oversight

Disaster Assistance: Information on FEMA's Post 9/11 Public Assistance to the New York City Area

Published by the Government Accountability Office on 2003-08-29.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

              United States General Accounting Office

GAO           Report to the Committee on
              Environment and Public Works,
              U.S. Senate


August 2003
              DISASTER
              ASSISTANCE
              Information on
              FEMA’s Post 9/11
              Public Assistance to
              the New York City
              Area




GAO-03-926
                                                August 2003


                                                DISASTER ASSISTANCE

                                                Information on FEMA’s Post 9/11 Public
Highlights of GAO-03 -926, a report to the      Assistance to the New York City Area
Committee on Environment and Public
Works, U.S. Senate




The terrorist attacks on New York               FEMA has supported many activities through its $7.4 billion in public
City created the most costly                    assistance-related funding to the New York City area. Activities funded
disaster in U.S. history. In                    include grants to state and local governments for emergency response, such
response, the President pledged at              as debris removal, and permanent work, such as the repair of disaster-
least $20 billion in aid to the city.           damaged public facilities. FEMA also provided public assistance-related
Approximately $7.4 billion of this
aid is being provided through the
                                                funding specifically directed by Congress that would not otherwise have
Federal Emergency Management                    been eligible for assistance (e.g. reimbursing costs of instructional time for
Agency’s (FEMA) public assistance               students who lost school time after the terrorist attacks). The major uses for
program, which provides grants to               this funding are as follows:
state and local governments to                  • $1.7 billion for debris removal operations and insurance.
respond to and recover from                     • $2.8 billion to repair and upgrade the transportation infrastructure of
disasters. The Senate Committee                     Lower Manhattan.
on the Environment and Public                   • $0.6 billion to the New York City Police and Fire Departments for such
Works requested that GAO
                                                    purposes as emergency efforts and replacing destroyed vehicles.
determine (1) what activities FEMA
supported in the New York City                  • $0.3 billion to miscellaneous city agencies for a wide range of activities
area through its public assistance                  (e.g., instructional time for students and building cleaning).
program after the terrorist attacks;            • $0.7 billion for non-New York City agencies for many purposes (e.g.
(2) how the federal government’s                    office relocations and repair of damaged buildings).
response to this terrorist event                • $1.2 billion available on June 30, 2003, for public assistance-related
differed from FEMA’s traditional                    reimbursements to New York City and state (work to be decided).
approach to providing public
assistance in past disasters; and (3)           The provision of public assistance to the New York City area differed in
what implications FEMA’s public
                                                three significant ways from FEMA’s traditional approach.
assistance approach in the New
York City area may have on the
delivery of public assistance should            Differences in This Public Assistance Approach
other major terrorist attacks occur
in the future.




                                                FEMA and New York City officials agreed that FEMA’s public assistance
                                                approach in the New York City area creates uncertainties regarding the
                                                delivery of public assistance in the event of another major terrorist event.
                                                They differed on the effectiveness of using the public assistance program as
                                                currently authorized as the vehicle for federal disaster response to a future
                                                major terrorist event. Key New York City officials said that the program
www.gao.gov/cgi-bin/getrpt?GAO-03-926.
                                                needed major revisions, while FEMA officials said it worked well along with
To view the full product, including the scope   the congressional prerogative to provide additional assistance. Nevertheless,
and methodology, click on the link above.       FEMA has begun to consider ways to redesign the program to make it better
For more information, contact JayEtta Z.
Hecker at (202) 512-2834 or                     able to address all types and sizes of disasters, including terrorist attacks.
heckerj@gao.gov.
Contents


Letter                                                                                   1
               Results in Brief                                                          4
               Background                                                                7
               $7.4 Billion in Public Assistance-Related Funding Provided for
                  Broad Range of Activities                                            11
               Debris Removal Operations and Insurance                                 12
               Interagency Agreement for Lower Manhattan Transportation
                  System Reconstruction                                                16
               NYC Police and Fire Department Reimbursements                           18
               Reimbursements to Other NYC Government Agencies                         19
               Reimbursements to Non-NYC Government Agencies                           21
               Reimbursements for Public Assistance-Related Work Authorized
                  by Congress                                                          23
               Public Assistance to NYC Differed from the Traditional FEMA
                  Response in Several Areas                                            24
               No Sharing of Public Assistance Costs by State or Local
                  Governments                                                          24
               Different Processes for Selecting Projects and Closing Out the
                  Disaster Based on Capped Funding Amounts                             26
               Size and Type of Work Was Different Than Work in Other Major
                  Disasters                                                            27
               Response to NYC Area Creates Uncertainties about How
                  Assistance Would be Delivered in a Future Catastrophic
                  Terrorist Event                                                      32
               Conclusions                                                             35
               Agency Comments                                                         36

Appendix I     Scope and Methodology                                                   37



Appendix II    Comments from the Federal Emergency Management
               Agency                                                                  40



Appendix III   GAO Contacts and Staff Acknowledgments                                  42
               GAO Contacts                                                            42
               Acknowledgments                                                         42




               Page i                                       GAO-03-926 Disaster Assistance
Table
          Table 1: Ten Projects We Reviewed and Applicant Organizations
                   Interviewed for Each of Them                                    38


Figures
          Figure 1: Distribution of $7.4 Billion in Public Assistance and
                   Public Assistance-Related Funding                                 4
          Figure 2: Public Assistance Funding Provides the Largest Federal
                   Contribution to the NYC Area’s Recovery                         10
          Figure 3: Public Assistance-Funded Debris Removal Operations             14
          Figure 4: Debris Screening and Inspection Operations                     15
          Figure 5: Interagency Agreement Will Fund Construction of a
                   Permanent New Station to Replace the Extensively
                   Damaged PATH Station Beneath the World Trade Center
                   Towers                                                          18
          Figure 6: Public Assistance Funded Police and Firefighter Overtime
                   and Replaced Emergency Vehicles That Were Destroyed
                   in the Terrorist Attacks                                        19
          Figure 7: NYC Agencies Received Public Assistance Funding for a
                   Range of Work Including Cleaning Dust from Buildings            21
          Figure 8: Port Authority Received Public Assistance Funding to
                   Restore Tunnels That Were Flooded in the Terrorist
                   Attacks                                                         22




          Page ii                                       GAO-03-926 Disaster Assistance
Abbreviations

DHS               Department of Homeland Security
DOT               Department of Transportation
EPA               Environmental Protection Agency
FEMA              Federal Emergency Management Agency
FTA               Federal Transit Agency
NEMIS             National Emergency Management Information System
NYC               New York City
OMB               Office of Management and Budget
PATH              Port Authority of New York and New Jersey




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Page iii                                                 GAO-03-926 Disaster Assistance
United States General Accounting Office
Washington, DC 20548




                                   August 29, 2003

                                   The Honorable James M. Inhofe
                                   Chairman
                                   The Honorable James M. Jeffords
                                   Ranking Minority Member
                                   Committee on Environment and Public Works
                                   United States Senate

                                   The Honorable George V. Voinovich
                                   The Honorable Hillary Rodham Clinton
                                   United States Senate

                                   The September 11, 2001, terrorist acts were the most destructive and
                                   costly terrorist events—in terms of lives lost, physical damage, emotional
                                   trauma, and economic hardship—that this country has ever experienced.
                                   In New York City (NYC), the attacks killed almost 3,000 people, injured
                                   thousands more, and leveled 16 acres of Lower Manhattan, including the
                                   World Trade Center Towers and other buildings on or around the World
                                   Trade Center site. The attacks also disabled major electrical and
                                   communications facilities and the transportation infrastructure in the
                                   Lower Manhattan area and left many residents temporarily homeless and
                                   thousands unemployed.

                                   To help NYC respond to and recover physically, emotionally, and
                                   economically from the damages it incurred, the President pledged and
                                   Congress appropriated over $20 billion in federal assistance. Today, less
                                   than 2 years after the terrorist attacks, the rubble that was the World
                                   Trade Center is gone and rebuilding efforts have started. The Federal
                                   Emergency Management Agency (FEMA) led the federal response.1 Total
                                   FEMA funding for several programs it administered to help NYC area
                                   accounts for about $8.8 billion of the $20 billion in federal assistance,
                                   making this the largest disaster response in the agency’s history. In only



                                   1
                                     In March 2003, FEMA and its approximately 2,500 staff became part of the Department of
                                   Homeland Security (DHS). Most of FEMA—including its disaster assistance efforts—is
                                   now part of the Department’s Emergency Preparedness and Response Directorate;
                                   however, it has retained its name and individual identity within the department. We
                                   therefore refer to FEMA in this report.



                                   Page 1                                                  GAO-03-926 Disaster Assistance
six other disasters had FEMA provided more than $1 billion in assistance,
the largest of them being the Northridge earthquake in California in 1994.2

FEMA’s public assistance program was the largest federal disaster effort
to the NYC area, totaling $7.4 billion.3 This program is designed to provide
federal disaster grants to eligible state and local government agencies and
specific types of private nonprofit organizations. It funds eligible
“emergency work,” such as responses by local emergency personnel and
debris removal, and “permanent work,” such as the repair, replacement, or
restoration of disaster-damaged facilities, as authorized by the Robert T.
Stafford Disaster Relief and Emergency Assistance Act.4 FEMA is expected
to provide about $7.4 billion to the NYC area through the public assistance
program and public assistance-related spending directed by Congress,
making FEMA’s public assistance funding the largest single federal
disaster aid effort to the NYC area.5

You asked us to review several aspects of the federal government’s
response and recovery efforts. Since FEMA’s public assistance program
was the largest federal assistance program to help the New York City area,
we agreed to identify what activities were funded and the possible
implications of this public assistance response to any major terrorist
events that may occur in the future. Specifically, we agreed to provide
information on (1) what activities FEMA supported in the NYC area with
its public assistance program after the terrorist attacks, (2) how the


2
 The six other disasters for which FEMA spent more than $1 billion were caused by
earthquakes, hurricanes, or floods. These six disasters are: $6.99 billion for the Northridge
Earthquake, Calif. (1994); $2.25 billion for Hurricane Georges, Ala., Fla., La., Miss., P.R., V.I.
(1998); $1.84 billion for Hurricane Andrew, Fla., La. (1992); $1.13 billion for Hurricane
Hugo, N.C., S.C., P.R., V.I. (1989); $1.14 billion for Midwest Floods, 9 Midwestern states
(1993); and $1.08 billion for Hurricane Floyd, 13 Eastern Seaboard states (1999).
3
 The term “public assistance” is also used for unrelated government programs administered
by other agencies. For example, in the Department of Health and Human Services, public
assistance refers to benefits for low-income individuals. For this report, public assistance
refers to the FEMA program.
4
 Pub. L. No. 93-288, 88 Stat. 143 (1974), as amended. The Stafford Act authorized the public
assistance program that gives FEMA authority to provide assistance, defines basic program
criteria and eligibility, and authorizes FEMA to publish regulations.
5
 In the Consolidated Appropriations Resolution for fiscal year 2003, Congress authorized
the state and NYC to use funds appropriated to FEMA for disaster relief for costs
associated with the World Trade Center attacks that are not reimbursable under the
Stafford Act. We refer to these funds as public assistance-related because they are used for
projects in the public domain that are not related to hazard mitigation.




