Oversight of SBA's Office of Disaster Assistance (Senate Small Business Committee hearing, July 13, 2022)
Summary
The printed record of a Senate Committee on Small Business and Entrepreneurship hearing, S. HRG. 117-328, titled Oversight of SBA's Office of Disaster Assistance, held July 13, 2022 in the 117th Congress, with Benjamin L. Cardin as Chairman and Rand Paul as Ranking Member. The one witness is Francisco Sanchez Jr., Associate Administrator of the SBA's Office of Disaster Assistance. In his opening statement Cardin says the office administers the SBA's disaster programs and implements the COVID EIDL program, which he says provided loans to nearly four million businesses and had problems including widespread fraud early in the pandemic. The record includes Sanchez's testimony and prepared statement and his responses to questions from Senators Cantwell and Hirono.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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“Oversight of SBA's Office of Disaster Assistance (Senate Small Business Committee hearing, July 13, 2022).”
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S. HRG. 117–328
OVERSIGHT OF SBA’S OFFICE OF DISASTER
ASSISTANCE
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
OF THE
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
JULY 13, 2022
Printed for the use of the Committee on Small Business and Entrepreneurship
(
Available via the World Wide Web: http://www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
48–248 WASHINGTON : 2022
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED SEVENTEENTH CONGRESS
BENJAMIN L. CARDIN, Maryland, Chairman
RAND PAUL, Kentucky, Ranking Member
MARIA CANTWELL, Washington MARCO RUBIO, Florida
JEANNE SHAHEEN, New Hampshire JAMES E. RISCH, Idaho
EDWARD J. MARKEY, Massachusetts TIM SCOTT, South Carolina
CORY A. BOOKER, New Jersey JONI ERNST, Iowa
CHRISTOPHER A. COONS, Delaware JAMES M. INHOFE, Oklahoma
MAZIE HIRONO, Hawaii TODD YOUNG, Indiana
TAMMY DUCKWORTH, Illinois JOHN KENNEDY, Louisiana
JACKY ROSEN, Nevada JOSH HAWLEY, Missouri
JOHN HICKENLOOPER, Colorado ROGER MARSHALL, Kansas
SEAN MOORE, Democratic Staff Director
WILLIAM HENDERSON, Republican Staff Director
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CONTENTS
Page
OPENING STATEMENTS
Cardin, Hon. Benjamin L., Chairman, a U.S. Senator from Maryland .............. 1
Paul, Hon. Rand, Ranking Member, a U.S. Senator from Kentucky .................. 3
WITNESS
Sanchez Jr., Mr. Francisco, Associate Administrator, Office of Disaster Assist-
ance, U.S. Small Business Administration, Washington, DC .......................... 4
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Cardin, Hon. Benjamin L.
Opening statement ........................................................................................... 1
Paul, Hon. Rand
Opening statement ........................................................................................... 3
Sanchez Jr., Mr. Francisco
Testimony .......................................................................................................... 4
Prepared statement .......................................................................................... 6
Responses to questions submitted by Senator Cantwell and Senator
Hirono ............................................................................................................ 24
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OVERSIGHT OF SBA’S OFFICE OF DISASTER
ASSISTANCE
WEDNESDAY, JULY 13, 2022
UNITED STATES SENATE,
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP,
Washington, DC.
The Committee met, pursuant to notice, at 2:30 p.m., in Room
428A, Russell Senate Office Building, Hon. Ben Cardin, Chairman
of the Committee, presiding.
Present: Senators Cardin, Shaheen, Booker, Rosen, Hickenlooper,
Paul, Risch, Scott, Ernst, Inhofe, Hawley, and Marshall.
OPENING STATEMENT OF CHAIRMAN CARDIN
Chairman CARDIN. Good afternoon. The Committee on Small
Business and Entrepreneurship will come to order. Today the Com-
mittee will conduct oversight of the SBA’s Office of Disaster Assist-
ance, which administers the SBA’s disaster programs.
The office also implements the COVID EIDL program that Con-
gress created to support small businesses through the pandemic.
Over the last two years, the SBA’s attention has largely been fo-
cused on supporting small businesses through the pandemic. EIDL
has provided loans to nearly four million businesses and served as
a lifeline when credit was not available from other sources. It was
critically important during this pandemic and it worked.
While the program has had its share of problems, including wide-
spread fraud in the early month of the pandemic and poor commu-
nications with applicants, particularly during the program’s final
months, its importance for small businesses cannot be overstated.
This hearing is an opportunity to discuss the Office of Disaster
Assistance’s traditional role, which is to help communities rebuild
in the wake of natural disasters. Due to the effects of climate
change, natural disasters are becoming more dangerous, deadly,
and frequent in every part of this nation. In the Southern states,
what used to be once-in-a-century hurricanes and tornadoes are
devastating communities and causing billions of dollars’ worth of
damage every few years. In Western states, there have been life-
threatening heat waves, crop-killing droughts, and historic wildfire
seasons in just the last three years. And in my home state of Mary-
land, in a single town, historic Ellicott City suffered two dev-
astating flash floods in two years.
So as we discuss the Office of Disaster Assistance’s procedures
this afternoon we must keep in mind that the SBA’s disaster loans
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to families and businesses will continue to be among the most im-
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portant Federal resources available in the wake of a disaster. The
faster communities can access capital after natural disasters, the
more quickly they can return to their homes and reopen their busi-
nesses. For homeowners, faster loan processing times reduces the
destabilizing effects of natural disasters that may prevent parents
from going to work and keep kids out of school. For small busi-
nesses, how quickly they receive a disaster loan could be the dif-
ference between a swift reopening or closing their doors for good.
Small businesses, we know, are the growth engine of our econ-
omy. We know that is where we create jobs. But they do not have
the same resiliency and the same deep pockets that larger compa-
nies have. So when a natural disaster occurs, they are much more
vulnerable of not being able to make it through that disaster.
Moreover, acting quickly to get families back into their homes and
to reopened shutters businesses help reestablish a state of nor-
malcy for communities and can prevent them from splintering.
