[Senate Hearing 114-636]
[From the U.S. Government Publishing Office]
S. Hrg. 114-636
FEDERAL DISASTER RESPONSE AND SBA IMPLEMENTATION OF THE RISE ACT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
APRIL 6, 2016
__________
Printed for the Committee on Small Business and Entrepreneurship
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED FOURTEENTH CONGRESS
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DAVID VITTER, Louisiana, Chairman
JEANNE SHAHEEN, New Hampshire, Ranking Member
JAMES E. RISCH, Idaho MARIA CANTWELL, Washington
MARCO RUBIO, Florida BENJAMIN L. CARDIN, Maryland
RAND PAUL, Kentucky HEIDI HEITKAMP, North Dakota
TIM SCOTT, South Carolina EDWARD J. MARKEY, Massachusetts
DEB FISCHER, Nebraska CORY A. BOOKER, New Jersey
CORY GARDNER, Colorado CHRISTOPHER A. COONS, Delaware
JONI ERNST, Iowa MAZIE K. HIRONO, Hawaii
KELLY AYOTTE, New Hampshire GARY C. PETERS, Michigan
MICHAEL B. ENZI, Wyoming
Meredith West, Republican Staff Director
Robert Diznoff, Democratic Staff Director
C O N T E N T S
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Opening Statements
Page
Vitter, Hon. David, Chairman, and a U.S. Senator from Louisiana.. 1
Booker, Hon. Cory A., a U.S. Senator from New Jersey............. 3
Witnesses
Kramer, Douglas J., Deputy Administrator, U.S. Small Business
Administration, Washington, DC................................. 5
Zimmerman, Elizabeth, Associate Administrator for Response and
Recovery, Federal Emergency Management Agency, Washington, DC.. 11
Alphabetical Listing and Appendix Material Submitted
Booker, Hon. Cory A.
Opening statement............................................ 3
Kramer, Douglas J.
Testimony.................................................... 5
Prepared statement........................................... 7
Shaheen, Hon. Jeanne
Prepared statement........................................... 40
Vitter, Hon. David
Opening statement............................................ 1
Zimmerman, Elizabeth
Testimony.................................................... 11
Prepared statement........................................... 14
FEDERAL DISASTER RESPONSE AND SBA IMPLEMENTATION OF THE RISE ACT
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WEDNESDAY, APRIL 6, 2016
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 2:00 p.m., in
Room 428A, Russell Senate Office Building, Hon. David Vitter,
Chairman of the Committee, presiding.
Present: Senators Vitter, Rubio, Scott, Fischer, Gardner,
Ernst, Ayotte, Cantwell, Heitkamp, Markey, Booker, and Peters.
OPENING STATEMENT OF HON. DAVID VITTER, CHAIRMAN, AND A U.S.
SENATOR FROM LOUISIANA
Chairman Vitter. Well, good afternoon, everyone. We are
going to go ahead and get started, and we are going to be
joined momentarily by Senators Booker, Rubio, and perhaps some
others.
Thank you all for joining me today for the Senate Small
Business and Entrepreneurship Committee's Hearing on recent
disaster recovery efforts and SBA's progress in implementing
the Recovery Improvements for Small Entities After Disaster Act
of 2015, also known as the RISE Act.
Now this year alone, FEMA and SBA have been responsible for
responding to numerous disasters. FEMA currently has 21
disaster declarations since January while the SBA has 5 agency
declarations of its own.
Among those are declarations that include my home State of
Louisiana, which experienced historic flooding last month.
Although Louisiana knows better than anyone the challenges of
rebuilding after a storm, the historic flooding we saw left
nearly half the state under a FEMA disaster declaration, with
even more parishes qualifying for SBA assistance.
It is unfortunate, but it remains true; disasters of this
scope are an indiscriminate and sweeping fact of life. They
affect the livelihoods of families and business alike and
require a speedy and effective response. Today's hearing will
take a close look at how well the Federal Government is
responding to these major natural disasters.
Of course, small businesses in particular are often among
those hit the hardest and experience long-lasting effects when
disasters occur. As the driving force of our nation's growth
and workforce, small businesses need extra help to get back on
their feet as quickly as possible, and we need to make sure
that they are receiving the help they need. This includes small
businesses in rural communities, which face their own unique
challenges, and the long-term recovery assistance we provide is
often vital in ensuring that they do not have to close their
doors.
That is why I made it a top priority last year to introduce
and pass legislation that would improve the SBA's disaster
recovery programs, and with the help of my colleagues on this
Committee, that RISE Act was signed into law last fall.
Now a major problem for small businesses after a disaster
is access to capital, and so we made sure the RISE Act included
language to improve the SBA's loan programs and their
administration so that small businesses can recover quickly.
Considering the SBA's significant shortcomings in the past,
particularly in its disaster recovery efforts in response to
Hurricane Katrina in 2005 and Superstorm Sandy in 2012, the Act
codifies a number of recommendations from the Sandy Rebuilding
Task Force and also provides more time to those impacted by
Sandy to apply for assistance if they had not already.
The Act also established the Recovery Opportunity Loan
Program which provides long-term disaster recovery assistance
to affected businesses after the closure of SBA's application
period for traditional disaster loan programs. With the SBA's
failure to stand up similar programs in the past, the Act
sought to ensure its success and to expedite loan-making and
processing by building the mandate for the Recovery Opportunity
Program on the preexisting 7(a) framework, utilizing existing
SBA lenders.
In addition to these key loan provisions, my colleagues and
I sought to help small business owners impacted by disasters to
compete for and win Federal grants and contracts. As I have
discussed with FEMA and the SBA in prior roundtables, it is
important for local small businesses to take the lead in
rebuilding and in cleanup efforts. While FEMA has previously
attested to their efforts to push their own contractors to
quickly turn over such responsibility to local small
businesses, the RISE Act finally grants them preference,
leveling the playing field when competing with larger firms.
More generally, there is a need to ensure small businesses
are supported and protected beyond their capital needs, too. My
colleagues and I ensured the RISE Act takes that into account
by authorizing a number of actions to do so. This includes
allowing for nationwide assistance from the SBDCs, additional
funding authority for counseling and technical assistance, and
allowing physical damage disaster loans to be used for life-
saving measures like safe rooms.
The improvements passed as part of the RISE Act build on
the already substantial progress that FEMA and the SBA have
made in the last decade. Still, because such disasters can
leave complete devastation in their wake, we continue to face
challenges in carrying out an effective response. That is why
it is so important not only to become better prepared, and to
better prepare the public, for disasters but to also identify
and execute tangible improvements in FEMA and SBA responses.
We all recognize the important role that small businesses
play in each of our local communities and economies. So when it
comes to helping small business' recovery after a major natural
disaster, the conversation is not so much political as it is
tactical, thank goodness.
I look forward to today's discussion. Thanks to everyone
for being here today.
With that, I want to turn it over to my colleague, Senator
Booker. He has been a great partner here in the Senate,
including on the RISE Act, particularly given his Superstorm
Sandy experience, and he is sitting in as Ranking Member for
Senator Shaheen who could not be here today because of an
absolute conflict.
Senator.
OPENING STATEMENT OF HON. CORY A. BOOKER, A U.S. SENATOR FROM
NEW JERSEY
Senator Booker. Thank you very much, and I really do
appreciate your leadership on the RISE Act.
It is good to be here today. It is Jeanne Shaheen who I am
thanking for being Ranking. That was a rhyme; I do not know if
you noticed that. But she has been pulled away on other
business.
I really appreciate Senator Heitkamp and Senator Fischer
for being here. They are to this Committee like Bruce
Springsteen and Bon Jovi are to the State of New Jersey.
So I want to recognize the incredible resiliency of New
Jersey. We, as a State, endured a superstorm and recently the
Storm Jonas, and our State has shown incredible strength, but
this truly has been a partnership as well with a lot of
different actors who have helped us become strong.
I saw firsthand, as a mayor, the devastation of Sandy hit
our largest city as well as throughout our coast, and I could
not be prouder of the way that the people in our State really
pulled together to demonstrate New Jersey's strength.
Communities throughout our State are still, though,
unfortunately, working to recover fully from Superstorm Sandy.
There is a lot more to be done.
The passage of the RISE Act, which again I do want to thank
Senator Vitter for his leadership, really has helped New Jersey
communities to heal. As of March 31st, the SBA disaster loan
program has provided my State with over $863 million in loans
for small businesses and homes--about $848 million during the
original relief effort and over $15 million in loans in the 3
months since the disaster loan program reopened in December
2015.
