California Governor's Office of Emergency Services Issues Public Comment on FEMA Proposed Rule

WASHINGTON, March 13 -- The California Governor's Office of Emergency Services, Mather, has issued a public comment on the Federal Emergency Management Agency proposed rule entitled "Cost of Assistance Estimates in the Disaster Declaration Process for the Public Assistance Program". The comment was posted on March 12, 2021:

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The California Governor's Office of Emergency Services (Cal OES) submits the following comments in response to FEMA's Proposed Rule on the Disaster Declaration Process for the Public Assistance Program.

The Federal Emergency Management Agency (FEMA) proposes to substantively revise the estimated cost of the assistance (COA) disaster declaration factor for the Public Assistance (PA) program by accounting for 13 years of inflation, adjusting by a State's Total Taxable Resources (TTR), and by utilizing annual population estimates rather than decennial census data. The impact of the proposed revisions to the disaster declaration process for the Public Assistance program would be untenable for California. As discussed in the comments below, when calculating the State COA using the proposed per-capita inflation adjustment, the TTR adjustment, and the annual PEP data, California's threshold balloons to over $108 million, an 89.56 percent increase from the fiscal year 2020 formula. Furthermore, without proposing changes to or publishing the methodologies of evaluating the localized impacts and recent multiple disasters factors, the estimated cost of the assistance factor would remain the status quo metric in determining whether or not to approve a major disaster declaration.

1. Estimated Cost of the Assistance Factor

FEMA's published analysis of 589 declared major disasters between 2005 and 2014 demonstrates that the probability of an incident being declared a major disaster when the incident exceeded the State COA indicator was over 80 percent. FEMA acknowledges that damage assessments meeting or exceeding that benchmark were "highly correlated to whether that State will ultimately receive supplemental Federal assistance for that incident."/1

The abrupt increase to the State COA in this proposed rule will distance FEMA's partnership with State, Local, Tribal, and Territorial governments in reducing risk and accelerating recovery throughout the nation. Specifically, this rule would dramatically increase California's COA to $108 million, leaving communities without federal resources during their time of greatest need, negatively impacting response and recovery outcomes.

Moreover, even though the Disaster Recovery Reform Act of 2018 (DRRA) directs FEMA to give greater consideration to the recent multiple disasters and localized impact factors, the estimated cost of the assistance factor remains the only codified benchmark. Thus, leaving the other factors to be evaluated on a subjective basis, as no published documentation nor proposed rulemaking clarifies their methodologies.

A. Per Capita Indicator: Inflation Adjustment

Traditionally, FEMA introduces the State COA accounting for incremental economic fluctuations that states can anticipate and address in their budget planning. However, FEMA's proposal to rectify 13 years of inflation, from 1986 to 1999, places an immediate and significant burden on California, as highlighted by FEMA in Table 1--Proposed State COA Indicators./2

This proposal would increase the fiscal year 2020 baseline per capita indicator from $1.53 to $2.32, and would sharply increase California's COA from $56,998,553 to $86,429,178 when only considering the inflation adjustment. Additional proposed adjustments, detailed below, would further increase the State COA, although the inflation adjustment ushers in the most significant change in a single action. This radical change inhibits state and local governments from strategically scaling capabilities and capacity to meet the anticipated increased demand of responding to and recovering from disasters independent of federal support.

B. Per Capita Indicator: Total Taxable Resources Adjustment

While increasing the per capita indicator for inflation alone would certainly be a dramatic increase, multiplying it by the Total Taxable Resources (TTR) per capita index further increases California's cost of assistance threshold to an exorbitant amount. Following the 2020 fiscal year formula above, combining the inflation and TTR adjustments would increase California's COA to $102,245,717. As TTR data is invariably 2 years old and reflects only a potential of taxable revenue, the resulting calculation is an inaccurate assessment of a State's current fiscal capability, which is exacerbated during times of abrupt economic fluctuation, such as the ongoing COVID-19 pandemic. Additionally, California's threshold would continuously increase when combined with the annual population adjustments described below.

C. Annual Population Adjustments

FEMA's rule proposes to implement annual U.S Census Bureau Population Estimates Program (PEP) data as the basis for the State COA formula, rather than continuing to rely on the decennial census. This change would increase California's COA as the population continues to grow. In historical context, disasters occurring in the latter half of the 10-year census period would have encountered a lower State COA threshold when using the current formula, and thus would have experienced a greater chance of approval considering FEMA's reliance on the estimated cost of the assistance factor.

D. State Cost of Assistance Analysis

Using the 2016 TTR and 2018 PEP as provided by FEMA in Table 1--Proposed State COA Indicators, the average increase of the State COA of the 50 states would be over 56 percent./3

California's COA for fiscal year 2020 was $56,998,553 and would sharply increase by 89.56 percent to $108,048,052 when accounting for the inflation adjustment, and the latest TTR/4 and PEP/5 data.

This enormous threshold signifies that only the most catastrophic events would qualify for supplemental Federal assistance, especially when considering FEMA's historical heavy reliance on the estimated cost of the assistance factor. Correspondingly, by suddenly restricting traditional access to FEMA programs, an immediate and unreasonable financial burden is shifted onto State and local government, while also increasing the risk of disaster-prone communities, and delaying the recovery of disaster survivors.