The SBA, and the Office of Disaster Assistance more specifically,
must do all it can to improve the disaster response to provide as
much support as possible to communities in light of the increased
dangers created by climate change.
I was a member of this Committee when the SBA made several
improvements to a system to shorten loan processing times fol-
lowing Hurricane Sandy almost a decade ago. Now, as the COVID
EIDL program continues to wind down, the SBA must similarly
take the lessons learned from the pandemic to make even more im-
provements. And that is the role of this Committee, to oversight
how the SBA is responding to the experiences learned during the
pandemic.
So to Assistant Administrator Sanchez, I am looking forward to
hearing more about the consolidation of disaster lending functions
in the Office of Capital Access that was finalized last week. I hope
this change will address the widespread customer service problems
that we saw in the COVID EIDL program over the last two years.
I am also looking forward to hearing more about how the SBA in-
tends to further empower resource partners and local community
organizations to play a central role in the aftermath of natural dis-
asters.
The Maryland SBDC was an invaluable asset to small businesses
in historical Ellicott City following the floods in 2016 and 2018. I
was there, and I saw their work, and I saw how they literally saved
small businesses.
In addition to working with resource partners to help small busi-
nesses recover after a disaster, the SBA should leverage these orga-
nizations’ regional knowledge and relationships to better prepare
small business owners before a natural disaster. For example, the
SBA should use the SBDC’s SCORE chapters and Women’s Busi-
ness Centers to help small business owners create business con-
tinuity plans that will make it easier to reopen following a disaster.
Mr. Sanchez, I want to thank you once again for joining us today.
Oversight is one of the most critical functions of this Committee so
I am looking forward to a frank discussion about how the SBA and
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the Office of Disaster Assistance intends to support our commu-
nities in the years ahead.
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And with that let me yield to the distinguished Ranking Member,
Senator Paul.
OPENING STATEMENT OF SENATOR PAUL
Senator PAUL. This past December, violent storms swept across
my state. The tornadoes took the lives of 88 and injured hundreds
more across several other states. The damage was immense. In the
days following the storms I met with local officials across western
Kentucky to help them secure the resources they needed to clear
debris and rebuild.
It is understandable that government has a role in natural dis-
aster recovery. However, I think Congress made a mistake by ex-
panding the scope of the Office of Disaster Assistance. That office,
already tasked with helping rebuild after natural disasters, had
plenty of responsibilities without also having to clean up manmade
economic disasters like the ineffective and authoritarian COVID
lockdowns.
Last week, the Small Business Administrator’s inspector general
released a report detailing gross mismanagement of the Shuttered
Venue Operator’s Grant Program. For example, the IG found that
the SBA knowingly chose a riskier method of distributing funds.
Rather than doling out money at intervals, designed to ensure ap-
propriate use of taxpayer dollars, the SBA shelled the money out
in one large sum. As a result, SBA was unable to check if grantees
spent the awards on permissible expenditures.
The IG report also detailed how the allocated funds were without
government authorization and documentation. In the ten awards
reviewed by the inspector general, none had the proper authoriza-
tion. This stunning absence of safeguards resulted in over $33 mil-
lion in unauthorized commitments, that we know of. The IG report
found that as much as $9.7 billion could have been disbursed with-
out proper government authorization.
Perhaps most shockingly, in some instances the Offices of Dis-
aster Assistance gave applicants more money than they requested.
Of the ten awards received, the IG found that three recipients were
awarded more than they asked for, to the cumulative tune of $2.6
million. It seems Milton Friedman’s prophetic statement that ‘‘No-
body spends somebody else’s money as carefully as his own’’ is ap-
plicable.
To adequately address these concerns, my staff requested that
the Committee invite Inspector General Mike Ware to testify today,
but unfortunately that request was declined. Nevertheless, we
should not be deterred from addressing the major problems that
the IG identified. I hope the Chairman will commit to ensure that
the SBA is a responsible steward of taxpayer dollars.
Chairman CARDIN. Let me thank Senator Paul. As our staffs
have talked about, I do think it is important to have the IG here,
and we intend to invite the IG to the Committee for a hearing to
deal with the broader issues coming out of the different programs
administered by the SBA. But today’s hearing is going to focus pri-
marily on the reorganization and how SBA is handling the Office
of Disaster Assistance.
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And we are pleased to have with us today the Associate Adminis-
trator of the Office of Disaster Assistance for Small Business Ad-
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ministration, Francisco Sanchez. He took this position in January
of 2022, but he comes to us from experiences in local government.
He was the Deputy Homeland Security and Emergency Manage-
ment Coordinator for Harris County Office of Homeland Security
and Emergency Management, leading strategic development plan-
ning, public affairs, and community preparedness initiatives for
Texas’s largest county.
Mr. Sanchez, it is a pleasure to have you before the Committee.
You may proceed. Your full statement will be made part of our
record.
STATEMENT OF FRANCISCO SANCHEZ, ASSOCIATE ADMINIS-
TRATOR, OFFICE OF DISASTER ASSISTANCE, U.S. SMALL
BUSINESS ADMINISTRATION
Mr. SANCHEZ. Good afternoon, Chairman Cardin, Ranking Mem-
ber Paul, and distinguished members of the Committee. Thank you
for the invitation to be here.
This week marks six months leading the Office of Disaster As-
sistance, Office of Disaster Assistance, at the U.S. Small Business
Administration. Disaster recovery is one of the most important
functions of our work. We provide financial assistance so commu-
nities can rebuild, recover, and now to be more resilient.
SBA knows that we must do more to better leverage its programs
and resources to help small businesses in the face of increasingly
frequent and catastrophic disasters. I am proud to be one of the ar-
chitects that is optimizing the disaster program. By shifting the di-
rect disaster lending to the Office of Capital Access, it improves
customer service and elevates our investments in preparedness, re-
silience, and recovery.