In total, the SBA program has approved $2.5 billion in
loans in areas that have been negatively impacted by Superstorm
Sandy. Unfortunately, we have increased intense weather events
over the past couple of years. These challenges seem to be
coming and coming and coming.
I spent time back home this past winter, helping New
Jerseyans deal with the damage from Jonas and documenting the
devastating impacts that flooding can have on a home or a small
business. I am pleased that the SBA accepted the SBA disaster
declaration requested by Governor Christie in February that
Senator Menendez and I, along with our House colleagues, do
support.
I am hopeful that the changes within the SBA can make the
program strong and the improvements that are included in the
RISE Act can really help to make sure that after such weather
events, New Jersey, as well as other areas across our country,
can be granted expeditious and efficient help.
So while we continue to help Sandy and Jonas survivors, I
am eager to see the efforts that have been made to improve the
disaster relief program moving forward by both the SBA and
FEMA. I am confident that our businesses will recover. I am
confident that our State will stand stronger than ever before.
And, I want to thank the distinguished panelists for all
your hard work as civil servants in serving our country. I am
truly grateful for what you all do every day. You do not get
the gratitude, I think publically, as often as you and your
team members deserve.
I am also proud to be on this Committee and to be able to
work on behalf of small business owners and Americans impacted
by natural disasters all over our country.
Mr. Chairman, again, thank you for your leadership, your
partnership, and I look forward to this discussion today.
Chairman Vitter. Thank you very much, Senator Booker.
And, as is our custom, we want to get to the witnesses as
soon as possible. All other members are welcome to submit any
statements for the record, and obviously, you will have a
question time.
Both of our witnesses today are deeply involved in the
Federal Government's disaster response efforts, either as on-
the-ground first responders or as coordinators of much needed
long-term financing for rebuilding. They will speak today on
the successes and challenges of recent disasters and the
progress they have made in implementing the RISE Act.
Our first witness is Mr. Douglas Kramer, Deputy
Administrator at the U.S. Small Business Administration. Prior
to his confirmation as Deputy Administrator, Mr. Kramer served
as General Counsel for USAID from March to November 2015. In
his time as a member of this administration, he has also served
in the Office of the White House Counsel and as Deputy
Assistant to the President.
And then we will hear from Ms. Elizabeth Zimmerman,
Associate Administrator for Response and Recovery at FEMA, the
Federal Emergency Management Agency. Prior to her appointment
there, she was involved with emergency management in Utah and
served as Assistant Director of Recovery for the State of
Arizona. In her time at FEMA, she has sought to improve
coordination between the Federal, state, local, and tribal
governments through the development and publication of the
National Disaster Recovery Framework, and also coordinated
implementation of the Sandy Recovery Improvement Act of 2013
which authorized several significant changes to the way FEMA
can deliver disaster assistance.
We look forward to hearing from you both. You have five
minutes each. I believe our electronic clock is out right now,
but you will get cues from staff about that wind-down. We look
forward to hearing from you.
Mr. Kramer.
STATEMENT OF DOUGLAS J. KRAMER, DEPUTY ADMINISTRATOR, U.S.
SMALL BUSINESS ADMINISTRATION
Mr. Kramer. Thank you, Chairman Vitter and Senator Booker
and all members of the Committee, for this opportunity to
testify about SBA's commitment to providing timely disaster
assistance and to update you on our efforts in response to last
month's presidential declaration for flooding in Louisiana and
our work to redouble our efforts on behalf of those still
impacted by Superstorm Sandy.
Last year alone, SBA was on the ground for 11
presidentially declared disasters including flooding in Detroit
and Texas, an earthquake in Napa Valley, wildfires in Southern
California, and record flooding in South Carolina. For the
year, SBA's team fielded more than 145,000 calls, deployed more
than 400 personnel to disaster zones, inspected more than
19,000 damaged properties, processed 30,000 applications, and
disbursed more than $340 million to disaster survivors.
SBA's committed professionals have been doing this work for
a long time. In fact, our Office of Disaster Assistance reached
a milestone last year; we surpassed 2 million disaster loans
approved since our founding in 1953. Over those years, we have
awarded more than $54 billion in disaster loans for small
businesses, homeowners, nonprofits, and renters.
On Monday, I toured SBA's Disaster Recovery Center in
Slidell, Louisiana, to get a firsthand look at our efforts to
deliver aid in 35 parishes declared Federal Disaster Areas
after the recent flooding. All of us understand well the
urgency of the situation and appreciate Chairman Vitter's
hands-on leadership in speeding help to so many in need.
SBA currently has 85 staff on the ground across Louisiana,
working in concert with FEMA. To date, we have received more
than 2,500 loan applications and approved more than $18 million
in financing, with millions more expected in the coming days
and weeks.
I also want to thank Chairman Vitter, Senator Booker, and
the members of the Committee for your passion and persistence
on behalf of the survivors of Superstorm Sandy. Your leadership
in getting the RISE Act through Congress is already making a
significant impact. Long after the mainstream media may have
turned its focus away from the devastation wrought by this
disaster, the Committee kept fighting for Sandy survivors. Your
bipartisan leadership has enabled SBA to reopen loan
application processes this year for those still working to
rebuild in Sandy's aftermath.
Since the RISE Act authorized reopening assistance to Sandy
victims four months ago, we have received more than 1,800
applications, opened 29 centers in 9 states, and maintained a
field presence for more than 100 days. During that time, we
serviced 1,500 disaster survivors and conducted more than 330
loan closings. Our average processing time, importantly, on
those applications was reduced to just nine days. And, we have
already approved an additional $34 million in disaster
assistance.
SBA did learn some important lessons after Sandy, and now
we are applying them. As you will recall, after Sandy, too many
storm victims had to wait several months to get their disaster
claims processed by SBA, and that is simply unacceptable. We
have taken steps to ensure that never happens again.
I have been directly and repeatedly engaged with our Office
of Disaster Assistance Leadership on their efforts to automate
and streamline our application approval and distribution
processes. The promise of new technology and automation is
particularly well suited to the demands of ODA's work, which
requires flexibility and the need to scale up in just a few
days.
Some of the improvements have already been implemented, and
we have updated our online disaster loan application so
applicants can fill out a form on SBA's secure web site and
submit it digitally. Ninety percent of SBA disaster loans today
are being submitted online. We know that applications that are
intuitive and accessible will lead survivors to getting back to
pre-disaster situations quickly. And we have also recently
instituted phase one of the web portal that will allow disaster
survivors to go online and see the exact step in the process
where their application is sitting.
Our work to fully implement the RISE Act is ongoing. We are
publishing rules to implement the RISE Act changes in the
disaster loan program. We recognize the value of providing not
only financing but also high-quality business counsel and
disaster mitigation strategies to help recovering small
businesses. SBA staff is currently finalizing our regulatory
strategy under the RISE Act to institutionalize our ability to
award additional disaster counseling funds when necessary.
Mr. Chairman, SBA Administrator Maria Contreras-Sweet and I
have visited several of our disaster operations in the field. I
have had the opportunity to visit our SBA processing center in
Texas as well as Disaster Recovery Centers in Louisiana and
Missouri.
I have seen how hard our committed staff works. They are a
knowledgeable, experienced, and caring group of public servants
who are ready to uproot their own lives and respond to chaotic
and stressful circumstances when the American people need us
most. I am proud to work with them, encouraged by the
improvements we have already made, and look forward to working
with this Committee to make additional improvements wherever
they may be needed.
Thank you for your leadership and support, and I would be
happy to answer any questions you have.
[The prepared statement of Mr. Kramer follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Vitter. Thank you very much, Mr. Kramer, and we
will certainly be getting to those questions.
Now, Ms. Zimmerman.
STATEMENT OF ELIZABETH ZIMMERMAN, ASSOCIATE ADMINISTRATOR FOR
RESPONSE AND RECOVERY, FEDERAL EMERGENCY MANAGEMENT AGENCY
Ms. Zimmerman. Good afternoon, Chairman Vitter, Senator
Booker, and members of the Committee. Thank you very much for
the opportunity to be here today to testify on FEMA's support
to the private sector during the disaster response and recovery
process.
At FEMA, we recognize how important it is for the
community's recovery following a disaster to get local
businesses back up and running. Local businesses are where our
survivors work, get their resources, and where they connect
with other members of their community.
