[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND
RELATED AGENCIES APPROPRIATIONS FOR 2020
_______________________________________________________________________
_______________________________________________________________________
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
_____________
SUBCOMMITTEE ON THE DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND
URBAN DEVELOPMENT, AND RELATED AGENCIES
DAVID E. PRICE, North Carolina, Chairman
MIKE QUIGLEY, Illinois
KATHERINE M. CLARK, Massachusetts
BONNIE WATSON COLEMAN, New Jersey
BRENDA L. LAWRENCE, Michigan
NORMA J. TORRES, California
PETE AGUILAR, California
MARIO DIAZ-BALART, Florida
STEVE WOMACK, Arkansas
JOHN H. RUTHERFORD, Florida
WILL HURD, Texas
NOTE: Under committee rules, Mrs. Lowey, as chairwoman of the full
committee, and Ms. Granger, as ranking minority member of the full
committee, are authorized to sit as members of all subcommittees.
Joseph Carlile, Winnie Chang, Josephine Eckert, Angela Ohm,
Sarah Puro, Rebecca Salay, and Gladys Barcena
Subcommittee Staff
_____________
PART 6
Page
Oversight Hearing_FAA Aviation Certification..................... 1
The Department of Housing and Urban Development's Community Development
Block Grant-Disaster Recovery Program......................... 51
Department of Transportation's Fiscal Year 2020 Budget Hearing Part
5_Submitted Attachments.......................................... 123
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
_____________
Printed for the use of the Committee on Appropriations
DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND
RELATED AGENCIES APPROPRIATIONS FOR 2020
_______________________________________________________________________
_______________________________________________________________________
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
_____________
SUBCOMMITTEE ON THE DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND
URBAN DEVELOPMENT, AND RELATED AGENCIES
DAVID E. PRICE, North Carolina, Chairman
MIKE QUIGLEY, Illinois
KATHERINE M. CLARK, Massachusetts
BONNIE WATSON COLEMAN, New Jersey
BRENDA L. LAWRENCE, Michigan
NORMA J. TORRES, California
PETE AGUILAR, California
MARIO DIAZ-BALART, Florida
STEVE WOMACK, Arkansas
JOHN H. RUTHERFORD, Florida
WILL HURD, Texas
NOTE: Under committee rules, Mrs. Lowey, as chairwoman of the full
committee, and Ms. Granger, as ranking minority member of the full
committee, are authorized to sit as members of all subcommittees.
Joseph Carlile, Winnie Chang, Josephine Eckert, Angela Ohm,
Sarah Puro, Rebecca Salay, and Gladys Barcena
Subcommittee Staff
_____________
PART 6
Page
Oversight Hearing_FAA Aviation Certification..................... 1
The Department of Housing and Urban Development's Community Development
Block Grant-Disaster Recovery Program......................... 51
Department of Transportation's Fiscal Year 2020 Budget Hearing Part
5_Submitted Attachments.......................................... 123
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
_____________
Printed for the use of the Committee on Appropriations
U.S. GOVERNMENT PUBLISHING OFFICE
38-820 WASHINGTON : 2020
COMMITTEE ON APPROPRIATIONS
----------
NITA M. LOWEY, New York, Chairwoman
MARCY KAPTUR, Ohio
PETER J. VISCLOSKY, Indiana
JOSE E. SERRANO, New York
ROSA L. DeLAURO, Connecticut
DAVID E. PRICE, North Carolina
LUCILLE ROYBAL-ALLARD, California
SANFORD D. BISHOP, Jr., Georgia
BARBARA LEE, California
BETTY McCOLLUM, Minnesota
TIM RYAN, Ohio
C. A. DUTCH RUPPERSBERGER, Maryland
DEBBIE WASSERMAN SCHULTZ, Florida
HENRY CUELLAR, Texas
CHELLIE PINGREE, Maine
MIKE QUIGLEY, Illinois
DEREK KILMER, Washington
MATT CARTWRIGHT, Pennsylvania
GRACE MENG, New York
MARK POCAN, Wisconsin
KATHERINE M. CLARK, Massachusetts
PETE AGUILAR, California
LOIS FRANKEL, Florida
CHERI BUSTOS, Illinois
BONNIE WATSON COLEMAN, New Jersey
BRENDA L. LAWRENCE, Michigan
NORMA J. TORRES, California
CHARLIE CRIST, Florida
ANN KIRKPATRICK, Arizona
ED CASE, Hawaii
KAY GRANGER, Texas
HAROLD ROGERS, Kentucky
ROBERT B. ADERHOLT, Alabama
MICHAEL K. SIMPSON, Idaho
JOHN R. CARTER, Texas
KEN CALVERT, California
TOM COLE, Oklahoma
MARIO DIAZ-BALART, Florida
TOM GRAVES, Georgia
STEVE WOMACK, Arkansas
JEFF FORTENBERRY, Nebraska
CHUCK FLEISCHMANN, Tennessee
JAIME HERRERA BEUTLER, Washington
DAVID P. JOYCE, Ohio
ANDY HARRIS, Maryland
MARTHA ROBY, Alabama
MARK E. AMODEI, Nevada
CHRIS STEWART, Utah
STEVEN M. PALAZZO, Mississippi
DAN NEWHOUSE, Washington
JOHN R. MOOLENAAR, Michigan
JOHN H. RUTHERFORD, Florida
WILL HURD, Texas
Shalanda Young, Clerk and Staff Director
(ii)
DEPARTMENTS OF TRANSPORTATION, HUD, AND RELATED AGENCIES APPROPRIATIONS
FOR 2020
----------
Wednesday, September 25, 2019.
OVERSIGHT HEARING--FAA AVIATION CERTIFICATION
WITNESS
DANIEL K. ELWELL, DEPUTY ADMINISTRATOR, FEDERAL AVIATION ADMINISTRATION
Mr. Price. The hearing will come to order.
I would like to welcome today's witness, Mr. Dan Elwell,
the deputy administrator of the Federal Aviation Administration
and acting administrator from January of 2018 until August of
this year.
I understand Mr. Elwell left a conference with his
international counterparts in Montreal to be with us here
today.
So I thank you for doing that, for accommodating us.
I also want to welcome Mr. Earl Lawrence, who serves as
executive director of the FAA's Aircraft Certification Service.
He is here to assist us with technical questions during the
hearing.
We appreciate your both being here.
The FAA's certification process is a vital component of
aviation safety. Located within FAA's Office of Aviation
Safety, the Aircraft Certification Service ensures that pilots,
aircraft, and aircraft components, as well as airlines and
charter flight operators meet safety standards and regulatory
requirements. More than 1,300 engineers, scientists,
inspectors, and test pilots are responsible for carrying out
these critical activities.
Unfortunately, the certification process, long considered
the gold standard by other regulators around the world, has
been called into question following the tragic crash of Lion
Air Flight 610 in Indonesia and the crash of Ethiopian Airlines
Flight 302 less than 5 months later.
These horrible incidents resulted in the deaths of 346
people and caused immeasurable pain and suffering for the
victims' families, some of whom are with us in the hearing room
today.
They don't just deserve our sympathy, however. They deserve
a thorough and impartial accounting of what went wrong,
followed by the implementation of any reforms, any changes
necessary to ensure that something like this can never happen
again.
As with many aviation disasters, it appears that a complex
chain of events occurred in just the right sequence with
devastating consequences. Initial reports indicate that
equipment failure, automated systems in the cockpit, and human
error may all share some of the blame.
There are also many legitimate questions surrounding the
certification process and the extent to which the certification
process has been delegated through Organization Delegation
Authority, ODA, the arrangement with Boeing, whether that may
have contributed to a massive failure in regulatory oversight.
I want to be clear, as Members of Congress, we are not
professional accident investigators or prosecutors. We, in
fact, await the release of the crash reports from experts on
the ground and the pending recommendations from several
investigative panels that are expected in the coming weeks and
months.
At the same time, as elected officials, we are charged with
independently assessing what has happened and using our own
judgment to consider possible remedies. We will work with the
FAA, the many oversight bodies conducting audits and reviews,
and outside experts to ensure that profits and production
timelines are never prioritized over the safety of the
traveling public.
This subcommittee in particular is responsible for
allocating resources to the FAA so the agency can effectively
carry out its mission. This isn't a partisan issue. Under the
leadership of both Democratic and Republican members, we have
consistently funded FAA's aviation safety and certification
activities at or above the levels requested by the agency.
In the wake of the MAX crashes, the House-passed fiscal
2020 THUD funding bill, our bill, included a major infusion of
new funding in anticipation of substantive responses required
by the ongoing reviews.
We need a detailed and transparent accounting from the FAA
about what happened, how the agency is using its existing
resources, and whether additional funding or additional
authorities are needed for FAA to remain the world leader in
aviation safety.
For example, how do we ensure that FAA employees and their
designated representatives working for aircraft manufacturers
are insulated, totally insulated, from conflicts of interest?
Does the FAA have adequate in-house expertise and staff with
proficiency in computer science, systems and engineering, and
data modeling? How will FAA safely return the MAX to service in
coordination with international partners?
We also need more details as to how the FAA plans to
review, assess, and expeditiously implement any forthcoming
recommendations. The confidence in our aviation system is at
stake, and nothing less than full disclosure and accountability
from all stakeholders is going to be required.
The strength of the Appropriations Committee lies in our
commitment to comprehensive oversight of agency funding and
activities, line-by-line, year-by-year. This hearing is just an
initial step in this process. I expect the FAA to continue to
provide us with timely information to inform our work, and I
look forward to hearing the testimony of our witness today.
Now I would like to recognize the distinguished ranking
member, my friend and partner, Mr. Diaz-Balart.
Mr. Diaz-Balart. Mr. Chairman, thank you very much, sir,
and thank you for holding this very important hearing on the
Federal Aviation Administration certification activities and
other issues. And I will start by associating myself with the
words of the chairman.
I also want to thank our witnesses. We had a very
productive meeting before. And so we have again the FAA's
deputy administrator, who also recently served as acting FAA
administrator.
I do want to note, sir, your experience as an Air Force-
trained fighter pilot and who served in the first Gulf War
prior to flying for the commercial airlines. And so on a
separate note, thank you for your service. Thank you for your
service.
Look, Chairman Price and I have worked for over 4 years
very closely now to make aviation safety a top priority within
the THUD bill. In particular, we have worked together to make
sure that the FAA's Aviation Safety Office has the resources it
needs to certify aircraft, to oversee the safety of air
carriers, and ensure that pilots and the rest of the aviation
workforce operate within, again, with the highest standard for
public safety, that that always has to be obviously the first
priority.
These investments have contributed to the U.S. leading the
way to a historic record of safety in commercial aviation in
recent years. However, these two crashes of the Boeing 737 MAX,
both the Lion Air and Ethiopian, again, claimed 346 lives, and
it stunned the global aviation community, it stunned the
American people, and clearly has pained all of us.
And so, again, as I mentioned before, I associate my words
with what the chairman said. To all of those that lost loved
ones in these flights, there are no words to express what needs
to be expressed.
But, you see, actually it as our duty on this committee to
play our part to ensure that such a tragedy never happens
again. The Boeing 737 MAX was certified by the FAA through a
process known as Organization Delegation Authority, as we refer
to as ODA, and Congress has supported this ODA process and
other forms of delegation for decades. It is not a new issue.
And I also understand, and I have gotten more information
about that, that delegation is the practice not only of the
FAA, but, frankly, of many aviation authorities around the
world. And I look forward to discussing the ODA process in this
hearing this afternoon.
But I would be remiss, because there have recently been
questions raised about the qualifications of the FAA safety
workforce, particularly those who participate in flight
standardization boards. We need to be assured that the FAA has
the right level of oversight when it delegates certification
activities, and we need assurances that the FAA safety
personnel have the right credentials to do their jobs, because
obviously the safety of our skies cannot be compromised.
I look forward to hearing what the FAA is doing to restore
the global confidence in the certification process and what
practical steps we can take to help you achieve that goal.
And, finally, I do have a specific request, if at all
possible, at the beginning, which is, to make this conversation
more productive and to make sure that we are all on the same
page and all understanding what we are saying, there are a lot
of acronyms out there. And I would ask you if you could please
try to not use acronyms and to actually--I know it is going to
be a little longer--but spell out the words, because otherwise
it is a whole separate language, a different language.
And so with that, Mr. Chairman, again I thank you for
holding what I believe is a very, very important meeting and I
thank you for your leadership.
I yield back.
Mr. Price. Thank you very much.
I now turn to the chairwoman of the full committee, the
House Appropriations Committee, Representative Nita Lowey.
Mrs. Lowey. Thank you.
Thank you, Chairman Price, Ranking Member Diaz-Balart, for
holding this hearing.
I welcome Deputy Administrator Elwell before the
subcommittee.
Deputy Administrator Elwell, as we discuss improving the
Organizational Designation Authorization process, I trust that
you and your colleagues at the FAA share a commitment to
ensuring that all passengers, pilots, and crew members can
travel safely through our skies.
Please use this committee as a resource. We want to help
you prevent the next aviation catastrophe. We want to know
where Federal funding is best directed. I find it troubling
that the President's fiscal year 2020 budget request included a
$9 million reduction in FAA safety funding.
House Democrats responded in our fiscal year 2020
Transportation, Housing and Urban Development appropriations
bill by increasing FAA's safety funding $267 million above
fiscal year 2019 enacted levels. Our bill provides the FAA the
resources to hire more inspectors, engineers, and technicians
to oversee the Organization Designation Authorization process
and other safety functions.
Secretary Chao has said that her number one priority at the
Department of Transportation is safety. If we are going to
address the root causes of the MAX crashes, then we must have a
bipartisan commitment to robust funding to promote the safety
of our air travelers, both at home and abroad.
Thank you for being here, and I look forward to your
testimony.
Thank you.
Mr. Price. Thank you.
Deputy Administrator, we, again, appreciate your being
here. We recognize you for a 5-minute opening statement. And
any statement beyond that that you would like to submit for the
record, we would welcome that submission.
Please proceed.
Mr. Elwell. Thank you, Chairman Price, Chairwoman Lowey,
and Ranking Member Diaz-Balart. It is good to be with you this
afternoon. Thank you for inviting me here today to discuss the
FAA's certification process and, in particular, what we are
doing to reexamine that process following the 737 MAX crashes
in Indonesia and Ethiopia.
Before I go further, I want to recognize the families and
friends of those who lost their lives in those crashes. We at
the FAA acknowledge your pain and your loss. It reconfirms the
seriousness with which we approach safety and solidifies our
resolve to make the aviation system as safe as we possibly can.
The FAA's aircraft certification processes are well
established, thorough, and have consistently produced safe
aircraft designs. Since 1997, FAA and industry efforts have cut
the risk of a fatal commercial aviation accident in the United
States by 94 percent. In the past 10 years, there was one
commercial airline passenger fatality in the U.S. in over 90
million flights.
But one fatality is one too many. That is why our safety
culture focuses on continuous improvement and why we welcome
external reviews of how we regulate.
The FAA certifies the design of aircraft and components
used in civil aviation operations. Some version of our
certification process has been in place and served us well for
over 60 years, but it is under constant review. What has not
changed is that for any project, the FAA identifies all safety
standards and makes all key decisions regarding certification
of the aircraft.
To leverage the technical expertise that exists outside of
the FAA and to enable FAA's experts to focus on the most
critical issues, we allow for delegation, including
Organization Designation Authorization, or ODA, as you have
mentioned.
With ODA, the FAA may authorize an organization to act as
its representative. Such delegation is not self-certification.
The FAA retains strict oversight authority. It is the
applicant's responsibility to ensure that the aircraft complies
with FAA safety regulations. The FAA's responsibility is to set
the safety standards and determine that the applicant has shown
that the overall design meets the standards.
While these certification processes have helped us to build
an admirable safety record, the 737 MAX crashes placed a
spotlight on FAA's approach to aircraft certification.
There are a variety of reviews of our processes and
procedures underway, all of which we welcome. At the request of
Secretary Chao, the Department of Transportation's Inspector
General is auditing the certification of the 737 MAX, and a new
22-member committee will advise the Department on aviation
safety oversight and certification programs, including a review
of the FAA's procedures for the certification of new aircraft.
The FAA established a Joint Authorities Technical Review,
or JATR, to review the certification of the 737 MAX automated
flight control system. The JATR is chaired by former NTSB
Chairman Christopher Hart. We anticipate reviewing the JATR's
report soon.
These initiatives, the IG audit, the advisory committee,
and the JATR, are geared towards developing systemic
improvements for the future. Other efforts have focused more
specifically on safely returning the MAX to service.
The FAA initiated a multi-agency independent Technical
Advisory Board, or TAB, to review Boeing's software update and
system safety assessment. The TAB is evaluating Boeing's
proposed technical solutions for the 737 MAX and the TAB's
recommendations will inform the FAA's decision concerning the
737 MAX fleet's return to service.
In keeping with the FAA's longstanding cooperation with its
international partners, the FAA hosted MAX-focused meetings of
directors general of civil aviation authorities from around the
world in May and again, as the Chairman just mentioned, 3 days
ago in Montreal. We also met in April with safety
representatives and pilot unions for the three U.S.-based
commercial airlines that have the Boeing 737 MAX in their
fleets.
Finally, our new Administrator, Steve Dickson, like me, is
an experienced pilot who is using his background to understand
the MAX's problems and propose solutions. Steve took part, as I
did, in simulator sessions and is planning to pilot an actual
MAX aircraft during FAA's review of Boeing's proposed fix.
At this time, we continue to evaluate Boeing's software
modification, and we are still developing necessary training
requirements. This work is not following any prescribed
timeline. As we have said repeatedly, the MAX will return to
service for U.S. carriers in the U.S. airspace, and it won't be
returned until the FAA's analysis of the facts and technical
data indicate that it is safe to do so.
This concludes my statement.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Price. Thank you.
The focus of this hearing is on how the FAA exercises its
certification authority, the degree to which the agency
delegates that authority, carries it out itself, and then
delegates authority, and the way the FAA oversees the process
of delegation, the work done by the delegated authority, and,
of course, then the budgetary implications, the staffing and
expertise and budgetary implications of all of this, what does
it take to do this and do it well and do it with the assurance
we need that these processes are being expertly and thoroughly
carried out and that you have the resources, the personnel you
need to do this, that you can hire and retain the kind of
expertise the agency simply must have to carry out both the in-
house functions and also to oversee the delegated functions.
Presumably this review process may lead to some
reassessment of how much you have delegated, what kind of
capacity remains in-house at the FAA. And to the extent you
conclude that delegation is acceptable and necessary, then what
does it take to make sure that that is overseen properly and
that to the extent industry is involved in this that there is
not a chance of profits being placed over safety, not a chance
of conflicts of interests intervening, that we absolutely are
assured of the integrity of this process.
Now, whatever form this takes in the end--and we understand
you cannot anticipate all this now, because these reports are
coming, and we will all need to scrutinize what those reports
recommend. Still, we have to write a budget for next year. You
have to draw some conclusions right now about what this
experience indicates and the direction you want to go.
And the first line of questioning, therefore, needs to be,
for this hearing, anyway, needs to be what the agency needs
going forward to assure us all, assure the flying public, that
safety is being placed--has a primary focus and that you can
carry out your functions.
So the capacity of the workforce, the size, the skill, the
culture, is going to shape everything you do. You are under a
lot of pressure to improve efficiency, to reduce costs. The
industry is under those pressures.
So achieving efficiency and reducing costs is going to
require--continue to require changes in flight operations,
changes in technology. This is going to introduce more and more
complexity into the certification process.
So bottom line question. Do you have enough computer
scientists, systems engineers, human factor scientists, data
analytics professionals, who are as fluent in the state of the
art as their industry counterparts and as fluent as they need
to be?
Mr. Elwell. Thank you for that question, Chairman Price.
You were correct in your opening statement in saying that
this Committee has always adequately funded the FAA for its
mandate and for its duties. I will just reiterate safety is
absolutely, as Secretary Chao has said, as all of you have
said, is our number one priority, and that, to that end, is
what we look at when we are determining our workforce.
Right now we have an adequate workforce for what you
describe. But it is interesting that you put it the way you
did, sir, about keeping pace with technological advancement.
That is a challenge. Technology is changing much more rapidly
today than when I entered the business in 30, 40 years ago. And
it is a challenge to keep pace with industry technology
changes.
So we are looking for system safety engineers, we are
looking for computer programming experts. But, of course, we
are competing with the panoply of industries that require those
same skills, and we are competing for a dwindling supply of
STEM graduates coming out of universities around the world.
So we appreciate you asking that question. We are
adequately funded and staffed today. But as you said, these
reports will no doubt give us more insight into our processes
and our needs and our, particularly, resource needs. And I
commit to you to continue a dialogue with this Committee and
you on what our resource needs are going forward.
Mr. Price. We need to have that dialogue, and it needs to
be kept absolutely current. We will produce a budget for next
year, and it will make certain assumptions about what your
needs are.
