welcome this risk-based funding approach, an approach we agree with. however, speaking on behalf of the larger industry including thousands of assets not listed on the ttal, i recognize that the narrow funding approach could preclude other important security improvements from receiving funding consideration under such limited transit dollars availability. we're also concerned with the elimination of the tsgp from the national preparedness grant program and we call for the sufficiently funded targeted grant program for public transportation security as envisioned in the 9/11 commission act. and finally, we support the approach that congress has consistently endorsed in legislation that allows grants to be provided directly to the transit agencies as opposed to requiring applications be made through the state administrative agency. before closing, i want to inject a personal note on behalf of the

port authority executive director who along with myself and other senior port authority staff are honored to be hosting chairman ever holt, ranking member price and committee members next week at the world trade center site. we're looking forward to showing you how the port authority has utilized and can continue to utilize federal homeland security dollars to support our own investments and security initiatives at this site of national historic significance that continues to be one of the highest risk targets in our nation. thank you for the opportunity to testify on these critical security issues. i welcome any questions you may have. thank you. >> thank you. the fy '13 grant proposal from the department builds on the reforms this committee implemented back in fy '12. i'd like to hear from each of you briefly to discuss the

proposed fy '12 guidance and the department's proposed fy '13 unlg proposal. budget proposal. budget proposal. >> we made some recommendations in the written submitted and i did as well in the oral. the needs assessment is also included in the written testimony. and it talks about some of the benefits that we have seen as a result of fire and safer. the amounts that we're requesting that we increase to are relative to the effect that we've seen of the grants over the last several years. and can you hear me? i didn't hear myself over the mic. i'm not sure how specific you want me to go on the answer

there. okay. and it's included in the written testimony. there is a lot of evidence there that points to very specifically the effect, to the positive effect of fire and safer. so i think it's important that we keep making progress. when you look at the needs assessment, one of the things it absolutely points out is there are still staffing shortages across the fire service. and the effect of fire and safer to improve on that shortage is something i think we should >> thank you. >> and i'll be very brief. i think that, you know, because the system of, you know, the grant system has been so difficult, that there is a lot of obligated funding and grant funding. and people seem to perceive that

as a difficulty with the ports and really not take a hard look at a system that has become, as i said, very cumbersome and has this huge sort of pile-on effect, particularly with requirements both state and federal, and requirements from historical state people and historical federal people. and it's just -- in our world, it's made it very, very difficult to execute money. so as a result, i think there is money that appears like it isn't needed because it hasn't been executed. but i think realistically, the grant funding, port security grant funding is still needed. and my principle recommendation would be to restore the funding to the levels. it's been dramatically cut, about 75% over the period of the -- over the last three or four fiscal years. and in addition to that, really take a look at the grant system and try to fix that, and then

you will be able to sort of execute all the funding. because as we go and try to do our day to day business, and we're a very large port with a very big staff, it is extremely difficult for us to deal with the grant process. and i can't even imagine how a smaller port can deal with the grant funding process. there is not a week that goes by at the port of los angeles where somebody doesn't just say this is so difficult, why don't we just not ask for money anymore. so i think fundamentally, you have got to work with dhs and fix the system, because it's very repetitive. and if you're a port like we are, which is also associated with the city, the city of los angeles, we have federal requirements, procurement, environmental, historical. we have state requirements, procurement and environmental and historical. we have city requirements we have to deal with. you're making it so difficult to execute that i think that's got to be fixed.

and when you fix that, people will be spending the money in the -- as it's given to you, and you won't have this lag where it seems like there is this big pot of money left over that people don't need. it's not that they don't need it, it's just that it's very difficult to use it. >> the question going between '12 and '13, i think it's very commendable what congress did this year in the fy '12 budget giving $974 million of budget to the department to allocate the funding based upon which programs met the national need. and i think that's commendable. and i think that the department went about that in a very professional and organized way. the 2013 proposal, as i mention in my brief oral statement, like i said, has some concerns to it if it's not -- if congress doesn't act to reauthorize.