My experience has been formed by nearly two decades in disaster
response and putting communities back together. Prior to joining
SBA, as you mentioned, Chairman, I served as the Deputy Home-
land Security Emergency Management Coordinator. Harris County
is 1,777 square miles, serving five million residents, including the
city of Houston. I had the honor to serve on command staff for four
of our nation’s ten most devastating natural disasters. My experi-
ence in times of crisis informs how we are now leading recovery
from the ground up and across the SBA and the Federal family.
A priority of the Biden-Harris administration and Administrator
Guzman is to improve the effectiveness of helping businesses,
homeowners, renters, and private nonprofits for all hazards. In my
short time at the SBA I have learned that we have a great asset,
an incredible team that is up for that task.
From helping open the Astrodome during Hurricane Katrina and
welcoming more than 200,000 evacuees to being at the helm during
Hurricane Harvey, which now ties Katrina as the costliest tropical
storm on record, I have looked in the faces of people going through
their worst, and on their worst days we must be at our best.
This is not just a professional obligation. To me, response, recov-
ery, and resilience has a deep personal connection. In 1983, at the
age of 11, Hurricane Alicia struck the Texas coast. It spared my
family but that name was retired. During Tropical Storm Allison
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in 1989, my mom stood watch as the water swelled out of the
bayou, swept up our street, and letting out a sigh of relief as it re-
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treated from the front door. Hours later, we felt under our feet the
dark water seep up from the floorboards, and Allison too was a
name that was retired.
During Hurricane Ike in 2008, I was working in our Emergency
Operations Center, feeling helpless as my childhood home flooded
again, this time a total loss. With the help of Federal programs we
helped my mom rebuild, including elevating her home. The storm
hit on September of 2008, and my mom would not be able to move
back in until September of 2012, a rough road of four long years.
That storm name, too, was retired.
During Hurricane Harvey in 2018, I worked around the clock in
our Emergency Operations Center responding to 50 inches of rain.
That is 9 trillion gallons of water. My mom was responding too.
Her resilient home was an island of refuge as dozens of neighbors
and friends escaped the several feet of water that drowned the
neighborhood. But my mom and her home were safe.
Recovery tied to resilience works. Each of those storm names
have been retired, but the remnants and the havoc they wreaked
remain. Disaster are a continuum, and we are reshaping our work
to respond accordingly.
The year 2021 marks the sixth consecutive year in which ten or
more billion-dollar disasters have struck the United States. Today
we are on the ground across 11 states and 25 primary counties, re-
sponding to three presidentially declared disasters, four agency
declarations, and five governor certifications. We are only at the
start of the 2022 hurricane season but already have three named
storms.
We are responding to the challenges we face today in reshaping
to be nimble, scalable, and flexible for the disasters on the horizon.
In short, we are ready.
My thanks to this Committee for your support of our mission and
for your dedication to help disaster survivors. I look forward to our
continued work together to build resilient small businesses so our
local economies can thrive and people can prosper.
And again, thank you for the invitation, Mr. Chairman.
[The prepared statement of Mr. Sanchez follows:]
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Chairman CARDIN. Well thank you, Mr. Sanchez. I appreciate
your testimony and your service.
I want to drill down a little bit more on your comments indi-
cating that the reorganization under the Office of Access to Capital
is going to, you say, make the services more friendly to those who
are relying upon disaster relief help. I would like you to explain
how you see the improved services to the people in need and what
lessons we learned from the pandemic that we can use to improve
the services during a disaster, whether it be a natural disaster or
whether it be a pandemic.
Mr. SANCHEZ. Thank you, Mr. Chairman, for that question. It
right person, right job, and it is, in part, implementing some of the
lessons that we learned from COVID—technology, building capac-
ity, surge, putting those protocols in place to be able to detect and
deter fraud and respond to that.
The Office of Capital Access is the home to the lending programs
of SBA, so the expertise is already there. We will see efficiencies,
improved technologies for improved customer service. What that al-
lows the Office of Disaster Assistance to do is to focus on the very
critical piece of connecting disaster survivors with that streamlined
and improved disaster lending process.
Chairman CARDIN. Because, yeah, particularly during the pan-
demic there were concerns on how the programs were being admin-
istered. I understand the Office of Capital Access has direct lending
services to your customers. So I do think you need to assure that
the service levels meet the needs. During a disaster it is critically
important to be on the ground immediately, have your personnel
on the ground immediately at the site. The businesses cannot seek
you out. They are trying to board up their properties and figuring
out what they have to do in order to stay afloat. You need to be
where they are.
Is that the intent that you will be able to provide that type of
on-ground services during a natural disaster? Actually, before it
even starts you need to be on the ground.
Mr. SANCHEZ. Senator, that is exactly the intent, to meet the cus-
tomer where they are. Part of that improvement is we can be on
the ground quicker. We can meet with those, as you mentioned,
those local resource partners, SCORE, and those programs, to en-
sure that we are tailoring our response in a way that is reflective
of that community’s needs, and we can stay longer, focused on that
mission of being on the ground to ensure that long-term recovery,
that we are part of that and in sync with those local priorities.
Chairman CARDIN. So how do you coordinate the work that you
do with your resource partners with the SBDCs and the Women’s
Business Centers, or with the other community organizations, such
as the CDFIs, or, quite frankly, with the other Federal agencies
that are involved during a natural disaster such as FEMA and
HUD? How do you coordinate the different players that are there
to help someone, a business or homeowner, during a disaster?
Mr. SANCHEZ. By its very definition, a disaster means that local
resources are overwhelmed. Not even a Federal agency can tackle
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that altogether. So that is why those relationships are critically im-
portant.
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In every opportunity that I have had to be on the ground I had
visited with our local partners, our Business Development Centers,
our Women Entrepreneur Centers, local Chambers of Commerce, to
see how we can leverage those relationships. We work across the
board with FEMA, HUD, and other agencies to make sure we are
lockstep moving forward and being nimble and scalable to tailor
our response from the ground up to meet those needs.