I am pleased to provide you an overview of FEMA's disaster
assistance programs and their initiatives we have established
to coordinate with and assist the private sector during
disaster recovery. I also will discuss specific support we are
providing to local businesses during the current response to
Louisiana.
Following a presidential disaster declaration, FEMA has
three primary disaster assistance programs that can be
activated--the Individual Assistance Program, the Public
Assistance Program, and the Hazard Mitigation Grant Program.
The IA Program provides support to individual survivors,
including grants for temporary housing, and home repair or
replacement, as well as other disaster-related expenses. FEMA's
individual assistance applicants must first apply to SBA before
we can provide some types of disaster assistance.
The Public Assistance Program provides Federal funding to
state, local, tribal, territorial governments, and certain
nonprofit organizations for emergency works, expenses, and
repairs or replacements of public infrastructure.
The Hazard Mitigation Grant Program provides Federal
funding for mitigation measures throughout the declared state
or tribal nation to help reduce risk before the next event.
During a presidential disaster declaration that authorizes
individual assistance, the U.S. Small Business Administration's
low-interest loan program is also activated, which includes
funding for damaged property or economic injury. The SBA
program is a primary source of Federal funding for affected
businesses in the aftermath of a declared disaster. FEMA does
not have the authority to provide Federal assistance to
businesses, and our partner, SBA, is the key to that assistance
for them.
Following a disaster declaration, FEMA deploys private
sector staff dedicated to engaging the business community to
ensure that FEMA understands the impacts of the disaster on the
local economy. They also connect businesses to SBA's loan
program liaisons, as well as FEMA's Individual Assistance
Program, so that they can help their employers help themselves
and keep staff working in the affected area and to get the
assistance they might need for their families.
FEMA also contracts with local firms during disaster
response to support the community recovery. Section 307 of the
Stafford Act directs FEMA, to the extent feasible and possible,
to contract with local firms for disaster response activities.
All procurement unit leads in the joint field office that are
deployed to a disaster response are trained on local contract
considerations and how to identify local businesses that could
be used. From 2010 to 2015, FEMA awarded more than $88 million
in contracts to local firms during response activities.
We want to use local businesses, but we also do not want to
compete against those in the community that may need the same
resources. Much of the support to local businesses is conducted
indirectly through the grants that we provide to local, state,
and tribal governments.
FEMA also directly employs members of affected communities
through our local hire process. This not only helps provide
employment opportunity for survivors who may have been impacted
by a disaster but also allows FEMA to hire staff who have
connections to the community and understand the unique recovery
challenges that they face. Several Katrina-impacted Louisianans
still currently work at FEMA that were hired on immediately
following Katrina.
As outlined in the National Disaster Recovery Framework,
the Federal interagency also works with the impacted state to
determine whether they need to activate the Economic Recovery
Support Function, which provides long-term Federal support to
help coordinate resources and provide technical assistance to
rebuild a local economy post-disaster.
Now I would like to give you a brief update regarding the
ongoing response in Louisiana to the severe storms and flooding
last month. I was able to go down there three days after the
President declared the disaster to meet with both the State's
and our folks that were deployed immediately after.
On March 13th, the President did issue the major disaster
declaration for Louisiana. This declaration and subsequent
amendments made funding available to both eligible individuals
and governments in 35 parishes through FEMA's Individual
Assistance and Public Assistance Programs and Hazard Mitigation
Assistance statewide.
Since the disaster was declared, more than 1,100 Federal
employees were deployed to support the State and implement the
Federal disaster assistance programs. FEMA's private sector
staff are coordinating outreach to businesses through
partnerships with SBA, a private sector coordinator at the
Governor's Office of Homeland Security and Emergency
Preparedness, the local Chambers of Commerce, and state
business and trade associations.
In the first 20 days following the declaration, FEMA has
contracted with multiple local firms, resulting in more than
$715,000 to the local economy for goods and services such as
the Joint Field Office security guards, translators and
interpreters, and office supplies.
FEMA has also deployed a Federal Disaster Recovery
Coordinator to Louisiana, who is currently working with the
State counterparts to determine the recovery coordination
needs.
In conclusion, here at FEMA we subscribe to a whole-
community approach to emergency management. All sectors of the
community, including the private sector, need to be involved in
the preparing for, protecting against, responding to,
recovering from, and mitigating future disasters in order for
us as a nation to be more resilient.
Thank you again, Chairman, for having me testify today, and
I look forward to answering any questions the Committee may
have.
[The prepared statement of Ms. Zimmerman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Vitter. Great. Thank you very much, Ms. Zimmerman.
I know Senator Rubio has an upcoming commitment. So I am
going to trade slots with him so he can ask questions before he
has to leave.
Senator.
Senator Rubio. Thank you. I appreciate your indulgence on
this. The Foreign Relations Committee has a meeting I need to
get to as well, so I appreciate you.
Chairman Vitter. Sure.
Senator Rubio. I will not use the full time.
But the first question, Mr. Kramer, as you may know my home
State is not a stranger to severe weather. We had a wetter than
average winter that caused Lake Okeechobee's levels to climb,
and as a result the U.S. Army Corps of Engineers began
discharging billions of gallons of water to the east through
the St. Lucie River and to the west as well. And the discharges
have had a dramatic and negative consequence on hundreds of
businesses that rely on healthy rivers, including, for example,
the commercial fishermen. And, of course, tourism results have
seen a decline in various parts of the State.
So I will continue to work on the Central Everglades
Planning Project, which is more of a long-term solution. But in
the short term, we should help these businesses that have been
harmed to recover, and here is how we can.
On the 17th of March of this year, the Secretary of
Agriculture issued a disaster declaration for several Florida
counties as a result of flooding due to heavy rains. This
declaration triggered the eligibility for SBA assistance. It is
my understanding that SBA is considering extending eligibility
under this same declaration to businesses affected by these
discharges from Lake Okeechobee, and of course, that is
something I would strongly consider--strongly encourage the SBA
to approve.
Can you update me on what the status is and the estimated
timing for a decision on that?
Mr. Kramer. Sure, Senator. Thank you for that question.
I am aware of the situation. I am aware that the Secretary
of Agriculture has made a declaration, a disaster declaration,
for that area. I am not aware, though, that--for an SBA
declaration in the absence of a presidential declaration we
have to receive an application from the governor for our
services and our declaration.
The governor has made such a declaration with regard to two
different events in late February related to tornadoes that
were in Florida, and so we have worked with them on that. And I
know that those came to us just last week, and we should have
an approval. I expect a decision in a matter of days on those.
I am not aware yet, though, that we have received a request
for a declaration on the other one, although I can contact our
staff and make sure they use the established lines of
communication they have.
Senator Rubio. So by issuing the declaration by the
Secretary of Agriculture for these counties, as a result of
flooding, this in and of itself does not trigger eligibility
for SBA assistance?
Mr. Kramer. I will confirm. My understanding is that when
there is a presidential declaration our services are
automatically triggered. Otherwise, there is a separate process
by which we make a declaration. Oftentimes, it can happen in
concert with the other ones, but the Secretary of Agriculture
declaration would not necessarily trigger our services. But I
will confirm that----
Senator Rubio. Okay.
Mr. Kramer [continuing]. And make sure that we follow up.
Senator Rubio. Well, if there is something missing from the
State side, we would like to know about so they can address it.
It related to the event you talked about, Ms. Zimmerman. My
question is with regards to both Escambia and Santa Rosa
Counties. They were ravaged by storms. The first had one
tornado hit the Town of Century, hit over 100 homes and
commercial buildings, caused about 3.9 million in damages. And
then the second hit Ferry Pass just a few days later and
destroyed, or severely damaged, about 300 homes and buildings.
And, the total damage, about $18 million.
So the governors made these requests, and I wrote the
President twice in support of two separate disaster
declarations--first, for an emergency declaration which was
denied, and then subsequently, a major disaster declaration
which was also denied.
So the Pensacola News Journal has reported that one of the
reasons that the State will not receive disaster assistance is
because, independently, the storms failed to meet a damage cost
threshold for Federal assistance. The Journal says that FEMA
refused--this is a quote--``refused to let the State roll the
damage amounts for the two tornadoes into one request.''
However, given that these storms occurred in the same week
and were only 30 miles apart, I believe FEMA should be able to
roll the damage totals from the area into one request. It is my
understanding that this has been done in the past for similar
disasters.
So what are the guidelines for assessing the cumulative
effects from storms in close proximity and time? And I guess
what are the guidelines? I know that has happened in the past.