Page 2                                                        GAO-03-926 Disaster Assistance
federal government’s response to this terrorist event differed from FEMA’s
traditional approach to funding public assistance in past disasters, and (3)
what implications FEMA’s public assistance approach in the NYC area
may have on the delivery of public assistance should other major terrorist
attacks occur in the future. We also agreed to provide a separate report on
the overall federal disaster assistance given to help the NYC respond to
and recover from the terrorist attacks. That report will be provided to you
later this year.

To address our objectives, we reviewed disaster-related project
documentation, and we analyzed management information system data on
the public assistance FEMA provided and its cost. We reviewed
approaches FEMA traditionally used to fund major natural disasters and
the staffing and coordination processes it used to deliver the assistance
and compared them to approaches used in the aftermath of the World
Trade Center attacks. Using a structured data collection and interview
instrument, we reviewed decisions FEMA made on funding applications
for 10 projects that were nontraditional when compared to the types of
work funded in the aftermath of previous major natural disasters. We also
interviewed FEMA, NYC, and nonprofit organization officials about the
assistance provided and the challenges FEMA faced in delivering public
assistance. We asked these officials their views on whether differences in
the approach to delivery of public assistance in the NYC area
demonstrated a need for a new approach to providing public assistance
should another major terrorist event occur in the future. Our scope and
methodology are discussed in greater detail in appendix I.




Page 3                                          GAO-03-926 Disaster Assistance
                   FEMA supported a wide range of activities for the NYC area with its public
Results in Brief   assistance program. The approximately $7.4 billion in funding was
                   distributed to major categories of recipients. (See fig. 1.)

                   Figure 1: Distribution of $7.4 Billion in Public Assistance and Public Assistance-
                   Related Funding


                                                                         Debris removal operations and insurancea
                                                                         ($1.7 billion)




                               23.0%

                                                         37.9%           Interagency agreement for
                                                                         transportation system reconstruction
                                                                         ($2.8 billion)

                        16.3%


                                    9.5%                8.1%
                                                                         NYC Police & Fire Departments
                                                                         ($0.6 billion)

                                                                         4.1%
                                                                         NYC government agenciesb ($0.3 billion)
                                                                         Non-NYC government agenciesc ($0.7 billion)

                                                                         Public assistance-related work authorized
                                                                         after 6/03 ($1.2 billion)
                   Source: GAO analysis of FEMA data.

                   Note: $0.08 million in grant administration costs are not reflected in the graph but are part of the total
                   public assistance-related spending. Percentages do not total 100 percent because these costs are
                   not included and due to rounding.
                   a
                    Includes the NYC Departments of Sanitation and Design and Construction, and the U.S. Army
                   Corps of Engineers.
                   b
                    Excludes the NYC Departments of Police, Fire, Sanitation, and Design and Construction.
                   Reimbursements to these four departments are shown under Debris Removal Operations &
                   Insurance and NYC Police and Fire Departments.
                   c
                    Includes New York state agencies, nonprofit organizations, and the Port Authority of New York and
                   New Jersey.


                   Debris removal operations (costing about $0.7 billion) involved removing,
                   screening, and disposing of 1.6 million tons of debris. The establishment of
                   an insurance company to cover possible claims resulting from debris
                   removal operations is projected to cost about $1 billion. The largest



                   Page 4                                                              GAO-03-926 Disaster Assistance
individual amount of FEMA’s public assistance funds—$2.8 billion or 38
percent—will be used jointly with additional funds from the U.S.
Department of Transportation to repair and upgrade the transportation
infrastructure—including streets, subway systems, and commuter
railways—damaged in the disaster. Reimbursements for NYC Police and
Fire Departments’ emergency efforts, pensions, and vehicle and equipment
losses amounted to $0.6 billion. The $0.3 billion in reimbursements to NYC
agencies other than the Departments of Design and Construction,
Sanitation, Police and Fire were for various activities such as exterior
building cleaning, rescheduling elections, and DNA testing to identify
victims. Another $0.7 billion provided to non-NYC government agencies—
such as New York state agencies, nonprofit organizations, and the Port
Authority of New York and New Jersey—was to reimburse these agencies
for, among other things, relocating offices and supporting some
transportation projects that were not covered in transportation efforts
listed above. Lastly, $1.2 billion was made available in June 2003 as a result
of FEMA’s early close out of its traditional public assistance program to
NYC and state for congressionally authorized costs associated with the
terrorist attacks. Most of these costs would not have been eligible for
reimbursement under FEMA’s traditional public assistance program. To
receive the $1.2 billion reimbursement for public assistance-related costs,
FEMA officials reported that NYC and state officials must prepare
traditional grant applications to document that disaster-related costs have
been incurred, however Congress authorized a much wider scope of costs
that could be reimbursed than are authorized under the Stafford Act. As
we concluded our review, the list of projects to be funded had not been
determined, but NYC and state had requested reimbursements for
heightened security in the aftermath of the terrorist attacks and cost-of-
living adjustments to pensions of the survivors of fire fighters and police
officers killed in the line of duty in the terrorist attacks. A reimbursement
had been made for a public awareness campaign called “I Love New York,”
which was designed to attract visitors back to the city after the terrorist
attacks.

While FEMA followed traditional processes for considering most
applications, public assistance provided to the NYC area after the terrorist
attacks differed significantly in three major ways from FEMA’s traditional
approach. First, FEMA did not require state or local governments to
provide a share of federally provided disaster response and recovery costs.
Typically, FEMA’s public assistance program shares disaster costs
burdens, with FEMA providing 75 percent of the costs—the minimum
provided for under the Stafford Act—and affected state and local
governments paying the remaining share. At the direction of the President,


Page 5                                           GAO-03-926 Disaster Assistance
FEMA provided 100 percent of all public assistance costs in the NYC area.
This was the first time an entire FEMA public assistance operation was
100 percent federally funded. The second distinct aspect of FEMA’s public
assistance to New York was that there was a funding target that became a
cap on the level of the assistance. As a result, the public assistance
program did not follow customary project selection and close out
processes. Consistent with the President’s and Congress’ commitment of
approximately $20 billion in disaster assistance to New York, FEMA
operated with a set spending level appropriated by Congress that it did not
exceed for all public assistance-related work for the NYC area. In contrast,
in prior disasters all applications for public assistance that FEMA
determined to be eligible under the provisions of the Stafford Act were
funded. Also, FEMA closed out public assistance funding for the World
Trade Center disaster in June 2003, releasing money that had not been
spent to NYC and state officials to use at their discretion for disaster-
related expenditures. A FEMA official said that no prior disaster had been
closed out in this manner before work had been completed. Third, the size
and type of work funded was quite different from the public assistance
provided after prior major natural disasters. FEMA determined some non-
traditional work was eligible for its public assistance program using
flexible interpretations of the Stafford Act. For example, public assistance
has traditionally been limited to coverage of disaster-related losses and
damages—restoring, but not improving, existing infrastructure. However,
FEMA officials said that they broadly interpreted the Stafford Act to allow
funding that will not only to rebuild transportation systems that were
damaged from the terrorist attacks, but may also improve the overall
transportation system in Lower Manhattan. For example, within the
FEMA/Department of Transportation interagency agreement, work has
been proposed to construct a new transit station to replace the existing
but undamaged Fulton Street station to improve the overall flow of
commuter traffic. Congress also authorized FEMA to fund other disaster-
related work, some of which would not have been eligible for assistance
under the Stafford Act. As a result of the June 2003 close out of the public
assistance program, $1.2 billion in funds that had not been spent for
traditional public assistance work was made available to the city and state
of New York for broader purposes authorized by Congress. For example,
NYC plans to use FEMA funds to cover some of the costs of heightened
security after the attacks.

These distinct aspects of FEMA’s public assistance response in the NYC
area compared to public assistance responses delivered after previous
major disasters create uncertainties about the delivery of public assistance
should there be another catastrophic terrorist attack in the future. FEMA


Page 6                                          GAO-03-926 Disaster Assistance
             and NYC officials who managed the disaster recovery efforts agreed that
             the decisions made in New York would likely be considered if terrorists
             struck again, and that it is uncertain whether an approach similar to the
             one that evolved in NYC would be followed. Furthermore, NYC and FEMA
             officials differed on how well the public assistance program, as authorized
             by the Stafford Act, serves as the federal government’s vehicle for
             delivering this type of assistance. The NYC officials we interviewed did not
             think that the current program fully addressed the needs of the city. They
             said it should not be used to respond to major terrorist events unless it is
             significantly amended to address what they believe are unique challenges
             in aligning disaster assistance with the consequences of a terrorist
             incident; these concerns include long-term environmental liabilities and
             the need for heightened security efforts in the immediate aftermath of a
             terrorist attack. In contrast, FEMA officials said that they were generally
             satisfied that the Stafford Act provides the necessary flexibility for
             responding to terrorist attacks since Congress may authorize additional
             assistance to disaster-affected areas to address specific and unique needs,
             as it did for the NYC area. As we were completing our audit work, FEMA
             established a working group to look at ways to redesign the public
             assistance program to meet community needs for all types and sizes of
             disasters in the future, including those resulting from terrorist events. This
             group expects to provide an initial concept for revising the program by
             September 30, 2003.