Chairman CARDIN. Well, I want to follow up, not necessarily
right now, as to how we make sure that we have that type of co-
ordination and how this reorganization with the SBA will assist.
You are the lead in some areas, in some you are not, but you all
have to be working in a coordinated way during these stressful
times.
I want to get to one other subject, and that is the pre-disaster
planning, to have plans in place to use resources to help particu-
larly small businesses develop a pre-disaster strategy and plan. We
have allowed the use of resources for this purpose. Tell me how you
intend to carry out that role of your responsibilities.
Mr. SANCHEZ. Yes, Senator. That is exactly the part of the new
mission is to making sure that we lean in ahead of the disaster as
we have folks on the ground working with our field office, working
with our local resource partners, that we take those plans, at the
high level, but then tailor them to meet the unique needs of that
community, not just now, well in advance of a disaster, but as we
are landing on the ground, making sure we tweak those to be re-
sponsive in the moment, and we are going to move forward as we
do that, make that part of the planning process, make that the in-
stitutional way to respond, and build out that culture.
Chairman CARDIN. Thank you. Senator Marshall.
Senator MARSHALL. Thank you, Chairman. Administrator San-
chez, welcome, and thank you for coming here this afternoon. Kind
of a follow-up question that the Chairman was getting at as well.
Kansas does not have a huge hurricane with billions of dollars
of damage. Typically we have lots of small disasters. That is a tor-
nado impacting a town, you know, two or three different times a
year, and then we have had our share of wildfires as well. While
the disaster office has been there for each of our events, they are
at an incredibly slow pace. For example, fires in Hutchinson, Kan-
sas, on March 9th, the SBA Resource Center was not set up until
April 28th, seven weeks later. Constituents struggle to wait seven
weeks for that assistance.
Why would there be substantial delays? What would you feel is
success? How do you measure success? What would be your goal in
your response team getting to a disaster?
Mr. SANCHEZ. Sure. Thank you, Senator. I will address, in part,
what the SBA challenge is and how we tie it to the larger picture.
Typically, for loan processing, it is about five days, and then dis-
bursement of first funds is—I am sorry. Loan processing is about
eight days for homeowners, five days for the actual disbursement.
We come in on the ground after there has been a disaster dec-
laration at the state. We are working with our state partners to
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educate about how we meet the threshold to try to expedite that
process so that we can be on the ground quicker as well.
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Senator MARSHALL. What about the time to be on the ground,
from the time the disaster occurs? How do you measure that and
what would you think? Like seven weeks just seems too long to me.
Mr. SANCHEZ. Yeah, Senator. That was seven weeks from the
time of the disaster. What we have to wait for to actually open the
lending process is for the disaster declaration to be cleared, re-
quested by the state, and then we can be on the ground. We are
working with our partners to educate how we can expedite that for
our states. But once we get that trigger we can be on the ground
within 48 to 72 hours.
Senator MARSHALL. So your goal would be once the state declares
a disaster is to have presence there in two to three working days.
Mr. SANCHEZ. Yes, sir. Once that comes to us we sign it and we
are on the ground.
Senator MARSHALL. Okay. Again, kind of along the same line of
questioning, for those wildfires it appears that our staff had to do
most of, I am going to call it marketing, letting them know what
the SBA could and could not do, how they could help. What can you
do to better improve your communication to those small businesses
that you are there to help them? What are the opportunities for im-
provement there?
Mr. SANCHEZ. I think as the Chairman mentioned, reaching in
to SCORE and those local district offices to see how we can tailor
that for that specific community, and I have a commitment to work
with our officials from those states and local officials to see—you
are where the expertise is on the ground. How do we leverage our
knowledge to those local communities? What community should we
be in? What does that message need to look like? We want to in-
crease access of those programs. It is an under-told story so we
want to partner with that when we are on the ground with local
officials and local expertise to make the most impact.
Senator MARSHALL. Okay. Thank you so much. I yield back.
Chairman CARDIN. Senator Shaheen.
Senator SHAHEEN. Thank you, Mr. Chairman, and Mr. Sanchez,
thank you for being here and for your ongoing efforts.
I want to begin with a statement that I know is not directly
under what this hearing is about and what we are working on
today, in terms of disaster assistance, but I would be remiss if I
did not ask you to take back to SBA the frustration that we still
hear in New Hampshire from small businesses who were in the
queue for EIDL loans and the program was so precipitously discon-
tinued. Business owners are still very frustrated by that, and it left
a very bad taste for people who were counting on the SBA to help
them through the pandemic.
So again, I appreciate this is not under your purview but I do
think it is a message that the SBA needs to hear, and hopefully
that as we look at lessons learned we will be looking at what we
can do better in those kinds of situations.
One of the things that has been really important in New Hamp-
shire has been our district office in sharing with small businesses
what help is available through the SBA. They have really done
great outreach, and I know that, or at least as I understand under
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this reorganization you are looking at ODA to be that office that
does outreach and education.
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So can you talk about how you see that continuing to work with
the district offices and what resources you think district offices are
going to continue to need in order to do their piece of outreach and
information to small business?
Mr. SANCHEZ. Sure. First, Senator, I will gladly take back that
message, and I will assure you, from the Office of Disaster Assist-
ance for those lessons that were had during COVID, while they
may have not been in the Office of Disaster Assistance we are
going to take those lessons and make sure that we can apply them
across the board to our mission, to improve the customer experi-
ence.
In terms of our district offices, they are so incredibly connected
in those communities. They know how that community works. They
know where their Economic Development Agencies are and those
Chambers.
We are in communication constantly about how we can partner
up with that local expertise. From us, bring the resources that we
can bring to bear for that lending capacity and connecting people
with programs. But they are also critical for us to deliver after a
disaster not just lending but connecting them to the resources that
are already provided by the SBA across the board, to bring those
to disaster survivors. So not only have we provided lending but
those resources so they can continue to thrive and be more resil-
ient, and tackle that from the whole SBA angle.