And I stress again, this is not a static picture. We need
to assess what has happened here. By definition this has been a
regulatory failure. And we have to understand it thoroughly and
understand to what extent it--what its implications are for the
delegation authority, for the in-house performance of FAA, and
for what it is going to take to perform these functions going
forward.
So we, of course, in the near term will need to make these
adjustments and do the best we can to address these needs for
the next fiscal year, but this is going to be an ongoing
challenge. And at the root, this process and whether it works
is about the people you hire, their integrity, their expertise,
and the effectiveness of how they are organized.
Mr. Diaz-Balart.
Mr. Diaz-Balart. Thank you, Mr. Chairman.
Mr. Elwell, September 23 an Office of Special Counsel
letter raised some serious questions about aviation safety
inspector training weaknesses that were also identified by an
internal FAA investigation, is my understanding.
So both investigations found that safety inspectors in Long
Beach and Seattle did not meet FAA's formal training
requirements. Now, this resulted in the FAA inspector lacking
proper credentials to establish pilot requirements for the
Gulfstream VII. At best this would suggest either a lack of
clarity in training requirements for safety inspectors or, at
worst, well, something worse. This could raise serious safety
concerns.
So can you assure us that you have taken all the necessary
steps to correct this deficiency--and if it isn't a deficiency,
you might want to clarify that--in pilot standards for the
Gulfstream VII.
Mr. Elwell. Thank you, Mr. Diaz-Balart.
That is still being discussed internally. But what I can
tell you today is any insinuation that the FAA misled Chairman
Wicker in our reply to his inquiry is not what happened.
I want to make clear also that the OSC's letter connecting
training ambiguity, as you alluded to, to the MAX is also
simply not accurate.
The training issue identified by FAA's independent auditor
was not related to the specific work of the 737 MAX Flight
Standardization Board members. The FAA representatives on the
Flight Standardization Board were fully qualified for the
activities they performed.
Now, that said, the original whistleblower allegation did
raise legitimate issues. We are dealing with those issues. As
you mentioned, the Gulfstream VII, we are looking intently at
the ambiguity in the original order that led to some of the
confusion.
But I can assure you there was no misleading in the letter
sent to the Senator, and absolutely no pilots working on the
737 MAX certification were unqualified. They were all fully
qualified for their activities.
Mr. Diaz-Balart. I get that. I mean, I did read those
letters, which is why I have kind of focusing on the Gulfstream
VII. I mean, there, there seemed to be some issues, right? Am I
wrong?
Mr. Elwell. That was--the original whistleblower charges
were against the Gulfstream VII pilots, but--
Mr. Diaz-Balart. Right. So what steps are you taking to
correct this flaw in inspector training requirements? You know,
what else can you tell us that will restore our confidence in
the competence of inspectors involved in, again, flight
standardization boards?
Mr. Elwell. So the first thing I should do is separate the
difference between what you are talking about, the Gulfstream
VII. Those are check pilots. That is a completely different
training regimen and product in the pilot supply that we use
for Flight Standardization Board.
So there was some ambiguity in the training instructions
for the Gulfstream VII. That ambiguity led to the perception
that some of them did not--had not gone through all of the
training procedures.
That ambiguity is what we are looking at, what we are
focused on, and what we are determined to remove. We shouldn't
have that kind of ambiguity in our orders.
We absolutely respect the OSC's role in what they are
doing. We have issue with some of the things that they have
concluded in their investigation, but we are going to rectify
this, particularly, to your point, the Gulfstream VII check
airman training issue.
Mr. Diaz-Balart. That would be helpful.
Mr. Chairman, I want to go into the whole international
certification process, what other countries do, but I don't
have enough time. So I will wait for the next round if that is
all right.
Thank you, Mr. Chairman. I yield back.
Mr. Price. Thank you.
Mrs. Lowey.
Mrs. Lowey. Thank you.
I am sorry that I was detained in another hearing and I
couldn't hear the whole presentation. But I am a little puzzled
by what I am hearing. Lives were lost, families will never
regain their loved ones, and there seems to be ambiguity that
maybe you can clarify as to what is your responsibility, what
is Boeing's responsibility.
And then you were talking about it is difficult to find
youngsters who graduate--I hear this all the time--who graduate
without the appropriate credentials and focus on the expertise
that you need.
What are you doing about it? Be nice if maybe we provided
more scholarships. But to me that is such a weak excuse for a
company like Boeing that is making--I won't even get into the
numbers.
I am just puzzled by some of the testimony as to whose
responsibility is it. For example, reports indicate that in the
case of the 737 MAX, not all of the pilots flying the aircraft
were alerted to key changes in the software governing the
response to runaway trim.
Do you see it as the FAA's responsibility to notify pilots
of relevant changes, the technical changes, or is that a task
that is delegated to your private sector partners?
This, to me, is really shocking. I would think it is the
responsibility of Boeing. But if you are not doing appropriate
oversight, maybe you are the culprit as well.
Could you discuss that? This is very puzzling to me.
Mr. Elwell. Chairwoman Lowey, you started with the question
about workforce.
So just for a moment, I will talk about that workforce. And
the future workforce of the FAA is a very high priority for us.
We have a future workforce steering group. We are looking at
working with industry, working with universities, working with
trade schools, working with associations that reach out to
young people to get young people.
We are finding it is too late to talk to young people about
aerospace technical degrees in high school. We have to get them
in elementary school. And so we have a lot of programs.
It is a concern, but it is a future workforce thing. As I
said to Chairman Price, we are adequately staffed today, but we
are looking to the future.
With regard to the certification of the MAX, those are
excellent questions. As I said in my opening remarks, the
responsibility to meet the certification standards rests with
the manufacturer. And then it is the FAA's responsibility to
ensure that the certification process and the way in which the
manufacturer meets those standards is adequate and we check it
all along the way.
There is no self-certification. You mentioned about
training. Part of certification, the certification application
that the manufacturer of the aircraft puts forward, is their
recommended training protocol. And that also we oversee and we
have to approve.
So clearly, as the Chairman mentioned, there are issues
that have led to these horrific crashes. We are addressing and
working--I think there were--and, Earl, you can get into the
finer details--over 100,000 hours from the FAA and 297
different test flights in the certification. And I recently
heard, since the grounding, another 100,000 hours have been put
into the examination of the flight control automation and the
certification therein.
So we are committed to examining. It is already the most
intense and robust examination of an aircraft we have ever
accomplished. But we won't let the 737 MAX fly again until we
are absolutely certain of its safety.
Mrs. Lowey. First of all, I would hope you wouldn't,
because there seems to be too many questions out there that
have not been answered appropriately.
But I also wonder, when you talk about young people, what
are you doing about it?
Mr. Elwell. What are we doing about----
Mrs. Lowey. Yeah. What are you doing about it to try and
encourage young people to enter this very technical field?
Mr. Elwell. Last year we had a workforce summit held at
National Airport. Secretary Chao was there and Air Force
Secretary Heather Wilson. We work very closely with the Air
Force. We try not to compete for resources either at the FAA or
with the pilot profession writ large.
But one of the things, for instance, Air Force Junior ROTC
came to us because they want to do a program where they capture
young people between their sophomore and junior year in high
school. In partnership with certain universities, they want to
take these kids and put them through a summer program where
they come in not knowing anything and come out with a private
pilot's license. But they needed help from us on a regulatory
and a certification basis.
There are many, many, too many stories to describe to you
now, ma'am, but we are engaged with the Aircraft Owners and
Pilots Association on the programs they are putting in place
into attract young people to the profession.
Women in Aviation, we have met numerous times, and they are
very interested. Women are woefully underrepresented in the
industry.
So we are looking at programs both to incentivize young
people to enter the profession and then to keep them there.
Mrs. Lowey. Thank you.
Thank you, Mr. Chair.
Mr. Price. Mr. Womack.
Mr. Womack. Thank you, Mr. Chairman, and thanks to our
panel here today.
I know enough about this process to be dangerous, I guess.
I have a couple of questions regarding the European
aviation safety program, and I believe the technical acronym is
EASA. Is that correct?
Mr. Elwell. Yes, sir.
Mr. Womack. There have been a lot of questions in this
entire episode regarding the use of the delegation that the FAA
uses in its certification process.
Can you help me understand what the difference is between
what we do here and the process used by EASA, if that is a
clear enough question?
Mr. Elwell. Yes, sir. Thank you for that question.
It is clear and it is something that probably needs to be
explained because it is a bit complex.
The difference between ODA in the U.S. and what they call
DOA or DAO over in Europe in EASA, there are some significant
differences, but fundamentally it is the same thing, which is
using the expertise that resides uniquely in the company that
makes the aircraft, using that expertise without letting go of
your oversight. That is what we have been honing for decades.
There have been over 130 refinements to the delegation process.
EASA is relatively new to it, but they have embraced it.
They are much, much smaller than the FAA, so they have to avail
themselves of delegation.
But if I could let Earl, the expert here on this, to maybe
explain the nuance.
Earl.
Mr. Womack. Yeah. And, Mr. Lawrence, as you do that, you
say, Mr. Elwell, that there have been like a hundred
refinements to that particular process. Were those inspired or
executed as a result of what was determined to be some
shortcoming in the process? Were they technical? What would
cause the process to undergo a refinement, as you call it, a
hundred times? And I assume we are talking over a number of
years.
Mr. Elwell. Yes, sir, we are. And those kinds of
refinements can be generated internally by recommendations
within our own experts and our own inspectors. Some of the
refinements actually were statutory; they came forward in
legislation.
We are constantly refining to do it better, to have a
better linkage between the manufacturer designing and producing
aircraft and the entity that oversees and regulates it.
Mr. Womack. I am going to run out of time here in a minute,
so I want to give Mr. Lawrence an opportunity to make an expert
out of Mario Diaz-Balart, because I am a lost cause.
Mr. Lawrence. Thank you, sir.
Fundamentally, the European system for design and
production, their laws and regulations are different. And what
they do in Europe is recognize an organization. That is the
organizational design approval.
So instead of delegating, they actually recognize an
organization, such as Airbus, as having design authority in and
of itself, okay, and that is what is different, that is
retained in the U.S.
So in the U.S., determination rests with the FAA
Administrator, that is where the legal authority is retained.
And it is not to say that both systems don't have the proper
oversight. They do. But that is the fundamental legal
difference.
So when you hear the Europeans say they don't delegate,
that is because the organization--you have to become a design
organization before you can even start a process or be involved
in the design of an aircraft. And so they approve an
organization to do the work, and that organization does the
work.
Mr. Womack. As I understand it, the executive director of
EASA recently said his agency wouldn't accept the FAA's
certification of the flight control softwares for the updates
to the 737 MAX. What is that impact?
Mr. Elwell. Well, sir, I think that might have been taken
out of context. As I said, I was in Montreal a couple of days
ago, and I talked to Patrick Ky personally. He is the head of
EASA.
And Patrick, just like the other states of design, Canada
and Brazil and ourselves, is committed to remaining linked
through transparency, collaboration. We meet and we talk with
them all the time.
The characterization that some press reports have made that
there is a rift, a split, a going-their-own-way kind of thing
internationally is not what we are experiencing.
And Patrick reaffirmed in front of roughly 40 to 50 civil
aviation authorities worldwide that while simultaneous
ungrounding, when or if that happens, is desired, it is not
obligatory.
And just by nature of the process, countries will be
several days or what-have-you off. Even if they are in complete
agreement with everything we have done, they have different
protocols, different regulatory procedures that they have to go
through before they unground.
So we, you know, to the contrary of what has been reported,
we probably have never been closer with our colleagues
internationally because it is such an important thing we are
doing, and we have to get it right and we have to get it right
globally.
Mr. Womack. I appreciate it. Thank you. I am out of time.
Mr. Price. Ms. Clark.
Ms. Clark. Thank you, Mr. Chairman. Thank you to the
witnesses.
And thank you to the families that have joined us. We share
in your grief and in the quest for answers.
Recently, Mr. Lawrence, you shared with this subcommittee
that immediately after the Lion Air accident the FAA analyzed
flight data and found zero incidents of the Boeing 737 MAX trim
system runaway, one of the causes attributed to the crash.
And it is my understanding that there are a number of self-
reporting incident systems that pilots and the FAA have access
to. These are databases with a mix of proprietary data and
public information, but they are a critical predictive tool to
help the FAA identify risks before we have an incident or a
tragic accident.
I am concerned that there is not one centralized database.
This data is housed within FAA, within NASA, and then there is
the NTSB, and that is not an exhaustive list.
Time is of the essence when we are talking about safety and
preventing loss of life. Do you see a benefit for combining
this data into one system?
Mr. Lawrence. Well, thank you, ma'am, for the question.
Certainly there is a benefit of being able to share
information quicker and sharing more information. I think the
challenges that we have internationally and domestically is
that information comes from various sources, that, one, they
are not required to share that information, and, two, there is
concerns about how that information will be used, legal
concerns as one example.
So those are the things that we are working for. I think
the entire industry, especially through our Commercial Aviation
Safety Team, our CAST, has been working together with all of
the industry and the regulators to share data as freely as we
can and work cooperatively to move forward. And trust has been
building over many years. And I think that is reflective in our
accident record and how much it has improved over the years.
Ms. Clark. Are there steps that Congress can take to help
you with that, to erase some of these barriers to sharing this
data?
Mr. Lawrence. I am sure both the FAA and industry would be
happy to work with the committee to determine what would be the
best steps to assist us in sharing more data and putting it to
better use.
Ms. Clark. And am I safe to assume that you analyzed all
these different incident databases before making the
determination on whether or not to ground the Boeing 737 MAX?
Mr. Elwell. Yes, ma'am, we did. We examined all of the
pilot report databases for incidents. And in North America, in
Canada, and the United States, the 737 MAX, what is called FOQA
data--which is, I am sorry, I don't know what F-O-Q-A--do you
know what that is, the acronym? Basically it is digital data
that streams right off the aircraft.
So you were talking about different, varying ways of
reporting. That is digital data coming right off the aircraft.
And there were no either AOA or runaway pitch trim anomalies
across the fleet in Canada and the U.S. over 50,000 flights.
So----
Ms. Clark. So that brings up a point, because another one
of my concerns is that there does seem to be a gap in some of
this data, if we are looking at--I believe the term you use on
your accident and incident data system, as of this morning, the
freeze date, which is the date an incident was reported, is
that correct, or the date of the incident itself, was December
30, 2018.
So that is a 9-month lag in getting this information
through the data system. So maybe there is some information
that is streaming, but isn't that a very long time?
Mr. Elwell. So one of the things is that that streaming
data, that FOQA data, goes to the operator, goes to the
airline, before it comes to us. So there is a lag there.
I can look into it and get back to you, ma'am. I am a
little bit confused by that. It isn't 9 months, it shouldn't be
9 months.
But in answer to your question, we did a very, very
thorough examination of all reports, both the digital download
that we got from 737 MAX, you know, in North America, and the
handwritten notes. Pilots do what is called NASA reports, ASAP
reports, if something anomalous happens in a flight and they
describe it at the end of the flight and submit it, and we
looked at all of those records as well.
Ms. Clark. Okay. I would appreciate some followup on that,
because the concern of having the FAA have a 9-month gap
between posting and uploading these incidents to the database
and the actual date of the incidents. And I know there is time
that needs to de-identify and scrub some of this information.
But that seems too long for passenger safety.
Thank you.
Mr. Price. Let me just quickly ask a followup.
Is it possible that because of some ambiguity about the
name, the character of the MCAS system, that some of these
incidents were simply not identifiable as pointing to the kind
of incidents that, in the international crashes, were fatal? Is
that possible, that there is some ambiguity as to what these
pilots were experiencing?
Mr. Elwell. Sir, I would assume--I won't say it was
impossible. But our data, specifically the data pulling from
pilot reports, there were 24 reports that had to do, one way or
another, with flight controls, pitch control.
As a pilot, you know, I was intensely interested in my
role, and I read every single one of them, and none of them
pertained or had anything to do with MCAS or runaway pitch
trim.
On the FOQA data, on the data streaming side, that is much
more granular, and we absolutely know, unequivocally, that that
data did not come back on anything on MCAS or runaway pitch
trim.
Mr. Price. Mr. Aguilar.
Mr. Aguilar. Thank you, Mr. Chairman.
Thank you, gentlemen, for being here, and for our guests.
Mr. Elwell, as the FAA examines aviation safety, can you
talk to me about the systems that are in place to prevent
aircraft manufacturing managers, specifically who have a task
to meet production deadlines, from overlooking or undermining
safety concerns? Can you talk through a little bit about that
process and what safeguards are in place?
Mr. Elwell. With a manufacturer with whom we have an
Organization Designation Authority, or Authorization, there are
a number of requirements and bars that that manufacturer has to
pass in order to even have an ODA relationship with us.
One of is those is a familiarity with our manual, ODA
manual. And in that manual is extensive instruction. And the
list of behaviors and prohibitions, to the very thing you are
talking about, there is--and again, Earl, is the certification
expert at the FAA, can get into greater detail.
But part of the requirements to become a company with whom
we have an ODA relationship is the very thing you are talking
about, is, A, that it obviously can never be done and, B, if it
is done, what the enforcement or what the ramifications will
be.
Earl.
Mr. Lawrence. Thank you.
This deadline-driven stress exists in all areas, as we
know, in all workplaces. And the focus on when it comes to the
aircraft companies, not all have ODAs, for example. We accept
direct reporting to our ACOs, to our engineers. There is an
ongoing relationship. And when they hear something, often there
is that informal action by our engineers.
If it is a formal action, say it is a whistleblower or
something along those lines, those are--trigger formal
investigations where we send out our inspectors. I have
inspectors that do just that. They do quite a bit of it, quite
frankly, where they go out and they will investigate a specific
incident and then will take actions on that.
When it comes to ODAs specifically, they can effectively
lose their delegation, because one of the things that they have
to do is maintain that. And, yes, we have removed a delegation
before, not in any of the major companies. But we have taken
action and we will take action, because we constantly monitor
it.
Mr. Aguilar. How many inspectors, this group that you
mentioned, that you indicate you have, inspectors that you have
that go out in the field as a result of hearing something, how
many of those inspectors do you have? And is that an area that
you foresee is in a growth side?
Mr. Lawrence. Sure. So what we do is throughout the United
States in local offices, where the manufacturing takes place--
forgive me, sir, I don't have the exact number on the top of my
tongue right now, but we have serve hundreds of them, and
they----
Mr. Aguilar. Does every office have a group?
Mr. Lawrence. Well, these are separate offices, what we
call manufacturing inspection offices. And what they do is they
are placed where the manufacturing takes place and they travel
around. They will visit a manufacturer based on the risk of the
product that they make, but they will see them at least once
every 3 years.
So if you are making hose, for example, they may only see
them once every 3 years. If you are building something like a
fuel pump that goes in a tank, it will be at least every year.
But they look at each one and they do risk-based evaluations.
If there are problems with their product, they will
increase the amount of inspections that they do. And they,
again, they--we never assign them--there is a ratio of the
number of companies that they oversee per inspector. And we
maintain that ratio and we hire more inspectors when we have
more companies and more products to oversee. So we maintain a
ratio for those inspection activities.
Mr. Aguilar. It is meant to grow with more--with more--
Mr. Lawrence. If there is more products and more
manufacturers, we increase the number of inspectors to align
with that.
Mr. Aguilar. Okay. My next question about workforce.
Mr. Elwell, you talked about costs associated with hiring
new engineers as well. What is the plan to continue to grow and
hire and retain highly skilled engineers? And what are things
that we can do, what programmatic and what incentives, what
tools do you need to grow on the engineering side?
Mr. Elwell. That is a great question, sir.
And as I said earlier to the Chairman, this Committee and
Appropriations in general have always met our needs and, as was
pointed out, surpassed usually what we even asked for. And we
have used that to good effect.
But what we are continuing to do, which is outreach into
the community and outreach into organizations and working with
stakeholders who have as much need for the expertise that we
do.
We can't compete with industry on the engineering side. And
if it was just about money, I think we would--I wouldn't be
able to tell you today that we are properly resourced.
But we are an agency that is full of people that are
committed to the mission, the safety mission, and I think that
drives folks more than compensation, and that is kind of how we
get them and that is how we keep them. But that alone isn't
going to do it. We have to go after it from all sides.
Mr. Aguilar. Thank you.
Thank you, Mr. Chair.
Mr. Price. Mrs. Lawrence.
Mrs. Lawrence of Michigan. I want to thank you, Chairman,
for convening this important hearing.
To the family members who are here today, my sincere
condolences. And, like you, I want answers as well.
Following the devastating Boeing crash, it is imperative
that the FAA use all of the resources at its disposal to ensure
oversight. However, I am very concerned by the Office of
Special Counsel's report to the President regarding allegations
that numerous FAA operation aviation safety inspectors, which I
will use the acronym ASIs, were not properly accredited to
certify pilots or pilot training on procedures and maneuvers.