Ms. Zimmerman. Thank you, Senator.
Yes, when storms impact communities, we look; we work with
our partners at the National Weather Service to identify
whether storms are of the same system or if they are of
separate systems, and so we rely on them as another Federal
agency to tell us if they are one system or not.
When we look at disaster damages and the impacts, we look
at that first, but we look at the overall impacts of those
disasters and get the requests from the governors, which we did
have a request from the governor for the storm that hit
Escambia and Santa Rosa, and they requested for individual
assistance.
We went out and performed damage assessments alongside the
state and local communities and identified a total of 45 homes
destroyed and 40 with major damages, so looking at just about
85 homes, major damage or destroyed. So that was of a level
that it was felt that the State would be able to handle that.
Senator Rubio. Okay. Well, just in closing, I just want to
hopefully be able to work with you on this because this has
been a recurring issue in Florida. Florida is victim to
multiple storms that occur within a short period of time. In
and of themselves, the one storm, the one tornado may not reach
the threshold, but when you combine all these events happening
in the same geographic area within a close proximity of time
and space, if you add those up, it gets pretty dramatic. And
Florida seems to be repeatedly impacted by this.
I hope we can establish guidelines that allow us to meet
that threshold, and I am sure we will work with your agency to
do that, I hope.
All right, thank you.
Thank you, Chairman.
Chairman Vitter. Great. Thank you very much.
Senator Booker.
Senator Booker. Mr. Chairman, with your indulgence and
thanks to your example, I am going to allow Senator Heitkamp to
go next.
Chairman Vitter. Okay.
Senator Heitkamp. He said he would only do that if I made
it a big public display that he was so gracious, but . . . no.
[Laughter.]
Senator Heitkamp. Actually, I think that----
Chairman Vitter. I do not think Marco spent enough time
pointing that you are on our side. So maybe you can.
Senator Heitkamp. Example, right?
I think it is interesting when you look around this podium
here to see that there is not a state that is not impacted by
disaster. And you know, you can have a state as large as
Florida, as large as New Jersey, rural like North Dakota and
like Louisiana, and we all know that it is some of the most
trying times for so many of our people.
And certainly, when we think about disaster in North
Dakota, we think about flooding. And it is not the kind of gush
flooding that you see come down a valley. It is the slow rising
of water that spreads out of the banks and literally can
destroy a whole town, similar to what happened in Grand Forks,
North Dakota.
Now being a kind of veteran of the programs, obviously, we
were participating and glad to see the Chairman's emphasis on
the RISE Act, see it passing, but also want to make sure that
implementation is done in a way that we think that was intended
by Congress.
And one of the criticisms that I frequently hear,
especially of the SBA programs, is the criticism that you
have--it seems like there is one hand taking, or one hand
extended while the other hand is taking. And way too often, for
small businesses it is not just their business that is
affected; there also is their home.
And so we were pretty insistent that a provision needed to
be placed that would prohibit SBA from collateralizing
someone's home because then literally their whole life is at
risk, unless that was necessary.
Mr. Kramer, can you tell me what is the timeline in
implementation of that provision? Because as I understand it,
it is one of the provisions of the RISE Act that has not yet
received implementation, has not been implemented.
And, if it has not been implemented, then what is your time
frame in which you will see it being implemented?
Mr. Kramer. Well, thank you, Senator, for that question,
and I think you hit in the question on some of the challenges
that we face in providing disaster assistance and running a
prudently managed program.
On the one hand, we go into these difficult circumstances.
We are the loan side of the operation, not the grant side of
the operation. So, in addition to providing support, we are
creating a long-term relationship.
Under existing laws and regulations, we are required to
take the best available collateral in order to protect the
long-term sustainability and integrity of the program. But I
think when you talk to all of our folks who work in the Office
of Disaster Assistance, they know well how to be both competent
and also compassionate of the circumstances that people are
going through.
So as I think we are looking right now at writing
regulations that enforce the specific language of the RISE Act
with regard to taking collateralization of the home, and I
expect that at some point this summer we will have a draft of
that because we are trying right now to figure out how to do
exactly what you just said--to be compassionate and
understanding about people's need to keep their home after a
disaster, but also to do it in a way that also serves the other
obligations that we have, to take collateral in these loan
programs, maintain the subsidy rate that we operate with, and
all that.
So I can tell you that all of those aspects of your
question are being given due consideration. We are in the
process of working on a regulation this year that I think we
will have in draft form by sometime this summer.
Senator Heitkamp. So you anticipate that by this summer we
will at least know what the draft regulation looks like, with
implementation probably by the end of the year?
Mr. Kramer. I think that is probably the schedule.
Senator Heitkamp. What would you do in the meantime? The
old rules would remain in existence until you change, or would
there be an ad hoc determination?
Let's say we had a disaster tomorrow in North Dakota.
Mr. Kramer. Right.
Senator Heitkamp. With SBA funding for small business, how
would--given that this law is in effect, how would you then
implement this provision without a regulation?
Mr. Kramer. You know, I asked our staff a very similar
question to that--what we are doing in the interim, and how
often it is the case that we go in and actually take and try to
foreclose on the property of a disaster survivor. And my
understanding is because of what we do and the other resources
we have in the field actually foreclosing on someone's home as
collateral is an act of absolute last resort that we do not see
happen very often.
And so I have made clear to that staff that before we would
take some action we would need to think clearly about how to
make sure that we are in compliance with the new terms of the
statute. But it is something, frankly, that I do not think we
expect to happen in the short term while we are doing this.
Senator Heitkamp. Well, obviously, I am deeply concerned
because a lot of times second and third mortgages on homes is a
reality for homes that are devastated by a natural disaster.
And simply to--you know, if you are a homeowner, one would
question why you would ever hang on, and that is not good for
the community either. So, if we are going to see communities
recover, we need to make sure that there is a possibility of
recovery in a way that is maybe more humane than what we have
had before.
Ms. Zimmerman, I think we have come a long way on disaster
response and recovery, and certainly, with the passage of the
RISE Act. But there is always room for improvement. And I know
when we look at the challenges in a rural state, like North
Dakota, getting out there and getting people to kind of
appreciate what the unique challenges are in a rural community.
Can you just tell me what you see as necessary next steps
to provide coverage not just in large urban areas but also
rural areas in terms of recovery from natural disasters?
Ms. Zimmerman. Sure. As we are out in any disaster, it is
challenging, when you are in a rural community that has been
impacted by disasters, to make sure we go to the people. And
that is one of the things that we, over the last few years,
have been concentrating on with FEMA, to make sure we have
staff going out in the field to meet the disaster survivors
where they are at, where they are trying to recover, and not
making them come to us.
So by having mobile centers that we move around and take
people so that they can be walking the streets in those rural
communities or driving to where the people live to make sure
they are getting the assistance, whether it be that assistance
that FEMA could provide or from any of the voluntary agencies,
we are working very closely with other partners that we have in
the emergency management/disaster response world.
Senator Heitkamp. I think one of the great challenges here
in terms of disaster relief is that the balance between wanting
it to be self-contained and have no subsidization from Federal
taxpayer dollars, and then recognizing that the taxpayer input
and dollars that we can bring to help a community recover is
good overall for the economy of this country but also is a good
investment. So it is a tough balance.
And so you see it right now with flood insurance. I am
trying to figure out if we are going to cash-flow flood
insurance entirely on its own or whether we are going to have
some kind of subsidization that recognizes a universal risk
that we all take and that we are all in it together.
So I think these are issues that we are going to have to
work through in Congress.
But we certainly appreciate the work that both of you do,
and I am grateful, as is my State, for all of the assistance
FEMA has given us as we experience, whether it is a tornado or
whether it is devastating flooding in my State. Thank you again
for your public service.
Chairman Vitter. Great. Thank you, Senator.
I will go to my questions now. First, I want to thank both
of you and your agencies for your response recently in
Louisiana. It has been very proactive and very aggressive, and
we appreciate that. And I think all of our goals is to make
that the new normal in every state after every disaster from
now on.
Let me go back to the RISE Act. One significant provision
in the RISE Act was the Recovery Opportunity Loan Program, and
that is a big priority of mine in the RISE Act, and we want to
get that up and going.
Now we were concerned when we were writing the RISE Act
that if you look at, say, the 2008 Farm Bill, with disasters
programs in it like the Immediate Disaster Assistance Program,
that is still not implemented. It is still without regs,
without guidance, basically with no substantial action, Mr.
Kramer, from the SBA. We do not want that to happen. It should
not be happening there.