because it creates a patchwork program of between now and 1 october, assuming we have a 1 october appropriation, is unrealistic to me. so either reauthorize the program, after five years, or deal with the programs as '12 did under the current coninstruct of law. i think that the president's budget as proposed could still be implemented, using the implementing recommendations of 9/11 act, unless congress would like to open up the reauthorization issue. >> mr. mullen? >> first 2012, we think the layout is a good transition towards where we have been towards a new system, because the flexibility is improved. running grants to the state we think is a good move to help with accountability and drawdown issue. in our proposal, they're still absolutely included. we just recommend that they are required to operate within the

overall preparedness system. i think we're beginning to move in that direction so we can help them and they can help us and we can understand each other's issues. i will just say in case we run out of time, very few problems occur that occur within the boundaries of a port authority. the locals are involved either way. the economy is involved either way. we are very interested in working closely with those organizations, port and transit, to make certain that we're attending to their needs in this new system. and i don't believe that we will shrink from trying to assist them in every way and be very sensitive and respectful of their concerns. i think it gives them an opportunity to collaborate with us too. it isn't just us getting into them. for 2013, there are many similarities between the proposal we developed at the end of last year with the president's grant structure there is some concerns, though. the definition of regionalization needs some work. we need to talk about the peer review process. it appears to be a little more

than an additional bureaucratic layer. i don't believe if we move to a project-based system that we need to have federal review of every project when the locals and the states are collaborating closely on devising and deciding what would be the best use of limited funds. so there are issues about the urban area that i think still need to be addressed. we've tried to address that in our paper. and in fact we've addressed most of the issues that have come up in our paper, which i think is in your request for brief response, i'll stop there. >> okay. thanks. mr. mullen? >> thank you. i agree with captain holmes in the idea of separating the funding for reports and for security.

the security grant, by combining the programs, there is no guarantee that any money at all will go to transit security grants. as far as the 2012, the transit security grant program, there is only $87 million in that program. that's down from the previous year of 2011 where there was 200 million. and that's down from previous years. so the amount of funding needs to increase. in 2013, the elimination or the reduction of the time to finish performance on projects goes from three to five to two years. congressman price mentioned a project like that you wouldn't be able to do. i think what will happen now -- essentially what will happen is you'll be eliminating any major capital projects at all. it will all just be for operating expenses. and finally, we believe that the going through the states for funding believes just adds another step to the process.

and it's not necessary. most transit systems are already prepared to be able to accept grants directly, and there is no need to go through the states and just add additional administration to the program. >> thank you. mr. price? >> thank you, mr. chairman. i want to thank all of you for some very useful testimony, which we'll consider as we proceed to mark up this bill. let me just ask a couple specific questions. first to you, mr. canyon. as you're well aware, for the past few years, in light of the severe economic downturn, congress has included language in the appropriations bill that permits grant funds to be used to retain firefighters, to avoid layoffs, as well as to hire new firefighters as is the usual requirement under the saffir program. has this made a difference in houston?

has this made a difficulty difference in other situations that you would like us to look at? and do you think this waiver is necessary again in 2013? >> well, it's made a difference. less so in houston as opposed to other municipalities. the waivers, i know there is some concern temporary waivers that seem to be permanent, because we're coming back and saying we need those waivers again. i think first we have to look at it in the light of why those waivers were initially put in place and what they're there for. initially, you know, when this happened, it was 2002, and nobody realized the economic situation that we would be in over the last few years. nobody would predict the great recession. and there were safeguards that were put in place in these grants that would protect -- that would protect the process of supplementing and not supplanting municipalities'

responsibility to staff their departments. so to go forward, yeah, we need to keep the waivers in place because of the bills, the way they're written right now require -- i'll give you some specific examples so you know, or a specific example. initially, under the safeguards that were in place, a municipality was required if they hired a firefighter under safer to keep that firefighter, to provide funding for at least five years into the future. the department wouldn't be able to reduce their budget any at all. i can't think of one fire department, including houston, that hasn't had to reduce their budget after the recession. and i think any municipality that is looking at applying for a grant where they're required to have future funding for an

employee for up to five years would really have to give that a hard look about whether or not that's a grant they could apply for and make that kind of commitment. so unless the -- there is some reform, and i know there is at least one bill to reform this legislation -- unless there is some reform and we have to keep the waivers in place so that safer is a workable alternative to bring firefighters back to work and keep some folks on the >> a workable alternative that is under conditions of economic pressure and duress. >> yes. >> let me turn to mr. holmes and mr. depallo. you have both in your testimony referred to the shortened time frame that is proposed by the department for awarding funds, or for getting funds out the door. and you both have suggested that this might eliminate certain