As technology continues to evolve, it is important that all
workers are qualified and credentialed to do the work. However,
this SC report appears to contradict that. In one instance, 73
percent of ASIs had not completed the formal training. And to
make the matter worse, the investigation found that these
employees were not even qualified to enroll in remedial
training classes. Now this is the report that was given to the
President.
Deputy Director, does the FAA need more initiatives for the
workforce program to ensure that all FAA employees receive the
training that they need to do the job? You have said that you
can say for a fact you don't--you are not fully staffed but, my
goodness, what can we expect when even the staff you have of 73
percent has not even completed the formal training that is
required?
Mr. Elwell. Thank you for that question, Mrs. Lawrence. As
I said at the beginning, we fundamentally disagree with OSC's
conclusions. And I would offer to the Committee, after the
hearing, at any time to sit down both with the Office of Audit
and Evaluation internally, the FAA's Office of Audit and
Evaluation, that sent the--the report from which the OSC made
its conclusions. I think, if we had the ability to go over it
in great detail, you would see that their conclusion----
Mrs. Lawrence of Michigan. So if it is not 73 percent that
have not completed, what is your number?
Mr. Elwell. So this goes toward the conversation we were
having earlier about the confusion in the order, and that is
the part that concerns me, that we are going to rectify. But
within the order of the requirements, there were two
statements, one that said one must have a certain level of
classroom training to be qualified to be a Gulfstream VII check
airman. Another part in the same order said but on-the-job
training can suffice or supplant the requirement for the
classroom training.
And what our auditors ascertained is that the OJT had
sufficed and they weren't unqualified. And one of the reasons
for that is because we often hire, especially in our pilot
force, second- or third-career people with thousands and
thousands of hours of expertise.
Mrs. Lawrence of Michigan. I would say I appreciate you
disagreeing with it. But what are we supposed to hold as the
standard? And the assumption that because a person comes to
this position with external training, there should be an
expectation for everyone that the FAA is putting in these jobs,
that they have the training that we want them to have.
I have another question. My district is home to the
headquarters of Williams International, which focuses on the
development, manufacturing, and support of small gas turbine
engines. The 2018 FAA reauthorization introduced several
certification reform intended to improve the FAA aircraft
certification and regulatory process.
My question to you: Can you describe the FAA's current
status, sir, on recruitment and training of the FAA workforce?
Even though you don't agree with the report, what is your
current status of the recruitment and training, reviewing and
communications of ODA best practices and your strengthening of
the engagement with other international aviation authorities on
safety and pilot training?
Mr. Elwell. Mrs. Lawrence, that is--again, that question is
the crux of what we are doing. We have roughly half a dozen
different investigations, audits, and reports looking at the
certification process from the micro--the components on the 737
MAX, all the way to the DOT IG's examination of how we do
certification writ large. We anxiously await those findings
because it is through that scrutiny, through those
investigations----
Mrs. Lawrence of Michigan. When do we expect the findings?
Mr. Elwell. So the findings are up to--actually, the body
that is doing them. My understanding is the DOT IG gave
themselves, I think, a year to 18 months to finish. The
Technical Advisory Board that is looking over our shoulder,
their recommendations are in, and we have committed to
answering all their recommendations in our process to unground,
if we unground, the 737 MAX. So that is sort of the gamut from
right now to, you know, a year or so in the future, and there
are other boards and bodies in between that.
But it is those investigations, it is those reviews and
audits that are going to help us understand how we can make
improvements as they get us their recommendations.
Mrs. Lawrence of Michigan. I know my time is up, but if we
get a second round, I would like to follow up on that. Thank
you.
Mr. Price. Thank you.
Mr. Elwell, I want to return to the line of questioning
Mrs. Lowey was pursuing, because I think it was important to
understand how this perfect storm, except there were two
perfect storms that occurred, and how we trace the
responsibility and how we--what kind of conclusions we make
about the kind of changes that need to be made. I mean, these
were--these were awful, awful tragedies, and by definition,
there was a breakdown in a system that is supposed to protect
the traveling public.
Now, it was--as I said in my opening statement, there were
apparently many facets to this. There was a malfunctioning of
the sensors. There was the kicking in of this poorly
understood, at least by some operators, this poorly understood
MCAS software system. There was then a failure on the part of
pilots to correct for the upper thrust of the aircraft and they
stalled and they crashed. The pilot couldn't or didn't cut off
the system.
There is some ambiguity, as you said earlier, about whether
comparable sequence of events developed with American
operators. Maybe not. We know there was at least one comparable
incident with an Indonesian aircraft the day before the fatal
crash.
So there are multiple points at which this could have been
avoided, but in the end, the fact that the pilots did not
apparently know what kind of corrective action to take is
pretty striking and it does raise questions as to whose
responsibility it is to make certain that the way these systems
function and the way they might malfunction and the way the
corrective action could be taken, whose responsibility is it to
make sure that that is crystal clear. And it is crystal clear
in the--I mean, this is an international market. You know,
Boeing certainly has a worldwide market in these aircraft. The
FAA has these international relationships, and there is a sense
that--I would think there is a widespread sense that we are not
just--not just regulating for the American market and for the
American flights, but for international flights that use this
equipment.
So whose responsibility is that? And can you assure us
that, as you review this and as you oversee this, that it is
going to extend to that kind of situation, that kind of
circumstance? These are not--these are going to be planes
operating all over the world where the pilots, the kind of
training of the pilots, the instruction, you know, there may be
cultural differences, you know, whatever. What assurance can we
have that justice is being done to the international nature of
this challenge?
Mr. Elwell. Mr. Chairman, thank you for that question. We
mentioned earlier about the International Civil Aviation
Organization. They are meeting today for the next almost 2
weeks in Montreal, and they meet every 3 years, and they meet
to ponder and to discuss what their agenda will be for the next
3 years.
One of the things that we do in every triennial at the
International Civil Aviation Organization is present to our
international colleagues what we do, how we view safety, and we
propose standards as we have in numerous assemblies. This year,
the U.S. has submitted a working paper on automation
dependencies, and that working paper will be discussed and will
be presented and, like all U.N. Agencies, ICAO, they can take a
while sometimes.
But I agree with you, there is a definite need for us to
look at this internationally, to look at the operation of
aircraft from an international perspective. It is daunting to
think about the different factors that go into a culture or a
company or a government, and there are 193 governments that
meet in Montreal to discuss these things.
But our responsibility, of course, and the limit of our
responsibility is our manufacturers, our operators, our
national airspace system.
Mr. Price. I am sorry, but these are aircraft that are
operating all over the world.
Mr. Elwell. Yes, sir.
Mr. Price. And, you know, the manufacturer is selling them
all over the world, is vouching for these aircraft for their
safety, for their design, for their--you know, it seems--I
don't know what kind of--what kind of role the international
bodies might play with regard to augmenting or basically
certifying what you certify. I don't know what capacity they
have to add to that or to critically scrutinize it, but it
appears to me that certainly the manufacturer and also our
agency, given your worldwide reach, it appears to me that it
ought to be a very central consideration.
Mr. Elwell. Yes, sir.
Mr. Price. What it is going to take to operate this plane,
this modified aircraft with these newfangled, you know,
equipment modifications. What is it going to take to operate
that plane safely, not just in the U.S., but around the world,
and to give, if the manual is insufficient, if the training is
insufficient, if the simulations don't do the job, to
critically evaluate that? And I hope that these assessments
that are underway are going to get at this.
Mr. Elwell. Yes, sir.
Mr. Price. But it seems pretty fundamental to me what kind
of responsibility our country assumes and our regulatory
agencies assume to the world, to the world market, to the
international customers and, you know, people who depend on us
in the end and who do believe that these aircraft are safe.
Mr. Elwell. Yes, sir. And we have a number of bodies that
gather for that exact purpose. But I agree, we can never rest
on how we do it, and we have to continue to strive to raise the
bar globally. Our joint authority tech review, nine different
countries are reviewing what we are doing right now. We have
the certificate--what is it--CMA, the certificate----
Mr. Lawrence. CMT.
Mr. Elwell. CMT. We have all of the--in the 192 countries,
there actually are just four that have internationally
recognized certification design and approval, and that is
Canada, Brazil, ourselves, and Europe. And we work with those
four bodies in all of our certification work, but we can always
do better.
And, sir, we look forward to working with your Committee,
with the entities that provide the recommendations from these
studies, to make it better. We are committed to it.
Mr. Price. Thank you.
Mr. Diaz-Balart.
Mr. Diaz-Balart. Thank you, Mr. Chairman.
Mr. Elwell, so, again, this meeting of the International
Civil Aviation Organization general assembly, which is, I
guess, this week and next week, right, as you mentioned and,
again, that deals with international pilot training centers.
Would you walk us through your recommendations? Do you already
have that, you know, what you are going to be recommending so
far to this organization, to this body?
Mr. Elwell. Yes, sir. And please excuse me because there
are quite a number of working papers, and I have in front of me
the recommendations that this paper proposes.
And remember that the International Civil Aviation
Organization does not have enforcement like any U.N. Body. They
provide guidelines. They provide recommended policies and
procedures. And our recommendation is that all States evaluate
their training requirements, their minimum requirements, if you
will. For instance, the ICAO recommended minimum is 200 hours
in type. The FAA's minimum, this is in type aircraft flown. So
you could be a pilot under ICAO-recommended minimums with 200
hours in that airplane. We require 1,500 hours total before you
can fly a commercial aircraft. That is a significant
difference.
We meet in Montreal and we meet with ICAO to have those
discussions with other civil aviation authorities about our
thinking and why we do the things that we do.
The paper that we are writing says, as airplanes become
more automated, the skills to fly manually degrade. And we have
known this for--since automation has come to the fore. There is
no question automation has made aviation much, much safer, but
there is always a--an effect to any new thing you do, and what
automation has done has hindered the ability for pilots to
manually fly.
So one of the recommendations is we implore other civil
aviation authorities to embrace the concept of automation
dependency and to ameliorate it, either in training programs or
through individual country standards, because at the end of the
day, as long as aircraft are piloted, no matter how autonomous
an aircraft might be, those skills have still got to be there.
Mr. Diaz-Balart. Let me change to workforce, and we have
had--different members have had questions about this. And so
you have a workforce of about 1,400 in the aircraft
certification service. Do you believe that you have an adequate
workforce to proper--to have proper oversight of the ODAs--
which I said I wasn't--not to use an acronym, but I am using
it. But you understand them, so I can use them. I can do it
that way. Do you think that you have enough workforce there?
Mr. Elwell. Yes, sir, we do. We have enough in the
certification workforce to handle the ODAs' agreements that we
have, but as Earl pointed out a few minutes ago, that is a
constantly changing landscape. And we welcome the Committee's
offer for us to reexamine on a nonstatic basis to constantly
reassess the resources we have compared to the resources that
we need. And we promise and commit to stay in that conversation
with you to let you know if either through the recommendations
that we get as a result of all these inquiries, if those
recommendations show that we are short or we need to add in one
area or another, we will take a good look at it and we will
definitely talk to the Committee.
Mr. Diaz-Balart. Again, in one of the previous
conversations, this kind of came up, the fact that FAA has
experienced problems recruiting and retraining engineers. You
are not the only one, by the way, but obviously--and other
technical staff and potentially even greater with software
engineers just because of the marketplace.
How quickly, if, in fact, you had to, how quickly could you
hire new technical staff to beef up your oversight capabilities
in some of those areas that are highly--you know, those folks
are highly sought after, rare, rarer, I guess. And by the way,
do you have--in your case, would they have to be American
citizens?
Mr. Elwell. Some of the activities that we do at the FAA
require citizenship.
Mr. Diaz-Balart. Which then limits your pool rather
substantially even more. So if you had to all of a sudden, some
of the recommendations were that you had to staff up on some of
these, you know, kind of piggybacking on Chairwoman Lowey's
question, how quickly could you do some of these things?
Mr. Elwell. Yes, sir. That is a challenge, and it would
depend on what the recommendation said and how we evaluated the
recommendation, whether or not we felt it was too much, too
little.
I don't foresee in the near term something so drastic that
we would not be able to fill the need. But over time, looking
at the demographics of engineers coming out of U.S.
institutions today, we are concerned which, again, is why we
are reaching out as young as practicable to get folks
interested in our industry and our vocation of aerospace.
Mr. Diaz-Balart. Thank you.
Thank you, Mr. Chairman.
Mr. Price. Thank you.
Ms. Clark.
Ms. Clark. Thank you, Mr. Chairman.
Back to the question of these separate databases. Besides
the AIDS database, there is also an ASRS, the Aviation Safety
Reporting System. There were a number of complaints in that
system submitted by pilots voicing concerns about the 737 MAX.
This included mentions of the plane suddenly nosing down and a
flight manual that really didn't give adequate information
about the MCAS. These complaints were logged beginning October
of 2017 through March of 2019, right around the time of the
Ethiopian Air crash.
Were these complaints reviewed prior to these incidents?
And, if so, what actions did the FAA take based on them?
Mr. Elwell. Thank you for that question. I referenced
earlier there were 24 in the ASRS. And you accurately describe
one of them, the pitch down on the 737. That particular
incident--and, as I said, I read them. That particular incident
took place when the autopilot was engaged. And, as you said,
the MCAS, the Maneuvering Characteristics Augmentation System,
does not operate except in manual mode.
So it is a bit technical, but there were a number of things
that allowed us, and we were able to eliminate all 24 ASRS
reports as having anything to do with MCAS or what happened in
the Lion Air incident, which is when we began pulling all those
reports and doing the investigation to see if it was something
systemic, and ultimately we were able to determine it was not.
Ms. Clark. So these were all reviewed prior to these two--
prior to the Ethiopian Air incident?
Mr. Elwell. Yes, ma'am.
Ms. Clark. Okay.
Mr. Lawrence. If I can just add, you mentioned the one that
mentioned the MCAS system. That was after we issued an
emergency AD and, in fact, in the report, the pilot who was
making the report referenced the fact that we were--that we had
issued an emergency AD. And so that was in between the two
accidents, so in that particular case. You know, so it is true,
there was one that specifically mentioned but, again, it wasn't
an actual failure of any system. It was just a concern being
lodged that the pilots didn't have sufficient information about
the system.
Ms. Clark. Okay. If I can go back to the AIDS system for a
while, maybe you can help me work through something. When you
go to look up incident reports for the Boeing 737 MAX, you
can't really find it. If you put in Boeing as the aircraft
maker, 737 as the model, then you have to make a selection for
the series. There is 100, 400, 800, and 900, but we couldn't
find the MAX.
Is it listed under a different series? I mean, what is the
story?
Mr. Lawrence. Thank you very much for that question. And I
appreciate your focus in this area. It is one of our
frustrations. There is so many different ways--and we call it
taxonomy--which you can identify an aircraft, an aircraft
system that searches can become very difficult, unless you are
very familiar with the subject matter.
And that is why, for example, in the NASA reports, the
ASRS, there is full-time NASA staff that do nothing but review
all of those. And the ISIS system--well, I am sorry.
Ms. Clark. But isn't it strange that 2 years into this
there isn't a classification for this aircraft?
Mr. Lawrence. Well, there is. There is. It is, but people
put in--it is the 800 and 900, but people enter data their own
ways. And so that is always a struggle in tracking everything.
And we do search through them. There are mechanisms. There is
more and more powerful systems that can search all those
various things out. And, again, this is where you were asking
before. Are we refocusing our efforts on having more skills and
hiring more people with that skill set to analyze that data?
Absolutely.
Ms. Clark. Yeah. I mean, it seems like this is just crucial
data that we need for safety that can just fall through the
cracks. When you are looking at pilots, as you said, put them
under series 800. Some were under 737 Next Generation. It just
seems like we need uniformity in this and the ability to get
this information across databases, and we are here to help. We
want to make this easier, and we are counting on you for the
safety of aviation to help us work through this.
Thank you. My time has expired.
Mr. Price. Thank you.
Let me turn to the specifics of the 2020 budget, and then
go to a more general kind of observation. The House THUD bill
provides, as you know, a $267 million increase for aviation
safety. The Senate bill provides a $23 million increase. We
have got to work out those differences; hopefully sooner rather
than later. The budget request sought a $9 million decrease,
the Trump administration's budget request, but that request was
prepared before the FAA grounded the MAX.
Now, we have got write a budget. Hopefully, it is going to
be enacted without endless continuing resolutions.
At this point, what do you recommend? What parts of the FAA
budget should we add emphasis to for 2020 with a larger budget?
And there is, there is, I think, potential support for a large
budget, assuming we know what it buys and what kind of capacity
it gives you.
What do you want to buy more of? What kind of quality
assurance? What kind of--what kind of expertise? Any
calibration you would anticipate, any recalibration at this
point that you would anticipate between FAA's in-house
capacities and ODA and the ability to oversee the ODA
operations? Any guidance you can give us and, of course, we
will seek this continually as we actually finalize this, but I
wondered what you would say about it today.
Mr. Elwell. Well, Mr. Chairman, as you know, sir, you
mark--you described your mark in the Senate and we, the
Administration, has not had an opportunity yet to come up with
an administration position on where we are, where we might be.
I would, though, in general say that while the--we appreciate
and have always appreciated this Committee's support of our
mission, but what some people don't understand, we have a line
of business called the Office of Aviation Safety. But in
reality, the FAA is the Office of Aviation Safety. All of our
lines of business and staff offices in one way or another are
committed and connected to safety.
So, you know, we are trying to move at the pace of
technological advancement. As I said earlier, it is moving
incredibly quickly, which is why we have proposed, the FAA has
proposed, and the Department is, one of Secretary Chao's
priorities is new technology, innovation. We are looking at the
FAA to creating an Office of Innovation whose role will be just
what has been discussed here today, the ability to assimilate
new technologies and new ideas and get them into the system
with greater speed and dexterity than we currently are geared
and wired to do.
Mr. Price. Well, we do need to work on this and work on it
continually. Let me just convey as clearly as I can what our
expectations are in terms of our job and the kind of job we
need cooperatively to do looking toward 2020.
We, of course, know that reports will come in and you will
draw conclusions from those reports and that this is not a
onetime process. But in these next weeks, we expect a
justification of your budget request, as you may augment it,
looking forward. We expect at least preliminary conclusions as
to the calibration and recalibration that needs to take place
between FAA's core capacities and delegated authority. We
expect an accounting of the oversight you are going to give to
those to whom authority is delegated and an assurance that you
have assessed that and reassessed it.
Just an example from our discussion a few moments ago. I
want to know what kind of responsibility Boeing assumed. I
assume this was a delegated function basically, this question
of not just installing MCAS, but also describing it in the
manual, integrating it into the instruction system for pilots,
understanding that these planes are being sold all over the
world. They are being operated all over the world. I assume
that Boeing had initial responsibility for making certain, not
just the mechanical aspects of this system, but how it
operated, what could go wrong, what pilots all over the world
would need to know in order to recognize malfunction and to
correct it.
I assume that the FAA's responsibility is to oversee that,
to scrutinize it. I would expect you to have full awareness of
this potential problem. It just seems like such an obvious
problem, maybe in retrospect more so. But clearly, it could
have and should have been anticipated.
I would expect the FAA to have the capacity to deal with
this. If you are not doing it directly, then at least
scrutinize it with great care and with great attention to
worst-case scenarios.
I think we want that kind of assurance that that is the
kind of--that is the kind of thinking and planning and
assessing and self-criticism that you are doing as we receive
these budgets. It is not just about dollars and it is not just
about the on-paper qualifications your employees may have. We
want to be responsive to your needs, of course, and we
understand the difficulty of hiring and retaining people that
you need. You are competing with industry. We understand that
people have to have an extra measure of devotion and
dedication. We understand that. We respect it.
But we do need to have from you, now and ongoing, an
assessment of what we learned from this and what kind of
capacities you intend to make sure we have going forward.
Mr. Elwell. Yes, sir. And I commit to you that you will get
that.
Mr. Price. Thank you.
Mr. Diaz-Balart.
Mr. Diaz-Balart. Thank you, Mr. Chairman.
Let me--you know, it looks like the central issue in
potentially the accidents and the grounding of the 737 MAX
seems to be the MCAS and also the angle of the tach sensor. So
let me just throw a couple of things that I have heard out
there--that we have heard out there. It is heard and read out
there and if you can kind of respond to them.
One is that through the certification process, there was
little attention given to MCAS as a new feature of the 737 MAX
and that pilots may not have been aware of the new system or
the challenges that might arise if that MCAS malfunctioned, if
you could kind of address that.
And also, the other thing is that the 737 has a single
angle of a tach sensor which sets up a single point of failure
where multiple sensors could potentially have created
redundancy and reduced the risk. If you can address, because we
have heard that a lot, seen that a lot, address those issues to
whatever extent you can at this moment.
Mr. Elwell. Thank you for that question, sir. To the first
part about how much was known, we in the certification--and I
am speaking to a process that predated my tenure, but the
understanding is that we retained MCAS briefly until we were
assured--and you may know a little more detail, Earl, about
when MCAS was delegated--but we knew what the MCAS was for and
what--why it was put in place. And it was a subsystem of what
is called the speed trim system, which already had been
certificated with the NG in prior models of the 737.