Senator SHAHEEN. Well, I am really glad to hear that. I know
there is a proposal through SBA to reduce pretty significantly the
operating budgets of district offices. So I hope, again, that you will
take back just how important it is in New Hampshire—and I am
sure it is true of the other states that members represent here—
the work that gets done.
My next question is really a more overarching one for the long
term, and that is how are we going to continue to address disaster
assistance given the increasing costs each year from climate change
and other aspects of disasters that we are seeing? Because I do not
think that we are going to be able to continue to do it in the same
way that we have, and so we have got to take a different approach.
I appreciate that this reorganization may be one effort to take a
look at that, but I think we are going to have to be much more vi-
sionary about how we think about this in the future.
Mr. SANCHEZ. Senator, it is something I am passionate about
from a local perspective. I come from a region where we now aver-
age a presidentially declared disaster every nine months, and that
does not even include Harris County, Houston, Texas. And so along
the Gulf Coast, and it does not even include the SBA declarations
yet or the other smaller disasters.
And let me sort of paint, if I can, the landscape.
Senator SHAHEEN. Great.
Mr. SANCHEZ. SBA is often the first and only on the ground, as
we do not meet those other thresholds, and we are there more
often. Since 2000, for example, there have only been four years in
which there were more presidentially declared disasters than there
were SBA disasters. So not only are we often the first and only, the
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only Federal agency to the scale that we do to do homeowners and
renters, private nonprofits, and businesses. So we have to scale up,
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14
so we have got teams that can get ready to surge and meet those
disasters this hurricane season and wildfire season.
We need to be flexible, and we need to be nimble. And we need
to work within the authorities that we have to be able to adapt to
need. But the pace is incredible, and we have got some work ahead.
Senator SHAHEEN. If I can ask one more question, Mr. Chairman,
one of the things that we looked at when we were working on bi-
partisan infrastructure package last year was how to put in fund-
ing for resilience. And you talked about your mother’s home and
building it back more resilient than it was originally.
But how do we incorporate that in ways that are within existing
law, for example? One of the things I found particularly frustrating
when I first got to the Senate was the fact that under our FEMA
requirements you had to build back exactly the way it was before,
and it took a long time for us to get that changed.
But resilience has got to be part of what we are doing now. We
have got to be looking at prevention as much as we are looking at
restoration after a disaster has occurred. So how do you think
about that in terms of SBA?
Mr. SANCHEZ. Sure. From my perspective, from every cycle of
emergency management, preparedness, response, recovery, and
mitigation, two elements. One is on the mitigation piece. Once you
get a disaster loan, you get 20 percent on top of that to mitigate
in a way that you build more resilient to the disaster you were im-
pacted, we need to explore making mitigation available at the front
end as well instead of having to wait for businesses or homeowners
to be impacted.
The other piece is a cultural shift in recognizing that that prob-
lem is real, that it is here, and we need to adapt, and we have got
some catching up to do. And what I have heard from small busi-
nesses across the country is they want to tackle it but they are
busy trying to keep the lights on and keeping the open sign there.
So what we can do, and will be doing, is providing, at the front
end, accessible information on how they can be resilient, from sim-
ple steps to the more robust steps, how climate change may affect
those regions. And so they have that bandwidth and knowledge
and make it easily accessible so we can digest that for them and
make it something they can take action on, and do that homework
for them and be a good resource.
Senator SHAHEEN. Thank you. Thank you, Mr. Chairman.
Chairman CARDIN. Senator Inhofe.
Senator INHOFE. Thank you, Mr. Chairman. I do have a couple—
one is not a question but it is a request for assistance in a problem
that we are having, that you probably are not aware of but maybe
you are. I do not know. When disasters happen, states can request
a FEMA disaster declaration or SBA disaster declaration to help
with the rebuilding process. Unfortunately, the Oklahoma Office of
Emergency Management in my state has been told by your SBA re-
gional counterparts, for a number of years now, that if a state is
denied a FEMA declaration they forfeit the ability to subsequently
apply for SBA declaration in order to receive assistance.
Now I know that some people have denied this, and head-
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quarters says that this is not the case, and that states can apply
for an SBA declaration.
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15
Now this is a discrepancy that is repeated several times, and the
request I would like to have from you, Mr. Sanchez, we need your
commitment to resolve this issue. We have had this for a long pe-
riod of time. We get some inconsistencies with this. And to do this
it would be necessary, I think, to follow up with both my office and
your Office of Emergency Management to correct this.
Can I depend on you to help us in this effort?
Mr. SANCHEZ. Yes, Senator.
Senator INHOFE. To personally become involved in?
Mr. SANCHEZ. Yes, sir. Not only that, Senator, I am working on
it already. You know, Oklahoma is a neighbor of where I come from
in Texas.
Senator INHOFE. Sure. Sure.
Mr. SANCHEZ. I called this morning to Mark Gower, who is the
Director for the state Office of Emergency Management in Okla-
homa. You can apply for an SBA disaster declaration if you are de-
nied by FEMA. I think there is confusion as to whether you can
launch SBA prior to FEMA, and so we are going to work through
that. And I am glad to keep your office informed and work directly
with Oklahoma to make sure we can be as flexible and nimble as
we can be to get those programs on the ground.
Senator INHOFE. Well, I know you can do it. And by the way, I
am very familiar. In the real world I was a builder and developer,
mostly in South Texas, and I know how things worked. And I have
worked with your department over a period of time.
So if we could do that, if you could do that and give that commit-
ment to us, that would make our lives a lot easier.
We have a lot of natural disasters, as you know—tornadoes,
wildfires, and other problems. The SBA is currently working with
FEMA to respond to recent flooding in Seminole, Oklahoma. These
disasters have a unique impact on rural communities, and we are
a rural state, so when we have rural problems we feel it a little
bit more than a lot of others do. They have a unique impact on the
communities where they can easily wipe out the livelihoods of
Oklahomans involved in farming and ranching.
So is there something that you could share with us today that
I could take back that you are doing to ensure the individuals in
rural communities are able to access SBA disaster resources?
