible  terrorist events. Supporters of FEMA’s transfer in its entirety to DHS argue  that dual use of funding for natural and man-made disasters and  emergencies is appropriate in an “all hazards” approach to disaster  assistance. For example, the Director of FEMA’s Office of National  Preparedness said that leaving FEMA intact in DHS would enhance the  agency’s preparedness capabilities, not detract from the agency’s natural  disaster response and recovery functions. Further, FEMA mitigation  officials said that they are currently working to identify terrorism  mitigation activities that are also “all hazard” and address natural hazard  mitigation priorities.
Concerns have been raised that with the emphasis on terrorism  preparedness in the aftermath of September 11th, the transfer of FEMA to  DHS may result in decreased emphasis on mitigation of natural hazards.  Opponents of the FEMA transfer, such as a former FEMA director, said that  activities not associated with homeland security would suffer if relocated  to a large department dedicated essentially to issues of homeland security.  They contend that the agency’s disaster mitigation programs and other  efforts integral to FEMA’s current mission that have no bearing on  homeland security will be compromised. They argue that agency resources  dedicated to those functions have already been, and would continue to be,  diverted to the homeland security mission, resulting in diminished federal  capabilities for nonnational security activities.
section_title: Role and Relationship of Predisaster Mitigation to New Preparedness Efforts
paragraphs: As a result of the terrorist attacks, many new initiatives have been  undertaken to begin addressing security concerns; however, many of them  raise questions regarding the role and relationship of preparedness and  mitigation efforts. FEMA requires states and communities to develop  mitigation plans to obtain mitigation funding; however, other proposed  legislation calls for similar, but more specialized, homeland security  preparedness plans that may overlap with the required mitigation plans.  For example, proposed legislation directed at increasing port security will  require all facilities in port areas, as well as the Department of  Transportation, to develop plans for action to deter and minimize damage from catastrophic emergencies. FEMA hazard mitigation officials said  that they are aware that there were numerous and related planning  requirements being placed on communities, and that they are working  toward identifying and minimizing the impact of such requirements.   The  officials said they are confident that they will become aware of all such  requirements due to the plans to consolidate preparedness efforts within  FEMA. They said that planning requirements that address mitigation-type  efforts will be adequately coordinated and, where appropriate,  incorporated by reference into overlapping or related plans to minimize the  burden on all stakeholders.
The new initiatives may also result in duplication or overlap in programs.  Many programs are being initiated that address the predisaster  environment, most significantly the $3.5 billion first responder grant  program proposed by the administration to fund state and local first  responders for terrorist attacks. The first responder grant program would  provide funding to states and local governments to prepare for terrorist  events, and a portion of this preparedness may involve activities that could  be viewed as mitigation. Other programs, such as the Emergency  Preparedness Enhancement Pilot Program, which is contained in proposed  DHS legislation, may also involve the development of and funding for  mitigation related activities, because it will provide funds for improved  security measures at private entities. The number and size of these  programs could result in duplication of effort and confusion among the  state and local governments partnering in mitigation efforts. We found such  problems occurred in the past with other assistance being provided to  states and localities. We reported in September 2001, for example, that first  responder training and assistance programs were being conducted by three  federal organizations—FEMA, the Department of Justice, and the Federal  Bureau of Investigation—which resulted in overlapping and duplicative  activities and caused confusion on the part of state and local officials.
section_title: Usefulness of HMGP Funding for Terrorism Disasters Is Unclear
paragraphs: As discussed earlier, HMGP funds have been typically made available to  states following presidentially declared disasters in amounts totaling as  much as 15 percent of the federal grant funds spent on the disaster. HMGP  funds have historically been used for natural hazard mitigation, although  no restrictions have been made on the types of disasters for which these  funds are made available. Consequently, HMGP funds can be, and have  been, made available after disasters resulting from terrorist attacks. In fact,  according to FEMA officials, after the 1995 explosion at the federal  building in Oklahoma City, HMGP funds were made available to Oklahoma.  The amount provided was relatively small—$1 million—which FEMA  officials said was due to the low amount of disaster assistance funds spent  on this disaster.   According to these officials, the mitigation funding  provided to Oklahoma was used for natural hazard mitigation because  FEMA has traditionally interpreted the HMGP authority to limit funding to  only natural hazard mitigation projects.