             In commenting on a draft of this report, the Acting Director of FEMA’s
             Recovery Division said that FEMA officials are proud of the agency’s
             response in delivering public assistance programs to NYC and state, and
             that they are satisfied that FEMA’s authority was adequate and flexible
             enough in most circumstances to meet the response and recovery needs of
             New York. FEMA’s comments are reprinted in appendix II. FEMA also
             provided technical comments on our draft, which we incorporated into the
             report where appropriate.


             Under the Stafford Act, when a major natural catastrophe, fire, flood, or
Background   explosion occurs that is beyond the capabilities of a state and local
             government response, the President may declare that a major disaster
             exists. This declaration activates the federal response plan for the delivery
             of federal disaster assistance. The response plan is an agreement signed by
             27 federal departments and agencies, including the American Red Cross.
             Under the Stafford Act, FEMA is responsible for coordinating both the
             federal and private response efforts. President Jimmy Carter established
             FEMA in 1978 to consolidate and coordinate emergency management


             Page 7                                           GAO-03-926 Disaster Assistance
    functions in one location, addressing concerns about the lack of a
    coordinated federal approach to disaster relief. FEMA most recently
    redesigned its public assistance program in 1998. The federal assistance
    coordinated by FEMA is designed to supplement the efforts and available
    resources of state and local governments and voluntary relief
    organizations.6

    While FEMA had the lead in coordinating the federal response to the
    attacks on NYC, other federal agencies, including the Department of
    Transportation (DOT), the Small Business Administration (SBA), the U.S.
    Army Corps of Engineers, and the Environmental Protection Agency
    (EPA) also provided significant assistance. The disaster declaration from
    the President triggers not only a role for FEMA as coordinator of the
    federal emergency response plan, but also a role in delivering assistance
    through several programs it administers. These programs include
    individual assistance to victims affected by a disaster and hazard
    mitigation funds to state and local governments to take steps to prevent
    future disasters. However, FEMA’s public assistance program is typically
    its largest disaster assistance effort. It is designed to provide grants to
    eligible state and local government agencies and specific types of private
    nonprofit organizations that provide services of a governmental nature,
    such as utilities, fire departments, emergency and medical facilities, and
    educational institutions, to help cover costs of emergency response efforts
    and work associated with recovering from the disaster. According to
    FEMA regulations, work eligible for public assistance must be

•   to repair damage that occurred as a result of a declared event,

•   located within an area declared by the President as a disaster area, and

•   the legal responsibility of an eligible applicant.

    The Stafford Act sets the federal share for the public assistance program at
    no less than 75 percent of eligible costs of a disaster with state and local
    governments paying for the remaining portion. The assistance is to be
    provided to repair, restore, reconstruct, or replace eligible facilities. The


    6
      In a December 2002 report, we discussed charitable organizations’ contribution to the
    disaster relief efforts in the NYC area and the need for a greater FEMA role in facilitating
    collaboration among these organizations. U.S. General Accounting Office, September 11:
    More Effective Collaboration Could Enhance Charitable Organizations’ Contributions in
    Disasters, GAO-03-259 (Washington, D.C.: Dec. 19, 2002).




    Page 8                                                    GAO-03-926 Disaster Assistance
amount of public assistance provided is reduced by, among other
considerations, insurance proceeds and salvage value. Because the
assistance provided by the program is limited by these factors, as well as
certain eligibility criteria, the amount of public assistance funds FEMA
provides in a disaster does not equal the total financial impact of a disaster
on an affected community or area.

The Stafford Act has been amended several times since its enactment in
1974, and FEMA has taken steps over the years to redesign its public
assistance program with internal policy changes to make eligibility criteria
for public assistance clearer, and more consistent and accurate. The
Senate report on the Disaster Mitigation Act of 1999 noted that the
congressional interest in reducing the federal cost of disaster assistance
would be achieved by, among other things, reducing the types of facilities
and activities that may receive assistance in the event of a disaster.7 In
August 2001, we reported that in a period of about 2 years since FEMA had
completed a 1998 redesign of the public assistance program, it had
developed or revised public assistance program policies in 35 areas or
topics in part to make clearer eligibility criteria and improve the
consistency and accuracy of eligibility determinations for individual
projects.8

FEMA’s public assistance program is the largest portion of the federal
assistance provided to New York in the aftermath of the World Trade
Center attacks. Of a total of over $20 billion in federal assistance approved
for this disaster, either in the form of direct assistance or in the form of tax
benefits, about $7.4 billion was funded through FEMA’s public assistance
program or through public assistance-related spending authorized by
Congress through appropriations to FEMA. Figure 2 shows that FEMA’s
public assistance program is providing the largest single portion of the
federal contribution to the NYC area’s disaster recovery effort.




7
    Senate Report 106-295.
8
 U.S. General Accounting Office, Disaster Assistance: Improvement Needed in Disaster
Declaration Criteria and Eligibility Assurance Procedures, GAO-01-837 (Washington,
D.C.: Aug. 31, 2001).




Page 9                                                GAO-03-926 Disaster Assistance
Figure 2: Public Assistance Funding Provides the Largest Federal Contribution to
the NYC Area’s Recovery

                                                                 FEMA public assistance-related funding
                                                                 ($7.4 billion)

                                                                 6.4%
                                                                 FEMA individual and nonpublic
                                                                 assistance-related funding ($1.3 billion)

                                                                 3.9%
                                                                 Other federal agencya funding ($0.8 billion)



                                        11.8%                    DOT fundingb ($2.4 billion)
           36.3%


                                         17.2%                   Housing and Urban Development (HUD)
                                                                 fundingc ($3.5 billion)

                       24.5%
                                                                 Liberty zone tax packaged ($5.0 billion)

Source: GAO analysis of FEMA and Congressional Budget Office data.

Note: Percentages do not total 100 percent due to rounding.
a
    Includes the Department of Health and Human Services, Department of Labor, and SBA.
b
    DOT funds are to assist in rebuilding and improving the transportation infrastructure.
c
  HUD funds are to be used for a variety of purposes, including assistance to businesses and
individuals, infrastructure restoration, and economic recovery.
d
 Estimate by the Joint Congressional Committee on Taxation in March 2002 of the cost of the Liberty
Zone tax package to the federal government. The cost of the tax package in lost revenues to the
federal government will not be precisely determined because data is not available. The package
contains provisions designed to spur economic revitalization in Lower Manhattan.


FEMA may assign work or enter into agreements with other federal
agencies and the American Red Cross to handle aspects of public
assistance within their areas of expertise. These agreements are called
mission assignments and interagency agreements. Mission assignments
were widely used in the first few months after the World Trade Center
disaster to provide assistance for short-term projects. Interagency
agreements—used for long-term projects—are similar to mission
assignments in that they are funding agreements between agencies to
provide goods and services on a reimbursable basis.




Page 10                                                                     GAO-03-926 Disaster Assistance
                         In March 2003, FEMA and its responsibilities were placed entirely into
                         DHS in the largest reorganization of the federal government since the
                         formation of the Department of Defense. The Emergency Preparedness
                         and Response Directorate within DHS has responsibility for the public
                         assistance program and continues to be referred to as FEMA, which we do
                         in this report.9


                         The approximately $7.4 billion of public assistance and public assistance-
$7.4 Billion in Public   related work funded through FEMA is providing a broad range of aid to
Assistance-Related       the NYC area. For example, public assistance-related funding was, or will
                         be, provided to reimburse NYC authorities for immediate response and
Funding Provided for     recovery actions—such as debris removal operations and emergency
Broad Range of           efforts by the NYC Departments of Design and Construction, Sanitation,
                         Fire, and Police—and for long-term actions to repair and upgrade
Activities               damaged facilities and transportation systems. Because of the unique
                         nature of the NYC disaster, existing FEMA data system categories for
                         tracking and reporting public assistance do not provide for some of the
                         large public assistance-related efforts.10 Based on our analysis, we
                         categorize the public assistance and related funding for NYC into six
                         general areas:




                         9
                          FEMA’s Office of National Preparedness, which is responsible for terrorism preparedness
                         and response, was placed in the Border and Transportation Security Directorate. This
                         placement was designed to achieve a measure of consolidation with preparedness
                         functions from other agencies. However, as we reported in our Performance and
                         Accountability Series in January, 2003, other disaster preparedness and response efforts
                         will be in the Emergency Preparedness and Response Directorate and close coordination
                         will be needed among these groups to ensure that problems of duplication, overlap, and
                         confusion that occurred in the past are not replicated. U.S. General Accounting Office,
                         Major Management Challenges and Program Risks: Federal Emergency Management
                         Agency, GAO-03-113 (Washington, D.C.: January 2003).
                         10
                           FEMA’s categories for public assistance work are (1) debris removal, (2) emergency
                         protective measures, (3) road and bridge systems, (4) water control facilities, (5) public
                         buildings and equipment, (6) public utilities, and (7) recreation and other. However, some
                         large public assistance efforts funded in NYC did not fit well within the standard
                         categories. For example, a $64.6 million application to cover increased NYC contributions
                         to the retirement system due to the line-of-duty deaths of police and fire fighters in the
                         terrorist attacks was classified as an emergency protective measure, and a FEMA official
                         noted that the “recreation and other” category was used to classify reimbursements that
                         did not fit in other categories. For example, funding to provide additional school time for
                         students who lost instructional time as a result of the terrorist attacks was classified as
                         “recreational or other.” For this reason, we did not use the FEMA categories for our
                         analysis.




                         Page 11                                                   GAO-03-926 Disaster Assistance
                 •   debris removal operations and insurance;

                 •   reconstruction of the Lower Manhattan transportation infrastructure
                     under an interagency agreement with DOT;

                 •   reimbursement of police and fire department costs;

                 •   reimbursement of expenses incurred by NYC agencies other than the
                     Departments of Design and Construction, Sanitation, Police and Fire for
                     such activities as DNA and forensic testing to identify victims and exterior
                     building cleaning;

                 •   reimbursement of expenses to agencies that are not part of the NYC
                     government (i.e., New York state agencies, the Port Authority, and private
                     non profits) for disaster-related costs such as transportation work not
                     covered under the interagency agreement discussed above; and

                 •   reimbursement of public assistance-related expenses authorized by
                     Congress that would not otherwise have been eligible for assistance (i.e.
                     heightened security after the terrorist attacks) from funds made available
                     after the June 30, 2003, close out of the traditional public assistance
                     program.