Mr. SANCHEZ. Senator, thank you for asking that because that
hits close to home for me. I was both in deep South Texas, rural
Texas.
Senator INHOFE. Where?
Mr. SANCHEZ. Brownsville. Two miles more south and it would
have been Matamoros. Mercy Hospital.
Senator INHOFE. I am totally familiar with that, South Padre Is-
land and then all the way up to—well, halfway up the state.
Mr. SANCHEZ. It is. My grandfather actually owned about a 20-
acre ranch, Los Palmitos. So he was a rancher as well and did
some crops there. So I get rural. It is actually a focus of mine.
I have reached out—and that is part of making sure we meet the
customer where they are at. We have had some rural communities
hit, and my instruction to the team is get on the ground, talk to
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local officials, let us get out there, in less time than necessary. I
have spoken to county executives directly myself that have 7,000
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16
or less population, 17,000 or less population. It is a focus of mine.
And if there are lessons to be learned or ways that we could im-
prove, not only am I open to it, it is something that I am highly
focused on personally.
Senator INHOFE. Good. That is all I could ask, and I look forward
to great results. Thank you.
Mr. SANCHEZ. Thank you, Senator.
Chairman CARDIN. Senator Hickenlooper.
Senator HICKENLOOPER. Thank you, Chair Cardin, and thank
you for your service and for appearing here.
First, thank you for taking into consideration the suggestion that
my colleague, Senator Bennet, Representative Neguse, and myself
all made in terms of the Marshall Fire, the letter we sent in
March. I think modernizing how the SBA calculates building costs
is an important first step, as Coloradans figure out how they are
going to rebuild after that horrendous fire. But I think we also
need to update the borrowing limits to reflect the median value of
a house, that has more than doubled in the 28 years since the last
time we had a reset.
So how do you think the SBA should, and how well the SBA up-
date their disaster loan assistance home and personal property
loan maximums to account for this roughly 30 years of consistent
inflation?
Mr. SANCHEZ. Senator, that is an excellent point in terms of the
lending limits. The last time we looked at it, it was 1990. I was
graduating high school. It is time for us to look at those numbers,
and we are looking at that. And my hope is that in the next few
weeks we will have some news to you from the Office of Capital
Access and our joint work together about how they are going to
tackle that, because we have got an approach that is being put to-
gether and we are going to be responsive to that.
And I was very pleased to be able to visit with Mayor Stolzmann
and local officials there in the Marshall Fire to see how we could
use existing rules to be adaptive, and we will continue to do that.
Senator HICKENLOOPER. Great. I appreciate that.
The chaos and damage that follows disasters often exacerbate
the existing obstacles for traditionally underserved communities in
their efforts to try and access capital. What is the SBA doing, and
what could it be doing more to ensure that individuals who may
otherwise struggle to secure affordable credit have the opportunity
to use these disaster relief loan programs?
Mr. SANCHEZ. Senator, we recently launched an equity action
plan to tackle issues like that, and fortunately the great team in
place before I came on board was wrapping that up. But one is ac-
cess to capital, making sure that we meet the customer where they
are. So whether it is a language issue or economic issue, that we
are meeting them where they are and explaining those programs.
It is, in the end, a lending program, so people have to go through
a complex financial process, so we are trying to streamline that and
improve that.
In the meantime, and even more so, my approach is if you come
to the SBA and ask for assistance, and if we cannot quite get to
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a yes yet, what other programs within SBA can we bring to the
table and leverage, and navigate our local resources to connect
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17
them with everything else in the community and Federal pro-
grams? So that really unified approach is something that we are
looking at to bring that to the ground.
Senator HICKENLOOPER. Interesting. And this is a little bit more
out on getting out on the edge. We, obviously, in Colorado, we feel
that we are on the front lines of climate change and the climate
crisis. We are seeing—I do not think you could call it a drought
anymore. It is aridification or desertification. It is the consistently
drying of our precipitation patterns, which has led to more and
more, worse and worse wildfires.
What is the SBA doing to ensure that the 7(a), the 504, other
lending programs are being used by small businesses, taking into
account resilience, you know, the resilience for disasters but also
preparedness to help mitigate what we know is coming in the form
of climate change?
Mr. SANCHEZ. Senator, in the past two years I believe we have
had 400-plus drought declarations in this country, and Colorado is
ground zero for some of those, and parts of the Western United
States. Working with my colleagues across SBA that oversee those
programs, to see how we can leverage that. And again, it is really
bringing the whole of SBA. We cannot look at disasters in that nar-
row scope anymore. What can we do to build resilience? How do we
incentivize that across other programs so that, quite frankly, those
businesses and homes can withstand the next disaster and recover
quicker? So that is a priority.
Senator HICKENLOOPER. Yeah, and I think obviously that is
something you are still figuring out and we are all still figuring
out, is how to look at this new reality.
Anyway, thank you for all your work and taking on such a chal-
lenging but very important job.
Mr. SANCHEZ. Thank you.
Senator HICKENLOOPER. I yield back to the Chair.
Chairman CARDIN. Thank you. Mr. Sanchez, my experience dur-
ing the disaster and the flooding in Ellicott City, Maryland, was a
positive experience with the SBA, the Federal agencies, the local
agencies. It was, I would compare it to a one-stop shop. They were
there. And yes, we went through a declaration, but we had re-
sources out before the declaration as far as advising the business
owners, property owners what they were likely to need to be able
to do.
So my question is, as you are now reorganizing, are there discus-
sions taking place to make sure that we have a seamless system
of applying for Federal help? The process might be different at
FEMA and HUD than it is at SBA. But are you coordinating that
to make it easier for the customer to be able to not be bounced
from one line to another but that can take care of all of their in-
quiries and applications in one location?
Mr. SANCHEZ. Senator, I am glad you bring up sort of the dif-
ference between the lending program and also how it rolls out on
the ground. I am the first non-banker to be in this position, so I
come from the perspective of a local official that has been repeat-
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edly hit with disasters. How do we improve that customer experi-
ence? And I know collaboration is the key to that.