As shown by the disaster in New York, the HMGP funding that could be  provided in response to terrorist events may be substantial. Currently,  FEMA has been authorized to fund disaster assistance to New York  approaching $9 billion. Based on this level of assistance funding and the  current 15 percent HMGP funding formula, New York could have received  about $1.3 billion in HMGP funding for mitigation projects. President Bush,  however, has limited the amount of HMGP funds the state can receive. In a  September 18, 2001, amendment to his major disaster declaration for New  York, the President stated that because of the unique nature and magnitude  of this event, federal funds from the HMGP would be limited to 5 percent of  the aggregate amount of federal grant assistance. FEMA officials said that  at this percentage rate, HMGP funding to New York might total about $417  million.
The key objective of the HMGP is to reduce the risk of future damage,  hardship, loss, or suffering; however, it is not clear how mitigation funds  can be effectively used to reduce the risk of terrorism damage and  associated hardship, loss, or suffering. FEMA officials said that it would be  difficult to develop a benefit-cost methodology for terrorism mitigation,  because there is little data upon which to calculate the likelihood of an  event and thereby determine the project’s benefit. FEMA officials said that  they are undertaking a pilot program with New York to identify terrorism- related hazard mitigation measures, such as physical protection and  security-related projects that can meet cost-effectiveness criteria.
section_title: Concluding Observations
paragraphs: FEMA’s current multihazard mitigation programs are viewed positively by  the emergency management community, but questions about the programs’  cost-effective projects have lead to a proposal to consolidate and revise  them. The focus of the proposed new program on obtaining the most cost- effectiveness projects, in light of current budget concerns, is well intended.  However, the issue facing decisionmakers is whether the proposed revision  to the program will make the program more effective in achieving disaster  mitigation objectives. The structure of the new program may not be able to  capitalize on the characteristics of the current programs that have been  viewed as successful—such as acting in the postdisaster environment to  quickly take advantage of mitigation opportunities and undertaking  outreach activities to develop grassroot support for mitigation. A balance  that includes these characteristics in the program may need to be struck,  and we are encouraged to see that FEMA is obtaining input and consensus  on how to best structure the new program if it obtains congressional  approval. Furthermore, without careful structuring of the program, FEMA’s  hazard mitigation program may not remain consistent with the approach of  disaster mitigation legislation passed only 2 years ago by the Congress that  emphasized involvement by all states, funding for planning activities, and  increased postdisaster mitigation funding for states willing to undertake  enhanced mitigation planning efforts.
The proposed inclusion of FEMA in DHS and, in the broader context, the  heightened concern over terrorism raises more fundamental issues about  hazard mitigation efforts, such as (1) how natural hazard mitigation  activities would fare in the new department that focuses on terrorism, (2)  whether planning and program efforts in the mitigation and preparedness  area should remain separate and distinct, and (3) how the HMGP—and the  legislation authorizing it—address the role and rationale for mitigation  after a terrorism-caused disaster.
section_title: Agency Comments
paragraphs: We provided a draft copy of this report to FEMA for its review. The FEMA  Director, in a September 24, 2002, letter commenting on the report,  generally agreed with the information presented and noted that the report  supports his belief that both pre- and postdisaster mitigation programs are  critical to FEMA’s success in reducing disaster losses. Additionally, the  Director stated that the expertise the agency has developed in natural  hazard mitigation is clearly applicable to the homeland security mission,  and FEMA looked forward to addressing the opportunities presented by  the proposal to include it in the new Department of Homeland Security.  FEMA also provided some technical comments that we considered and  have incorporated into this report where appropriate. FEMA comments are  contained in appendix IV.