                     Refer to figure 1 on page 4 for a graphic illustration of how public
                     assistance funding to the NYC area was or will be distributed within these
                     six categories.

                     Each category of public assistance funding and some of the major efforts
                     funded in each of them, are described in the following sections.


                     FEMA funded about $1.7 billion in work related to debris removal
Debris Removal       operations and to reimburse the NYC Departments of Design and
Operations and       Construction and Sanitation for debris removal expenses. The most
                     significant and costly activities in this category were removing and
Insurance            disposing of the destroyed World Trade Center buildings, screening debris
                     for victims’ remains and personal effects, and establishing an insurance
                     company for possible claims resulting from debris removal operations.

                     Workers spent an estimated 3.1 million hours over 9 months to remove
                     about 1.6 million tons of debris from the World Trade Center site. Debris
                     from the collapse of the World Trade Center towers extended 7 stories
                     into the earth and more than 11 stories high at Ground Zero. Thick dust



                     Page 12                                         GAO-03-926 Disaster Assistance
covered streets, buildings, and vehicles for blocks around the site. FEMA
provided $620.9 million for removing the debris from the World Trade
Center site and barging it to a landfill in Staten Island, N.Y., for screening,
sorting, and disposal. Original estimates projected that the recovery effort
and cleanup would take 2 years and $7 billion. Figure 3 shows debris
removal and barging operations.




Page 13                                           GAO-03-926 Disaster Assistance
Figure 3: Public Assistance-Funded Debris Removal Operations




Source: FEMA Photo Library.                                                                                           Source: FEMA Photo Library.

Debris removal contractors survey                                                                                     FEMA-funded debris removal
the piles of debris, estimated at                                                                                     efforts are in progress at the
1.6 million tons, at the site where                                                                                   World Trade Center about a
the World Trade Center towers                                                                                         month after the terrorist attacks.
once stood.




                                      Source: FEMA Photo Library.

                                      Two 500-ton floating cranes continue debris removal operations, loading
                                      wreckage onto barges to be towed to a city landfill in Staten Island, N.Y.,
                                      for screening, inspection, and disposal.




                                                    The need to sort and screen the debris to recover the remains and
                                                    personal effects of victims and criminal evidence made the debris removal
                                                    operation even more difficult. FEMA provided $72 million to the U.S. Army


                                                    Page 14                                                         GAO-03-926 Disaster Assistance
                                                    Corps of Engineers to manage the debris inspection at the landfill. The
                                                    sorting activities were an intense, meticulous effort to recover remains
                                                    and personal belongings of victims to return them to their families and to
                                                    gather criminal evidence related to the terrorist attacks. The Corps of
                                                    Engineers provided labor, heavy equipment, conveyer belts, and screening
                                                    equipment. The Corps also provided temporary buildings for storage and
                                                    to shelter workers, worker decontamination facilities, and food service
                                                    facilities. Figure 4 shows debris screening and inspection operations at the
                                                    landfill.

Figure 4: Debris Screening and Inspection Operations




Source: FEMA News Photo.                                                         Source: U.S. Army Corps of Engineers.

Two views of inspectors at work at the city landfill in Staten Island, N.Y., screening through mixed debris for victims’ remains and personal effects and
criminal evidence.




                                                    In addition to the costs of debris removal and disposal, FEMA set aside $1
                                                    billion to establish a debris removal insurance company to cover
                                                    contractors and NYC for liability claims resulting from debris removal
                                                    operations.11 According to city officials, private contractors came to
                                                    Ground Zero to do search and rescue, recovery, and debris removal work



                                                    11
                                                     FEMA was authorized to do so by the Consolidated Appropriations Resolution of 2003,
                                                    Pub. L. No. 108-7. $1 billion is a projected cost, but actual costs will be unknown for many
                                                    years.




                                                    Page 15                                                              GAO-03-926 Disaster Assistance
                      in the immediate aftermath of the terrorist attacks before entering into
                      formal contract agreements with NYC. The outstanding issue that kept the
                      contractors and NYC from reaching a final agreement on compensation for
                      the work done was liability insurance coverage. City officials said that
                      liability insurance could not be obtained from a private insurance
                      company because of the unknown risks and potentially large number of
                      liability claims. Based on input from insurance experts, city officials and
                      FEMA determined that the best solution was to establish an insurance
                      company with $1 billion in federal capital to provide $1 billion in coverage
                      for a payout period of up to 25 years. The insurance fund will cover NYC
                      workers and contractor employees. As of June 2003, the details of the
                      insurance coverage had not been finalized. Additional perspectives on how
                      aspects of FEMA’s establishment of the insurance fund differed from a
                      traditional public assistance activity can be found on page 30 of this
                      report.


                      FEMA provided $2.8 billion to help fund an interagency agreement with
Interagency           the DOT to reconstruct the Lower Manhattan transportation system. The
Agreement for Lower   terrorist attack at the World Trade Center severely damaged the
                      intermodal public transportation system that was used by about 80 percent
Manhattan             of the 350,000 daily commuters to Lower Manhattan—the highest
Transportation        percentage of people commuting to work by public transit of any
                      commercial district in the nation. The Port Authority of New York and
System                New Jersey (Port Authority) commuter station underneath the World
Reconstruction        Trade Center was destroyed, and subway stations servicing the area were
                      sufficiently damaged to prevent trains from stopping at them. In addition,
                      some tunnels were temporarily closed, preventing commuter buses from
                      entering Lower Manhattan. Access to and mobility within Lower
                      Manhattan was severely diminished. Many streets were closed due to
                      debris from the collapsed buildings and the subsequent debris removal
                      operations. Large rescue vehicles and heavy debris removal equipment
                      also damaged the area streets, making them more difficult to navigate.

                      Plans are underway to rebuild and improve the Lower Manhattan
                      transportation system with funding from FEMA and DOT. These agencies,
                      under an interagency agreement, will contribute $4.6 billion to these
                      transportation system projects, with FEMA providing $2.8 billion and DOT
                      providing an additional $1.8 billion. The agreement will result in not only
                      rebuilding a system that was damaged, but also improving the overall
                      Lower Manhattan transportation system. The agreement designated DOT’s
                      Federal Transit Administration (FTA) as the lead agency in charge of



                      Page 16                                         GAO-03-926 Disaster Assistance
administering the federal assistance and coordinating with state and local
implementing agencies.

In February 2003, the Governor of New York submitted funding requests to
FEMA and DOT for three priority projects estimated to cost between $2.55
billion and $2.85 billion—the World Trade Center Transportation Hub,
Fulton Street Transit Center, and South Ferry Subway Station to improve
the overall flow of commuter traffic in lower Manhattan. Although the uses
for the remaining $1.7 billion to $2.0 billion of the $4.6 billion in
FEMA/DOT funds had not been determined as of June 2003, uses for the
remaining funds being evaluated included improvements in access to JFK
Airport and Long Island, improvements to West Street Route 9A, a tour
bus facility, the World Trade Center sub grade infrastructure, and
commuter ferries and street configuration work.

Figure 5 shows the extensive damage to the PATH commuter station
beneath the World Trade Center Towers after the terrorist attacks and a
model of the permanent station planned to be constructed in its place with
FEMA/DOT interagency agreement funds.




Page 17                                        GAO-03-926 Disaster Assistance
Figure 5: Interagency Agreement Will Fund Construction of a Permanent New Station to Replace the Extensively Damaged
PATH Station Beneath the World Trade Center Towers




Source: FEMA News Photo.                                           Source: Port Authority of N.Y. and N.J.

The PATH train station beneath the World Trade Center Towers was   A model of the permanent station to be designed and constructed within the
severely damaged in the attacks. A new permanent station will be   FEMA/DOT interagency agreement in place of the damaged facility.
constructed within the FEMA/DOT interagency agreement.




                                                FEMA is also funding transportation-related work for the Port Authority
                                                outside of the scope of this interagency agreement. This work is discussed
                                                on page 21 of this report. We provide additional perspective on how
                                                aspects of this interagency agreement differ from FEMA’s traditional
                                                public assistance response to major disasters on page 28 of this report.


                                                FEMA provided about $643 million in assistance to the NYC Police and
NYC Police and Fire                             Fire Departments to pay benefits and wages to emergency workers during
Department                                      response and recovery efforts and to replace vehicles and equipment. As
                                                first responders, these departments suffered heavy casualties and damages
Reimbursements                                  in the collapse of the twin towers of the World Trade Center: 343 NYC fire
                                                department employees, 23 active city police officers, and 5 retired city
                                                police officers died in the line of duty, and 238 emergency vehicles, as well
                                                as radios and other equipment were lost or destroyed. In the months after
                                                the attack, nearly 100 firefighters per shift worked at the disaster site
                                                around the clock standing over contractor-operated steel-ripping machines
                                                looking for victims’ remains. Similarly, police officers were stationed 24
                                                hours a day, 7 days a week to provide security at the disaster site. Figure 6



                                                Page 18                                                      GAO-03-926 Disaster Assistance
                                                   includes photographs of police and firefighters during the search and
                                                   rescue phase of work immediately after the terrorist attacks and 2 of the
                                                   emergency vehicles that were destroyed in the World Trade Center
                                                   collapse.

Figure 6: Public Assistance Funded Police and Firefighter Overtime and Replaced Emergency Vehicles That Were Destroyed
in the Terrorist Attacks




Source: FEMA News Photo.                                               Source: New York Fire Department.

Police and firefighters worked around the clock in the search and      Two of the emergency vehicles destroyed when the World Trade Center
rescue phase following the terrorist attacks. FEMA public assistance   towers collapsed. FEMA public assistance reimbursed NYC the funds to
reimbursed for overtime.                                               replace emergency vehicles and equipment.