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18
We are working with FEMA, HUD, and our Federal partners to
work on what does the sequence look like, how can we collapse it
or be adaptable to make those resources, all of those resources,
available in a one-stop shop as much as possible.
Already we are removing barriers. We had a pilot program on
the threshold, so there would be less bouncing around between
FEMA and SBA. We have now implemented that for hurricane sea-
son. So that is just one step and that is already in effect, and we
are going to continue to explore how we do that better.
Chairman CARDIN. The SBA already allows the borrower to use
a certain amount of their loan for future mitigation. Are they doing
that? Is that program well understood by the customer, that they
are permitted to do mitigation with a certain amount of their
loans?
Mr. SANCHEZ. We are actually increasing right now. We have
had, in my short time here, going on two or more educational op-
portunities for our lenders on the ground so they can explain that
program better. It is, I think, an underutilized program, so we are
going to continue to champion that, and even go back to existing
disasters. You have two years to apply for that after you get the
loan, so we are even going to go back and reach out to the folks
that are already accessing the program, to remind them about that
opportunity.
Chairman CARDIN. I appreciate you keeping us informed as to
whether there are additional authorities that you need or whether
you have adequate authorization. Mitigation is so critically impor-
tant, so we do want that information to get out there.
Senator Rosen.
Senator ROSEN. Oh, thank you. Thank you. I just came from pre-
siding. Thank you. I appreciate it. Thank you for holding the hear-
ing and for waiting for me to come from the floor. It is so impor-
tant, the disaster assistance that you do for small businesses, and
I really want to thank you for being with us today.
You know, you know, Senator Cardin is, of course, from Mary-
land, but I am from Nevada, out west, and what do we have there
but a major, major drought, extreme drought, and extreme heat.
And so extreme heat and drought really do have effects on our
small businesses.
We have experienced historic high heat, high temperatures. Reno
and Las Vegas are the two fastest-warming cities in the country—
or two of them, excuse me—and extreme heat events have caused
hundreds of deaths. They have devastated our small businesses
and rural communities, who really rely on outdoor recreation and
that part of the tourism economy.
Unfortunately, the Federal Stafford Act does not list extreme
heat as a potential disaster, and therefore FEMA has never de-
clared an extreme heat disaster. But given that small businesses
can only receive SBA disaster assistance if they are located in fed-
erally declared disaster areas, businesses facing the impacts of ex-
treme heat, they are really just left without support. Last year,
Senator Cornyn and I sent a letter to FEMA asking the agency to
address extreme heat as a major disaster.
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So, Mr. Sanchez, as FEMA works through its own internal proc-
ess how can SBA work with FEMA? How can you provide more re-
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19
sources to our small businesses that are dealing with these impacts
of extreme heat? And I would also add that, you want to include
drought in that too because really, it is pretty much the same
issue.
Mr. SANCHEZ. Senator, thank you for that question. You know,
I come from Houston where we experienced the hottest June on
record, and there are records like that all over the country. I will
certainly work with FEMA to see how we are in that process and
fold that under disaster declaration.
I had the opportunity actually a few months ago, before I even
came on board here, to visit with a colleague in Cook County—I am
sorry. Not Cook County.
Senator ROSEN. Cook County is in Illinois, and Chicago, right.
Clark County. That is my Clark County.
Mr. SANCHEZ. Thank you, Senator. And what they are seeing
there is heat having a cascading impact, as a community that is
used to heat but even more that disaster is becoming more prob-
lematic and more consequential. So it is a local concern there, and
I do look forward to addressing that. And if that is something that
is a declared disaster we certainly can bring resources to bear to
help recover.
Senator ROSEN. Yeah, and like I said, we are trying to work with
FEMA to get these disasters declared. On top of this, because of
the extreme heat and extreme drought we have wildfires. They are
impacting our small businesses, hundreds of wildfires each year in
Nevada. They threaten lives and livelihoods. Of course, they are
happening all across the West and across the country. But they
drive away our tourists with wildfire smoke, our poor air quality,
and in the case of the 2018 Martin and Sugarloaf Fires, they
burned nearly 1 million acres of land.
And so 80 percent of Nevada, over 80 percent, is federally owned
or managed in some form, so we all have to coordinate, and SBA
has a major role to play in terms of stakeholder collaboration, be-
cause we have Department of Defense, we have Department of En-
ergy, we have BLM, et cetera, et cetera.
So as we enter wildfire season can you discuss your outreach to
our small businesses that may be in the wildfire impact zones, if
you will?
Mr. SANCHEZ. Sure, Senator. As a former firefighter I get the
threat that the wildfires face, and particularly in areas like the
West and in Nevada. Not only are we ready to respond to that in
bringing resources on the ground, we are trying to be innovative.
We have got a strategic partner in the Institute for Business and
Home Safety.
We recently launched an event in California where we saw the
Paradise Fire, as an example of launching information of how busi-
nesses and homeowners can become more resilient and prepare for
wildfires. So not only responding when it happens so we can pro-
vide those resources for recovery on the ground, working with part-
ners to ensure that they have the preventive preparedness informa-
tion in advance as well.
Senator ROSEN. And then, again, I think this probably would
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take coordination with FEMA or other agencies. But we have busi-
nesses that are impacted. Maybe they are okay but the road is out
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20
because of a fire or a flood or a mudslide. A bridge is out. Our
internet is out because of the wildfires. So these businesses have
business interruption even though they may not be burning down
themselves.
And so can you commit to trying to work with FEMA on how you
can help the small businesses again that are in this impact zone?
They are impacted as a result of this fire, drought, or heat, but
they are not burning down at the moment.
Mr. Sanchez. Excellent point, Senator, and I am committed to
that collaboration. I will tell you, we are already doing that. I visit
with my counterpart at FEMA on a regular basis to see what does
that local situation look like? We did exactly just what you asked
in Montana, for the fire in Yellowstone. We had businesses that
were not impacted but roads and bridges were down so tourism
was down. So we worked with the state and said, hey, were you
aware that you can still apply for disaster loan for disasters, so
they would be able to utilize that.