And it has been reported, the MCAS was developed to counter
an anomaly in the handling characteristics of the 737 MAX that
was brought on by wider-diameter engines forward and the wing.
I have said in past hearings and I will repeat, as a pilot
my entire life, when I heard, when it first was reported to me
that the MCAS was not described in the flight manual, I didn't
agree with that. I believed that the MCAS should have been in
the flight manual, should have been known to pilots,
particularly because it was--although it was designed to come
into play at a very, very thin, rarely used slice of the flight
envelope, it operated in manual mode. And as a pilot, when
there is something in an airplane that is going to move when
you are flying, you want to know about it. You want to know why
and you want to know about it.
But, again, all of the reviews and the investigations and
the audits are looking at those exact questions about how we
could have done it better, how we could have seen when it was
presented, and envisioned malfunctions, and we did do that in
flight testing. We put the MCAS through the paces.
When you talk about the AOA, I can briefly discuss some of
the mitigations now that we have been working on.
And, Earl, please interrupt.
The MCAS now, the new design, the MCAS will look at both
AOA veins. As it was originally designed, it looked at the AOA
vein that was primary for the flight. And since there is an AOA
vein on each side of the airplane, the primary AOA vein would
swap. Every other flight, the other AOA vein would be used. And
the thinking there is, by swapping on every flight, if there
was something wrong with one or the other in the course of a
day, you would be able to detect it.
But now there is a comparator, and if the AOA veins differ
by 5\1/2\ degrees or more, the MCAS can't operate. If MCAS does
operate, it will only operate one time. And for it to operate
again, the problem would have to be completely resolved to
normalcy and then go back into the regime that it is required.
Finally, if--and this is an almost inconceivable scenario--
where MCAS is activated multiple times, it cannot put the
stabilizer into a position that the pilot won't have at least
1\1/2\ Gs of elevator control.
So these are the things that have been incorporated. We
still have our work to do. And I went beyond, I am sorry. I
answered more than you asked, but that is----
Mr. Diaz-Balart. No, I appreciate that.
Mr. Chairman, would I indulge and if you would give me just
a few more seconds?
Mr. Price. Sure.
Mr. Diaz-Balart. Just to finalize, and I think it is
important and we talked about it before, but this chairman and
when I chaired it and this team and this subcommittee--and, by
the way, I know on this issue I can speak for the full
committee chairwoman, her issue has always been safety. And, by
the way, her issue has been safety, whether it is dealing with
FAA, whether it is dealing with, you know, train crossings. I
mean, that is--and so I just want to reemphasize that.
You know, if there are issues that you think that you need,
you are going to find a subcommittee that is exceedingly
responsive to you. And I don't think--and I can't speak for
other members, but I think on this issue, just because of
knowing the full committee chairwoman's attitude, because I
have had to deal with it--I won't say--I shouldn't say I have
to. I have dealt with the full committee chairwoman's
insistence on issues dealing with safety. I am sure the
chairman has dealt with it. I have dealt with it.
And so I just want you to know that if there are issues,
when we are dealing with safety, this subcommittee always wants
to be helpful. And, yes, we obviously are going to demand that
you justify every taxpayer dollar and cent, but just know that.
And I hope you realize that you have folks here who want to be
helpful and understand that that issue is of the--I mean, it is
the most important issue that we deal with, obviously, and so I
just wanted to leave with that.
I thank you for your service, but I just want to make sure
that you understand and that you understand that we are here to
be helpful on a lot of issues but when it comes to safety, in
particular. So thank you.
And, Mr. Chairman, thank you for allowing me to indulge
additional few seconds.
Mr. Price. I thank my friend. And I do think that is a good
note on which to conclude this hearing.
The hearing, obviously, fundamentally, is about safety and
the commitment to safety, and we know you share that
commitment. We take you at your word on that. We know about the
famous triple redundancy standard that you apply, and we, of
course, understand why you do that and how important that is.
There is a lot of work to do, I think. It is work to do
within the agency, with this committee, and in our mutual
addressing of these issues. This MAX tragedy--these MAX
tragedies indicate a need to scrutinize the certification
process very, very carefully as we have discussed today in
various aspects.
The whistleblower and Office of Special Counsel matter
about the safety inspector and their qualifications, of course,
that needs to be addressed, cleared up, made sure we are
dealing with that adequately. There is ongoing audit work on
air carrier maintenance programs that suggests some
deficiencies with maintenance that need to be addressed. So
there are questions about certifications, flight standards,
maintenance.
All of that underscores the importance of a culture of
safety, not just specific measures for specific problems, but a
culture of safety that addresses the agency's entire work. And
we can't legislate that, nor can you simply order it from the
top. There is going to have to be, I believe, a constant
renewal of this culture, a nurturing of this culture. And that
is a major, major challenge for you, as well as to us as your
partners in appropriating and figuring out how to oversee your
agency and help ensure top performance.
So we all want to err on the side of safety, err on the
side of more training, not less, err on the side of maybe
quadruple redundancy or whatever it takes to make sure that
safety comes first.
So I would appreciate any observations you have about that.
That really is a challenge, I think, that goes beyond any
specific measures you might take or tweaks you might make in
processes. It is a commitment to constantly renew that
commitment to safety as your primary mission.
Mr. Elwell. Well, Mr. Chairman, Ranking Member Diaz-Balart,
thank you very much for the opportunity to let us come and talk
to you today.
And at the beginning of my comments, when I said that we
welcome scrutiny, we welcome these reviews, they always make us
better, and it always makes us better to sit before you and to
talk to you about these things. You have made it crystal clear
that you are linked with us on the priority of safety. You have
also made it crystal clear that we need to stay in direct
contact with you with regard to resource constraints, if we
have any, when it comes specifically to safety. I got that
message. I will certainly convey that to Administrator Dickson
who, as you know and you mentioned, took over in August.
We, all of us, we come into this because we are dedicated
to safety, to aviation safety. And when there is loss of life,
it is devastating but it redoubles our efforts. And we are
absolutely committed to making sure that we leave no stone
unturned, as it were, to ensure that we are safer tomorrow than
we are today.
Mr. Price. Thank you very much.
The hearing is adjourned.
[Questions and answers for the record follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Thursday, October 17, 2019.
THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT'S COMMUNITY DEVELOPMENT
BLOCK GRANT-DISASTER RECOVERY PROGRAM
WITNESSES
IRV DENNIS, CHIEF FINANCIAL OFFICER, DEPARTMENT OF HOUSING & URBAN
DEVELOPMENT
JEREMY KIRKLAND, COUNSEL TO THE INSPECTOR GENERAL, HUD OFFICE OF
INSPECTOR GENERAL
DAVID WOLL, PRINCIPAL DEPUTY ASSISTANT SECRETARY FOR COMMUNITY PLANNING
AND DEVELOPMENT, DEPARTMENT OF HOUSING & URBAN DEVELOPMENT
Mr. Price. Good afternoon. The hearing will come to order.
I would like to welcome today's witnesses: Mr. Irv Dennis, the
chief financial officer at HUD, and Mr. David Woll, Principal
Deputy, Assistant Secretary for Community Planning and
Development. That is on the first panel. On the second panel,
we will hear from Mr. Jeremy Kirkland who serves as counsel to
the HUD Inspector General.
So we thank you all for being here. We look forward to your
testimony. HUD's Community Development Block Grant Disaster
Recovery Program, or CDBG-DR, is a vital tool for States and
municipalities as they recover from major disasters. Grantees
use flexible CDBG-DR funding to rehabilitate and reconstruct
damaged housing, buy out vulnerable or damaged properties, and
repair public facilities such as community centers.
A. The activities must primarily benefit low and moderate
income people in the most affected and distressed areas. Since
1993, Congress has provided more than $86 billion in
supplemental appropriations for the CDBG-DR program. As the
severity and frequency of storms has increased, so has the need
for this kind of funding. In 2017 alone, Congress appropriated
more than $35 billion for grantees recovering from major
hurricanes Harvey, Irma, and Maria. To put this into
perspective, HUD's entire budget in the last fiscal year was
approximately $54 billion.
Unfortunately, Congress has never formally authorized the
CDBG-DR program. That means that for each appropriation, the
Department must issue a notice in the Federal Register that
outlines grantees funding allocations, program requirements,
and waivers. Without this notice, States cannot submit actions
plans to the Department, or sign a grant agreement, or begin to
draw funding, necessary steps that will take at least several
months after the notice is issued.
Today, there are dozens of Federal Register notices
governing 123 active grants for 57 grantees across the country.
However, issuing Federal Register notices has taken longer in
recent years. After the 2005 Gulf coast hurricanes, HUD needed
45 days after the initial appropriation to issue the notice.
After Sandy in 2012, it took 35 days. But after the 2017
hurricanes, it took 145 days. And when Congress appropriated
CDBG-DR mitigation funding in February of last year, HUD didn't
issue a notice until August of this year, a delay of 18 months.
That is 547 days, and even then, the notice came only after
Congress initiated a statutory deadline.
That is only part of the story. Rather than comply with the
clear statutory language and bipartisan legislation that was
signed into law by the President, HUD is with holding the
required Federal Register notice for Puerto Rico. The other
affected States had to wait 18 months which was bad enough, but
Puerto Rico is still waiting. As everyone knows, the island was
utterly devastated by back-to-back hurricanes. Nearly 3,000
people lost their lives, tens of thousands of homes were
damaged.
I, other committee members, have visited the island. We
have seen firsthand the challenges that must be overcome for a
full recovery. We have seen the urgent need for this funding,
and yet, it has been held back, and as I understand it, a few
moments ago, Acting Chief of Staff Mick Mulvaney doubled down
on that policy publicly in a statement he just made. HUD claims
they are not comfortable moving forward due to allegations
about fraud and corruption in Puerto Rico. This contradicts
HUD's own certification of Puerto Rico's financial controls
with respect to the CDBG-DR program. Further, what is a notice?
We need to understand what a notice is. It is just an initial
step in a process.
HUD must review the grantees action plan and eventually
sign a grant agreement after the notice. Those serve as
additional checkpoints for financial controls or other
questions about grantee capacity. HUD also claims they can't
move forward as they await the release of a pending Inspector
General report about Vivienda, the island's housing department.
Our understanding is that the IG has identified some challenges
regarding procurement and staff capacity, but not widespread
corruption. But, in any event, the IG has not asked HUD to
withhold the notice or otherwise to slow up the funding.
Procurement challenges are common among grantees. They should
not be used as a pretext for punitive or prejudicial action.
HUD should publish this Federal Register notice without further
delay. Just as concerning are reports that the HUD Inspector
General is facing ongoing challenges accessing information
including emails and interviews with HUD staff as part of their
investigation into whether HUD has slowed the disbursement of
funds to Puerto Rico.
If true, this is completely unacceptable, and must be
corrected. We look forward to hearing directly from the IG
later this afternoon. Of course, the CDBG-DR program is bigger
than just Puerto Rico, although Puerto Rico has clearly been
singled out. Many States, including my home State of North
Carolina, are implementing action plans, or awaiting additional
notices from HUD to tap into disaster funding that was
appropriated last year and in June of this year.
Meanwhile, both the HUD IG and GAO have raised important
questions about HUD's internal capacity staffing and oversight
of the CDBG-DR program. I look forward to a robust discussion
of these topics, which will continue to be a major focus for
this subcommittee.
Finally, I want to mention that this is the first CDBG-DR
hearing we have had since the retirement of Stan Gimont, the
long-time HUD staffer who many of us consider the foremost
expert on this program. His retirement is a loss to HUD and to
the country. But we certainly wish him well in the next
chapter. We welcome Tennille Smith Parker, who is stepping up
as Stan's replacement. The career staff at HUD do outstanding
work, and we thank them for their service.
Now, I would like to recognize the distinguished ranking
member, my friend and partner, Mr. Diaz-Balart, for any reports
he would like to make.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Diaz-Balart. Chairman Price, thank you, again, for
holding this hearing, and I also would like to welcome our
witnesses, Dr. Woll and Mr. Dennis. Our witnesses today are
charged with the oversight of the Community Development Block
Grant-Disaster Recovery program. This program is critically
important to places like Puerto Rico, Texas, Florida and North
Carolina, and so many other States and jurisdictions that have
been hit by devastating storms and floods in the recent years.
I am particularly proud of the work that Chairman Price and I
did with every member of the subcommittee, to respond to the
three 2017 hurricanes: Harvey, Irma, and Maria, that caused
such terrible damage. And again, in 2018, Mr. Chairman,
hurricanes hit our home States rather hard. Hurricane Michael
in the panhandle and Hurricane Florence in North Carolina. Our
communities continue to work to recover from these storms.
In fact, the long-term recovery from these storms has just,
just begun in these States and the territories. Enormous damage
caused by the 2017 storms led this committee to set a new
priority on investments to make communities more resilient.
This is something that was done and begun in this subcommittee,
and that is why we established the CDBG mitigation program to
help strengthen our Nation against future disasters, those
disasters that we know, unfortunately, right, are going to come
again.
I am confident that this program will protect lives and
property when future--those future storms inevitably hit. This
will ultimately also reduce the burden to the taxpayers as
houses and public infrastructure and businesses are able to
better withstand the onslaught of hurricanes, floods, and
wildfires and such. But we all must be aware that standing up a
major program is clearly not a small task, and this is a new
program that has been generously funded. A successful
mitigation program will require vision, innovation, and
oversight by HUD leadership. And it will also require
significant coordination with other Federal agencies.
But you know, really, most importantly, it will require
that the State and the territory officials who are charged with
executing this new program have the skills and the workforce to
get the job done right, and to make sure that taxpayer money is
well protected.
So while CDBG-DR provides vital long-term recovery
resources to our States and territories, the program is
characterized by, frankly, major delays due to lack of an
authorization and codified regulations, something that all of
us have talked about for such a long time. This is something
that Congress and the administration must work together to
solve, and I hope we can discuss some potential solutions to
this challenge today, and I know, Mr. Chairman, that there is
legislation out there that both you and I have had an
opportunity to kind of look at, and I think there is a lot of
promise with that legislation.
Finally, I would also like to express my concern that HUD
missed the statutory deadline for publishing the mitigation
notice for Puerto Rico. Look, I understand that there may be
factors outside of our witnesses' control that led to this
missed deadline, but I am troubled. I am always troubled, and I
don't care which administration may do it, when any
administration doesn't meet requirements set in statute, and I,
of course, have a special concern when it is a requirement of
the Appropriations Committee in the appropriations bills.
I want to thank you, gentlemen, for being here with us
today for the job that you do, you and the team, that day in
and day out, do such important work for our country, and I look
forward to your testimony. Thank you, Mr. Chairman. I yield
back.
Mr. Price. Thank you. We are now pleased to be joined by
the chairwoman of the full House Appropriations Committee,
Representative Lowey, and I am happy to recognize her.
Mrs. Lowey. And I would like to thank my friends, Chairman
Price and Ranking Member Diaz-Balart, for holding this hearing
today. Mr. Dennis and Mr. Woll, we hope you can shed light
today on what appears to be perpetual stonewalling by HUD and
Secretary Carson in your responsibility to assist Americans who
lives have been devastated by natural disasters. Hurricane
Maria destroyed homes, businesses, and public infrastructure in
Puerto Rico and the U.S. Virgin Islands into September of 2017.
Yet, grantees in those areas still have not received funds
appropriated by Congress as early as February of 2018 because
the administration has not yet executed grant agreements, or
has failed to even issue required notices. On April 1,
Secretary Carson gave this subcommittee his word that notices
for mitigation funding for potential CDBG-DR grantees would be
issued by May 1. HUD missed the deadline.
Congress passed the additional supplemental appropriations
for Disaster Relief Act of 2019 in May, on a bipartisan basis,
to provide an additional $331 million to address unmet recovery
needs for Puerto Rico and the Virgin Islands. The President
signed this bill into law on June 6, requiring HUD to publish
all notices for mitigation funding, included in this bill as
well as prior spending bills by September 4, 2019. No caveats.
No carveouts. No exemptions.
HUD barely made that deadline, but missed Secretary
Carson's self-imposed deadline of May 1 by a longshot with
notices for various disasters on August 30, followed by a
notice for the Virgin Islands on September 4. Yet, as we sit
here today, the notice for Puerto Rico still has not been
issued. American communities have been waiting far too long for
the relief and recovery assistance they deserve. Any further
delay by HUD to facilitate CDBG-DR funds to Puerto Rico and the
U.S. Virgin Islands is not just unacceptable, it is unlawful.
I hope you will take these concerns and your duties
seriously by contributing to a productive discussion today, and
by doing your jobs to help Americans in need. Thank you. Thank
you, Mr. Chairman.
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Mr. Price. Thank you. Mr. Woll, you are now recognized for
your 5-minute opening statement. Any elaboration to the
statement or further material you wish will be inserted in the
record.
Mr. Woll. Thank you. Good afternoon, Mr. Chairman, members
of the subcommittee. Thank you for welcoming us today to
discuss HUD's Community Development Block Grant Disaster
Recovery program. By way of introduction, prior to joining HUD,
I served as a Federal prosecutor, and later as the director of
New Jersey's Superstorm Sandy compliance unit, which
safeguarded balance of dollars in Federal funds for disaster
recovery. I am honored to be joined today by HUD's Chief
Financial Officer, Irv Dennis, whose impressive background
includes a 37-year career as a partner with Ernst & Young,
where he advised public company boards, audit committees, and
top executives of large institutions, many of whom had to
navigate crisis conditions of their own.
HUD is currently administering disaster recovery portfolio
of $55 billion in active grants, with projects dating back to
the terrorist attacks on September 11, 2001. But contrary to
popular belief, HUD is not in the immediate disaster response
business. That work is performed by FEMA and SBA. Instead, HUD
is focused on long-term recovery. That recovery process begins
when you and your colleagues in Congress appropriate CDBG-DR
funds based on unmet needs assessed from FEMA and SBA data for
presidentially declared major disasters, HUD allocates those
funds to the most impacted and distressed areas.
Following the public announcement of allocations, HUD
publishes a Federal Register notice outlining the framework of
program requirements. Grantees then develop stakeholder
informed action plans and certify their capacity to manage the
funds. HUD reviews and approves these plans and monitors the
grantees for compliance.
The group of 2017 disaster grantees consisted of
California, Florida, Georgia, Missouri, Texas, and the U.S. VI,
as well as Puerto Rico, to address their unmet needs, Congress
appropriated a total of $19.4 billion in two separate tranches
of funding: The first supplemental appropriations bill
contained $7.4 billion, and was allocated to Florida, Puerto
Rico, Texas, and the U.S. Virgin Islands. That tranche is now
fully available to those grantees, which today have spent a
combined total of $123 million, or just 2 percent of those
funds.
The second supplemental appropriation for the unmet needs
of the 2017 class totaled $12 million. Of that amount, a
combined total of $1 billion is currently available to grantees
in California, Florida, Georgia, Missouri, and Texas. Action
plans for Puerto Rico and the U.S. VI have been approved by
HUD, and funds will be released to these grantees pending
execution of grant agreements.
In 2017, for the first time in the history of HUD's
administration of disaster recovery programs, Congress provided
mitigation funds as part of a CDBG-DR appropriation. Mitigation
funds were appropriated not only for the 2017 grantees, but
also for those receiving funds from disasters in 2015 and 2016.
HUD has never before administered a standalone mitigation
program. Standing up this new program has taken time, but we
believe it is time well-spent, given the historic size of the
appropriation and the fact that every grantee awaiting
mitigation funds already has access to funding for unmet needs.
Mr. Chairman, we certainly want to acknowledge that the
primary reason we are here today is because Congress directed
us to publish the mitigation notice by September 4. I want to
assure you that we take Congressional deadlines seriously, and
we were able to meet the September 4 deadline for 17 of the 18
grantees. However, in the case of the largest grantee, Puerto
Rico, that work continues.
Our choice, quite simply, was whether to come before you
today to explain why we did not meet the deadline, but
hopefully safeguarded the funds, or come before you a year from
now to explain why we released balance of dollars that were
wasted and never reached the people of Puerto Rico.
All of us at HUD stand shoulder to shoulder with the people
of Puerto Rico. Senior leadership, senior HUD leadership,
including Secretary Carson, our Deputy Secretary, and both Irv
and I, along with our dedicated career staff have visited
Puerto Rico multiple times to meet with the Commonwealth's
political leadership and with officials at Vivienda.
Our partnership is strong, and we are actively engaged with
Vivienda to establish financial controls, policies and
procedures that will protect taxpayer dollars and ensure the
recovery of the people of Puerto Rico.
We will also soon be announcing the appointment of a
Federal financial monitor in San Juan to oversee the
disbursement of disaster recovery dollars to Puerto Rico. Mr.