                                                   Public assistance grants to these two city agencies included $341 million
                                                   for police overtime and death benefits and $223 million for firefighter
                                                   overtime, death benefits, and funeral costs. Grants also reimbursed
                                                   emergency service departments $44 million to replace 98 firefighter
                                                   vehicles, radios, and other equipment; and $26 million to replace 140
                                                   police emergency vehicles and emergency equipment that were destroyed
                                                   in the terrorist attacks.


                                                   Although the NYC Departments of Design and Construction, Sanitation,
Reimbursements to                                  Fire, and Police were the city agencies that received the largest amounts
Other NYC                                          of FEMA public assistance funding for debris removal and insurance and
                                                   for emergency response losses and expenses related to the terrorist
Government Agencies                                attacks, FEMA also provided direct public assistance to a number of other
                                                   NYC agencies for a wide range of work totaling almost $300 million.
                                                   Projects included:



                                                   Page 19                                                   GAO-03-926 Disaster Assistance
•   $46.7 million to the Office of the Chief Medical Examiner for DNA testing,
    forensic analysis and equipment to help identify victims of the terrorist
    attacks;

•   $8 million to the Department of Elections to reimburse the expenses it
    incurred to reschedule elections that were being held on September 11,
    2001, and to replace damaged voting equipment;

•   $19.3 million to the NYC Department of Education to pay for instructional
    time for students who missed school due to closures, delayed openings,
    and school relocations12; and

•   $8.6 million to the NYC Department of Environmental Protection for
    exterior building cleaning.

    Other examples of funding that went to city agencies are $12.9 million to
    the NYC Department of Citywide Administrative Services for emergency
    supplies, equipment and services, and $10.6 million to set up the facilities
    and provide equipment and furniture for the NYC Family Center and
    reimburse city and state personnel for overtime at the Family Center who
    provided services for NYC residents in the aftermath of the terrorist
    attacks. Figure 7 shows the cloud of dust that covered buildings for blocks
    around the World Trade Center.




    12
     Funding of $77 million was approved for the NYC Board of Education for this purpose. As
    of April 2003, $19.3 million was. The remaining funds were de-obligated from the project
    and directed to public assistance related work authorized by Congress after the close out
    of the traditional assistance program.




    Page 20                                                 GAO-03-926 Disaster Assistance
                     Figure 7: NYC Agencies Received Public Assistance Funding for a Range of Work
                     Including Cleaning Dust from Buildings




                     Source: U.S. Environmental Protection Agency.

                     Contaminant-filled dust covered buildings in the blocks around the World Trade Center. FEMA
                     reimbursed the NYC Department of Environmental Projection for the exterior cleaning of 244
                     buildings in Lower Manhattan.




                     FEMA provided over $700 million in public assistance-related funding to
Reimbursements to    agencies that were not part of the NYC government, including the Port
Non-NYC Government   Authority, state agencies, counties, and private nonprofit organizations.
                     Among the agencies receiving some of the largest amounts was the Port
Agencies             Authority, which sustained substantial losses of lives and property as a
                     result of the terrorist attacks. The funding for the Port Authority was in
                     addition to the FEMA transportation funding provided in its interagency
                     agreement with DOT to rebuild and improve the Lower Manhattan
                     transportation system, as discussed on page 16.

                     FEMA reimbursed the Port Authority for a wide range of work including
                     $285.0 million to relocate offices that were located in the World Trade
                     Center, repair commuter train tunnels that were damaged in the terrorist



                     Page 21                                                        GAO-03-926 Disaster Assistance
                                                  attacks, implement emergency ferry services, open a temporary PATH
                                                  station, and pay overtime to the Port Authority police. The damage to the
                                                  Port Authority’s PATH train system was extensive; tunnels leading from
                                                  the station to New Jersey were flooded and the Exchange Place station in
                                                  New Jersey had to be closed because the station could not operate as a
                                                  terminal. All tunnel components (i.e., fiber optics, conduits, pipes, lighting,
                                                  ductbanks, track, contact rail, and ballast) needed to be replaced. The Port
                                                  Authority also received public assistance funds to replace equipment it
                                                  lost when its World Trade Center facilities were destroyed, including its
                                                  voice telephone network, desktop computers, and fax and photocopy
                                                  machines, and to pay overtime labor costs for the emergency response.
                                                  Figure 8 shows PATH tunnel repair and construction efforts.

Figure 8: Port Authority Received Public Assistance Funding to Restore Tunnels That Were Flooded in the Terrorist Attacks




Source: Port Authority of N.Y. and N.J.                                 Source: Port Authority of N.Y. and N.J.
Ongoing efforts in June 2002 to restore two 2-mile PATH tunnels under   As of March 2003, progress shows in one PATH tunnel as the PATH
the Hudson River, connecting Lower Manhattan and New Jersey. The        Service Restoration project moves forward to the goal of restoring
tunnels were flooded as a result of the terrorist attacks.              service to Lower Manhattan in December 2003.




                                                  FEMA also provided public assistance funds to many other non-NYC
                                                  government agencies to reimburse them for emergency and repair costs.
                                                  For example, the New York State Police received $45 million for security
                                                  operations, and New York University received $5.9 million for air
                                                  monitoring, environmental cleaning, and emergency supplies and services.
                                                  Other examples include the NYC Office of Emergency Management, which



                                                  Page 22                                                         GAO-03-926 Disaster Assistance
                     received $11.8 million from FEMA to replace destroyed equipment and
                     leased office space that was located in the World Trade Center; Pace
                     University, which was provided $4.4 million for damaged buildings; and
                     the Battery Park City Authority, which received $3.9 million to repair
                     damaged facilities.


                     Lastly, $1.2 billion was made available in June 2003 as a result of FEMA’s
Reimbursements for   early close out of its traditional public assistance program to NYC and
Public Assistance-   state for congressionally authorized costs associated with the terrorist
                     attacks. Most of these costs would not have been eligible for
Related Work         reimbursement under FEMA’s traditional public assistance program. The
Authorized by        close out freed funds for discretionary public assistance-related uses by
                     NYC and state and ensured that FEMA would spend the entirety of the
Congress             appropriated assistance to the NYC area. Funds obligated for all of
                     FEMA’s programs, including individual assistance and hazard mitigation,
                     were reconciled, and funds that had not been expended for approved
                     projects as of April 2003 were de-obligated to be used for discretionary
                     public assistance-related expenditures. To receive the $1.2 billion
                     reimbursement for public assistance-related costs, FEMA officials
                     reported that NYC and state officials must prepare traditional grant
                     applications to document that disaster-related costs have been incurred;
                     however, Congress authorized wide discretion on the type of costs that
                     could be reimbursed.

                     As we concluded our review, the list of projects to be funded had not been
                     determined, but NYC and state had requested reimbursements for
                     heightened security in the aftermath of the terrorist attacks and cost-of-
                     living adjustments to pensions of the survivors of firefighters and police
                     officers killed in the line of duty in the terrorist attacks. A $19 million
                     reimbursement has been made for a public awareness campaign called “I
                     Love New York,” which was designed to attract visitors back to the city
                     after the terrorist attacks. We discuss the heightened security
                     reimbursements in more detail on page 32 of this report as an example of
                     funding that was different in scope than a typical public assistance project
                     and that would not have been eligible for FEMA funding unless it was
                     specifically authorized by Congress.




                     Page 23                                         GAO-03-926 Disaster Assistance
                           Each disaster to which FEMA responds has aspects that make it unique
Public Assistance to       from other disasters, resulting in some differences in forms of assistance
NYC Differed from          provided to affected communities within the parameters of the Stafford
                           Act eligibility requirements, according to the head of FEMA’s public
the Traditional FEMA       assistance program. While FEMA followed traditional processes for
Response in Several        considering most applications, the public assistance response in the NYC
                           area after the terrorist attacks differed significantly from the traditional
Areas                      approach FEMA has used in providing assistance under the Stafford Act
                           after major natural disasters. The three significant differences were:

                       •   the elimination of any local sharing of disaster response and recovery
                           costs,

                       •   capped amounts of funding that resulted in significant modifications to the
                           project selection and close out processes, and

                       •   the size and type of projects funded.

                           Many of these differences are based on presidential and congressional
                           direction; however, some are the result of FEMA’s interpretations of the
                           Stafford Act to allow the approval of funding for certain assistance to New
                           York.


                           The Stafford Act sets the federal share for the public assistance program at
No Sharing of Public       no less than 75 percent of eligible costs. The President can increase the
Assistance Costs by        federal share for the public assistance program if it is determined that the
                           disaster costs greatly exceed a state’s financial capabilities. In practice, the
State or Local             federal share has reached 100 percent for emergency work, for limited
Governments                periods of time, if determined that it was necessary to prevent further
                           damage, protect human lives, or both. In 1992, for example, after Florida
                           and Louisiana suffered large disaster expenses as a result of Hurricane
                           Andrew, FEMA funded 100 percent of all public assistance costs above $10
                           per capita.13 According to a FEMA official, the 1994 Northridge, California
                           earthquake, which cost almost $7.0 billion, was FEMA’s most costly
                           disaster funding effort until the World Trade Center attacks occurred;
                           FEMA provided for 90 percent of all public assistance costs. In discussing
                           the question of state and local sharing of public assistance costs, FEMA



                           13
                            Per capita personal income is commonly used in federal grant programs as a basis for
                           sharing program costs between states and the federal government.




                           Page 24                                                 GAO-03-926 Disaster Assistance
officials stated that they are reluctant to recommend a 100 percent federal
share for projects unless there are compelling reasons to do so because
the traditional process with a matching share creates incentives for state
and local officials to control costs and closely evaluate projects.

In the days immediately following the terrorist attacks, the President
determined that the magnitude and nature of the disaster justified the
federal government funding the total cost of public assistance projects,
and he directed that FEMA fund 100 percent of the eligible costs with no
state or local matching funds. This increased FEMA’s costs and
significantly reduced costs to NYC and other recipients. For example, on
the transportation repair and improvements efforts, NYC area recipients
did not have to make a financial contribution that could have totaled
nearly $680 million—25 percent of the $2.75 billion that FEMA is
providing.