As agreed with your office, unless you publicly announce its contents  earlier, we plan no further distribution of this report for 10 days. At that  time, we will send copies of this report to the appropriate congressional  committees; the Director of the Federal Emergency Management Agency;  and the Director of the Office of Management and Budget. We will also  make copies available to others upon request. In addition, this report will  be available at no charge on the GAO Web site at http://www.gao.gov.
If you have any questions regarding this report, please contact me at (202)  512-2834 or at heckerj@gao.gov. Key contributors to this report were Mark  Abraham, Colin Fallon, Kirk Kiester, Aisha Cabrer, John McGrail, and Jack  Schulze.
section_title: Objectives, Scope, and Methodology
paragraphs: Debate has emerged in recent years about the effectiveness of the Federal  Emergency Management Agency’s (FEMA) multihazard mitigation  programs—the Hazard Mitigation Grant Program (HMGP) and the Project  Impact program. The administration also has proposed, in FEMA’s fiscal  year 2003 budget request, to change the multihazard mitigation programs to  improve their effectiveness. Further, the recent proposal to create the  Department of Homeland Security includes moving FEMA into that  department, which may also impact on the overall conduct and content of  these programs. The Chairman of the Subcommittee on International  Security, Proliferation, and Federal Services, Senate Committee on  Governmental Affairs, asked us to determine the available viewpoints on  the effectiveness of these mitigation programs and the possible impacts of  the two proposals. We addressed the following objectives:  What are the characteristics of FEMA’s current multihazard mitigation  programs, and what do states perceive as these programs’ most  successful features?
How would the proposed program change FEMA’s current approach to  mitigation, and what are some of the concerns that have been raised  about this proposal?
What are the issues resulting from the increased federal focus on  homeland security on conducting hazard mitigation efforts?
To determine the characteristics of FEMA’s multihazard mitigation  programs, we reviewed FEMA’s Hazard Mitigation Grant Program and  Project Impact program regulations, policy guidance and handbooks,  which identified and described the programs’ purpose, goals, eligibility  criteria, cost-effective criteria and funding. We also examined relevant  legislation that described the programs’ objectives, funding, and the focus  of its activities. We conducted a review of the available literature on the  multihazard mitigation programs, including past GAO, FEMA Inspector  General, and other reports that provided a perspective on these programs.  We also discussed these programs with FEMA officials in Washington, D.C.,  as well as in its regional offices in Atlanta, Georgia; Denver, Colorado; and  Chicago, Illinois.
To determine state mitigation officials viewpoints on the successful  features of these programs, as well as their overall perspectives on the  programs, we interviewed state hazard mitigation officials from 24 states  within 4 FEMA regions (IV, V, VII and VIII) to obtain their views about their  experiences administering and utilizing these programs. We selected  these regions and the states within these regions because they provide a  representation of small and large states that contain urban and rural  communities that have received both small and larger amounts of  multihazard mitigation funding. These states also have varied experience  with disasters. We examined and synthesized documents provided by these  officials detailing their experiences with these mitigation programs. We  also conducted site visits and interviewed local hazard mitigation officials  in Georgia, Florida, and North Carolina because these states have a wide  variety of pre- and postdisaster mitigation projects and are very active in  both the HMGP and Project Impact program. We also reviewed studies  available from the Natural Hazards Research and Applications Information  Center and from FEMA that addressed the benefits and results of both the  HMGP and the Project Impact program. In addition, we met with officials in  OMB’s Financial Institutions Branch to obtain their perspectives on the  effectiveness of the current programs as well as on the objectives for the  proposed new mitigation program.