Chairman, natural disasters do not just devastate housing
capital. They devastate human capital through lives lost or
interrupted, school days missed, and communities fragmented
under enormous strain. At HUD, we are committed to the recovery
of all Americans whose homes and communities were devastated by
natural disasters and we are steadfast in our stewardship of
the funding entrusted us by you and your colleagues in
Congress. Thank you for the opportunity to update the
subcommittee on HUD's disaster recovery work.
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Mr. Price. Thank you. Thank you. We will now turn to
questions, and I will start with a brief recounting of what
brought us to this point. On February 9, 2018, the President
signed the Bipartisan Budget Act of 2018. That Act included $28
billion in Community Development Block Grant Disaster Recovery
funding. Of that amount, no less than $12 billion was for
mitigation funding. Neither Puerto Rico nor the Virgin Islands
have had success to any of the funding from this Act. Secretary
Carson testified before this subcommittee in April, and he said
the mitigation notice for the--I am sorry. The notice for the
mitigation funding would be issued, would be issued on or
before May 1. May 1 came and went. No notice.
Frustrated by HUD's pace providing assistance to
individuals and communities in need, Congress included a
provision in the June supplemental appropriations bill that
required the Secretary to issue the mitigation notice within 90
days. The 90 days expired on September 4. HUD issued mitigation
notices for all grantees, except Puerto Rico.
Now, gentlemen, the administration has a duty to faithfully
execute the law. Why didn't HUD follow the law, issue the
Federal Register notice for mitigation funding for Puerto Rico?
Mr. Woll. Mr. Chairman, we were able to meet your deadline
with respect to 17 of the 18 grantees and the U.S. Virgin
Islands, but after the deadline was set in June, there were a
number of troubling events in Puerto Rico that caused everyone
concern. In July, there was a Puerto Rican cabinet secretary
and high government official who were indicted for procurement
fraud, and procurement fraud is always one of our chief
concerns.
In July and August, there were hundreds of thousands of
people in the street demanding the Governor's resignation. In
less than 1 week in August, Puerto Rico had three different
governors. No one was certain who the governor was going to be,
or how that would affect Vivienda, who is our main partner, our
grantee. Even before the hurricanes, Puerto Rico declared
bankruptcy because of financial mismanagement.
In addition, we also knew of an impending IG audit, and we
recently reviewed an IG audit around Puerto Rico's capacity to
manage these funds, which was of concern to us. Given that
troubling sequence of events, we thought it was the most
prudent course was not to rush the money out. As I mentioned in
the opening remarks, I believe we had a difficult choice to
make. Protect the funds and come before you today to explain
missing the deadline, or come before you in a year to explain
why we released billions of dollars in funds that were wasted,
and did not go to the people that need it the most, which is
the people of Puerto Rico.
Mr. Price. Well, with due respect, I think you are posing a
false choice, and I will explain why I think that. But you
know, with respect to obeying the law, it shouldn't be a
difficult choice, should it?
Mr. Woll. We thought it was a difficult choice in this
instance because of the events that happened in August.
Mr. Price. You have the option of ignoring the law because
of an array of alleged troubles in Puerto Rico. Three
governors, for example, that justifies your breaking the law.
Mr. Woll. With respect to the three governors, our concern
was that----
Mr. Price. I know you have concerns. These concerns are
legitimate. The question is, A, does that justify breaking the
law in your case, a very clear directive; and B, what is this
notion that the issuance of the notice is the only checkpoint
you have? I mean, of course we want to see any difficulties in
Puerto Rico examined. We are going to be hearing from the
Inspector General about the work--her office about the work she
is doing. We want to address these issues. That is not the
issue. The issue is why you held up, or are holding up the
mitigation notice in violation of the law.
The mitigation notice isn't the sole checkpoint. The law
contemplates a multi-step approach. You are required to have
this notice in place by September 4. There is then the
formulation of an action plan. You then review and approve the
action plan, right? That is a checkpoint. You then execute a
grant agreement. That is a checkpoint. The law explicitly
states that with respect to the mitigation funds, the Secretary
needs to recertify the grantee's financial control provisions
before making a grant. So you had plenty of opportunity to do
that.
Why not the notice when the law requires you to issue the
notice? Why is that some kind of unique choke point that you
are bound to use as a way of denying these much-needed funds? I
just don't get that argument?
Mr. Woll. Well, Mr. Chairman, we view the mitigation
notice, the action plan and the grant agreement as
interdependent. As you know, the notice sets out sort of the
rules of the road for the action plan, and we wanted to
reference controls, the important financial controls that we
thought were essential in the actual notice to inform Puerto
Rico's action plan. We hope that the grant agreement will then
buttress both the notice and the action plan, and he wanted to
pursue hopefully this boots-and-suspenders approach that is
transparent to the public because everyone can see exactly what
is required of the grantees.
Puerto Rico is a very high-risk grantee because of the
amount of money involved. It is far more than double what
Louisiana received following Hurricanes Katrina, Wilma, and
Rita. It is roughly 26 percent of all disaster recovery funds
that have been granted since 2001. It is a lot of money, and on
top of that, Puerto Rico has had issues with procurement and
other issues around financial controls. We want to have a
belts-and-suspenders plan in place to make sure that A, we are
protecting taxpayers, but B, more importantly, that the money
is going to the people of Puerto Rico being wasted or abused.
Mr. Price. What was your statutory authority, to not obey
the law and issue this notice?
Mr. Woll. What we wanted to do is be in front of you today,
sir.
Mr. Price. What is the statutory authority?
Mr. Woll. There is no statutory authority. We wanted to
come before you today and explain why we didn't meet the
deadline as opposed to coming to you later and explaining to
you why billions of dollars were lost and not spent on the
people of Puerto Rico and, instead, were spent on procurement
fraud.
Mr. Price. Mr. Diaz-Balart.
Mr. Diaz-Balart. Thank you, Mr. Chairman. Mr. Woll, in
being contacted by the Honorable Gonzalez-Colon's office, I
want to ask the following question: In your written testimony,
you mentioned that there are concerns from HUD regarding Puerto
Rico seeking relief under Title 3 of the PROMESA Act, which
established the financial oversight and management board. And
so, could you please elaborate on those concerns, since it is
my understanding, that the board handles State funds
exclusively. So why should these concerns be tied to the
management of Federal disaster recovery systems from HUD, or am
I incorrect there?
Mr. Dennis. Yeah. I think the view on that when you take a
risk assessment of any entity, and we will call the
Commonwealth an entity in this case, Vivienda is part of that
entity, and you take a look at the corporate governance of it
all. Even though money is going right to Vivienda, we are
working closely with them, and we have a good collaborative
relationship with them, and they are trying to do the right
thing. They want to do the right thing for sure. We are seeing
that. There are other entities involved, the money's going to
flow through Vivienda. It is going to flow through subgrantees,
other governmental entities, so we are not looking at Vivienda
in isolation. When you do a risk assessment of any entity, you
look at the corporate governance of it all, not just a
particular part. So that is really why we are focused on that.
Mr. Diaz-Balart. And I think it is important for us to
understand just the enormous challenge faced by Puerto Rico.
You mentioned the amount of money, and it is frankly a huge
amount of money, but the challenge faced by Puerto Rico in
executing this CDBG-DR funds provided from Hurricane Maria. So
can you break down where we stand with the $19.9 billion that
has been allocated to Puerto Rico and how much of that has
actually been spent to date?
Mr. Woll. Sir, I can respond to that. Puerto Rico currently
has available $1.5 billion in funds. To date, they have spent
less than 1 percent of that amount. That is not atypical. It
took New Jersey roughly 2 years to spend $1.5 billion. So that
is not--you know, but they do have plenty of money available to
meet unmet needs. We recently approved another grant agreement
for an additional pot of money for Puerto Rico, and we are
preparing grant agreements as we speak, and hope to have that
money obligated soon.
We also are working very, very hard on Puerto Rico's
mitigation notice. We feel like we have had--it has been an
interagency review. We feel like we have had significant
breakthroughs, and that we are getting very close there as
well. And finally, with respect to the $1.9 billion for an
electric power grid, we are working very closely with our
Federal partners in terms of the best way to spend that money.
We are not in the power business. It is not our expertise, and
so we have been working very closely with FEMA who has already
made a substantial, billions of dollars of investment in Puerto
Rico's power grid, as well as the experts at DOE.
And so, we are going to stand shoulder to shoulder with
them and work with Puerto Rico in getting a very good electric
grid system for them.
Mr. Diaz-Balart. The success of the mitigation program
depends on how well the efforts are coordinated with other
Federal agencies, obviously, and so, can you describe a little
bit of the process that HUD undertook with other Federal
agencies to develop the mitigation, the Federal registry
notice? You know, will other agencies contribute to the review
of the State and the territories mitigation action plans?
Mr. Woll. Yeah, absolutely. What we don't want to do is,
you know, act in a silo on mitigation. It is just too important
that we get it right. It is a really large allocation that we
hope will lead to really long-term recovery, and actually
protection from States, so we want bold projects that aren't
just going to affect next year, but will be in place 10 to 15
years down the line.
So we have had multiple meetings with FEMA, at least four
in-person meetings. Many phone calls. We received input and
advice from DOE, from the Army Corps, and from SBA. This was a
really long process. Our career staff, which I call the best in
the building, did a fantastic job in drafting a mitigation
notice, I think, that we are all very proud of, and we hope
that it satisfies Congress.
Mr. Diaz-Balart. Mr. Chairman, I am running out of time,
and I have a lot of other questions, but I will wait for the
next round.
Thank you, Mr. Chairman.
Mr. Price. Thank you. Ms. Lowey.
Mrs. Lowey. Thank you, Mr. Chairman.
Mr. Dennis, Mr. Woll, you say in your testimony that HUD is
investing time and expertise into helping Puerto Rico build a
strong recovery. Could you share it with us what specifically
have you asked of the Puerto Rico Department of Housing that
they have not done, and I would like both of you to respond?
Mr. Woll. Well, first, we have a very good partnership with
Vivienda, and we work very closely with them. They have
available to them $1.5 billion in funds right now. They have
spent less than 1 percent of that money, so they have a lot of
money available for unmet need. As with any other grantees,
what we are mostly worried about is, we take an objective
assessment of what the risk is, and we require controls be in
place around those risks. We have worked very closely and
provided a lot of technical assistance to Puerto Rico in terms
of developing their systems, making sure that they have proper
staffing, you know. It takes a long time.
This is a Commonwealth that manages $23 million in CDBG
funds, and all of a sudden they have $1.5 billion that they are
trying to manage, so it is a big step up. And so we have been
helping them, but like a lot of other grantees, they do
sometimes struggle with systems and the staffing. But again, we
spend a lot of time helping them and working with them and we
are in constant communication with them.
Mrs. Lowey. Can you be more specific? I would really like
to know what the problem is here. What have you asked of the
Department of Housing that they have not done? It seems to me
there is a lot of money out there. Can you be more specific?
And I just want to say one other thing, because we all
understand that Puerto Rico has experienced political changes,
but how has that situation impacted your ability to work with
the Puerto Rico Department of Housing?
Mr. Dennis. You know, the Department of Housing has never
handled DR money before. This is $20 billion, and when you
think of $20 billion going through an entity that has no
infrastructure for that, that does not get developed overnight.
When you think of the capacity they need, they need people,
they need processes, and they need technology. None of those
did they have on day one. We have been working very closely
with them. They are doing a great job of developing that, but
as we sit here today, they don't have all the people they need,
their IT systems aren't fully functional, and their policy and
procedures are not completely written. And one of the things
that we are looking at within DR in general, not specific to
Puerto Rico, but something I brought my thinking, my 37 years
experience, is to not only look at the controls at Vivienda,
but look at the controls and the oversight of the subrecipients
and the subgrantees.
When you look at prior IG reports, there is a lot of misuse
of those funds and improper payments at those sublevels, and
what we are trying to make sure is that there is good oversight
and controls and policies in place so when it leaves the
grantee, even though they may have great procedures, what is
the control and oversight at the subrecipient, the subgrantee,
and ultimately he gets paid. That is not completely built out.
They are doing a great job. We are working well with them. They
are receptive to what we are talking about. I have been down
there three or four times, and my team has been down there
seven times. Dave's team has been down there several times, so
it is not what they are not doing; it is just that they are not
quite ready to take $20 billion and flush it through the
system.
They have $1.5 billion, that is helping them get up and
running. They spent a little over $2 million, or less than 1
percent, whatever the math is, so there is money down there for
them to spend. This is not holding them up from what they are
doing. But having that infrastructure on to process $20 billion
is absolutely critical to make sure that is in place properly.
Mrs. Lowey. So explain to me what HUD can do or should do
in a situation where the need is really quite extraordinary,
correct?
Mr. Woll. Absolutely. The need is extraordinary.
Mrs. Lowey. I know you go back to your offices and you say
they are not doing it. What can you do differently?
Mr. Woll. They do have access, as I said, to the $1.5
billion. And one of the things that we also are concerned about
that Irv has mentioned many times is, we are worried about how
their oversight of subrecipients, because just given our
experience with disaster recovery, and my experience with Sandy
is a lot of the problems may come on the procurement side,
particularly with subrecipients. And so we want to also make
sure that, you know, Vivienda has worked very well with us, you
know. We have a wonderful partnership with them. They are very
receptive to everything that we have asked, but it is not just
Vivienda in a vacuum. We have to work with the reality that
they face, which is this money going out to subrecipients, and
that typically is where you get a lot of the problems with
fraud, waste, and abuse.
Mrs. Lowey. So what can we do differently? We all agree the
need is great. You are saying they can't get it done because
they can't handle that much money. How many people do you have
working for you?
Mr. Dennis. Look, I think your question is a good one.
Mrs. Lowey. Would you just answer that?
Mr. Dennis. How many people do you have on your staff, 25?
Mr. Woll. For disaster recovery, we are going to be
doubling in size. We are going to have close to 50, hopefully
by the end of the calendar year.
Mrs. Lowey. So is there any way that you can provide some
additional leadership so this money can be spent effectively? I
just don't understand it. The need is great. Obviously, you are
saying--am I finished? Yes. I am finished. Maybe you can
clarify--maybe you can just clarify, and then we will turn to
the next person.
Mr. Dennis. Look, I think your question's a good one. I
came aboard on January 18. Dave is new, and one of the things
we are thinking about is, how can we do this better for any
grantee or State that needs help up front as opposed to waiting
later on? We are thinking of different ways and processes that
we can do to help, like a Vivienda, kind of jump-start their
thinking and give them tools up front earlier in the processor
so it doesn't take so long to build out the infrastructure.
We haven't formally--we haven't put that in place yet, but
it is something that is on our agenda that we want to think
about as we go forward. And $40 billion over the last couple
years, this money came at us quick, it came at us fast, and it
is going out to the States quickly. And, quite frankly, prior
to this administration, we don't have all of the infrastructure
we need in CPD. We are doubling the staff. That doesn't happen
overnight with the hiring rules within the government, so this
is taking time to get where we need to be to even administer
the funds that we have.
Mr. Price. Mr. Womack.
Mrs. Lowey. I guess I have used up my time, but I gather it
is not just--Mr. Chairman, it is not just the administrators
there. You are saying you don't have adequate skilled staff to
administer it from your office. Is that what we just heard?
Mr. Dennis. No. We have the adequate skills. We are looking
to increase our head count.
Mrs. Lowey. Thank you, Mr. Chairman.
Mr. Price. Thank you. Mr. Womack.
Mr. Womack. I thank the chairman. Well, it is obvious we
have a disaster, the Federal Government has a response, and we
all want to see money flow to the people that need it the most.
So I am going to ask. You have already touched on, Mr. Woll, a
little bit about why you are here instead of here a year later
on a totally--in a totally different way, you know, trying to
explain something bad.
You are probably taking the lesser of the two evils, i.e.,
if I am hearing you correctly--and don't let me put words in
your mouth--your concern was money flowing out when it is
really not ready, and there are great concerns about a climate
in a devastated area that is known and rife with all kinds of
potential corruption and opportunities for taxpayer money.
Look, I think the people in my district that I represent
would want to make sure that if we are sending taxpayer money
out to help people, that it is going to the right people for
the right purpose, and it is properly accounted for. Is that an
accurate way to portray your decision to delay rather than just
get money flowing out there and have to come back later and
explain why it ended up in the wrong hands or for the wrong
purposes?
Mr. Woll. That is exactly right.
Mr. Womack. So how bad could it have been? Let's just fast-
forward a year. Let's say that the money flowed, that you
dismissed your own concerns, and instead, you just hit go. How
bad could this have been?
Mr. Woll. Well, there is always the potential for fraud,
and I should say, not just fraud coming from people within
Puerto Rico, but when you have that much money, you have a big
target on your back. That would be people coming to try to take
your money away from you and not spend it on the people the
money's intended for. So that is always a concern, but of
particular concern is always procurement fraud.
In July, as I said, there was an indictment in Puerto Rico
involving a cabinet secretary, and another high official who
were stealing money in a procurement. You know, that is money
that will never be recovered. It is gone. With CDBG, we could
potentially make up the money through subsequent allocations,
but with respect to the disaster because it is a one-time deal,
that money--that money is lost forever and the people of Puerto
Rico will never have that money.
It belongs to them, and we want to make sure--we want to
make sure that we get out enough money that they can satisfy
their unmet need, but we also have to be prudent and careful
and we have to think about your constituents and other
taxpayers and what they want us to do with that money and to
safeguard that money.
Mr. Womack. So generally speaking, what are some of the
worst-case scenarios that could happen? Aside from Puerto Rico,
without being specific to a devastated area, what are some of
the things that--what are the lessons that we have learned in
the past that basically kind of champion the path for the
future that we want to make sure that we have learned this
lesson, we don't go down this path, we learn from history, and
we actually make all the right calculated decisions, get the
money in the right hands, and properly accounted for? What
would that be?
Mr. Dennis. So when you look at prior IG reports, you
notice deficiencies in the various parts of the complete flow
of funds. And the complete flow of funds is Treasury to the
grantee to the subgrantee/subrecipient on out. There are IG
reports that would suggest there are deficiencies at the
grantee level in that oversight of the subgrantee and
subrecipients.
So what could happen there? There could be conflicts of
interest in procurement, money could get in the wrong hands,
there could be money paid for services that aren't performed,
there could be duplicate payments, and all that gets very
complicated when you are flowing that through to the people
that are in need.
So that is why it is so important that these grantees have
the right infrastructure of people, process, and technology to
make sure that the procurement is done right, it is done in
accordance with Federal law, to make sure there is no improper
payments, make sure there is no conflicts. It is a complicated
process. And in Vivienda's case, you are starting with a clean
sheet of paper. None of this has happened before. They don't
have an infrastructure in place on day one. It takes a while to
build that out.
Mr. Womack. So if the worse situation happened, how tough
is it to claw back the money?
Mr. Woll. It's very hard. If it was stolen----
Mr. Womack. Next to impossible, isn't it?
Mr. Woll. Yes. That is correct. And Irv is talking about
putting the processes in place, and on top of that, you need to
have monitoring, and that is why, in addition to having a
dedicated staff down there to do monitoring, the Secretary
hopes to announce soon the appointment of a Federal financial
monitor, who actually will give everybody more comfort that the
money is being safeguarded and spent on the people who need it
the most. As the Secretary says, the people in need, not the
people with greed.
Mr. Womack. Absolutely.
I yield back.
Mr. Price. Ms. Clark.
Ms. Clark. Thank you, Mr. Chairman.
I thank the witnesses for joining us, but I have to say I
am getting a little confused on the thread of your argument
here. So if I understand you, and according to the comments
within the last few hours from Acting Chief of Staff Mick
Mulvaney, this administration did not want to give aid to
Puerto Rico because they thought it was corrupt. Is that
correct?
Mr. Woll. The long-term recovery of both the administration
and HUD is the--I am sorry--the long-term recovery of Puerto
Rico is the top priority.
Ms. Clark. Is that a yes or a no?
Mr. Woll. We want the money to go to the people of Puerto
Rico, and certainly not through corruption. We don't want it
wasted through procurement fraud.
Ms. Clark. So the decision not to file the notice by the
September 4 deadline was because of corruption, though. Is that
correct? That was your testimony earlier?
Mr. Woll. There were a number of troubling events that
happened in August in addition to prior financial mismanagement
issues in Puerto Rico that led us to believe that the more
prudent course of action was to make sure that we had proper
controls in place, so that we could better ensure that the
money is spent properly and spent on the people of Puerto Rico.
Ms. Clark. So let's back up for a minute here. So during
the gubernatorial changes, no key official at Vivienda, which
is the Department of Housing, changed, correct? Secretary Gil
was the same official through all three governors. Is that
correct?
Mr. Woll. Yes. He is currently the Secretary, yes, ma'am.
Ms. Clark. And there were no indictments issued involving
the Department of Housing in Puerto Rico. It was the Department
of Education. Is that correct?