Although New York received the benefits of 100 percent FEMA funding of
public assistance projects, the President reduced the amount of related
Hazard Mitigation Grant Program funds provided to New York. Created in
1988 by the Stafford Act, this grant program provides funds to
communities affected by major disasters to undertake mitigation measures
following a major disaster. At the time of the terrorist attacks, grants funds
up to 15 percent of the total amount of FEMA assistance provided are
available to states following a disaster.14 However, in this case, the
President limited the mitigation grant funds to 5 percent of the amount
spent. Had the hazard mitigation funding percentage not been reduced,
more than $1.2 billion in mitigation funds would have been required using
the customary 15 percent of total cost criteria.




14
  The Consolidated Appropriations Resolution of 2003, Pub. L. No. 108-7, has since
amended the Stafford Act to reduce the amount available for mitigation grant funds to 7.5
percent. However, pursuant to the The Disaster Mitigation Act of 2000, up to 20 percent of
the total estimated federal assistance amount is available for states that meet enhanced
planning criteria.




Page 25                                                   GAO-03-926 Disaster Assistance
                         In a typical major disaster, FEMA’s consideration of whether work is
Different Processes      eligible for public assistance is not constrained by a limit on the total
for Selecting Projects   amount of public assistance funding that can be spent, and disasters
                         remain “open” with FEMA until public assistance work is substantially
and Closing Out the      completed. Generally, FEMA officials approve all public assistance
Disaster Based on        applications that meet eligibility criteria under the Stafford Act, and they
                         fund the work from FEMA’s disaster relief fund. Also, according to a
Capped Funding           FEMA public assistance official, direct congressional appropriations are
Amounts                  not typically made for a specific disaster. The official explained that
                         damaged facilities are identified within 60 days following a kick-off
                         meeting to begin federal disaster assistance between FEMA officials and
                         state and local officials of the area impacted by the disaster. Proposed
                         work is then considered for eligibility and funded through “project
                         worksheets”—applications for specific funding amounts to complete
                         discrete work segments. Project worksheets document the scope of work,
                         cost estimates, locations, damage descriptions and dimensions, and
                         special considerations of each work segment. No limit is set on the dollar
                         amount of eligible work that can be approved. As the response and
                         recovery progresses, states reimburse applicants for all costs that meet the
                         Stafford Act’s public assistance eligibility criteria and FEMA reimburses
                         the states for the federal share. A public assistance official noted that
                         disasters remain open with FEMA long after public assistance funds have
                         been obligated. For example, as of June 2003, the Northridge, California,
                         earthquake was still an open FEMA disaster 9 years after it occurred due
                         to large and long-term reconstruction efforts. Disasters are “closed” when
                         the project is complete, the final costs are known, and all appeals of
                         funding decisions have been resolved.

                         Following the terrorist attacks, however, the process of selecting projects
                         that were eligible for funding and closing out the public assistance for the
                         NYC area did not follow FEMA’s customary process because FEMA had a
                         set amount of funds available for public assistance efforts. Congress
                         provided FEMA with specific appropriations for the terrorist attacks that
                         resulted in a capped funding amount of $8.8 billion for its efforts to aid the
                         NYC area from the President’s pledge of at least $20 billion in federal
                         assistance. In consideration of funding required for its other programs
                         (assistance for individuals impacted by the disaster and hazard mitigation
                         grants), $7.4 billion remained available for public assistance and public
                         assistance-related projects. To help ensure that the amount of public
                         assistance did not exceed this amount, FEMA asked that city and state
                         officials prioritize their funding needs. As a result, about $400 million in
                         funding initially budgeted for the Port Authority was eventually
                         reallocated to other projects. FEMA also delayed a decision on funding for


                         Page 26                                          GAO-03-926 Disaster Assistance
                        city and state pension actuarial losses resulting from line of duty deaths of
                        police and fire fighters at the World Trade Center site so that officials
                        could be certain that the costs of the project would not cause FEMA to
                        exceed its total appropriation for the disaster.

                        A second major difference from how FEMA typically manages a disaster
                        occurred when it established a June 30, 2003, deadline for closing out the
                        regular public assistance program and the disaster before work was
                        completed. According to FEMA officials, they established this deadline for
                        closing out public assistance projects eligible for funding under the
                        Stafford Act so that any remaining funds could be used for work identified
                        as high priorities by city and state officials in New York and authorized by
                        Congress. They said that deadlines for closing out public assistance had
                        not been set in any prior disaster until work was completed, but that they
                        believed it was necessary for the NYC area to manage the available funds
                        to ensure that its priorities are best met as quickly as possible.


                        The response to the NYC terrorist attacks was the largest public assistance
Size and Type of Work   effort in FEMA’s history and by far its largest response to a terrorist event.
Was Different Than      Prior to the World Trade Center attacks, FEMA’s most costly disaster
                        assistance—almost $7 billion—was provided to aid in the recovery from
Work in Other Major     the Northridge, California, earthquake in 1994. FEMA spent more than $1
Disasters               billion for five other disasters in its history. Further, FEMA’s experience
                        with terrorism was limited to two occasions prior to the World Trade
                        Center attacks. In April 1993, a major disaster was declared in the
                        aftermath of an explosion caused by terrorism at the World Trade Center.
                        FEMA spent about $4.2 million on that disaster recovery. In April 1995, an
                        emergency and then a disaster were declared in Oklahoma City,
                        Oklahoma, in the aftermath of the bombing of the Murrah federal
                        building—FEMA spent about $530 million on that recovery effort.

                        In its response to terrorism in the NYC area, FEMA provided public
                        assistance funds for the same types of projects that are funded after a
                        natural disaster (e.g., removing debris, repairing roads, and replacing
                        emergency vehicles that were destroyed). However, other work funded
                        was quite different because of the magnitude and nature of the disaster.
                        FEMA officials said that they determined that some non traditional work
                        was eligible for its public assistance program using flexible interpretations
                        of the Stafford Act. Examples of public assistance projects approved by
                        FEMA that we identified as being different from traditional public
                        assistance work due to their size and/or type of work done included



                        Page 27                                          GAO-03-926 Disaster Assistance
improvements to the Lower Manhattan transportation system and air
quality testing. Some of these projects are discussed as follows.

Improving Lower Manhattan’s Transportation System ($2.75 billion).
Public assistance has traditionally been limited to repair of disaster-related
losses and damages to existing infrastructure. Assistance has not generally
been provided to enhance or modernize the infrastructure beyond its pre
disaster conditions. In recognizing the interdependence of Lower
Manhattan’s transportation system, however, FEMA officials said that they
broadly interpreted their guidelines to enter into an interagency agreement
with DOT to rebuild physical facilities that were damaged from the attacks
and construct new facilities that may improve the overall Lower
Manhattan transportation system. FEMA attorneys said that they
determined that the Stafford Act would permit funding for the
restructuring of the Lower Manhattan transportation system because they
concluded that repairing and replacing individual elements would not
completely restore the system’s functionality.

Testing air quality and cleaning buildings ($36.9 million). FEMA officials
said that air quality testing and removing dust from buildings had not been
an issue in prior major disasters, however, it was important to the physical
and psychological well being of NYC citizens in the aftermath of this
disaster. FEMA determined that the testing of air quality and cleaning were
eligible for public assistance funding where the collapse of the World
Trade Center buildings, resulting fires, and subsequent debris removal
caused potential health issues related to air quality. To meet this need,
FEMA entered into interagency agreements with EPA to sample and test
air quality in the NYC area, as well as to test ways to clean potentially
hazardous dust in building interiors. FEMA also provided funding to the
New York Department of Environmental Protection for the exterior
cleaning of 244 buildings and the interior cleaning of residences. EPA
provided oversight over the interior cleaning program as part of the
interagency agreement with FEMA.

Reimbursing costs for rescheduling New York elections ($11 million).
According to a FEMA official, this disaster was the first during which
elections were being held on the day of a federally declared disaster event.
FEMA officials said that they considered whether the costs of canceling
the elections statewide and rescheduling them at a later date were eligible
for public assistance or were increased operating expenses for the state
and local governments that are not considered to be eligible for assistance
under the Stafford Act. After initially denying the public assistance
application for reimbursement, FEMA officials reconsidered and


Page 28                                          GAO-03-926 Disaster Assistance
determined that the costs were eligible for reimbursement as disaster
related expenses. NYC was also reimbursed for costs of damaged and
destroyed computers, voting machines, and ballots as Stafford Act eligible
public assistance.

Aiding WNET Public Television (covered completely by private insurance)
and the Legal Aid Society of New York for Public Assistance ($1.6 million).
According to FEMA officials, WNET, a nonprofit television station,
requested reimbursement from the public assistance program for expenses
for a communications antenna that was damaged in the World Trade
Center attacks. The New York Legal Aid Society asked for reimbursement
of disaster-related costs including repair of damages to its building and
reconstruction of its data hub that was destroyed in the attacks. Although
public television stations are not among the specific types of non profit
organizations that are normally considered to be eligible applicants for
public assistance because they provide essential government services (i.e.
educational, medical, water, and sewer treatment facilities), FEMA
determined that WNET was eligible as a public facility because it provided
health and safety information to the general public during the crisis. Later,
WNET received full coverage for its claims from a private insurance
company, so FEMA funds were not awarded. Similarly, FEMA officials
said that although legal aid societies are not generally eligible for public
assistance, the Legal Aid Society of New York was eligible because it
provided government services as the public defender for NYC. These
projects were not traditional because they required flexibility in FEMA’s
interpretation of Stafford Act definitions of private nonprofit and public
facilities that are eligible for public assistance.

Notwithstanding its efforts to be flexible in defining public assistance
activities eligible under the Stafford Act, FEMA officials denied some
applications because they determined they were not eligible for public
assistance under the Stafford Act, but the Congress directed FEMA to
reimburse the NYC area for some public assistance-related costs that
would not otherwise have been eligible for funding. An estimated total of
$2.2 billion of FEMA’s public assistance funds—about 28 percent—will go
to these costs.15 This public assistance-related funding was different from
work FEMA funds under the Stafford Act. The projects included


15
 The congressionally directed funding includes funding for projects that FEMA officials
said were at least partially eligible for public assistance under the Stafford Act (i.e. the
contractor portion of the $1 billion debris removal insurance fund to cover workers at the
World Trade Center site.)




