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First the Flood, Now the Fight
Critics Say FEMA Is Impeding Gulf Coast Rebuilding As Disputes Hold Up Nearly $1 Billion in Relief Funds

By Spencer S. Hsu
Washington Post Staff Writer
Wednesday, August 30, 2006

Someone had to pay to remove 3,000 dead trees in New Orleans. The trees, insisted the Federal Emergency Management Agency, couldn't have been killed by Hurricane Katrina's floodwaters because they weren't toppled to a certain angle. New Orleans would have to pay.

Nonsense, city administrators argued. Brackish water swamped the city for weeks, killing the trees where they stood. Only after months of delay did FEMA relent, adding the trees' removal to the toll of the catastrophe.

Through hundreds of such disputes large and small, the most costly disaster in U.S. history is fast becoming its most contentious, with appeals and disputes worth nearly a billion dollars bogging down repairs of critical public systems and delaying the return of residents.

Current and former officials at all levels blame FEMA workers' inexperience with eligibility rules, weaknesses in U.S. disaster laws and inconsistent treatment by Congress for much of the wrangling. The huge scale of the storm and honest disagreement over whether federal or local taxpayers should pay the tab add to the conflict.

"Disasters should be difficult to declare. . . . But once you get them, FEMA should not worry about cutting costs," said Daniel A. Craig, who stepped down in October as head of FEMA's recovery division and is now consulting for New Orleans. "Public entities are eligible for everything they have lost due to the disaster. It is not up to FEMA to cut corners or makes sure money is saved."

Gil H. Jamieson, FEMA's deputy director for Gulf Coast recovery, agreed that "we're in this to rebuild the city" and added: "We are not in it to delay for the sake of delay. Are there folks who sometimes hose it up? Absolutely. But I think we're doing a good job of helping it recover."

The disputes come as the costliest part of the recovery begins: restoring water, power, roads, bridges, schools and other public facilities along the Gulf Coast. Agency veterans said the spending will have more impact on the physical rebuilding of the Gulf area than anything else FEMA does over the next decade, possibly eclipsing its role in aiding individual victims of the storm.

The Sewerage and Water Board of New Orleans, for instance, sustained $446 million in storm losses, said Executive Director Marcia St. Martin. But FEMA has committed just $113 million so far.

FEMA notes that New Orleans promised U.S. environmental regulators $640 million in repairs before Katrina, and that the antiquated system is too big for the Crescent City's reduced population.

"That's what makes a city -- if you don't have water, sewer and drainage, you don't have a city," lamented Robert Jackson, spokesman for the sewer board. "The money so far only scratches the surface of the devastation. In some cases you've got underground devastation that you haven't seen even in a year's time."

Jamieson acknowledged that "one of the toughest issues is: How do we not buy any city a completely new water and sewer system but in fact try to attribute how much it was damaged before the storm?"

"We want to give them what they deserve but . . . make sure they are not getting more than they deserve, at some other community's expense," Jamieson said.

In St. Tammany Parish, officials were told last year that to obtain FEMA reimbursement, they needed to prove that each tree stump was the work of Katrina before it could be removed. Cleanup waited for months while the parish photographed and obtained global positioning satellite data on each one.

When the evidence was presented to a new FEMA crew, they asked, "Why did y'all GPS all these things?" the parish president, Kevin Davis, said in an account first reported by National Journal.

FEMA's Jamieson said that inconsistent interpretation of rules has been a daunting problem and that FEMA is trying to keep senior officials in place. He also cited successes, such as the scheduled Sept. 25 reopening of the state-owned Louisiana Superdome, a $94 million FEMA project.

Still, Jamieson said, "the time is right" to hold the nation's disaster law "to the light of day."

"We need to take a look at how well the legislation has served us."

Under the law, known as the Stafford Act, FEMA exerts its greatest long-term influence over rebuilding communities by deciding which projects are eligible for funding and by negotiating reimbursement of most state and local governments' costs. Generally, the federal government will pay only to restore facilities to pre-disaster conditions, not upgrade them, as a way of protecting taxpayers. But several former federal and state officials said the rules are open to broad interpretation and congressional intervention.