We certainly do not want it to happen in the Recovery
Opportunity Loan Program. For that reason, one thing we did is
design and stand up that Recovery Opportunity Loan Program on
the existing 7(a) loan program platform, which should mean the
process to implementation should be a lot quicker.
So what is the update on that, and what is a specific
timeline on this implementation of the Recovery Opportunity
Loan Program?
Mr. Kramer. Well, thank you, Senator Vitter, and I think a
lot of my response will agree with some of what you just said.
I think the Recovery Opportunity Loan Program in the RISE
Act has a good opportunity for success in great part because of
what you just said about the fact that it is an idea built upon
our existing 7(a) loan platform.
Outside of the straight disaster loan context, most of our
other business finance programs operate as guarantees where we
are not making the loans, and so we need a willing partner,
that bank that is going to go out and make a loan to a small
business that we then guarantee, which takes some of our direct
control out of that system. And I will talk about, you know,
the IDAP, EDAP, and PDAP in a second, which is, I think, part
of the frustration we are running into in getting those up and
running.
On Recovery Opportunity, though, to make sure that I answer
your question up front, we are looking right now at modeling
how we can get the regulations written on this. I would expect
that sometime this summer we will have regulations out on
Recovery Opportunity.
Frankly, I will tell you the one issue that we are trying
to get through right now is the opportunity in the Recovery
Opportunity loans is that it takes a normal 7(a) loan and
increases our guarantee up from what is usually 50 percent to
85 percent. And I think we try to use that 35 percent to
incentivize the banks to become partners in helping us in
disaster response, which is a great idea.
At the same time, though, our fees have to remain the same,
and we have to operate that program at zero subsidy. So, in
order to roll that out, we need to do the modeling to make sure
that we can take on that additional guarantee amount without
changing the fee structure of the subsidy amount, but we are
doing that work right now. Once we figure that out, it will
lead us to writing regulations, which we expect to do this
summer and have those.
Chairman Vitter. And so this summer would be the end of
that whole process?
Mr. Kramer. I think the end of the process, where we have
looked at that and we are then writing the regulations and then
putting them into a clearance process and putting them out for
comment.
Chairman Vitter. Well, I do not want to eat up all my time
on this.
Mr. Kramer. Sure.
Chairman Vitter. But could you follow up in writing with a
schedule of the entire rollout process to completion of this?
My experience in life with myself, among others, is that you
will never stay on a reasonable schedule unless you first have
a reasonable schedule. I mean acknowledge a goal. And so, if
you can give that to us in writing, that will be a great step
with regard to staying on some reasonable schedule.
Another big concern that we tried to address in the RISE
Act certainly comes out of my Katrina and Rita experience. One
of the most frustrating things I saw was enormous, mostly FEMA,
dollars coming into Louisiana for all sorts of things like
debris removal, just to take an obvious category, and almost
all of it going to mega-contracts, to mega-firms, outside
Louisiana. And the only Louisiana small business participation
was six rungs of subcontracts down, pennies on the dollar.
And we did some analysis comparing that, for instance, to
local jurisdictions that had preexisting debris removal
contracts with local, and those were much more efficient, much
lower cost for the taxpayer, much bigger positive impact for
local businesses, which helped with the recovery.
So we tried to address that in the RISE Act.
Going back to Mr. Kramer, there has been real delay in
SBA's formulation of guidelines for Federal agencies to meet
that local requirement. What is the cause for delay? How are we
going to break through that?
Mr. Kramer. So, on that specific provision, we do have a
draft of rules that we are currently consulting with the FAR
Council because eventually the way we expect that process to go
is we would take the regulations on the local contracting
preference and incorporate that into the general Federal
procurement policy rules. And so we are in that stage of the
discussion right now with them to get those provisions
implemented.
Chairman Vitter. Okay. Again, if you could follow up with a
specific timeline that we can stick to because this is another
big, big priority of many members on this Committee and
otherwise.
Okay, now we will go to Senator Peters. I think that order
is right.
Senator Peters. I will be happy to go. But Senator Booker,
were you?
Senator Booker. No, sir. It is on you, Senator Peters.
Senator Peters. Well, thank you, and my accolades to you as
well for passing because you were here before me. So I
appreciate that.
Senator Booker. I appreciate it. Feel free to take more
time up if you would like to give me more accolades.
Senator Peters. Thank you.
Thank you, Mr. Kramer and Ms. Zimmerman. I appreciate your
being here, and I want to echo what my colleagues have said. We
appreciate your work in standing up for emergencies that occur
around the country. It is something that we must do as a
nation, to stand with those who are facing a crisis in whatever
form. It goes to the core of who we are as a people, I believe.
And that is why it has been somewhat concerning, and
disappointing I think, with what has happened with the
situation in my State with the City of Flint, which I think
most everyone would agree has been absolutely a catastrophic
disaster that impacted an entire community. You have poisoning
of water that has impacted every citizen but in particular the
children. As you know, lead poisoning can have an impact on
brain development at an early age of exposure, which will carry
on for an entire lifetime.
We were pleased that the President declare an emergency,
which has been helpful with both SBA as well as FEMA resources.
But as you know, under the Stafford Act, it is not categorized
as a major disaster, and a request from the State to have it
categorized as a major disaster has been denied.
Although, I can assure you if you ask any resident of the
City of Flint if this is a major disaster they will not have to
think very hard or long about that. And certainly, if you ask a
child if this is a major disaster, given the situation that
they may have been poisoned for their rest of their life, it is
pretty clear to parents and everyone around them that it is a
major catastrophe.
So I guess we probably need to change that, and I certainly
think we need to work on thinking through how we define
disasters.
But perhaps, Ms. Zimmerman, you could explain to me some of
the limitations that are placed on FEMA as well as the SBA
without a major disaster declaration, although we do have this
emergency declaration. What are some of those limitations, and
how is FEMA's ability to respond impacted by the definition?
Ms. Zimmerman. Sure. Thank you, Senator.
As you stated, there is an emergency declaration, and we
have an authority to respond whether it is an emergency
declaration or a major disaster declaration. Based on the
governor's request to have assistance with bringing in the
water, the cartridges, the filters, and the test kits, we have
been doing that since January 15th when the major disaster
declaration was made, making those resources available to the
State and on down to the community of Flint so that they have
that and have the accessibility of all of those commodities. So
there is no difference between the emergency declaration and a
major disaster declaration in us being able to provide what was
being asked for.
And we are working side by side with the State and with
HHS, Health and Human Services, who has the lead for this event
on the other side, to make sure that as the governor's office
has stood up in the local community, to have their long-term
recovery committee looking at this and the full impacts of that
and what might be needed in the future. So we are participating
also with that on that side of it.
Senator Peters. Although I understand the emergency
declaration has been extended just to August?
Ms. Zimmerman. The governor asked for it to be extended
until August 15th, and we have done that.
Senator Peters. But my understanding is that FEMA also said
that this would be the last extension. Is that correct?
Ms. Zimmerman. So, yeah. So emergency declarations are
meant to be in an immediate emergency. It is usually between 60
and 90 days. This one we have extended for seven months, for a
total of seven months. So, looking at that, we would be looking
to the governor's committee on long-term recovery as well as
the Flint Recovery Group to be looking at what actions they are
going to be taking and how this situation will be addressed.
Senator Peters. So even though the statement was made that
this would be the last extension until August, is it possible
to extend it beyond that? Because it is clear that this is an
emergency that is going to last well beyond August?
And my concern, quite frankly, for Flint, is that although
it is receiving a lot of national attention now, there are TV
cameras, and the lights are shining very brightly, eventually,
that all goes away. And the problem is still very much there
and will continue to be an insidious problem for decades to
come.
How can we work with FEMA to extend? And if the governor
requested, what is the process to get additional Federal
assistance?
Ms. Zimmerman. Sure. Thank you, Senator.
So, yeah. So the intent of an emergency declaration, as was
given to us by Congress, was for those situations that are of
immediate impact--as I say, 30, 60, 90 days. So we have
extended it.
Emergency work, if you do have a major disaster
declaration, the most that usually goes for is six months. So
we would have to look at this because the intent of the
emergency declaration is not to go on for years, but something
that would be handled, and then you would look for what is the
longer-term solution to the issue.
Senator Peters. Right.
Ms. Zimmerman. So we would be happy to--we are
participating in those discussions, as I say, with the
governor's recovery committee as well as the Flint Recovery
Group.