Page 29                                                    GAO-03-926 Disaster Assistance
                        authorizing a debris removal insurance fund for workers at the World
                        Trade Center site and reimbursing NYC agencies for the costs of providing
                        heightened security after the terrorist attacks. In addition, as discussed on
                        page 24 of this report, as we concluded our review, FEMA and NYC and
                        state officials were considering projects to be funded with $1.2 billion that
                        became available after the close out of traditional work in June 2003 for
                        congressionally authorized purposes. None of these reimbursements were
                        eligible for funding under FEMA’s public assistance program.
                        Reimbursements being considered included payment of increased costs of
                        the Medicaid program to meet health needs of recipients after the attacks,
                        a public awareness campaign called “I Love New York,” which was
                        designed to attract visitors back to the city after the terrorist attacks, and
                        cost of living adjustments made to the pensions of survivors of firefighters
                        and police officers killed in the line of duty in the terrorist attacks.


Descriptions of Three   Debris removal insurance for workers at the World Trade Center site ($1
Projects and the        billion). As discussed on page 15, this project establishes an insurance
Congressional Actions   company to insure NYC and its contractors for claims arising from debris
                        removal at the World Trade Center, including claims filed by workers who
Taken to Fund Them      suffer ill health effects as a result of working on debris removal
Follow                  operations. FEMA officials said that the project is unprecedented in its
                        size and complexity and because it involves long-term health and
                        environmental issues of a scope FEMA had not considered in prior major
                        disasters. Although officials said that FEMA has never established an
                        insurance fund to manage claims from other major disasters, FEMA Office
                        of General Counsel officials noted that FEMA does frequently pay for
                        contractors’ insurance because it is built into the contract between the
                        public assistance applicant and the contractor. In this instance, workers
                        rushed to the disaster site before any contracts were approved, and no
                        private insurance company would carry the insurance because of
                        unknown liabilities. FEMA officials said that the portion of the project
                        pertaining to contractors qualified for public assistance under the Stafford
                        Act and is a disaster-related cost that FEMA has traditionally assumed in
                        major natural disasters. Expanding the coverage to include liability for
                        claims filed against NYC or by city workers was an eligibility issue that
                        was under consideration within FEMA when Congress authorized the
                        funding in the Consolidated Appropriations Resolution for fiscal year
                        2003.16



                        16
                             Pub. L. No.108-7.



                        Page 30                                          GAO-03-926 Disaster Assistance
Reimbursement for heightened security costs in the aftermath of the
terrorist attacks (amount of funding not determined). FEMA denied
applications for public assistance to reimburse city agencies, including the
Departments of Environmental Protection, Corrections, Fire, and
Transportation to cover costs for increased security (e.g., the Department
of Environmental Protection took increased security measures to protect
the city water supply). A FEMA official said that the applications were not
eligible for public assistance because the work was of the sort that was
being done nationwide after the terrorist attacks and were intended to
prevent future attacks rather than respond to the disaster that had
occurred. However, NYC Office of Management and Budget (OMB)
officials said that some of the heightened security costs would be
reimbursed as a result of the enactment of the Consolidated
Appropriations Resolution for fiscal year 2003, which allowed NYC
flexibility in covering disaster-related costs not otherwise reimbursable
under the Stafford Act. At the time of our review, the amount of funding to
be provided for heightened security costs had not been determined, but it
was anticipated by FEMA officials to be over $100 million.

Reimbursement for instructional time for students to make up for days
missed after the terrorist attacks ($19.3 million). FEMA initially denied a
public assistance request to pay for additional hours of instructional time
for students who missed school due to closures, delayed openings, and
school relocations in the aftermath of the terrorist attacks. FEMA officials
said that the application was denied because the after-school program
designed by the NYC Board of Education to make up for the lost
instructional time was predicated on direct FEMA funding, but it did not
meet the standards of emergency work for which applicants must perform
work immediately after a disaster, regardless of who will pay, to eliminate
an immediate threat to health, life, and safety. However, FEMA was
specifically directed by the congressional conference committee making
supplemental appropriations for fiscal year 2002 to provide funds for the
additional instructional time. The conference report also directed FEMA
to provide compensation to the NYC school system for costs stemming
from the terrorist attacks for services and supplies, including mental
health and trauma counseling, guidance and grief counseling, and
replacement of lost textbooks and perishable food.17 NYC Board of
Education had spent $19.3 million of a total $77.6 million approved for this




17
     House Report 107-593.




Page 31                                         GAO-03-926 Disaster Assistance
                        work as of April 30, 2003. The remainder of the funding was de-obligated
                        to be used for public assistance related spending authorized by Congress.


                        Because the public assistance response to the NYC area after the terrorist
Response to NYC         attacks was unique and expanded in terms of the level and types of
Area Creates            assistance provided, it creates uncertainty about how public assistance
                        will be delivered if another catastrophic terrorist attack occurs. Both NYC
Uncertainties about     and FEMA officials, including managers of the World Trade Center Federal
How Assistance          Recovery Office and top officials of the NYC Offices of Emergency
                        Management and OMB, agreed that they were uncertain regarding the level
Would be Delivered in   and type of future FEMA assistance. These officials stated that if another
a Future Catastrophic   major terrorist disaster occurs, other communities might seek similar
Terrorist Event         types of assistance as was received in the federal public assistance
                        response to New York. In this regard, an official of the NYC OMB
                        anticipated that one of the first calls by a mayor of a city that experienced
                        a major terrorist event would be to NYC to discuss the decisions made in
                        the aftermath of the World Trade Center attacks. FEMA Recovery Office
                        officials agreed that the decisions made in New York would be on the table
                        at discussions of federal assistance for any future terrorist event. They
                        noted that it would remain to be seen whether an approach similar to the
                        one that evolved in NYC, including a 100 percent federal share for public
                        assistance funding, a capped funding amount, and flexibility in addressing
                        needs, would be used following any future event.

                        The Congressional Research Service noted similar concerns in a June 2002
                        report about the implications that the response and assistance provided to
                        the NYC area may have on future federal response to catastrophic terrorist
                        events.18 The agency’s report pointed out that one of the long-standing
                        principles of federal disaster assistance policies has been that federal aid
                        should supplement—not supplant—nonfederal efforts and that the actions
                        taken in the aftermath of the terrorist attacks might have established
                        precedent for an expanded federal role in consequence management after
                        terrorist attacks. The report noted that traditionally, the types and
                        amounts of assistance provided after one disaster have been sought
                        following succeeding catastrophes.




                        18
                         Congressional Research Service, Federal Disaster Policies After Terrorists Strike: Issues
                        and Options for Congress (Washington, D.C.: June 24, 2002).




                        Page 32                                                  GAO-03-926 Disaster Assistance
The report also states that the overriding question is whether the range of
existing federal policies for responding to disasters is appropriate if a
terrorist attack more devastating than that of September 11 were to occur.
This is a question to which NYC and FEMA officials have differing
positions. With respect to the effectiveness of the Stafford Act in dealing
with a major terrorist event of an impact equal to or greater than the World
Trade Center attacks, the officials from NYC involved in the response and
recovery efforts whom we interviewed did not believe that the act fully
addressed the needs of the city and did not think it should be used to
respond to major terrorist events unless it had significant amendments to
address the unique challenges related to terrorist events. According to top
officials of both the NYC Office of Emergency Management and OMB, the
public assistance program authorized by the Stafford Act is not a good fit
for the needs of a large municipal government that is coping with the
effects of a terrorist event. They pointed out that the impacts of the
terrorist attacks in NYC were different than impacts from the natural
disasters that the act was created to address. For example, the Stafford
Act does not address concerns such as the federal government’s
responsibility for addressing long-term environmental liabilities.
Additionally, a NYC emergency management official noted that the
Stafford Act lacked provisions for cities and states to be eligible for
reimbursement of money spent to provide security in the immediate
aftermath of terrorist attacks. The city officials noted that funding to help
alleviate these impacts was eventually approved, but not without
considerable discussion with FEMA officials and specific direction from
Congress.

A key NYC OMB official also said that the Stafford Act is too restrictive for
responding to a major terrorist event because it does not allow the
reimbursement to affected communities for budget shortfalls resulting
from lost tax revenues. The official said that NYC lost tax revenues, both
from real estate taxes from the destroyed buildings and corporate, sales,
and income taxes from displaced businesses and individuals that were
eligible for reimbursement under the Stafford Act. He said that NYC
requested $650 million in reimbursement for revenue shortfalls in fiscal
years 2002 and 2003 that were directly related to the terrorist attacks.
While FEMA officials agreed that the estimate seemed reasonable, the
amount was not eligible for reimbursement under the Stafford Act.
Congress recognized the problem and provided the city some flexibility to
cover expenses in these areas. However, the New York OMB official said
that a federal block grant would have allowed the city to spend the money
in ways that were most needed without specific congressional
authorization to do so; he viewed a block grant approach to providing


Page 33                                         GAO-03-926 Disaster Assistance
    disaster relief as preferable to trying to obtain the funding under the
    Stafford Act.

    In contrast, FEMA officials said that the Stafford Act worked appropriately
    for the NYC area. FEMA attorneys said that the Stafford Act contains
    enough flexibility to allow funding for non traditional activities. They
    added that every disaster has unique aspects, which continually challenge
    FEMA officials to exercise their discretion under the act to provide needed
    assistance. Furthermore, they point out that it is always the prerogative of
    the Congress to provide additional assistance to disaster-affected areas to
    address specific and unique needs. If Congress saw a need to fund public
    assistance-related work not covered under the Stafford Act in the event of
    another major act of terrorism, it could appropriate funds specifically for
    the disaster, as it did in NYC. Consequently, the FEMA officials are
    generally satisfied that they are able to apply provisions of the Stafford Act
    to respond to the terrorist attacks and, as of June 2003, did not believe
    significant changes to the legislation were necessary in the aftermath of
    September 11, 2001.