And so we are working on those options and we will continue to
do that, and are doing that now, just through our normal course
of work.
Senator ROSEN. Thank you. I appreciate it, and really getting the
word out to our small businesses across the country really makes
a difference. Thank you.
Chairman CARDIN. Senator Booker.
Senator BOOKER. Administrator, so good to have you here——
Mr. SANCHEZ. Thank you, Senator.
Senator BOOKER [continuing]. And thank you very much for your
really hard work under difficult [inaudible-off microphone] small
businesses and the work you are doing is important.
I know from my time as a mayor, when I had a real job, that
we were really dealing with the impact of disasters. And being the
mayor during Hurricane Sandy was quite the challenge for my
community, and I was really proud of how my city, even though we
had loss of life and tremendous loss of property, I was really proud
about how we rose to meet that challenge.
But I learned a lot, because we were still doing recovery in New
Jersey from Hurricane Sandy a year or two later, when I became
Senator for the state of New Jersey, and traveling up and down
with Bob Menendez and seeing a lot of things that just do not
make sense to me. And that is why I am excited about pre-disaster
resources, because when people are hit time and time again, when
I have people telling me stories about, you know, back in 1980 we
had this happen, or even more recently, it is clear that we, as a
country, could save taxpayer dollars through a lot of our invest-
ments.
So again, the additional loan funds for mitigation, property im-
provements, I really believe are critical and something that I really
support, investments in natural infrastructure. These issues,
whether it is fires or flooding, are going to get worse and worse and
worse, and we have got to start acting.
Each weather event, as you know, typically costs tens of billions
of dollars in Federal recovery funding. Federal spending on disaster
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recover totals approximately half a trillion dollars since 2005. And
unfortunately, up to 13 million people can be displaced.
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21
So I just would love to hear and better understand how the SBA
has made these significant pre-disaster mitigation investments to
help on resiliency, and I was wondering if you could describe some
of the work in that area and maybe give me some more hope that
I can talk to a lot of the other mayors that are still doing the real
work, that we are going to be making more investments in helping
for resiliency.
Mr. SANCHEZ. Excellent question, Senator, because mitigation is
critical to making sure those businesses and homeowners can with-
stand a disaster but get back on their feet quicker, especially in
these economic times where it is already challenging enough.
We are adding a new focus and emphasis on that mitigation pro-
gram, so once you have a disaster loan you can add 20 percent on
top of that. But there are opportunities to explore the ability to
make those lending pre-disaster. So that is critically important.
You talked about Sandy. The number I have off the top of my
head is about a quarter billion for Ida. In New Jersey I believe that
is $6 million that folks have utilized for that mitigation program,
but they have the option to do that up to two years later. So if local
officials are looking at how do we address mitigation, let us work
with those individuals to see if they want to access that program
to build back stronger. And for businesses, making sure they know
the resources that they have available and education, what they
can do on their own, in addition to what we do, to build that resil-
ience piece, moving forward.
Senator BOOKER. And so this is one of those times where I think
the SBA is ahead of other government agencies in having this kind
of forethought. Are there lessons you are learning that other agen-
cies might be able to benefit from?
Mr. SANCHEZ. One, from a local perspective, is that is what we
are bringing to the table in terms of the importance of resilience.
There is a vast effort in the Biden-Harris administration to look at
resilience and climate change and tackle that. So there are a lot
of moving parts.
I think for us we need to own what is our primary mission and
deliver everything that we can, and so that is what we are doing
at the Office of Disaster Assistance. And as we move forward with
that robust approach for resilience, is really doing that in lockstep
and in sync with our partners to see how we can maximize those
impacts.
Senator Booker. That is very humble of you. It sounds like you
are saying, ‘‘Cory, I am just going to do my job and keep focused
on my goals and missions.’’
How about this, a little bit of advice for us? Do you think Con-
gress should be making larger investments, given your sort of cost
benefit analysis, investment return analysis? Do you think we
should be doing bigger investments in Congress in pre-disaster
mitigation or other things that you think are great investments in
terms of return, like that pre-disaster money might be?
Mr. SANCHEZ. Senator, in sheer numbers, for every $1 we invest
in mitigation there is $6 in return. But I do not think we can look
at that in a dollar-per-dollar ratio anymore. What does that mean
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for getting kids back in school, people back in their jobs, rebuilding
those neighborhoods and making sure people do not flee those dis-
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22
aster areas? That is absolutely critical and not part of the economic
equation.
So for me, as someone that has responded to that many disas-
ters, mitigation and resilience is absolutely key to making sure peo-
ple do not even have to recover.
Senator BOOKER. Fantastic. Thank you very much, Mr. Chair-
man.
Chairman CARDIN. Thank you.
Mr. Sanchez, let me thank you very much. The record will stay
open for two weeks for those who may have questions for the
record. We ask that you respond as quickly as possible to that.
And thank you for what you are doing. We are very interested
in being kept informed, as you see hurdles that you think we can
help you with. As Senator Booker was saying, we are very much
interested in trying to do pre-disaster mitigation. We also are very
supportive of using part of the disaster loans to mitigate future
challenges. So this is all part of our priorities, and we look forward
to your best advice to us how we can work together to achieve
those objectives.
Thank you very much, and with that the hearing will stand ad-
journed.
Mr. SANCHEZ. Thank you, Senator.
[Whereupon, at 3:24 p.m., the Committee was adjourned.]
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APPENDIX MATERIAL SUBMITTED
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File and source
- File
- CHRG-117shrg48248.pdf
- Size
- 1,874,586 bytes
- SHA-256
- 109748724ff8c37e15624758f724fc67769f1be89ca9612387fb2ba1dad66683
- Our copy
- CHRG-117shrg48248.pdf
- Original
- www.govinfo.gov