Senator Peters. Great. Well, I appreciate it. I see my time
is expired.
And, Mr. Kramer, I appreciate the SBA's efforts on loan
assistance as well in the City of Flint.
But it is just my hope that both of your agencies
appreciate, and I believe you do--you have folks on the
ground--and realize the long-term nature of this.
And when it comes to the recovery of small businesses in
particular, it is definitely long term in the fact you have
reputational risk, especially for our restaurants and other
places in Flint, where it may be a long time for people to come
back to those types of businesses, which is much different than
what you have in a natural disaster. When the hurricanes pass,
it is past. This is something that may have lingering, residual
impact, and I certainly hope the SBA will continue to be there
helping our local businesses.
Mr. Kramer. Yes, Senator, we plan to be. I think you have
seen in our response, in addition to our traditional loan
programs, which is often what we bring to disaster areas, I
think we identified in Flint that there was a need for
additional business counseling services, additional micro-loan
services. Administrator Contreras-Sweet went out and announced
some of those efforts. So I think we realized it was a unique
situation, different from some of the other disasters we have
seen, and I think have put in place some support that will help
that long-term recovery.
Senator Peters. Great. Thank you. Thank you both.
Senator Booker [presiding]. Senator Cantwell.
Senator Cantwell. Thank you, Mr. Chairman, and certainly
appreciate your discretion in allowing us to ask questions
before you.
Like many of my colleagues who have asked questions about
disasters that have already occurred, I do, too. And so
although I want to point out that we are doing a big Cascadia
exercise in Washington in a few weeks, or actually I think it
is in June, where nearly 6,000 people are going to participate
in a response plan for a possible tsunami event or something in
the Cascadia subduction zone. So we are talking about
something, you know, on a grand scale that could impact
thousands of people. So definitely appreciate FEMA's
participation in that.
But, two things. One, in the fires that we have had, we saw
both the declaration by FEMA that there was not enough housing
density to reimburse on the housing issue, and I feel like
there is basically a prejudice against our rural communities
that are clearly communities. If you have a valley community,
which is what the Twisp Valley was, and yet because it is not
in a dense concentration, and yet when hundreds of homes are
wiped out by a fire--and it is a tourism area. So if you do not
have workers to rebuild the homes, then you are not going to
have the same economy, which affects our whole state economy.
So I wonder what FEMA is willing to do to review that. You
turned down the request, but I do not even mean the specific
request now. I mean, what do you think about this issue that
there is a prejudice against areas that are not as dense?
Because I just do not think you are taking into consideration
the economic footprint of a rural economy and in these cases
where you are talking about whitewater rafting, skiing--you
know, again, destination tourism areas.
The second issue that has come up in both the Oso disaster
and the two fire seasons that we have had, which have been the
worst, I think the cost is--we think one of our tribes probably
had a $2 billion timber loss. That is how much economic impact
we are talking about.
That we do not have a good communication plan--there seems
to be a chicken and an egg between when a broadband
communication system is going to be deployed because no one
knows who is going to pay for that.
So, in the Oso case, literally, two communities were
separated by a mudslide that was devastating, and the broadband
was knocked out. And so the question was: Who is going to pay
for the communications? Who is going to pay for the disaster?
In the two fires, one, the fire basically burned up the
broadband, and so it was gone. And in the second fire,
literally, a similar situation happened. A command center was
trying to provide response to this whole county about whether
they should evacuate or not, but no one had any way to
communicate with anybody.
So I would rather see some temporary deployment of
broadband communication by FEMA, emergency response in the
emergency, and us not worrying about this issue of, okay, well,
now we have to gather all the information, have to submit it,
wait to see if there is a declaration before we are going to
provide the communication.
If these people are responsible in the middle of a fire
season for the evacuation plan, whether the valley should
evacuate, and yet we have no broadband and no one wants to
deploy the emergency communication, how is that an emergency
response?
So, Ms. Zimmerman, I do not know if you have some
suggestions for either of those problems.
Ms. Zimmerman. So, yes. Thank you, Senator.
So on the first one, for individuals. So density of the
houses is just one of the criteria that we look at. So,
obviously, we look at overall population but what the impacts
are. We look at the demographics of those that were impacted by
the disaster.
We look at what the state should be able to assist with. As
we know, when the local community gets impacted, then it goes
up to what the county can assist with, as well as what the
state can assist with, before it rises to the level of what the
Federal Government and what the impacts would be that would
have us come into it.
So we look at many different factors. One of the things----
Senator Cantwell. And is that an economic issue, do you
think? Is there some economic threshold?
Ms. Zimmerman. We look at the economic, but we cannot do
anything for the economic side. That is where we rely on our
partners at SBA for economic recovery from events. So as we
look that--but that is something that has been an issue for a
long time.
And from the Sandy Recovery Improvement Act--back in 2013,
that was passed--it gave us the ability to look at the
individual assistance and to be able to look at the criteria
that we would be looking at and how we would be able to say
whether or not a state can handle it, what is the state's
responsibility, the state's capabilities, and to be able to
look at that. So that is some guidance that we have looked at.
We have worked with our state and local partners to
identify how should we be looking at individual assistance
differently. So I can tell you that that guidance--we are
working together. We published some information in the Federal
Register, we got comments on that, and we about to--I would
hope before the end of the year, we would be publishing the new
criteria for individual assistance. So that is something we
have been working hand-in-and with----
Senator Cantwell. Is there anything about this density
issue?
Ms. Zimmerman. So, yes. So that is part of what it is that
we are looking at, as well as how we can truly look at the
financial capability. A lot of it comes down to what financial
resources are available at both the local and the state
governments. So that is something we looked at.
So, as I say, that should be coming out here before the end
of the calendar year.
Senator Cantwell. Okay. And what about the communication,
broadband communication?
Ms. Zimmerman. Communication. You know, we have our mobile
emergency response communications that we can dispatch when it
is needed. When you were talking about you have to gather all
the costs to see who is going to reimburse, if it is coming to
rebuilding something, that does come after a presidential
disaster declaration.
But when us--looking when you are talking about fires, in
the U.S. Forest Service and their efforts, they are the lead
when it comes to forest fires and the resources and things that
go out for that. So not being able to look at that, what
resources they have, but if we are called in to assist we can
do that with--we have mobile communications vans and trucks
that go out.
Senator Cantwell. I see my time is expired, but I want to
follow up with you on that because I really do think there is a
gap here. And I am happy to put it in writing and maybe get
some response.
Ms. Zimmerman. That would be good. We would look----
Senator Cantwell. But I definitely feel like we are still
in the emergency and there is no broadband communication and it
does not get deployed. So I still feel like there is a chicken
and egg here.
And I would appreciate if you would also look at--there is
a--after the Carlton Complex, which at that moment was the
biggest fire in our State's history. There are some FEMA
requests that are still unresolved in that Carlton Complex as
far as water main damage that was done. So if you could get us
a response on that, and we will get that to you in writing.
Thank you.
Chairman Vitter [presiding]. Great.
Senator Booker.
Senator Booker. Thank you very much, Mr. Chairman.
Before I start my remarks, I just want to give an
acknowledgment to the staffer in the back there who is holding
up the number sign. He is going above and beyond the call
today. And I will also mention that he has----
Chairman Vitter. Oh, I thought that was a rating, actually.
[Laughter.]
Senator Booker. Let's also mention for the record----
Chairman Vitter. I was noting that none of us were getting
above 5.
Senator Booker. No, no.
[Laughter.]
Chairman Vitter. I am glad to see it is the time.
Senator Booker. Which, as you know, these days for
Congress, that is still a generous rating.
But I will note that he has the second-best haircut in the
room right now.
So I just, again, want to--I cannot say how grateful I am
and my office is since, literally, the week that I arrived, in
fact before I was sworn in, in the special election, we began
working closely with FEMA and then the SBA on the urgencies
around Sandy. It has not always been a road without bumps, but
we have been so grateful for the responsiveness, corrective
actions, and even partnering with people like Senator Vitter
with the RISE Act, in trying to make sure that we are doing
everything possible.
I will note that the reopening of the centers has resulted
in tremendous resources being brought to businesses in my home
State. And so I really cannot say enough with the open lines of
communication, the partnership, the working together, and
really what this is all about, which is helping people in our
respective states. So thank you all for that.
I am just going to go with some general questions because,
obviously, I feel very much that I am getting a lot of the more
particular questions regarding Jonas and Sandy.