    Nevertheless, FEMA recently initiated an effort to develop a concept for
    redesigning the public assistance program. A working group of the Public
    Assistance Program Redesign Project, formed at the request of the
    director of FEMA’s Recovery Division, held its first meeting in May 2003.
    Members included FEMA public assistance and research and evaluation
    staff and state program managers to provide a broader perspective on the
    issues and concerns. The project was established to suggest proposals to
    improve the public assistance program and make it more efficient and
    capable of meeting community needs for all types and sizes of disasters,
    including those resulting from terrorism. Among other things, the project
    seeks to transform the program to one that:

•   is flexible enough to meet the demands of disasters of all types and sizes,

•   reduces overall resource requirements,

•   offers incentive for timely close outs,

•   places operational control principally with states and applicants, and

•   eliminates redundancies in decision making and processes.

    The working group will examine potential options for redesigning the
    program that include an annual block grant program managed by the



    Page 34                                          GAO-03-926 Disaster Assistance
              states, a disaster-based state-managed program, and a capped funding
              amount. The project is currently scheduled to hold a listening session for
              local officials and representatives of other organizations in August 2003,
              and develop a basic concept design for revising the program by September
              30, 2003.


              The public assistance program FEMA delivered in the NYC area after the
Conclusions   terrorist attacks was substantially different in several ways from a
              “typical” FEMA public assistance response. For example, in the NYC area
              there was a lack of cost sharing with state and local governments; a
              smaller than usual federal share of hazard mitigation funding; a different
              process for project review, selection, and close out; and, most
              significantly, the size and scope greatly exceeds the traditional public
              assistance response after a major natural disaster. The reasons for these
              differences are many and include the President’s early commitment to
              providing a specified amount of funding to New York, congressional
              direction on activities to fund, and FEMA’s discretion under the Stafford
              Act.

              Irrespective of the reasons for the differences in the way public assistance
              was delivered after the terrorist attacks, these differences raise questions
              about FEMA’s response to any future major terrorist event in this country.
              The key issue is whether the differences in the ways the public assistance
              program in the NYC area was delivered will serve a baseline for the federal
              approach in the event of another major terrorist event. Should such a
              terrorist event occur, it is not unrealistic to assume that affected
              communities will expect to receive public assistance comparable to that
              provided for the NYC area to meet their needs.

              DHS, within its Emergency Preparedness and Response Directorate, has
              an opportunity to assess the questions raised as a result of these
              differences and, if necessary, revise the public assistance program or
              provide Congress with suggestions for legislative changes that are needed
              so that it will be positioned to address new expectations for disaster
              assistance. The newly formed Public Assistance Redesign Project,
              established as we were concluding our audit work at the request of the
              Director of FEMA’s Recovery Division, plans to address many of the issues
              raised in this report, including whether the approach used in NYC is the
              appropriate way to provide federal assistance for recovery from terrorist
              acts. It is too early for us to assess the impact the project will have on the
              public assistance program in the future; however, it is a promising first
              step toward addressing these issues and better ensures that DHS will have


              Page 35                                          GAO-03-926 Disaster Assistance
                  a process in place to deliver public assistance that eliminates uncertainties
                  and questions about the ways in which the needs of affected communities
                  will be met in the event of another major terrorist attack.


                  In commenting on a draft of this report, the Acting Director of FEMA’s
Agency Comments   Recovery Division said that FEMA officials are proud of the agency’s
                  response in delivering public assistance programs to NYC and state, and
                  that they are satisfied that FEMA’s authority was adequate and flexible
                  enough in most circumstances to meet the response and recovery needs of
                  New York. The Acting Director did not take exception to any of the
                  information provided in our report. FEMA’s comments are reprinted in
                  appendix II. FEMA also provided technical comments on our draft, which
                  we incorporated into the report where appropriate.


                  As we agreed with your offices, unless you publicly announce the contents
                  of this report earlier, we plan no further distribution of it until 30 days
                  from the date of this letter. We will then send copies of this report to the
                  Secretary of Homeland Security and interested congressional committees.
                  We will make copies available to others upon request. In addition, this
                  report will be available at no charge on our Web site at
                  http://www.gao.gov.

                  If you or your staff have any questions about this report, please contact me
                  on (202) 512-2834 or at heckerj@gao.gov. Individuals making key
                  contributions to this report are listed in appendix III.




                  JayEtta Hecker
                  Director, Physical Infrastructure Issues




                  Page 36                                         GAO-03-926 Disaster Assistance
             Appendix I: Scope and Methodology
Appendix I: Scope and Methodology


             To determine what activities the Federal Emergency Management (FEMA)
             supported through its public assistance program, we analyzed published
             FEMA reports and FEMA’s National Emergency Management Information
             System (NEMIS) data. NEMIS is FEMA’s primary information system that
             manages disaster grant funding, and we analyzed NEMIS data on public
             assistance funding for this disaster. Though we were not able to
             completely assess the reliability of the published FEMA program data, we
             did perform logic tests of the data and found no obvious errors of
             completeness or accuracy. Also, according to FEMA officials, the
             published reports are the most reliable information available. The officials
             said that published FEMA reports were compiled based on NEMIS data, as
             well as the knowledge of public assistance program managers of funding
             for specific projects. We also updated spending amounts for some projects
             to reflect changes made after FEMA’s June 30, 2003,closeout of the
             traditional public assistance program, based on technical comments to our
             draft report. We interviewed FEMA headquarters, regional, and recovery
             office officials in New York City, N.Y., and Washington, D.C. We analyzed
             FEMA, Office of Management and Budget (OMB), and Congressional
             Research Service reports on federal assistance to the New York City
             (NYC) area to recover from the terrorist attacks. We reviewed the Stafford
             Act and FEMA regulations for ensuring that public assistance program
             funds are spent appropriately on eligible work and discussed oversight
             processes with FEMA headquarters, regional, and recovery office officials.
             We also discussed the agreements that FEMA used to coordinate
             responses of other federal agencies. We selected and examined the FEMA
             agreements with the U.S. Army Corps of Engineers, Department of
             Transportation (DOT), and Environmental Protection Agency (EPA) and
             reviewed support documents. We met with officials of the FEMA Inspector
             General to discuss planning for full audits of selected projects within 3
             years of their completion.

             To determine how the federal government’s response to the terrorist event
             differed from FEMA’s traditional approach to funding public assistance in
             other disasters, we selected 10 projects for detailed review from an issue
             matrix created by the public assistance officer at the World Trade Center
             Federal Recovery Office. The issue matrix tracked 32 public assistance
             funding issues and other types of concerns that required higher than
             normal levels of review. In making our selection of projects, we consulted
             with officials of the FEMA Office of General Counsel in Washington, D.C.,
             and FEMA officials at the World Trade Center Recovery Office in New
             York City, N.Y. For each project selected, we reviewed available written
             documentation such as project worksheets, case management files, letters,
             and memoranda. We reviewed the legislation that directed FEMA to fund


             Page 37                                         GAO-03-926 Disaster Assistance
Appendix I: Scope and Methodology




selected projects. Using structured interview instruments, we interviewed
FEMA project managers and representatives of agencies that applied for
public assistance to discuss how the challenging issues were considered
and resolved. Table 1 lists the 10 projects we reviewed and the applicant
organizations that participated in interviews on each of them. We also
discussed FEMA’s staffing processes with human resources officials at
FEMA Headquarters in Washington, D.C., World Trade Center Federal
Recovery Office managers, and representatives of each of FEMA’s three
technical assistance contractors who sent staff to NYC.

Table 1: Ten Projects We Reviewed and Applicant Organizations Interviewed for
Each of Them

Project                                            Applicant organization
Debris removal insurance for workers at Ground     • NYC OMB
Zero
Reimbursement for NYC budget deficits directly     •   NYC OMB
related to the terrorist attacks
Reimbursement for instructional time for           •   NYC Department of Education
students to make-up for days missed after the
terrorist attacks
NYC share of reimbursement for pension             •   NYC OMB
actuarial losses resulting from line of duty
deaths of police and firefighters at Ground Zero
Commuter train station construction costs          •   Port Authority of N.Y. and N.J.
                                                   •   NYC Department of Transportation
Reimbursement for damage to voting equipment       •   NYC Board of Elections
and rescheduling NYC elections
Reimbursement for heightened security costs in     •   NYC OMB
the aftermath of the terrorist attacks             •   NYC Office of Emergency
                                                        Management
                                                   •   NYC Fire Department
                                                   •   NYC Police Department
                                                   •   NYC Office of Corrections
                                                   •   NYC Department of Environmental
                                                        Protection
Cleaning of dust and debris from emergency         •   NYC OMB
vehicles                                           •   NYC Office of Emergency
                                                        Management
                                                   •   NYC Fire Department
                                                   •   NYC Police Department
WNET Public Television eligibility for public      •   Educational Broadcasting
assistance for disaster-related costs                  Corporation
                                                        (WNET)




Page 38                                                   GAO-03-926 Disaster Assistance
Appendix I: Scope and Methodology




 Project                                            Applicant organization
 Legal Aid Society of N.Y. eligibility for public   • N.Y. Legal Aid Society
 assistance for disaster-related Costs
Source: GAO.




To identify some of the implications these different approaches may have
on the delivery of public assistance should terrorist attacks causing
similarly catastrophic damage occur in the future, we interviewed FEMA
officials in NYC, and FEMA and Congressional Research Service officials
in Washington, D.C. We also analyzed our report and Congressional
Research Service reports on federal emergency response and recovery
policies, and we reviewed the Stafford Act and FEMA regulations.

We conducted this review from August 2002 to July 2003. We performed
our audit work in accordance with generally accepted government
auditing standards.




Page 39                                                   GAO-03-926 Disaster Assistance
              Appendix II: Comments from the Federal Emergency Management Agency
Appendix II: Comments from the Federal
Emergency Management Agency




              Page 40                                             GAO-03-926 Disaster Assistance
Appendix II: Comments from the Federal Emergency Management Agency




Page 41                                             GAO-03-926 Disaster Assistance
                  Appendix III: GAO Contacts and Staff
Appendix III: GAO Contacts and Staff
                  Acknowledgments



Acknowledgments

                  JayEtta Z. Hecker (202) 512-2834
GAO Contacts      John R. Schulze (202) 512-4390


                  In addition to those named above, John E. Bagnulo, C. Vashun Cole, Kara
Acknowledgments   Finnegan-Irving, Julian L. King, Deborah A. Knorr, and John A. Rose




(544046)
                  Page 42                                       GAO-03-926 Disaster Assistance
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