Mr. Woll. That is correct, but there actually was a news
story about Secretary Gil being approached by someone
concerning a procurement, and it was an improper contact that
Secretary Gil----
Ms. Clark. So is that why the notice wasn't----
Mr. Woll. No.
Ms. Clark [continuing]. Adjacent news story about Secretary
Gil?
Mr. Woll. No, but it is an ongoing problem down there with
procurement. Secretary Gil did the honorable thing, and he is
an honorable person, but it is an ongoing problem down there--
--
Ms. Clark. Okay. So we have an honorable head of housing.
Mr. Woll. That is correct.
Ms. Clark. And you have $1.5 billion that is gone to Puerto
Rico.
Mr. Woll. That is correct.
Ms. Clark. There is the process, right? First, we have the
Federal Register notice, then you have an initial action plan,
and then you have grant agreements. So your testimony today is
that in Puerto Rico, desperately in need of aid, you did not
meet the requirement, the legal requirement to file this notice
by September 4 because of corruption, fear of money going to
the greedy, not the needy, but this is the beginning. The
notice is the beginning. That is not distributing additional
funds.
Mr. Woll. The notice is the rules of the road, though, and
the notice informs the action plan.
Ms. Clark. And the rules of the road were a requirement by
filing by September 4. Who told you? Did this come from
Secretary Carson? Did this come from Mick Mulvaney, as he
indicated in his recent conference?
Mr. Woll. We were all concerned at HUD, and we were all
concerned about the troubling events that happened both in July
and August, and again, I think----
Ms. Clark. So have there been pass-backs with OMB? On whose
desk did this stop and say we are not going to comply with the
law around issuing this notice because we are concerned about
corruption?
Mr. Woll. We had multiple meetings at HUD around the events
that were happening in July and August, including----
Ms. Clark. With who?
Mr. Woll. Within HUD, we had with our senior leadership
team----
Ms. Clark. So this was just done within HUD senior
leadership? This was your decision?
Mr. Woll. It was--it was a HUD decision based on the number
of indicia that we saw of potential problems that we wanted to
stop, and wanted to make sure that we got this right; that we
didn't rush something out the door. We didn't rush billions of
dollars out the door that we couldn't protect.
Ms. Clark. So do you think those concerns about so-called
rushing billions of dollars out the door, which we are at the
beginning of the process, filing the Federal Register notice, I
don't understand how those two things square and why you
thought these concerns allowed you to not meet your legal
requirements.
Mr. Woll. Well, Puerto Rico currently has access to $1.5
billion. They have spent less than 1 percent of that money.
Ms. Clark. How does that change your legal requirement to
file this notice in a timely way?
Mr. Woll. Well, again, I think we had a choice to make,
whether we wanted to come before you and explain to you today
why we didn't meet the deadline as opposed to rushing money out
the door that we didn't think that they are----
Ms. Clark. Again, Mr. Woll, that wasn't the choice that you
made. Your choice was not to file the basic mitigation notice
by September 4. This is not the release of money on September
4.
Mr. Woll. Well, again, the mitigation notice, the action
plan, and the subsequent grant agreement are interdependent,
so----
Ms. Clark. They are interdependent, but they are not--I
mean, the September 4 deadline, I just--I fail to understand
from any of your testimony today why that was not met.
Mr. Woll. We had concerns about how the money would be
spent. We had concerns of making sure that we had control of
the funds.
Ms. Clark. So your concerns about corruption, you decided,
put you above the law, and you would just do this on a
different timeframe.
Mr. Woll. It wasn't just corruption; it was concerns about
having proper processes and controls in place so that we could
make sure that the money went----
Ms. Clark. My time has expired.
Mr. Woll [continuing]. To the right people.
Mr. Price. Thank you.
Mrs. Torres.
Mrs. Torres. Thank you, Mr. Chairman and Ranking Member,
for bringing this meeting together.
Thank you, also, Mr. Woll, for your kind words regarding
the Department's commitment to the recovery of Puerto Rico. I
hope that we can get to the bottom of why the Department's
actions are not in line with those words that you just stated.
It is my understanding today that White House Chief of
Staff Mulvaney stated that Puerto Rico is not a foreign
country, and that this comparison is extremely offensive.
Do you agree with that?
Mr. Woll. Our commitment at HUD is to work closely and----
Mrs. Torres. Do you agree that Puerto Rico is not a foreign
country?
Mr. Woll. Puerto Rico is part of the United States.
Everybody in Puerto Rico is a United States citizen.
Mrs. Torres. Yes or no. Puerto Rico is not a foreign
country, correct?
Mr. Woll. It is part of the United States, ma'am. They are
fellow citizens.
Mrs. Torres. So there has been a lot of back and forth as
to the inability of providing truthful information to Congress
and the notice. You talked a lot about public corruption, so
let's talk about public corruption.
Mr. Chairman, I would like to introduce a document to the
record. The document is a letter from the Office of Inspector
General--Mr. Chairman?
Without objection, I would like to introduce a letter from
the Office of Inspector General.
Mr. Price. Certainly. Without objection.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mrs. Torres. This document--I want to read the first
paragraph of this letter. It says: I am writing to express my
concern that Department officials provided inaccurate
information to congressional committee staff about my
communications to you regarding the Office of Inspector
General. Review of Vivienda's capacity to administer CDBG funds
appropriated for disaster relief to Puerto Rico.
The memo goes on to say that Department officials lied to
congressional committee staff when they claimed that the IG
told them the capacity review would have serious or significant
findings. The IG is quite clear that no specific actions were
recommended and that the review is ongoing.
Furthermore, that it was made explicit to Department
leadership that the IG's audit team had not yet prepared draft
findings to share with the Department.
So, Mr. Woll, this memo makes it very clear that Department
officials engage in fairly clumsy attempts to intentionally
mislead Congress. It also begs the question that if the
capacity review did not justify delaying the publication of the
notice, and if that is not, then what did?
Is the Department looking into why officials lied to
Congress staff in respect to the IG's conclusions in the
capacity review? And has there been any interference from the
White House or OMB that led to the Department's decision to
delay the publication of this notice?
Mr. Woll. Well, first of all, ma'am, it is a bit
perplexing, because as Irv and I sit here today, we are unaware
of anybody at HUD suggesting that the IG directed us not to
meet the deadline or to withhold the mitigation notice.
What did happen is that the IG informed us sometime in late
August, while everything else was going around--going on, that
it would soon have an audit report available concerning Puerto
Rico's capacity to manage these funds. We thought that that
audit would be, obviously, very relevant to the work that we
are doing and the controls----
Mrs. Torres. You are being repetitive right now. And I
asked you specific questions about has there been an
investigation as to why your Department lied to Members of
Congress, the staff?
Mr. Woll. I am unaware of anybody from the Department lying
to Congress about----
Mrs. Torres. Are you aware of the letter from the Office of
Inspector General?
Mr. Woll. I am aware of the general statement that we
somehow--we relied on them to say that we shouldn't issue the
notice. And I don't recall anybody ever saying that. So I am
perplexed by the letter. I am perplexed by that that was ever
done.
What we did was we said that we--and we have had a chance
now to look at the audit report, and we do have concerns about
the audit report that we saw. But all we knew in August was
that there was a report coming out, that it was going to be
about Puerto Rico's capacity, an issue that we were looking at
very closely all that time.
Mrs. Torres. So all of those concerns that you laid out for
Members of Congress regarding, using your words, public
corruption, why didn't you share that with Members of Congress,
or with the staff?
Mr. Woll. Concerns went beyond public corruption. I mean,
there were a number of things going on. As you said, we had
three different governors in one week. We weren't sure--it
worked out well where we----
Mrs. Torres. Why didn't you share that with the committee
staff? And are you saying that the IG is lying in the letter
that they wrote?
Mr. Woll. Certainly not. I am just perplexed, because I am
unaware--I am unaware of anyone at HUD saying that the reason
we are weren't going to meet the September 4 deadline is
because the IG told us that. That was never the case. We were
dealing with multiple things happening at the same time in
Puerto Rico, and a number of concerns all happened at the same
time. It was an inopportune time for it to happen----
Mrs. Torres. My time has expired. And I would like
something in writing to you as to what you have done to
investigate this lying issue to members of our staff.
Mr. Woll. And again, ma'am, I am unaware of anybody lying.
Mr. Price. Mr. Aguilar.
Mr. Aguilar. And so you talked--as part of your rationale,
I am just--I am trying to put a finer point on this and to
understand it.
Your argument is three governors, potential corruption in
the Department of Education, and what are the other--what are
the other reasons why you didn't meet the statutory deadline?
Mr. Woll. Well, I mean, there has obviously been issues
with financial management with respect to Puerto Rico going
back, even before the hurricane. I mean--the hurricanes. Puerto
Rico, you know, obviously filed for bankruptcy and they have
had financial mismanagement issues in the past.
All of this was happening when we are talking about the
deadline and missing the deadline. All of this was happening as
we were approaching the deadline. And it did cause us concern,
because when you have hundreds of thousands of people in the
street asking for the Governor to resign, you know, you have--
you have uncertainty. Certainly at that time who is going to be
the head----
Mr. Aguilar. Did any staff change at Vivienda?
Mr. Woll. Not that I am aware of. Thankfully, they are
still our partners and we----
Mr. Aguilar. No key staff changes. Look, there is
gubernatorial elections and--all over. There is issues all
over. There--aren't there--are you aware of any other
localities where Federal or State officials have gone in other
cities? I know of cities in California and in other States
where the feds are looking at--at different issues.
And so, I guess I am just trying to understand why you felt
these were the bases or collectively these. Because I will tell
you what it looks like. What it looks like is that you don't
believe that these individuals deserve this money, that these
individuals deserve access to disaster recovery dollars.
Based on what you are saying, you feel they deserve $1.5
billion, and they can be trusted with $1.5 billion, maybe, but
they don't deserve access to any more.
Mr. Woll. That is--that is just not true. I mean, we are
working extremely hard right now to get Puerto Rico the rest of
their money.
Mr. Aguilar. Okay. Great, great.
Mr. Woll. Congress appropriated that money, and it would
take an act of Congress for us to not give them that money.
Mr. Aguilar. Well, it took an act of Congress--we gave you
a statutory deadline, so clearly acts of Congress aren't really
your jam.
So I guess what I am asking is, if you want them to be
successful----
Mr. Woll. We do.
Mr. Aguilar. Okay. Good. What technical assistance have you
offered them in order to meet these deadlines? What technical
assistance--how many people have you offered to send down there
to help them, to train them, or to act as temporary staff in
this process? How many--how many people have you offered them,
full-time equivalents?
Mr. Woll. We have five dedicated people down there. We
don't do that with any other grantee. We put five people down
there who are there all the time working nonstop, 100 percent,
on Puerto Rico.
We have had multiple people from my office, my staff, go
down there on a routine basis. I have sent my own personal
staff down there, because they are IT experts, and they were
disaster recovery experts from Houston, who have walked them
through the DRGR process and trained them. We have had multiple
trainings with them. We have provided millions of dollars in
technical assistance to them. We want them to succeed. We are
pouring assets into Puerto Rico.
Mr. Aguilar. You are doubling your staff--I think you have
ample resources to continue to help them, five----
Mr. Woll. We are ramping up. We got down to 25 people
unfortunately. And, you know--and my career staff is fantastic.
But many of them are multitasking. You know, the person who
writes the Federal Register notice has to put down the pen and
jump on a plane and go monitor in West Virginia.
So, you know, thank--thankfully to Congress, you have given
us money and an appropriation to increase our staff. We are in
the process of more than doubling our staff. But we are going
to have some growing pains. And it takes a long time. You don't
just put somebody on the job and they are DRGR--you know, a
CDGB expert. It takes a while and maybe even take a year----
Mr. Aguilar. One question hasn't been asked. So when will
the notice be put out?
Mr. Woll. We anticipate that it will be very soon. I don't
want to commit to a specific date, but we are working. It is
one of our top priorities, is getting that Puerto Rican notice
out.
Mr. Aguilar. You are five weeks beyond the statutory
deadline. It is soon, but you don't--you can't share with us
what that timetable will mean, because the reasons you didn't
meet the deadline, those still exist, right? Those--there still
were--if you released the notice in December, there still were
three governors in a short period of time, there were still
other issues that you raised.
Mr. Woll. Yeah. And I think with respect--you know, with
respect to talking about the governors and the issues that were
happening in July and August, it was an attempt to explain why
we missed the September 4 deadline. It was not out of
disrespect for Congress or for this committee. That was not--
that was not it at all. We just felt that we had to do
something to protect the funds.
Obviously, hopefully, things will continue to be stable
there. We continue to have a great working relationship with
Vivienda, and we will work really hard, I assure you----
Mr. Aguilar. I have only got a little bit of time left.
Mr. Woll. Sure.
Mr. Aguilar. It doesn't feel like you are treating United
States citizens in Puerto Rico the same as you would treat
disaster recipients in other States.
Can you tell us an update on the selection process for this
financial monitor that you have--that you have indicated and
that a press release went out?
Will they be the point person on this? What will their
staff be? How will they monitor these assignments?
Mr. Dennis. Yeah. So the Federal financial monitor that was
announced by the Secretary in early August is designed to be
the point person in Puerto Rico overseeing the flow of funds.
It is intended to be a single point of contact, so it will be
easier for Vivienda to work with us. The primary purpose is to
review and monitor and oversee the flow of funds throughout the
whole process.
What our group did over the last 7 or 8 months is put
together a complex monitoring plan for the first time, and we
hope to get that implemented with the Federal financial
monitor.
We have somebody identified. We hope to announce them soon.
We are going through the hiring process that is a little bit
cumbersome with government. The person is well-respected. He
knows HUD. He knows the program. He is also a CPA by trade--not
by trade, but he has a CPA license, I think, and is acting at
this point. We have an org chart in place. We think it is going
to be a team of 10 to 15 people.
Mr. Aguilar. Does the individual have a background working
in Puerto Rico?
Mr. Price. The time of the gentleman has expired. Please
finish your sentence, and we will----
Mr. Dennis. Yeah, they will reside in Puerto Rico. And we
also have an org chart built out that will have deputies. We
have deputy people that we are reviewing. So I think this will
be a--this will be a good process for us.
Mr. Price. Thank you. Mrs. Lawrence.
Mrs. Lawrence. Yes. Thank you.
Congress provided $15 million for technical assistance for
CDBG-DR grantees. These funds were intended to develop the
staffing plans, procurement practices, and financial controls.
Corporate F/A/C/T/S/ is a company from my home State of
Michigan, has been involved in both Puerto Rico and the Virgin
Islands for technical assistant teams.
How much of the $15 million has the Department spent?
Mr. Woll. I am not aware of the exact number, but I am
happy to provide that to you in a subsequent correspondence,
ma'am.
Mrs. Lawrence. Are you aware of the activities they perform
with the funding?
Mr. Woll. I know that we provide a lot of technical
assistance to Puerto Rico in a lot of different areas.
They also--they also have their own consultants that they
pay for out of their--some of their funds, their admin funds.
They are receiving a lot of help and they are very open to
receiving help. They are very helpful in terms of meeting with
us and working with us. So we will spend whatever we need to
spend and technical assistance to make sure that they----
Mrs. Lawrence. Your technical assistants, are your monitors
speaking Spanish?
Mr. Woll. Yes. We have a dedicated group down there, all
Spanish speaking, yes, ma'am.
Mrs. Lawrence. Okay. So the U.S. Virgin Islands mitigation
notice was issued separately, and after the other guarantees
were already noticed. As we have heard, Puerto Rico's notice
has not been issued.
Mr. Woll. That is correct.
Mrs. Lawrence. Given the severity of the damage to these
islands, why is HUD appearing to ignore their needs? We are
talking about this sitting in this room with air conditioning,
heating, lights, and we know that the damage that we are
talking about and the need of the people in Puerto Rico is
real.
Why--why are you ignoring their needs?
Mr. Woll. We are not ignoring Puerto Rico's needs. We are
providing their needs through this initial allocation of $1.5
billion. They have a lot of money--that 1.5, like I said, that
can take up to a year-and-a-half to 2 years to spend. And
just--just to show you how difficult it is to spend that much
money, they have only spent less than 1 percent.
Now, that will increase as they start to put more and more
money into rebuilding housing. And we want them to speed their
spending. We want them to hurry up and get that done.
They are responsible for--they have enough money for unmet
needs. The mitigation that you referred to, that is for long-
term. We really want transformative projects. And I think that
is what the committee anticipated when you proposed that
legislation. You want something that is going to help them 8
years, 9 years, 10 years down the road.
Mrs. Lawrence. Mr. Woll, there has--there is a perception.
And based on some of the things you are saying, there is a
pattern of neglect for our U.S. territories common during this
administration.
What message does this send to the American citizens living
in Puerto Rico about their value to the Federal Government? And
this is a common concern and takeaway from lack of action of
this administration.
What do--how do you respond to that?
Mr. Woll. We are very committed to our fellow citizens in
Puerto Rico and to the U.S. Virgin Islands. We are working very
hard and diligently to get them all of the money that they are
due, and get them their money. What we do want to do, obviously
though, is make sure that it is spent on the people of Puerto
Rico, the people who are most in need, and we feel that--we
have a hard, delicate balance, where, of course, we have to get
money out the door. But separate and apart from that, we also
have an obligation to protect taxpayer funds. And we are trying
to strike that balance.
Right now, Puerto Rico has the $1.5 billion. We are closely
monitoring that, making sure that they have enough unmet need.
We will get them additional funds, and, eventually, we will get
them--hopefully very soon we will get them that mitigation
funding as well.
Mrs. Lawrence. I just want you to know that we have
concerns about corruption in all levels of our government. It
does not stop our government from working. From--if we went
through the current scenario we have now, should we not fund
this current administration because of the perception? No. We
have to fund and take care of our responsibilities. And I am
very concerned that in this scenario, we are not doing our job
and we are using it as an excuse.
Mr. Woll. We agree that corruption is a concern everywhere,
not just Puerto Rico and certainly wouldn't be singling out
Puerto Rico. But at the same time, Puerto Rico is a high-risk
grantee, if for nothing else, then they have $20 billion, which
is 26 percent of all of the money that has been appropriated
for disaster recovery since 2001. It is a huge amount of money.
Mrs. Lawrence. They are not just sitting there asking for
it, they need it?
Mr. Woll. Yeah, they do.
Mrs. Lawrence. Based on the situation of the weather.
Mr. Woll. And we will make sure that they have the money
that they need for their--for their unmet need.
Mrs. Lawrence. Thank you. I yield back.
Mr. Price. Thank you.
Mrs. Watson Coleman.
Mrs. Watson Coleman. Thank you. Does HUD have the authority
to delay the notices, or are you required by law to put these
notices out at a certain point of time?
Mr. Woll. There is--I don't believe there is any statutory
requirement, unless it is in the appropriation bill itself.
Mrs. Watson Coleman. So is it in the appropriations bill?
So then you violated the appropriations bill?
Mr. Woll. I think what the concern was with respect to----
Mrs. Watson Coleman. I don't want to hear it.
Who do you report to directly?
Mr. Woll. I report to the Deputy Secretary.
Mrs. Watson Coleman. Who do you report to directly?
Mr. Dennis. Deputy Secretary.
Mrs. Watson Coleman. And so the Deputy Secretary reports
directly to Ben Carson, the Secretary?
Mr. Woll. That is correct.
Mrs. Watson Coleman. Okay. So you are pretty high up not to
understand this memo that went from the Inspector General, Rae
Oliver Davis, to Secretary Ben Carson? It is in--it is
incomprehensible that you don't know about this. This is the
letter that Mrs. Torres mentioned, and that you said I don't
know anything about lying, so I don't know if I can answer the
question. So I suggest you go back and talk to the Deputy
Secretary and then perhaps the Secretary, if that is necessary.
Mr. Woll. What I said, ma'am, is I am not aware of
anybody--I am not aware of anybody at HUD saying that the
reason that we didn't meet the September 4 deadline is because
the IG told us not to meet the deadline. I am unaware of
anybody saying that.
We made that decision based on a number of factors,
including what we thought was an impending IG audit, but not
just for that reason.
Mrs. Watson Coleman. You have been talking around in
circles since I have been here, and I haven't been here the
whole time. So you use a lot of words that say very little.
So I am just going to ask some questions that I need yes or
no.
$1.5 billion has been released. Is that a yes or no?
Mr. Woll. It is obligated, correct.
Mrs. Watson Coleman. It is obligated, not released.
In order to spend it, do they have to give you a plan, and
does Puerto Rico have to give you a plan--HUD a plan, and then
get permission?
Mr. Woll. No. They have access to that 1.5 on a line of
credit. They have already submitted--with respect to the 1.5,
they have already submitted an action plan, so we have their
spending plan.
Mrs. Watson Coleman. Can they spend it? Can they just go
ahead and on and spend it then?
Have you approved $1.5 billion worth of expenditures?
Mr. Woll. As long as they spend it on things that are in
the action plan, yes. So they--the action plan----
Mrs. Watson Coleman. All right.
Mr. Woll. Sorry.