In the wake of the Gulf Coast hurricanes, FEMA appears to be taking a harder line, several current and former officials said.

So far, FEMA has approved about 34,000 aid applications from state and local agencies, 16,000 of them from Louisiana. It has rejected 1,015 requests, 95 percent of them from Louisiana. The state is appealing 200 decisions. Art Jones, the state's deputy coordinating officer, said he expects state appeals to grow at least sevenfold over eight to 15 years, topping 1,000.

"It's . . . a process designed to wear you down until you finally give up," said Richard A. Andrews, former California homeland security adviser.

State and federal disaster experts said they are hindered by burdensome rules and a shortage of expertise.

In New Orleans, city officials have received only 30 percent of $394 million requested and expect their requests to roughly triple over the next three years as work goes on. The city's deputy chief administrative officer, Cary Grant, said FEMA is underestimating the value of buildings and presuming wrongly that the city will be able to recover $500,000 in insurance for each of 394 damaged city facilities.

Elsewhere, local officials say a parade of new FEMA officials -- the overstretched agency rotates workers every 90 days or so and relies on temporary employees as well -- leads to constantly changing decisions on project approvals and paperwork.

One reason for mistakes is that FEMA has suffered a "brain drain" of top officials familiar with the complex rules to retirements and agency upheaval in recent years, said David Fukutomi, a FEMA consultant who is serving as a spokesman. But Fukutomi, who left FEMA this spring to become director of response and recovery for contractor EG&G, noted that experience shows that local officials spend more freely when they expect the federal government to pay their bills.

The state of Louisiana had only 14 disaster recovery employees before the storm and is relying on 173 contract workers provided by James Lee Witt Associates, the firm headed by the Clinton administration FEMA director, to help it manage the process, Jones said. FEMA has more than 700 people in the Gulf states working on the program, about 90 percent of them interim or contract workers, Fukutomi said.

Inconsistencies by Congress and FEMA also feed the acrimony.

After the Northridge earthquake in 1994, for example, U.S. and California authorities struggled with engineers to reach consensus on the price tag of repairing costly structures such as the UCLA Medical Center. FEMA rejected a state attempt to repair older buildings to meet newer building safety codes, for example.

After the Sept. 11, 2001, attacks, however, Congress directly gave the city and state of New York $20 billion -- but said no more would be forthcoming -- and directed FEMA to interpret the law liberally. FEMA approved $2.8 billion to repair and improve Lower Manhattan's transit system and waived a $680 million local match requirement, both counter to its normal practice. The state reported appealing none of its 1,900 aid requests to FEMA.

So far FEMA has allotted more than $7.9 billion to reimburse states for hurricanes Katrina, Rita and Wilma, and expects that number to grow significantly. Louisiana emergency managers say they expect the toll of facilities repair, as well as emergency expenses -- currently at $3.3 billion -- to exceed $25 billion. In Mississippi, emergency managers say they expect their costs -- now at $1.6 billion -- to total about $2 billion.

Jones said that at $3.3 billion so far, Louisiana is only 10 percent into what he expects will be a final tab of $25 billion to $50 billion.

In comparison, FEMA's Public Assistance program paid $8.8 billion to help New York's recovery after the 2001 terrorist attacks, $7 billion to repair damage after the Northridge earthquake, and $1.8 billion to rebuild after Hurricane Andrew in Florida in 1992.

Andrews and other officials proposed that Congress rely more on block grants as it did for New York, allow arbitration of appeals and reduce paperwork, and give FEMA field coordinators more authority.

Craig, the New Orleans consultant, said costs will escalate as crews uncover hidden damage and the enormous reconstruction effort sends building prices soaring. He said he expects federal costs to climb by as much as $75 billion. The federal government has committed about $123 billion to the recovery so far.

"It's going to be a $200 billion disaster," he said. "The real, permanent reconstruction hasn't started yet. They're still cleaning up debris."

Database editor Sarah Cohen contributed to this report.

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