kinds of larger scale projects, certain kinds of capital projects. i mentioned mr. fugate few minutes ago, the tunnel hardening as a possible example. i wonder if you would elaborate exactly just based again on your experience, on the kinds of projects you have asked for and have anticipated going forward, what would be the effect of that kind of shortened time frame. and i guess this particularly applies to the rail and transit side. you're going to have to make up in some way for this funding to pay for what you need to do. >> right. you mentioned tunnel hardening. we currently have a tunnel hardening project. a project like that requires a great deal of advanced planning, engineering, design, procurement of the equipment and materials necessary, and then implementation of a project. for example, in a tunnel that operates 24 hours a day, seven

days a week. it's impossible to do that in two years. most capital projects, and that's a very complicated one. even less complicated projects still require a great deal of planning, engineering and design. that's compounded by the fact that if the moneys are not released on time, the clock starts ticking later. so it just complicates the issue. so in effect, i believe, in my opinion, that by reducing the time period to two years, you're going to be eliminating any significant capital projects at all. >> i would echo that. and i think it's very similar in the port environment. in my comments, when i said you move from people seeking solutions to people buying stuff, that's what happens. they decide we're going to buy this because it's fast. we can do this fast. our projects are very similar. we have a multimillion-dollar camera system we built that we had to get an extension on that system. it was $27 million, 300 cameras.

we're doing directional drilling to lay fiberoptic cable. and in the new world order, we're looking at things like i.t. and cybersecurity. and those are solutions. they're systems. and they have to be designed. and sometimes these systems take a year or more to design. and then you are the contracting process, and you have to go through all the steps. if -- with this moving from three years to two years, i would have to say that you are -- i would have to agree, you're pretty much eliminating any sophisticated project. and what you're going to go back to is people getting the money and saying what can i buy quickly? let me buy ten cars, let me buy two boats. and you're not going to move forward in this process. you're going to backslide in this process significantly. >> thank you, mr. chairman. >> first of all, let me welcome all the panelists, because i

think each of you play a critical role in protecting our national security. but i do want to specifically thank mr. holmes for being here, flying across the country to testify. as i mentioned earlier, the port plays such an important role in our national economy. understanding the difficult budgetary decisions that mr. fugate has to make, the fact remains that a terror attack on the port of l.a. long beach complex would have a devastating impact on our national economy. you have heard mr. fugate's comments. i believe you were here during his testimony. could you comment on his response regarding the proposed grant program and his hope that

everybody can work together to properly prioritize the needs? and then also, if time allows, can you also provide us with some suggestions on how you think that the port security grant requirements and guidance could be improved and simplified. if you could offer us some suggestion how to do that. >> let me start by saying, you know, certainly mr. fugate is well recognized and has done a great job at fema. i think the first point i would make is there is a difference between coordination and control. you know, it's easy to make it sound like we don't work with the states, but we work very closely with the state of california doing risk assessments and identifying port needs. what we wouldn't agree -- what we wouldn't be so keen on is allowing them to have control of the funding. there is a big difference between coordinating with the

states and controlling, letting them control your funding. i mean, as you know, the port is fundamentally a business. we coordinate with a lot of people. but we don't let everybody handle our money. i think that's not a good decision. the second thing that i would say is i'm not sure what kind of needs. what we wouldn't agree -- what we wouldn't be so keen on is allowing them to have control of the funding. there is a big difference between coordinating with the states and controlling, letting them control your funding. i mean, as you know, the port is fundamentally a business. we coordinate with a lot of people. but we don't let everybody handle our money. i think that's not a good

decision. if you're looking at the relationship between a city and a state and a port and a state, they're very, very different. ports are very federally focused. port facilities are federally regulated facilities. and so i think there's a very good reason why the port funding should be separate from the other funding. you know, with respect to suggestions, i think as i said first of all, the funding has been woefully decreased. this year it's been recommended at $97.5 million. that's a 75% decrease over a few years. i think the second thing that i also said in my testimony is, and just said, it needs to be separate. port funding was separated because prior to 9/11, there was

very little requirements for security at ports and we had to start from zero and work our way up. so it was very important to separate the ports and focusing on the ports. i think bundling them together is saying that ports are not important. i don't agree. 93% of all the country comes in by water. the last thing i would say is, you know, we go back and forth about cost shares. and, again, i think it's important for the port or the organization to have skin in the game. but people still seem to not appreciate the fact that if any -- if the gentleman down at this end of the table or the fire department gets equipment, we have to maintain this forever. so we more than meet our requirement to ponying up the skin in the game. particularly with i.t. projects. if we do a -- our camera system maintenance is a million dollars a year. so i have significant skin in