Mrs. Watson Coleman. This money is to be used to do what,
build homes, build sewers, build infrastructures? If they do
anything that is on that list, you don't get involved, they
just go hire somebody, pay them to get it done?
Mr. Woll. Yeah. What we do at that point is just monitor
and make sure that they are following their own procedures and
that the money----
Mrs. Watson Coleman. Tell me why they have only spent 1
percent of this money right now?
Mr. Woll. It takes a long time. We are long-term recovery.
FEMA--just to explain, FEMA and SBA come in and they do a lot
of the initial work to get people back to where they were
before the storm. So they restore power. They do that sort of
thing. What we try to do----
Mrs. Watson Coleman. Yeah, if we are going to talk about
corruption, we can talk about that phase as it relates to
Puerto Rico. And then Puerto Rico has gotten a black eye from
the United States of America behind stuff that it had no
control over.
This is just absurd. This is--this is absurd to me that
Puerto Rico still has such a tremendous need for fundamental
things like a decent house, some plumbing, some sewers, some
access to drinking water, a telephone connection, whatever, and
we are sitting here having this silly conversation at this
stage about how we can get you to get beyond your convoluted
processes, and so-called accountabilities as it relates to
Puerto Rico that stands smack dab in the middle of our face
needing help. And what we can do these other things that this
administration is doing without any kind of accountability.
You all need to get the work done. You need to get the
resources to Puerto Rico. You need to get the resources to the
Virgin Islands. It does not escape me these are black and brown
islands. It does not escape me in this administration, that
what I see to be disparities in the way they are being treated
and the accountabilities that they are being duplicatively
required and dependent upon impacts black and brown and poor
people.
So as far as I am concerned, you all aren't doing your job,
and you need to do your job. I don't care if you hire 10 more,
no more, or if you stay or go.
I yield back.
Mr. Woll. Again, ma'am, the Virgin Islands has hundreds of
millions of dollars available to them for spending. Again, they
have spent only a fraction of it. It is not atypical. We will
start to see higher spend. But Puerto Rico has money for unmet
need and the Virgin Islands has money for unmet need.
Mrs. Watson Coleman. Let us hope that they don't have to
experience another devastating storm, either place. Let us hope
that. Thank you.
I yield back, Mr. Chairman.
Mr. Price. Thank you. Gentlemen, I would like to ask some
questions, many of which pick up from the earlier discussion. I
would appreciate just as quick an answer as you can manage. I
would appreciate that.
It bothered me to see you not question the premise--I think
in Mr. Womack's question, it came up again with Ms. Clark--you
seem to not be questioning the premise that money would, quote,
``flow out'' right after this notice was issued.
Why didn't you--why didn't you clarify that, in fact, no
money would flow out after the notice was issued?
Mr. Woll. If I had said that, it was inarticulate. I
apologize. There is a process. So the notice is followed by the
action plan, which is followed by the grant agreement, and then
the money is committed--it is in a line of credit, and then
available to the grantee to spend pursuant to the spending plan
or the action plan. So if I misstated, I apologize. It was
inartful.
Mr. Price. All right. Thank you.
All right. And then you treated the interdependence of this
process--you just now made clear; I was listening carefully--
you have now made clear this is a sequential process.
Mr. Woll. It is a sequential process.
Mr. Price. So it is interdependent in that sense. But these
are checkpoints. These are points in which the concerns you
have expressed all afternoon could be acted on, true? That is
the action plan and then the grant agreement.
Mr. Woll. So we have tried to build out the process a
little bit. We were trying to go more the belt-and-suspenders
approach. For example, one of the things we have worked very
hard on, we had a joint committee made up of the IG, OGC, and a
number of our different offices, to try to enhance our grant
agreement. The grant agreement we were using was literally a
two-pager that was adequate for CDBG, much smaller amounts in a
formula program. We wanted something that was more wholesome
and robust that would help protect--help protect the money. So
we built that out.
And the new process, or the belt-and-suspenders part of it
is to try to make them interdependent so that we have, you
know, conditions set out in the notice that we then ask them to
address in the action plan, that we would then include in the
grant agreement, so there is no surprises and nobody is
wondering----
Mr. Price. Well, actually that sounds like quite a good
idea. But it also sounds like it reinforces my initial point,
that the notice is the notice, and that there are subsequent
checkpoints.
Okay. And it seems to--you seem to be affirming--and I will
just ask you to confirm this. You seem to be confirming that,
at no point, has there been an indication from--we will, of
course, hear from the IG. But at no point has there been an
indication that anything in that capacity review would prevent
the issuing of a mitigation notice. Is that right?
Mr. Woll. There were some things in the capacity audit that
were troubling to us around procurement and around oversight.
Mr. Price. I am not asking whether they were troubling. I
realize that the capacity review will have--will have its
findings.
I am asking if there is anything there that would suggest
that the law should be violated, and that the mitigation notice
not issued.
Mr. Woll. It wasn't at one particular event. It wasn't just
the IG report. It was multiple events and multiple things that
were happening.
And if I could just say in our defense, this was happening
in August. There was a September 4 deadline. I agree that it
was an inopportune time for all of this to be happening, but it
was sort of in our face at the time. And that is--that is as an
explanation for the September--missing the September 4
deadline. It was no disrespect. We just felt that we had a
difficult choice given everything that was going on. But we are
working really hard right now to get that mitigation notice
out. It is our top priority--one of our top priorities.
Mr. Price. Glad to hear that. We knew nothing of these
difficulties through August, by the way.
Mr. Woll. And I am sorry if the communication was poor, and
that would be on us.
Mr. Price. Finally--and I will do this quickly.
But I just sense an inconsistency here, and I want you to
straighten it out.
You immediately fastened on the slow spending. You
criticized Puerto Rico for slow spending in the--in the money
they already have--have access to. That suggests it should be
faster, right? Then you suggest there are all kinds of grave
problems that--that won't even let you issue a mitigation
notice for this later tranche of funding.
So should they or should they not be allowed to draw down
on that $1.5 billion if these programs are so disabling?
And, by the way, by the way, they have drawn down $1.5
million. Have been there any disabling difficulties with
respect to that $1.5 million that would suggest that--that kind
of dire picture you have painted this afternoon?
Mr. Woll. Well, I hope I wasn't painting a dire picture,
because I think that we could--we will continue to work with
Puerto Rico in getting these issues resolved. But with respect
to the IG report, you know, there were some concerns around
procurements that have happened in oversight. So that is sort
of right in the heartland of what Irv was looking at and
concerned about.
Mr. Dennis. You know, on the $1.5 million, we do have four
people down there monitoring the disbursements and working with
them. And the $1.5 billion that they have and the money they
are spending is building out their infrastructure, as I
mentioned earlier.
As that gets built out, we will improve our monitoring
process to look at the complete flow of funds. But they have
money to--you know, I don't think we were criticizing their
expenditure of only $1.5 million. That is just a natural flow
some in of these disasters. So I don't think we were
criticizing that. But we do have people down there monitoring
the disbursements as they go.
And Vivienda, I want to stress--they are good people. We
have a good collaborative relationship with them. They take our
advice. And there is not issues with Vivienda that we see at
this point. But that doesn't mean there is not--the whole risk
structure of the island itself or the Commonwealth is what we
focused on.
Mr. Price. Thank you.
Mr. Diaz-Balart.
Mr. Diaz-Balart. Thank you very much, Mr. Chairman.
First, I want to put something in the language I said at
the beginning, which is to me, missing that deadline is
troubling. And you have heard that already.
But I think it is also important that we are very careful.
There is nothing that I have ever heard that shows that race
has anything to do with any decision here.
You know, those are--I know we have got to be careful to
throw those things around, because you cheapen then when racism
does take place.
So I just want to be very clear that I have seen nothing
that shows--there is not one iota of fact that shows that there
is anything having to do with race that has anything to do with
any of the decisions that you have made and clearly that
Secretary Carson has made.
And if somebody could show that to me, I would like to see
it. Because, again, it cheapens the issue when you throw racism
out there for political reasons, because racism does exist, but
it cheapens it when you just throw it out there.
And I have not seen one fact that shows that that was a
decision. I just wanted to put that for the record, Mr.
Chairman.
Let me ask a question.
Mr. Woll. Thank you for that.
Mr. Diaz-Balart. And, again, I am troubling by missing that
deadline. I really am.
If that deadline would have not been missed, would more
than has already been spent by Puerto Rico potentially would
have been spent?
Mr. Woll. I am sorry. I am not sure I followed.
Mr. Dennis. He is saying if the Federal Register notice was
filed, would they have spent any more money. And the answer is
no.
Mr. Diaz-Balart. Why not?
Mr. Dennis. Because it is a process, as the Chairman
indicated.
You know, they are doing what they are doing and spending
the $1.5 to get their infrastructure in place. The Federal
Register would have them--give them a little more of the ground
rules on the ultimate grant agreement. But, you know, they are
working towards that. They know what the--the goals are, the
unmet needs are, and the mitigation that maybe David could
speak to more. But it wouldn't have accelerated the $1.5
spending.
Mr. Woll. That is something--listen, our priority is always
to get money to the grantees for unmet need. And so with
respect to the entire class of 2017, they all have money for
the foreseeable future to spend on unmet need. That is what we
are constantly looking at, to make sure that they have that.
With respect to the mitigation funding, yeah, it is
important to get that notice out so that the process can start.
But that--as I said it a couple times earlier, that is really
long-term. We want them to a do a lot of planning around that.
We want them to take their time. And I think this committee had
in mind transformative, large projects that are going to have a
lot of meaning 10 years from now.
Mr. Diaz-Balart. Clearly it is understandable why, and you
hear it, and we hear it, and our constituents--it is
understandable why we want those that deserve it to get the
relief as soon as possible. And yet obviously, I will tell
you--and you heard it from Mr. Womack--we want to make sure
that the taxpayer money is protected.
That is a balance, right, that has to be--that has to be
reached. If we had authorization--if an authorization bill took
place, would it help, potentially, in getting the money out
faster? Would it potentially help in making sure that there is
less potential for waste and fraud and abuse? What are the
advantages, potential advantages, in this balance, because we
want the money out yesterday or, you know, the day after the
storm, right?
Mr. Woll. Correct.
Mr. Diaz-Balart. But we also need to make sure it is
protected, because it is hard-earned taxpayer money.
So what--would that authorization help? And tell us why
and--and what is the benefit, in those two aspects, those
specific aspects?
Mr. Woll. Right, I think--well, I think it definitely has
the potential to increase the speed of program delivery. As the
Secretary said before, you know, maybe we could start on second
base if we had the codification.
Again, I think it has to be done correctly. You know, HUD
has to tailor its approach to individual events and States. So
one of the key requirements for any codification would be that
it would include waiver and alternative requirements to get us
the flexibility we need to react to different events, different
types of disasters and the different grantees that we get,
whether it be California, Texas, or Florida.
So I think it could speed the process. It probably could
help with respect to fraud, waste, and abuse. Because, you
know, the rules would be very clear for everybody, and we could
have--we could have processes in place already as opposed to
building from scratch, as we had to do with certain grantees.
Mr. Diaz-Balart. Thank you, Mr. Chairman.
Time is up.
Mr. Price. Thank you.
Mrs. Lowey.
Mrs. Lowey. Thank you, Mr. Chairman.
Maybe it is a good thing this hearing is coming to a close,
because frankly, if it is confusing to many of us here, I
think, and I hope, you can straighten us out.
Mr. Dennis, in your financial evaluation of Puerto Rico,
you have advocated improving its financial controls. However,
HUD has already certified that the Territory's financial
controls are adequate.
So my first question--and maybe I will just ask both
together--and I know this hearing is coming to a close. Number
one, I would be interested in what has changed your view since
the Agency's assessment. Number two, we have seen other
agencies respond to Puerto Rico's political situation. For
example, FEMA changed drawdown requirements after the
gubernatorial change. After conducting audits of Puerto Rico's
expenditures, FEMA lifted those requirements and allowed Puerto
Rico to return to normal spending.
So maybe you can just answer this: Has HUD modified the
conditions under which Puerto Rico can draw down existing
funds?
Mr. Woll. Their existing obligated funds is that $1.5
billion. They are proceeding in spending that money pursuant to
the action plan that the Secretary approved. And so they have--
that money is available to them in a line of credit. We haven't
changed the rules on that. They are able to access that money,
as long as it is fits within the spending plan that they have.
Mrs. Lowey. Have you been to Puerto Rico?
Mr. Woll. I have, yes.
Mrs. Lowey. How many times?
Mr. Woll. I have been there one time since I have been in
this particular role. But we have--our Deputy Secretary has
been there, our CFO has been there twice. We have had multiple
career staff down there. We have a Department Enforcement
Center person down there now. We have a dedicated staff of five
people down there that we are in touch with every day. So we
spend a lot of resources down in Puerto Rico.
Mrs. Lowey. That I know. Are you getting the work done?
Mr. Woll. We are. And, you know, we have a good team down
there. They work very clearly with Vivienda. We have an
excellent relationship and a good partnership, and, you know,
we want to keep that going.
Mrs. Lowey. Maybe that is a good way to conclude this
hearing, Mr. Chairman, because I was there at the very
beginning, and the need was extraordinary. And the fact that it
took so long for this money to even be released, and there were
people, such as Mr. Mulvaney and others who didn't think the
money should be released, but I don't want to go over that
drama.
So I am glad you are concluding now. I hope there is good
oversight. I don't understand why money is being held up when
HUD certified that the Territory's financial controls are
adequate.
So I would be interested, Mr. Chairman, in getting progress
reports and what actually is happening there, because I think
you want to see progress, I want to see progress, and I am very
concerned that we are getting caught up in bureaucratic red
tape.
So good luck. Thank you for coming. I hope that you are not
only spending the money, but the oversight is keen and
adequate, so we know that all the damage is being repaired as
quickly as possible.
Thank you, Mr. Chairman.
Mr. Price. Thank you.
Mr. Aguilar.
Mr. Aguilar. I would like to ask you about the Virgin
Islands. It has been--correct me if I am wrong--March 1 of this
year, so seven months since HUD approved the Virgin Islands
action plan; is that right?
Mr. Woll. I believe that is correct, yeah.
Mr. Aguilar. However, HUD has not entered into a grant
agreement with the government of the Virgin Islands to allow
for the disbursement of the funds; is that also correct?
Mr. Woll. That is correct. We are in the process of
completing that grant agreement now to give them access to
additional funds, yes.
Mr. Aguilar. The first allotment of disaster recovery funds
took 72 days from action plan to execution of the grant
agreement. This was $242 million in disaster recovery from the
2017 supplemental.
The second portion of the disaster recovery funds is $779
million, and was appropriated in the Bipartisan Budget Act of
2018. I think it goes without saying the Virgin Islands relies
on this money for key projects, for port infrastructure, money
for elderly and disabled, workforce development.
When will the funding--when will the grant agreement for
the second apportionment of unmet needs be available?
Mr. Woll. So with respect--just so you know, with respect
to the first tranche, that money is already obligated, that is
in their line of credit, and they are able to draw down on that
now.
Mr. Aguilar. Sure. The one that took 72 days?
Mr. Woll. The one that was quick, yeah. Because, again, our
priority is unmet need, and then we try to get the folks the
money they need from it.
And, you know, we----
Mr. Aguilar. Why is it taking seven months for the second
tranche?
Mr. Woll. Well, couple of things happened. We tried to take
a harder look at our grant agreements. Our prior grant
agreements were insufficient. They were two pages for the CDBG
program. So we had a panel that we put together to try to
make--to make our grant agreements more effective and more
comprehensive. And so, we have that now. What we have to do is
we are doing it based on objective risk, the risk that a
particular grantee presents to us.
Virgin Islands is completely and separate from Puerto Rico.
It has nothing to do with Puerto Rico.
Mr. Aguilar. I understand that. Thank you for the lesson.
Mr. Woll. No, I wasn't trying to be condescending. I really
wasn't. I know that they are sensitive of that being lumped in.
That was all I meant by--I wasn't trying to imply otherwise.
But, you know, they have--they have capacity issues. For
example, with respect to their certifications, they indicated
that they would have X amount of staff, and they have had
trouble, you know, making that happen.
So we are trying to--we are trying to work with them as
well. We do anticipate having a grant agreement out to them
soon. And at that point, that money will be obligated and they
will be able to spend it.
Mr. Aguilar. More thorough is fine, more comprehensive is
fine; 72 days to 7 months, not--not helpful, really not. You
know, we have got--there is folks who need help, and that is--
that is difficult.
So will HUD impose stricter conditions for State grantees
through the second--through the Bipartisan Budget Act funding?
You said more thorough, more comprehensive, different
agreement, go away from a two-pager. So what changes in the
responsibilities that they will have?
Mr. Woll. Again, we are going to try to objectively address
risk in future grant agreements, regardless of who the State
is. We want it to be--we want it to be objective, and we want
it to be based--a lot of times it would be based on how they
have performed with all of their grant programs. For example,
you know, CDBG, whether they have had issues or not. And it is
also going to be based on the amount of money. Because the more
money, the more risk.
Mr. Aguilar. Back to this issue with the IG. And, you know,
we understand that there is a little bit of a disagreement on
the codification piece.
But if HUD believed that it was the prerogative of Congress
to codify the program, why didn't--why didn't you include it in
the legislative proposals for fiscal year 2020 for budget
justifications?
Mr. Woll. I am not sure that we have--I think that where we
are is we would be open--we think there could be some potential
advantages to codification, and we would be obviously open to a
dialogue on that in terms of what that would look like.
But I think--but the key, I think, is that we do it in a
correct way. I mean, what the appropriators give us now, which
is very helpful, is the waiver and alternative requirement
authority, which helps us to be flexible and nimble, which I
think is what the committee wants. And so, any kind of
codification to be done correctly would have to include that.
And, you know, obviously we want to work with you to making
that happen.
Mr. Aguilar. Yeah. Why not include that in your legislative
proposals to start the dialogue for--if that was something that
you thought would be helpful?
Mr. Woll. You know, I am happy to take that back to others
and propose that.
Mr. Aguilar. I am not asking you to propose it, I am just
saying like if you wanted to kick-start the dialogue, it seems
like that would have been the appropriate time to say, Hey,
Congress, maybe it would work better if we, you know, codify
this, even though the IG doesn't--thinks that you have the
authority.
So I just offer that to you hopefully as something we can
work through, as you are looking toward fiscal year 2021,
future justification.
Thank you, Mr. Chairman. Yield back.
Mr. Price. Thank you.
As we prepare to close the hearing, I do have--I do have
another question, in fact, an important question about the
pending appointment of a Federal financial monitor to oversee
Puerto Rico.
But before I turn to that, I just want to reiterate that
this committee, obviously, takes very seriously the failure to
meet the statutory requirement that the notice be issued. That
is why we are having this hearing, and that is why you have
heard what you have heard today expressed in various ways.
I am glad to hear that the notice is in the process, and I
welcome any prediction as to how soon we are going to see it.
But we are going to hear from the IG next, and what we are
going to hear from the IG, I believe, is that there is nothing
in that office's review that would justify holding up this
notice.
And we have heard from you, I believe, today that the
notice would not equate to the release of funds. And so,
therefore--and that there are multiple checkpoints at which
abuses can be prevented and safeguards can be exercised. And so
there is no real reason, in terms of whatever problems Puerto
Rico may have, for the notice to be the choke point. I think
that is what we have concluded, is what I have concluded from
today's hearing. And so I am--I am unmoved in my conclusion
that this was a serious mistake on the Department's part to not
meet the statutory deadline for the issuance of that notice.
And we, of course, welcome the news that the work is underway
on this notice and we expect it to be promptly issued.
Now, the announcement about the Federal financial monitor,
that is a separate but related matter. It was announced August
2nd, I believe, and the idea of the monitor was to oversee the
disbursement of disaster recovery funds to Puerto Rico. Press
release was interesting that Secretary Carson issued. Here is
what he said. He said it was the result of the Puerto Rican
Government's, quote, ``alleged corruption, fiscal
irregularities, and mismanagement,'' end of quote.
Now, HUD has conducted many reviews and site visits of
Puerto Rico's CDBG-DR programs. Did any of those reviews ever
find, quote, ``corruption, fiscal irregularities, and
mismanagement'' at Puerto Rico's Department of Housing?
Mr. Dennis. I don't know the--I haven't seen all of prior
IG reports, so I don't know the answer to that question. But I
don't know if his comment was specific to Vivienda. I think it
might have been to the Commonwealth in general.
Mr. Woll. I think that is correct.
Mr. Price. The Secretary is making pronouncements of that
sort, accusations of that sort. Wouldn't it behoove him to make
specific, or maybe even offer a citation or two?
Mr. Dennis. But, again, I am of the strong view that if you
are giving--think of a company. If you are giving money to the
subsidiary, you want to make sure the parent company is in good
financial health with good controls.
Mr. Price. Well, nobody is going to dispute that. The
question is, have HUD's own reviews ever found those defects to
be present? I think the answer is no.