But just generally, you know, the destruction of
residential homes and displaced local populations takes a major
toll on local economies. There is incredible evidence showing
that a dollar spent for mitigations before a disaster strikes
saves about four bucks in the aftermath. It is just sort of
common sense and even fiscal conservatism. It is like, where
would you rather put the resources?
But from 2011 to 2014, FEMA Spent 14 times more within its
mitigation programs after rather than before a disaster. So
just as a matter of thought on this and your input for the
record, Ms. Zimmerman, how can FEMA correct this seeming
imbalance in its approach to pre- and post-disaster mitigation?
Ms. Zimmerman. Sure. Thank you, Senator.
So the--I am not going to--the pre-disaster mitigation
program does not fall within my purview but very well aware of
the Hazard Mitigation Grant Program. So, after disasters,
communities get 15 percent of the total cost for individual
assistance and public assistance combined, an additional 15
percent on top of that. That then gets expended for mitigation
grant projects, which the state then administers, makes the
selection of those projects.
And if a state has an Enhanced Mitigation Plan, they can
get 20 percent of that total cost of the disaster.
Senator Booker. Right. But just in general--and I
understand that.
Ms. Zimmerman. Yeah.
Senator Booker. And these are great programs that we have
taken advantage of.
Ms. Zimmerman. Yes.
Senator Booker. But don't you think a rebalancing, seeing
what you are doing after the fact, that it could have maybe
even prevented if we had done work? Don't you think it requires
a rebalancing? I am asking you to opine here if you would.
Ms. Zimmerman. So for us, I mean, we are given the dollars
that we are given to work with and the statutes that allow us
where we can pay for mitigation.
So a lot of--I have to give accolades to a number of states
and local communities that put their state and local dollars
into the mitigation projects that they do. A lot of them do far
more than is provided by the Federal Government when it comes
to mitigation ahead of time.
Senator Booker. No. I appreciate that.
And then just real quickly in the two minutes I have
remaining, you know, it is about to be hurricane season right
now, and I just want to know--maybe I will turn to the SBA. Are
you doing anything to prepare for--you know, we have heard from
everywhere from Florida to, obviously, concerns I have, and
Louisiana. Are we doing anything to be proactive, learning what
we have from storms like Jonas and Sandy?
Mr. Kramer. Absolutely. So in response, I mean, we are
still, as I suggested in my opening remarks, implementing the
solutions to the lessons we learned from Sandy. A lot of that
for us is centered around automating our programs. We are a
good deal of the way down that road but not all the way there
yet, but we expect that over the next 6 to 12 to 18 months we
will have a fully automated system online.
We have found in some of the larger disasters we have
responded to in the last couple of years--the flooding in
Dallas, the flooding in South Carolina--that we have been able
to significantly reduce our response times, to get answers to
people applying for our loan programs, down to a matter of 10
days or so, a few days longer for businesses, shorter for
homeowners.
And we have confidence that we will be able to scale that
up to respond to even a much larger incident like a hurricane.
Our application process, the way we process those loans and
distribute them, I think are all far down the road of being in
a fully automated system so that we will be able to respond
more quickly even when we do have to scale up to hurricane
levels.
Senator Booker. Thank you, Mr. Chairman.
Chairman Vitter. Thank you very much.
Senator Markey, perfect timing. If you are ready, you are
up. Otherwise, I can go on a second round.
Senator Markey. I might need FEMA relief here.
Senator Booker. You, sir, are not a disaster.
[Laughter.]
Senator Markey. May I hold just for a minute?
Chairman Vitter. Yes. I am going to go to a second round.
Maybe you can follow me if that is okay.
Ms. Zimmerman, you heard my concerns about involving local
small business in recovery and cleanup. You mentioned that
issue in your comments, and previously Ms. Gerilee Bennett from
FEMA in a roundtable discussion commented on FEMA efforts to
better involve local small business. What is being done from
the FEMA perspective? Because I think that is such a missed
opportunity in the past in helping the economy recover through
these local small businesses.
Ms. Zimmerman. Sure. I appreciate that, Chairman.
So, as we are looking at disaster recovery work, FEMA
ourselves does not contract with small businesses to do debris
removal and to do other projects. That is through the grant
money that we give to the states, tribes, and local
communities.
But what we do when we set up our joint field offices is
any staff that we need to hire, such as the security, do local
hire programs so that we, as you say, bring back into the
community. Then also, as we go out and purchase, if we need to
purchase commodities or things, we try to do that on the local
basis. And then also, encouraging folks.
One of the great elements of the Sandy Recovery Improvement
Act is for the debris removal, and as you noted in your
comments. So being able to pay local communities that have gone
to the effort to put together a debris plan, to put together
pre-identified contractors, local contractors that they could
call upon in times of need and to be able to do their debris
removal, as well as to be able to reimburse those local
communities if they use their own workforces to do that debris,
which would not be part of their normal job duties.
So those efforts from the Sandy Recovery Improvement Act
have really--we have seen a lot more debris being removed
quicker, as well as less expensively, and to employ both local
contractors as well as the local community through their own
efforts.
Chairman Vitter. Okay. Great. Thank you.
Mr. Kramer, I mentioned previously the lack of
implementation of programs in the 2008 Farm Bill. Has SBA
completed revising its own planning documents. If not, when is
that going to happen, and why hasn't SBA reported to Congress
on issues it has with implementing those mandated programs, if
there are problems or obstacles?
Mr. Kramer. Thank you, Chairman. I am happy to provide that
update.
As we addressed before, with the three different forms of
those programs--the IDAP, EDAP, and PDAP.
On the IDAP, we issued regulations on that program to
implement that program in October of 2010. We have not yet,
though, had utilization of that program because, again, the
banks that are making the loans have not sought to utilize that
program.
So in order to modify that program to increase utilization,
and also figure out how to design the other programs so that
they would not run into similar obstacles, we recently put out
all three for an ANPRM to get comments from the banks
themselves about the programs and what they would like to see.
We recently closed that. We received about 20 comments
including from the 2 largest industry groups, and there was
decent expression of frustration by those banks about how they
could make this work.
And so we are engaged in a dialogue with them right now
about how we can redesign the programs to make it something
that they would choose to take on. There are some risks that
the banks would take on in those programs, and they are trying
to figure out what we can do to support them in doing that in a
way that would be beneficial to them.
So we are reviewing those comments right now, and I would
be happy to have our staff reach out to your staff once they
have reviewed those comments and provide a report on what we
are hearing about those programs and to talk about a way
forward.
Chairman Vitter. Okay. Could you also--I know I sound like
a broken record. Can you also give us a timetable about how we
are going to work this?
Mr. Kramer. Yeah. And I think that one--
Chairman Vitter. This stuff does go back to the 2008 Farm
Bill.
Mr. Kramer. We will do that.
Chairman Vitter. Okay. And then finally, Mr. Kramer, one
significant need for a lot of this to move more effectively is,
in some cases, automating the approval process for disaster
loans, other technology, IT issues. However, SBA has had
difficulty in the past in implementing large IT and technology
projects. What is the SBA doing to ensure that its IT
modernization projects, including DCMS 2.0, will be completed
on time?
Mr. Kramer. We have a five-minute limit for this? I could--
we have been working--I have been working directly on some of
the IT challenges at the agency since the day I got there a
year ago, and we are working on this on a number of different
fronts.
One of the things we have done that might get most directly
to part of your question is that we have identified the parts
of our IT system that are--you could argue it is all essential,
but--the most essential. When you look at our financial
systems, it is our capital access program and our disaster
systems. We have taken efforts to sort of prioritize and
emphasize those processes.
And so I think we do have sufficient funding in place. We
are sufficiently far down the road in procuring the contractor,
who has already done this sort of scope of work, to implement
DCMS 2.0, and that is on track. And I think that is something
that we will do successfully on time because we have already
taken a couple of steps in that direction.
We have successfully implemented the online application,
which is now being utilized in 90 percent of circumstances of
people applying.
We also, just within the last couple of weeks, set up phase
one of our web portal, which is the external-facing part that
allows disaster survivors who have applied for a loan to go
online and see exactly where their loan is in the process.
The part in the middle that remains is to make sure that we
take our processing systems and fully automate them so they can
be flexible and scalable as well.
But I think with the success we have had to this point I
think we will continue to have that in rolling out DCMS 2.0.
And I think when you look at what we have done with SBA
One, and the success we have had in sort of building up the
automation we have for our lending programs, and rolling that
out, I think we have seen good success in that regard.