To determine how the current legislative proposals might change FEMA’s  mitigation programs, we interviewed FEMA headquarters and regional  mitigation officials to gain their perspective about the proposed changes.  Specifically, with regard to the proposal to establish a new predisaster  mitigation program, we obtained their viewpoints on what challenges they  would confront in (1) developing the criterion and processes of selecting  mitigation projects; (2) addressing administrative issues, such as staffing;  and (3) addressing any statutory issues from replacing the HMGP with a  new competitive grant program. We also gained the perspectives of state  hazard mitigation officials we interviewed on how they perceived the  proposed changes would impact their ability to pursue mitigation activities.    We also reviewed available literature that presented the viewpoints of  various organizations on either the advantages or disadvantages of the  proposed program.
To determine the issues related to conducting hazard mitigation efforts as a  result of the increased federal focus on homeland security, we drew upon  recently completed work that is examining the challenges surrounding the  establishment of that department. This work included assessments of the  administration’s proposal to establish a Department of Homeland Security,  examinations of the relationships between federal, state, and local  governments in undertaking terrorism preparedness efforts, a review of  legislative proposals related to the Coast Guard and port security, as well  as ongoing work that assesses port security efforts. We also discussed the  effects of including mitigation activities with FEMA mitigation officials to  determine from them the concerns that exist over the movement of  mitigation activities into the Department of Homeland Security.
We conducted our review from November 2001 through August 2002 in  accordance with generally accepted government auditing standards.
section_title: Hazard Mitigation Grant Program Sum of Federal Share FYs 1996 through 2001
paragraphs: Sum of federal share – obligated (FY 1996 thru 2001) $3,081,072 (Continued From Previous Page)
section_title: Project Impact Communities
paragraphs: Mobile County with Town of Dauphin Island & City of Bayou La Batre Clay County/City of Piggott/City of Corning/City of Rector City of West Memphis; South Arkansas Community Development  County of Santa Barbara/City of Santa Barbara Las Virgenes Malibu Council of Governments (includes the cities of  Agoura Hills, Calabassas, Hidden Hills, Malibu & Westlake Village)
Region of San Luis Valley (Counties of Alamosa, Conejos, Costilla,  Mineral, Rio Grande, &  Saguache)
City of Deerfield Beach/Broward County Tampa Bay Region (Counties of Hillsborough, Manatee, Pasco, and  Pinellas & 38 incorporated municipalities)
Tri-County Council of Southern Maryland:  Calvert, Charles, & St.  Mary’s Counties Upper Mystic River Basin Watershed (in Middlesex County; includes  communities of Arlington, Burlington, Lexington, Medford, Reading,  Stoneham, Wilmington, Winchester, & Woburn)
Cape Cod Commission (includes 15 Towns that comprise Barnstable  County)
City of Charlotte & Mecklenburg County City of Wilmington & New Hanover County Buncombe County & all incorporated municipalities Lenoir County & all incorporated municipalities The Eastern Band of Cherokee Indians Research Triangle Region (includes Wake, Durham, & Orange  Counties with Research Triangle Park)
Luzerne County Flood Control Authority/Mitigation Advisory Board  (Includes the counties of Luzerene, Columbia, Montour,  Northumberland, and Snyder)
Anderson County, including the cities of Clinton, Lake City, Norris, Oak  Ridge, & Oliver Springs Harris County to include Bellaire, Webster, & Houston Two River-Ottauquechee Regional Planning Commission (includes  most of Orange & Northern Windsor Counties and the Towns of  Pittsfield, Hancock, and Granville)
North West Regional Planning Commission (includes 23 towns in  Franklin & Grand Isle Counties)
Addison County Regional Planning Commission (includes Addison  County and 21 Towns in the Region)
Roanoke Valley District Planning Commission (Roanoke County, City  of Roanoke, City of Salem, Town of Vinton)
Central Shenandoah Planning District (Augusta, Bath, Highland,  Rockbridge & Rockingham Counties; Cities of Buena Vista,  Harrisonburg, Lexington, Staunton, & Waynesboro; and 11 towns)
section_title: Comments from the Federal Management Agency
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subsections: section_title: Order by Mail or Phone
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