What is the role for this financial monitor, for Puerto
Rico? When is the monitor going to be appointed?
Mr. Dennis. The monitor is going to be appointed relatively
quickly. I would say over the next month or two.
Like I mentioned, we have a candidate going through the
hiring practice of the government which takes a while. The role
of the monitor is to oversee the flow of funds to make sure
that there are controls in place, not only at the grantee, but
at the subgrantee subrecipient, is to make sure that
procurement practices are in place, the conflict controls are
in place, making sure invoices that are getting paid to the
right people at the right time for the right services. It is a
program that we--I put together a--or the CFO shop put together
an audit program for monitoring. The Federal financial monitor
will use that as a starting point.
Like I mentioned earlier, there will be deputy financial
monitors, a team, and we are anticipating 10 to 15 people. They
will be on-site. And the role is to make sure that we are
looking at the controls in place for the complete flow of
funds, not just the flow of funds at the grantee level.
Mr. Price. So it is an elaborate arrangement, it sounds----
Mr. Dennis. And I should also say that this isn't specific
to Puerto Rico. You know, this was built from bringing my
private sector thinking in, that this is probably a program
that we are going to offer all of DR. It is just that we are
starting with Puerto Rico because it is new, it is big, and for
the risk areas that we identified earlier. And they are
starting with a fresh sheet of paper, so we have the ability to
influence it.
Mr. Price. Well, but the fact is, you have never appointed
such a monitor to any other CDBG-DR grantee. True?
Mr. Woll. I think there may have been at some point a
receiver, but I am not 100 percent sure. But this is a new
role, absolutely, and so it is going to be a little bit of
growing pains as we sort of figure out the best way for it to
work. But we feel that we have a very good candidate
identified.
And the other thing, too, the Federal financial monitor can
also help coordinate with the other Federal agencies down there
and as well as with the Inspector General, because what we
don't want to do is overburden the people at Vivienda by
sending group after group down there to do monitoring after
monitoring and get in their way. Because sometimes they ask us
not to go because they need to work.
Mr. Price. Well, our time is expiring, but I do want to ask
one more question, and that has to do with what might be
conditioned in terms of the appointment of this monitor.
Am I conditioned the release of funds? Do you expect the
release of CDBG-DR funds to be delayed until the monitor is
appointed?
Mr. Woll. No, we don't, because the money can get
obligated, as you know--and it takes--and I wasn't being
critical of Puerto Rico. I wasn't calling them a slow spender.
I mean, it takes a long time to spend that money. So the
monitor will be in place as most of the money is being spent,
so we don't have--we don't have to worry. We have plenty of
folks down there now to handle the money, the expenditures now.
Mr. Price. Sounds like a hands-on assignment. Can we be
assured that the monitor you are going to appoint will speak
Spanish?
Mr. Woll. Well, at a minimum, they will have multiple staff
people that speak Spanish. We already have five people down
there now who all speak Spanish. But it is tough to find
somebody who has all the skill set of what we are looking for
with a monitor. I mean, we are looking for someone who knows
HUD, knows our programs, has auditing and accounting
background, perhaps has legal background. So it is a difficult
person to find, and we are never going to find the perfect
person, but we are going to give----
Mr. Price. Some of this delicacy, this difficulty, I would
say Spanish fluency should be high on that list of
qualifications.
Mr. Dennis. The deputy of the financial monitor we have in
place does speak Spanish.
Mr. Price. Mr. Diaz-Balart.
Mr. Diaz-Balart. Mr. Chairman, by the way, I just remind
the chairman that the chairman's time is never expired. So----
Mr. Price. I have never gone over 2\1/2\ minutes, Mr.
Ranking Member.
Mr. Diaz-Balart. But, Mr. Chairman, if you do, I am not
going to be complaining. I just want to----
Mr. Price. All right. I will have to give you equivalent
privilege.
Mr. Diaz-Balart. Thank you, Mr. Chairman.
Mr. Price. All right. Good.
Mr. Diaz-Balart. By the way, to Mr. Aguilar's point, I
think it is important--and you mentioned the issue about
flexibility, right? And I am talking about now the codification
process. It is important that obviously this subcommittee--and
I know the staff is in touch. But I think it is very important,
Mr. Chairman, that we are very vigilant on any codification
bill going out there, making sure that it is something that
will not hinder our ability to do what has to be done.
And so I just, again, want to just encourage all of us, and
obviously the chairman and the staff, to be very vigilant on
that as well.
And lastly, if I may, Mr. Chairman, really kind of almost a
point of personal privilege. I want to thank you, Mr. Chairman.
Look, you, as well as the full committee chairwoman, always,
you have aggressive questions, but you are always pursuing the
facts. And I think this subcommittee has always been very good
at not getting in all of the noise out there, regardless of the
merits of whatever the noise is. And I think the leadership of
this subcommittee has an obligation to do that. And I will tell
you, Mr. Chairman, I am exceedingly proud that you always have.
And so--not that you are not aggressive, but as chairman or
as members of this subcommittee of Congress, we have an
obligation to be aggressive. We have an obligation to be upset
about missing deadlines. But I just want to thank you for,
while being aggressive, doing it in a way that keeps this
subcommittee from getting politicized, which is what has made
this subcommittee different. And I am very grateful to your
leadership, Mr. Chairman.
Mr. Price. I really appreciate those comments, my friend.
And I do think it is a standard you set and that I hope that
the subcommittee as a whole can uphold.
With that, I thank our witnesses. And you get the picture
in terms of our concerns. And I would hope the reasoning behind
all the questions you have been asked, and you also have a good
sense of our expectations.
And so, we look forward to continuing to work with you and
the Department.
Mr. Woll. Thank you very much, Mr. Chairman.
Mr. Dennis. Thank you.
Mr. Price. Thank you. And we will recess for just a few
minutes. We want to bring the next panel forward, and we are
already running quite late.
So we will resume very quickly.
[Recess.]
The Chairman. So committee will come to order for the
second panel. It consists of counsel to the HUD Inspector
General. Mr. Kirkland, we appreciate your appearing before us
today. You are recognized for 5 minutes of opening remarks.
Your full statement will be entered into the record.
Mr. Kirkland. Good afternoon, Chairman Price, Ranking
Member Diaz-Balart, members of the subcommittee and staff. I am
Jeremy Kirkland, Counsel to Inspector General at the Department
of Housing and Urban Development. It is a pleasure to be here
with you today to discuss our work in disaster recovery
oversight. I could not be more proud of our staff, their work,
and their accomplishments in this important area.
Since 2002, we have issued 124 audits, seven evaluations,
and have opened more than 600 investigations related to
disaster oversight. Throughout our work, we have noticed common
themes, including the need for codification, the need for model
programs that provide clear expectations for strong internal
controls, and the need for accountability for expenditures of
funds at late stages in the process.
We believe the CDBG-DR's mission is an important one. It is
so important that we believe it should be codified into its own
program within HUD. In fact, multiple grantees involved in the
recovery efforts in these most recent disasters have informed
us they believe codification can help.
We have all heard concerns about how long it takes CDBG-DR
funds to get out to those in need. The process is lengthy and
confusing for everyone involved. Currently, there are 76 active
Federal Register notices, dating all the way back to 9/11, that
grantees must navigate to determine how to design and implement
their local programs. Often primary grantees are new or
inexperienced, further complicating an already cumbersome
process.
We strongly recommend a clear and permanent framework for
this program. We believe it will reduce the time between
appropriation and disbursement, and will provide consistency
surrounding the requirements of the CDBG-DR program, upon which
grantees and the public can rely.
We also hope any permanent authorization will consider
identifying core program activities more clearly. There is a
steep learning curve for grantees, and adoptable core functions
would mitigate the delay, and possible mistakes in having each
new grantee create its own disaster program. We believe that by
codifying just the requirements for a grantee action plan, we
could trim 2 to 4 months off of this lengthy process.
Our work has continued to highlight that CDBG-DR can and
should provide a clear blueprint for all grantees to follow to
meet expected strong internal controls. Any grantee program
should include solid internal policies, strong monitoring,
clear understanding of reporting responsibilities, good
financial management policies, sufficient information systems
that ensure accurate and timely reporting of expenses in HUD
systems, clear conflict of interest policies, and training for
all employees.
Another concern we have noticed is the expenditure of funds
on projects that occur late in the funding process; in some
cases, 5 or more years after the disaster occurred. Examples of
this include sewer and infrastructure development on land where
homes are never built, among many others.
We recently had the pleasure of briefing your staff on our
audit report of Puerto Rico's Department of Housing, known as
Vivienda, which we are currently finalizing. The objective of
the review was to determine whether Vivienda had the capacity
to administer its CDBG-DR grants in accordance with applicable
regulations and requirements.
We found that they should improve financial controls, they
should develop processes to prevent duplication of benefits,
they should improve procurement controls, and they should
continue to increase staffing. These challenges exist because
Vivienda is a newly appointed grantee with no experience
administering CDBG-DR funds.
As part of our oversight work, I have personally visited
Puerto Rico and witnessed the ongoing recovery efforts. This is
a long-term process that requires a long-term commitment by
all, including HUD OIG.
I thank you for the opportunity to be here today, and I
look forward to your questions.
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Mr. Price. Thank you very much. We appreciate that
testimony, and we will take note of it in several respects.
What I want to do in our time today is to focus on the
question of the mitigation notice, which was the subject of the
last hearing and which, in various ways, the IG, your office,
has been cited. HUD did fail to comply with the law. That much
no one disputes. They didn't issue the mitigation notice for
Puerto Rico by September 4.
We have heard from HUD on several occasions that the reason
for the mitigation notice not being issued is related to
serious--not just serious questions about Puerto Rico's conduct
and capacity, but serious findings in the IG's capacity review.
So that is what I want to ask you quite directly.
At any point, has your office told or indicated to HUD that
there were grave findings in the capacity review that would
prevent them from issuing a mitigation notice?
Mr. Kirkland. No, Mr. Chairman.
Mr. Price. The answer is no.
Now, about that capacity review. You have now finished the
review. The draft findings have been sent to HUD, as I
understand, and to the grantee for comment. You have already
begun to discuss some of those findings in your statement. But
let me ask you, you heard the quote I read from Secretary
Carson alleging, quote, corruption, fiscal irregularities, and
mismanagement on the part of Puerto Rico.
Did your review encounter anything that would fit that
description?
Mr. Kirkland. No, sir.
Mr. Price. Are any of your findings out of the ordinary for
a CDBG-DR grantee?
Mr. Kirkland. The findings that we found are typical
findings that we would find with a new grantee. Obviously,
financial controls, procurement controls, the need for data
matching agreements to be renewed, staffing concerns, those are
pretty typical that we would find. And one thing to note,
obviously it is still a draft report. Vivienda and the
Department both get an opportunity to clarify anything as part
of the process. We do await the grantee's comments, and it
could adjust some of the findings that we found once Vivienda
provides us--they could provide us details that update the
information that we have. And so some of those findings could,
in the interim, improve.
Mr. Price. I wonder what you would say about the kind of
positive support HUD should be providing grantees. What do you
think HUD could do to ensure that grantees succeed rather than
fail, and then particularly, that they begin the disaster grant
on a sound financial footing? Has HUD taken any steps
internally to provide better guidance, technical assistance to
grantees, to avoid problems before they develop?
Mr. Kirkland. We do understand that HUD is engaged with all
grantees, attempting to provide guidance. We have been told
that they have been meeting with Vivienda to provide guidance
on technical issues. One of the concerns that we have is there
is no standard expectation. That is why we have so strongly
argued for codification of a program, because we really should
have a standard that all grantees should be held to. We should
have a standard that should be the best practice and the best
practice for any grantee. And unfortunately, HUD has relied on
grantees to develop the road for themselves, and that creates
problems, in our mind, for especially new grantees who are
attempting to look and execute the best practices out there.
Mr. Price. It is fair to assume that does create a
challenge for new grantees, and so we do need clear, consistent
standards and technical assistance in meeting those standards.
Mr. Kirkland. Yes, sir.
Mr. Price. Thank you.
Mr. Diaz-Balart.
Mr. Diaz-Balart. Thank you, Mr. Chairman.
And thank you for being here, but more importantly, thanks
for what you do.
You know, in a July 2018 report, the IG suggested that even
without--and correct me if I'm wrong--but even without a
permanent authorization, HUD could actually codify through the
regulatory process.
You know, and, Mr. Chairman, that is actually an
interesting idea, and, you know, so it doesn't necessarily
require legislation. It could be codified by rule.
Mr. Kirkland. That is correct.
Mr. Diaz-Balart. Which, you know, is something that maybe
we should also kind of think about, because, again, you know, I
don't know if that is better or worse. I think there is some
pros and some cons, but it is just another interesting approach
which I had not thought about. So I just wanted to throw that
out there.
We have seen estimates about mitigation, you know, from
time to time, you know, how much a dollar saved--spent on
mitigation can save later on. You know, is it one--you know, $1
now, $6 later. That is clearly one of the reasons that we, you
know, worked hard to put that mitigation money in there. And
so--but is there a way to kind of codify that and to make sure
that mitigation programs actually are going to be saving money
as opposed to just feel good, that, you know, we think are good
but eventually don't save money?
Mr. Kirkland. I certainly think with the focus on
mitigation within the IG, we have talked about ensuring that we
take a look at is that mitigation money going to the right
places and looking at future savings associated with mitigation
money that is going out, and we do intend to look at that from
the IG's perspective.
Mr. Diaz-Balart. And I think this may have been a better
question for HUD, and I apologize, but--you know, because it
would seem to me that you could create performance measures.
HUD could create performance measures to deal with--to making
sure that we are getting a return on this mitigation money that
is invested.
Mr. Kirkland. I certainly know there are measurements out
there that are standards looked at from the return on
investment on things like that, so I would assume that there
would be ways to put that together.
Mr. Diaz-Balart. Obviously, Puerto Rico's been a big part
of the hearing today for obvious reasons, right? And I think
the big reason, I think, there is a unanimous understanding
that, you know, missing deadlines is not something that we take
lightly from HUD, not from you because you haven't done that.
But tell me a little bit about what unique challenges, you
know, relatively--as far as a new grantee such as Puerto Rico
faces in executing the CDBG-DR program, especially, you know,
when you are dealing with a lot of money. What are some of
those? Are there unique challenges when you are new versus like
the State of Florida that unfortunately, by the way when I say
this, truly I wish we didn't have that much experience with
these issues, but unfortunately, Florida does. What are some of
those challenges and some of the risks, potentially, for new
grantees?
Mr. Kirkland. Well, you certainly have to start with--you
have to build all the infrastructure and the backbone that is
going to support the recovery effort. Also, with any new
grantee, there are new rules, new expectations. Many times, and
this is the case for every new grantee that we have seen since
dating back to 9/11, the money associated with--that is
provided through this disaster recovery is substantially more
for, in many cases, you know, looking at the State of New York.
Their average went up from--I think it was $42 million to $400
million or substantially more than that.
So the circumstances are that everyone is having to absorb
a higher expectation for every time they step into that role.
Mr. Diaz-Balart. If I may, one more question, Mr. Chairman,
if you would allow me.
So we heard a lot about, you know, the staffing issue of
HUD. So you are looking at now about, what, 150 people to
oversee the entire CDBG-DR portfolio. That is--you know, that
is, what, $55 billion in grant activity, which--and I know it
is oversimplifying because that is not the way it works, but
you are looking at about over a billion dollars for employee.
And that staff is also responsible for publishing guidance in
the Federal Registry, establishing allocations, ensuring
compliance, and in some cases, potentially even traveling to
places, right, and embedding. And so is the level of staffing
in that office of, you know, close to 50 adequate for managing
this multibillion dollar portfolio, and, you know, do they have
the staffing, and do they have the adequate skill to do that?
Mr. Kirkland. We have expressed concern on both of those
points. We don't think they have the adequate staffing at this
point in time, to the point of your question to oversee over a
billion dollars worth of a portfolio. We have expressed
concerns also they don't carry out their oversight role, their
monitoring roles, their technical advisory roles that they are
mandated to do. So from a staffing perspective, we don't think
they have the level of staffing that they should.
And also, looking at when these unprecedented disasters
occur, it overwhelms every system, including CDBG-DR systems.
We also have other types of disasters, looking at wildfires,
looking at earthquakes. Do they have the technical expertise to
know how to deal with different types of disasters and what to
look for and what to recommend? We don't think it is there yet.
We have recommended that they work on that, however.
Mr. Diaz-Balart. And, Mr. Chairman, I reminded you that the
chairman's time never expires, but I don't want you to remind
me that the ranking member's does, so I will yield back.
Mr. Price. Now we are even, right?
All right. One further question, but it is an important
one, and it draws on some information that your office had
furnished earlier. I know you have faced difficulties accessing
HUD emails in the course of carrying out your investigation. So
in an April 2019 briefing, the IG provided additional details
about these challenges, and in one case was told by HUD that it
would take about 6 to 12 months for the Department to turn over
emails relevant to the IG's investigation into HUD's treatment
of Puerto Rico.
We inserted language in the fiscal 2020 THUD bill to
clarify that HUD shall not withhold documents or delay access
to the Inspector General during investigations.
Are you still facing these challenges, that is my basic
question, when it comes to accessing emails or interviewing
witnesses during your investigations? And if so, have you
relayed concerns directly to HUD management? Can you
characterize their response?
Mr. Kirkland. Mr. Chairman, first of all, we want to
express our appreciation to this committee and to the committee
staff for your commitment to supporting our efforts as an
Inspector General. We think through that effort, we were able
to make some progress on emails and agency counsel in
interviews concerns. We have been in discussions with the
Department on both of those issues.
We can say, initially after engagement with the committee
and discussions with the Department, the email production time
improved. They got down to about 15 days that they were able to
produce.
One of the concerns--and this is a recent concern that has
come about. Several weeks ago, the Department asked us, in a
latest request, for about 2 weeks' worth of emails associated
with an investigation. They asked us to provide search terms to
help expedite production of those emails, and we did provide
those search terms late last week. We were told that it would
help significantly expedite that process. We were told just
yesterday, though, that the production is likely going to be
probably the end of this month.
We are frustrated by the fact----
Mr. Price. Excuse me. I am not understanding perfectly.
These are emails that you have requested?
Mr. Kirkland. These are emails that we have requested from
the Department, and the Department had gotten to where they
were producing them within about 15 days.
Mr. Price. Yes.
Mr. Kirkland. However, this latest request is about 2
months old. The Department informed us that if we provided
search terms, it would help expedite their production of those
emails. We provided search terms just last week, and just
yesterday, we were told that it would take till the end of this
month before they produce.
These continue to delay our investigations. We don't feel
that is timely production of emails, and they continue to hide
behind a poorly scoped e-discovery contract that they run these
emails through as a reason for the fact they can't produce them
timely to us. But any delays in the production of that
information is a delay in our ability to carry out our work,
our investigations, and it is important to us that they
understand we take that very seriously.
We did attempt to accommodate them by providing them search
terms. That is not something we were required to do, but we
understood that that would help expedite the process. It is
concerning that they continue to have these delays. Whether it
is for reasons of a poorly scoped contract or for other
reasons, we are frustrated by that.
As to agency counsel, we were able to reach agreement on,
with certain high-level agency officials, agency counsel can
sit outside the room to advise if issues come up associated
with executive privilege, could advise the person being
interviewed if issues come up. We reached that accommodation
recently and have finally been able to move forward with our
interviews associated with one of our investigations, but that
did cause a 2- or 3-month delay in negotiating that. But we do
have a path forward, we hope, on the agency counsel issue.
Mr. Price. Well, it is important to have that path forward
and to keep pressing on these matters and to have
accountability from the Department as to the reasonable request
you have made. And if there are reasons they should be modified
or can't be met, then to give an explanation, an accountable
explanation to you.
So we appreciate your good work, and we expect that you
will keep us informed about these matters and any other
impediments to your work that you encounter.
Mr. Kirkland. We certainly will.
Mr. Price. Mr. Diaz-Balart.
Mr. Diaz-Balart. No, Mr. Chairman. I just want to make sure
that there is no light between the chairman and I on this. I
mean, that is--you know, you have to be able to get timely
whatever you need. And I don't want to speak for the chairman,
but I think I can. If we need to be doing something to make
sure that you can get what you need, I think the subcommittee
will be very helpful. You have to be able to get timely
information in order to get your investigations done.
Mr. Kirkland. And I want to stress, on behalf of the
Inspector General, great appreciation for the entire committee
and your staffs on your commitment to ensuring that very fact.
It is clear to us that you are all committed to that fact, and
we have appreciated the dedicated time that you have put toward
ensuring that we do get that access that we are entitled to.
Mr. Price. Thank you very much. We appreciate your help
with this important hearing we have explored today, your
patience in waiting through a delayed proceeding. And we will
be in touch with you and your office about any followup that is
required.
Thank you very much, and the hearing is adjourned.
[Questions and answers for the record follow:]
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