So this is certainly not an issue that I will be resting
on. There are a number of IT challenges across the agency. But
I do think that we are making positive efforts and moving
forward on a number of them.
Chairman Vitter. Okay. Now we will turn to Senator Markey.
Senator Markey. Thank you, Mr. Chairman, very much.
And we thank all of you for your great work. I want to
begin by first thanking FEMA for your great work in helping us
up in Massachusetts after our 111 inches of snow last winter.
FEMA was just great, and I want to put that on the record.
We had 111 inches of snow, and Anchorage, Alaska had 20.
They had to actually truck in snow to begin the Iditarod race.
They had to do the same thing again this year. So, clearly, the
weather is changing, and FEMA has to adapt to it, and we thank
you so much for that.
And to the SBA, thank you so much. You were there after the
tragic Boston Marathon bombings. And when tornadoes swept
through the Cities of Revere and Springfield, the SBA made
Federal disaster loans to those communities.
And we in Massachusetts, we say, ``There but for the grace
of God goes us.'' If Hurricane Sandy had just been another
degree off and just hit us, we would still be in recovery.
So may I ask this? As FEMA and the SBA look at this change
in climate and the impact that it can have, especially on small
businesses, I look at a restaurant, Haddad's, down on the south
shore of Massachusetts that 10 years ago was told that they
were too close to the ocean. So they had to move it actually up
onto the side of a hill. And then the new maps came out two
years ago, and they were told that that is now no longer
acceptable, that they have to go even higher if they want to be
able to--in the long run, be able to qualify for low-cost
insurance.
So can you talk a little bit about that issue, and
especially how it impacts the SBA, and what planning FEMA has
in place in order to deal with that issue of the ever-rising
tides related to the warming of the oceans and the
intensification of the storms?
Up in New England, actually, our oceans are warming faster
than just about any other place in the world right now. So
could you deal with that, Ms. Zimmerman or Mr. Kramer?
Mr. Kramer. Thank you, Senator, for that question.
As a part of what we do, I would say that our first
response, or our first priority in providing a response, to
disaster survivors is to allow them to rebuild and get back to
a life as normal as it could have been before the disaster. In
doing that, we do make sure in the disbursement process that
people who are going through a moment of crisis have been
thoughtful and prudent about what they plan to do as far as the
disaster recovery goes and so that they are going to be doing
sufficient repairs to make sure that they have a sustainable
structure and home once they are done building.
And adding in the RISE Act the ability for them to put a
safe room into that dwelling is one advance in that direction,
trying to have that sort of advance thought.
I know that we continually look in the demands that we put
on folks to do prudent rebuilding. We are looking all the time
at these same sorts of issues of what are responsible ways to
rebuild and what standards we are----
Senator Markey. So looking out in the years ahead, do you
think that the SBA's budget and FEMA's budget will actually
have to be increased in order to deal with the ever-increasing
power of these storms to damage small businesses, Ms.
Zimmerman?
Ms. Zimmerman. So, yes. So from FEMA's side, we rely on SBA
because we do not have the authority to provide assistance to
small businesses. But, yes, definitely looking at the extreme
weather that we have seen and that we know we are going to see
more of and the changing climates and everything else.
So, really, what we have been focused on is taking a look
at not necessarily--most of our programs were rebuild to what
had been in the past, but really taking that emphasis look on
what could happen in the future and how can that risk, how can
the rebuilding and the recovery that we have a part of make
that be so it is insurable going forward, and so that we are
looking to what could happen in the future instead of always
looking backwards as our programs have previously.
Senator Markey. Do you think that Congress should amend the
Stafford Act to allow for adaptive rebuilding for communities
after natural disasters like Hurricane Sandy?
Ms. Zimmerman. So, I mean, we are constantly looking at our
programs, and what it is we can do under the wide range and the
ability with the Stafford Act, and how we can best support that
to be building and rebuilding for the future.
Senator Markey. And do you have specific recommendations as
to how the agency can improve its response to a similar
disaster like we had last winter in Massachusetts?
Ms. Zimmerman. So, for us, working hand in hand with the
state is very important for us to make sure that we are there
in support of them as we have been trying to lean forward when
it comes to disaster response. So as we see things happening
when we do have a notice for them, to make sure that we have
whether it is our commodities out there, our folks working side
by side in the emergency operations center there, just to be
able to be there and to get that knowledge, and to be able to
make sure that the resources flow shortly thereafter.
When you do have 111 inches of snow, you have got to make
sure people are safe and those actions that those local
communities can take so that residents are not in harm's way.
Senator Markey. And does the SBA have any plans for helping
to adapt to this climate change which is taking place? Is that
part of your thinking at all at this point?
Mr. Kramer. When you look at our role in the disaster
response, it is generally working on an individual basis with
disaster survivors, be them businessowners or homeowners, and
doing that sort of one-on-one relationship.
Generally, the sort of larger communitywide planning and
working with community institutions to take those sorts of
steps are things that are handled by our colleagues at FEMA and
other Federal agencies.
So to the extent that we can do that, and making sure that
businesses and individuals are being responsible in the way
that they rebuild, that is the way it usually manifests in our
program.
Senator Markey. Excellent. Thank you.
Thank you, Mr. Chairman.
Chairman Vitter. Okay. Thank you.
Senator Scott.
Senator Scott. Thank you, Mr. Chairman, and thank you to
both the witnesses for being here today.
As you both, I am sure, are very aware the fact that my
State, South Carolina, experienced devastating floods back in
October, which led to, of course, a recovery effort to rebuild
our communities, our homes, our businesses, and especially our
farms. Our farming community was--agricultural community was
devastated in many ways, and certainly the resources necessary
to rebuild are still in question, and we are still looking for
ways to be of assistance to our farming community and our
agriculture community.
In many ways, our State recovers quickly, but the only way
that we have been able to recover truly has been through the
assistance of both the SBA and FEMA. You guys have provided a
lot of boots on the ground, a lot of manpower, a number of
hours, and frankly, a lot of dollars and resources going into
South Carolina that we are very thankful for.
When I think about the impact of the storm on my community,
I think about the fact that Chairman Vitter was kind enough to
allow me to hold a hearing in South Carolina. What we heard
from that hearing was many of our citizens were very thankful
for the responsiveness of both agencies, very thankful for
their interactions and their communications on a consistent
basis, seemed to be positive which, of course, in the midst of
a storm is not necessarily always what one would expect.
There were some challenges, of course, and I would like to
ask a couple of questions about some of those challenges.
Ms. Zimmerman, I understand that over the past few months
FEMA issued over $150 million in loans and several million more
in grants to South Carolina residents. However, there were
still some FEMA claims that are outstanding, still pending. I
am not sure if you have an idea of how many cases or claims
that are still pending. Do you have an idea of what that number
would be for South Carolina?
Ms. Zimmerman. Thank you, Senator.
I do not, if you are talking about flood insurance claims
or--because just note that our Individual Assistance Program is
not a loan; those are grants that go out to the homeowners.
Senator Scott. Yes.
Ms. Zimmerman. And so if you are talking about flood
insurance claims, I do not know how many are still pending, but
I can get that information.
Senator Scott. That would be great if you could get that
for me.
Ms. Zimmerman. Sure.
Senator Scott. Another question for you, ma'am. Do you have
any recommendations for ways to reduce the hurdles or the
bureaucracy that is in your agency to make it easier and
perhaps more efficient for folks who are waiting for those
claims to be finished up? Is there any way that we could
expedite that process, or do you see any hurdles that we can
work on clearing out of the way?
Ms. Zimmerman. Yes. So, if those are the flood insurance
claims----
Senator Scott. Yes.
Ms. Zimmerman [continuing]. That does not fall in my
purview in response and recovery, but I will definitely go back
and meet with Roy Wright, who is our Associate Administrator
over flood insurance, and be happy to get that information and
to provide any additional assistance that we think could help,
if there is anything that we need from the State to help
process those claims.
Senator Scott. Okay. Thank you very much.
Ms. Zimmerman. Sure.
Senator Scott. Thank you, Mr. Chairman.
Chairman Vitter. Okay. That wraps up our discussion.
Thank you both very much for this discussion and exchange
and also, even more importantly, for your ongoing work in all
of our states, certainly including mine right now due to the
recent flooding.
We identified a number of things where we requested
information and will actively follow up. So we will follow up
on all of that and have as a goal working to improve responses
in all of these areas.
Thank you very much.
[Whereupon, at 3:22 p.m., the hearing was adjourned.]
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