the game. so i'm not sure what a 25% cost share proves. i think that there should be a uniform cost share waiver because some years there is a cost share and some years there is not. i think there shouldn't be a cost share. but i think one of the most important things we can do immediately is there needs to be a joint dh port user group to take a look at this system and see ways where we perhaps can accept a state environmental or historic preservation clearance as good for the federal government, because we keep -- we keep repeating these things on several levels. i think we have to be willing to say as mr. fugate says we have to trust the states, let's trust the states. if the states do an environmental clearance, an historical clearance, that should be good for the federal government as well. but the current system, it's not. it's repetitive, and it's this pile-on thing that is really making it difficult for to execute grants. i hope that answered all your

questions. >> it does. >> i didn't mean to ramble. >> does anyone else want to comment if i have the time on any of the comments that mr. fugate made? >> i can say i agree as well. the difference in -- between ports and transit are very -- the needs are very much different. and it needs to be separated at path we carry over 250,000 passengers a day. we're a wide open system. and there is a tremendous threat and risk associated. but it's a different type of risk. and we need to be able to compare projects accurately and be able to prioritize them, and do so across different modes or industries makes it that much more complex and difficult. >> and if i may say one last thing, this idea of lumping grants together presumes that there is some overarching methodology that exists, that i can determine whether a suicide bomber at the mall of america or in one of my colleagues' transit facilities is more or less risky than something happening in the port. and up to this point, i don't think that overarching methodology exists. so if you're trying to put everything together and divvy it

up, you have the presumption that there is some methodology you're going to use to do that. and i'm not sure that right now that exists. >> yes? >> i did want to comment. the key point is visibility of what is being spent and what is being committed. and i think we get that through the development of the -- which is clearly going to be released in the next couple of weeks. it would be very desirable for every part of the community, ports, transit, and all the others to plan and do that together, participate together. then we get an idea. because the dollars are not going up. they are going down. and as dollars go down, we all have to decide what is the best way to say that i will understand mr. holmes' issues a lot better when as part of a

thira we can look at what his risks are and make some intelligent judgments about how can we support those things. >> thank you. thank you. let me address one question to you. nema has been very outspoken about the needs to show the impact of investment into grant programs, particularly in the times such as today. of these, empg is one of the few grant programs that has significant cost share. so it's not just federal funds that are invested, but also state and local funds. how does nema measure performance, and what lessons learn candidate you share with the rest of the stakeholder community? >> one of the better measures is what the federal government does not have to do because of the capabilities that exist in local and state government about empg. i was just looking at the report

that we submitted to the committee just the other -- just yesterday, i believe. there was something like 98 or 99 presidential disasters. there were another 250 state events that did not rise to a level of a disaster, largely because of the ability of the states to control, manage, and prepare in advance and coordinate response. there were thousands of other events that the local governments manage that require very little or no intervention by the state because their professional staff at the local level are equipped, skilled, and talented enough to address the problem, keep it from getting out of proportion. so in addition to the fact that when we're allocating $350 million, that immediately is a minimum of $700 million that is with our match requirement. and the additional moneys that -- we sense most jurisdictions overmatch at the local level. i would say that the way we have

measured this is we have tried to report to you very clearly how empg is actually saving money by allowing the response to occur at the lowest possible level as needed so, when there is a big event like some of the things that just happened, that's the kind of time when the federal assistance can be valuable. but as mr. fugate even acknowledged, even assistance is more oriented towards recovery because skill sets of the people that have been on the ground using this combination of dollars that have been provided. >> of course our time is rung out. but one thing that we have -- one of the challenges that we face, especially in the tightening budgets, is to make sure that taxpayer funds are used wisely. and this creates the need to measure the effectiveness of every grant fund. mr. caynon, let me ask you about this. how would this be established with the funds we grant to the fire departments? >> well, i mentioned it earlier.

and everyone's got a copy of the needs assessment that the prior administration did. for us, one of the major shortfalls in our profession is staffing. we've seen, like i said, some progress in staffing because of safer. and we're asking obviously to do what we need to continue that progress. i guess that's the most immediate measurable way that we can look at the success of these grants is the effect that we've seen on staffing so far. it's difficult i think for folks