In an analysis of California's major disaster declarations since 2010, 10 of the 18 previously approved events would have failed to meet the proposed State COA for their given year, accounting for TTR and PEP adjustments for that time period. These include significant events such as the 2010 Baja Earthquake, the 2011 Tsunami, and numerous wildfire events, including the 2013 Rim Fire, the 2015 Valley and Butte wildfires, and the December 2017 (Thomas) and Summer 2018 (Carr and Mendocino Complex) wildfires. Most notably, these events had FEMA-concurred preliminary damage assessment totals ranging from $48,598,651 to $103,511,546, with a grand total of nearly $500 million. For context, California's historical COA ranged from $43,694,426 in 2010 to $56,998,553 in 2020.

Beyond the impacts to California's recovery, the proposed rulemaking would also result in hundreds of millions of dollars lost in unrealized Hazard Mitigation Grant Program (HMGP) projects, significantly affecting local jurisdictions' and California's ability to prepare for and mitigate against future events - contrary to the intent of FEMA's strategic plan. Specifically, FEMA acknowledges that Federal mitigation funding provides a significant return on investment by reducing future disaster costs, and highlights research in its 2018 - 2022 Strategic Plan that for every $1 the Federal Government invests in mitigation saves taxpayers an average of $6 in future spending./6

In this regard, severely limiting the California's opportunity for supplemental Federal assistance by significantly raising the State COA is counterintuitive to the proposed Federal cost-savings related to this action. Following the analysis presented above, if these events were not declared due to falling short of the State COA, a total of 177 HMGP projects would never have occurred, accounting for $229,978,909 in lost funding to prepare for and mitigate future events.

Furthermore, FEMA posits that this policy change would "incentivize States to invest more in response, recovery, and mitigation capabilities,"/7 but the aggressive proposal would likely result in less investment as States prepare to shoulder a significant increase in disaster expenditures in their already tight budgets, which are even more stressed due to the effects of the COVID-19 pandemic.

In this context, California already invests extensive funding in local jurisdictions through the California Disaster Assistance Act (CDAA). Since 2010, California has declared 76 State disasters, accounting for nearly $320 million in reimbursement for certain emergency activities and investment in the repair, restoration, or replacement of public real property damaged or destroyed by a disaster./8

2. Localized Impacts and Recent Multiple Disasters Factors

Section 1232 of the DRRA directs the FEMA Administrator to give greater consideration to severe local impacts and recent multiple disasters, and make corresponding adjustments to FEMA's policies and regulations regarding such consideration. However, FEMA believes that the current regulatory text in 44 CFR 206.48(a)(2) enables FEMA to provide adequate consideration of local impacts while ensuring that FEMA does not over step the statutory requirement that an event be beyond State capability./9

Additionally, FEMA also believes that the current regulation is sufficiently flexible to address the DRRA requirements concerning recent multiple disasters.

FEMA updated its disaster declaration request and evaluation templates in May 2019 to allow state and territorial governments to submit additional information regarding severe local impacts and a 12-month disaster history. However, it is concerning that there remains no published methodology on how these factors are evaluated, especially when the estimated cost of the assistance factor has historically proven to be the strongest indicator of whether a State would receive supplemental Federal assistance to an incident./10

Butte County is just one of the many California communities that have faced repeated disasters with long-term effects that are not captured in the 12-month history currently allowed by FEMA. The 2018 Camp Fire ravaged the local housing stock and tax base by destroying over 18,000 structures, including nearly 14,000 homes. Unfortunately, tragedy struck again almost 2 years later when the 2020 North Complex Fire destroyed over 2,300 structures, including over 1,500 homes. Similarly, Napa, Solano, and Sonoma Counties experienced devastating wildfires in the Fall of 2017 that destroyed over 7,000 structures, including over 5,100 homes. Each county was impacted again in 2020 with multiple conflagrations, resulting in the loss of nearly 3,000 structures, including over 1,400 homes. These events demonstrate the need to expand the 12-month disaster window to allow FEMA the opportunity to comprehensively evaluate the full scope of a recent disaster.

As recovery from major disasters typically lasts for many years after the response phase, expanding the 12-month history would allow for the submission of additional information from the State that would provide a more accurate assessment of the impact, and strengthen a major disaster declaration request.

In this regard, greater consideration to localized impacts is also essential and must be emphasized to ensure that severe concentrations of damage in local jurisdictions warrant Federal assistance, even when the State COA is not met.

Conclusion

These proposed changes to the estimated cost of the assistance formula would create a burdensome and unrealistic threshold for California to exceed, nearly doubling the current State COA indicator. As this single declaration factor has historically been given the greatest weight in FEMA's decision-making in recommending that the President declare a major disaster authorizing PA programs, California faces the risk of having only the most catastrophic incidents declared in the future, adversely affecting the response and recovery outcomes for communities denied Federal support.

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Footnotes:

1/ https://www.federalregister.gov/d/2020-27094/p-66

2/ https://www.federalregister.gov/d/2020-27094/p-183

3/ https://www.federalregister.gov/d/2020-27094/p-183

4/ https://home.treasury.gov/system/files/226/TTR-tables-2020.pdf

5/ https://www.census.gov/programs-surveys/popest/technical-documentation/research/evaluationestimates.html

6/ https://www.fema.gov/sites/default/files/2020-03/fema-strategic-plan_2018-2022.pdf

7/ https://www.federalregister.gov/d/2020-27094/p-27

8/ https://www.caloes.ca.gov/cal-oes-divisions/recovery/public-assistance/california-disaster-assistance-act

9/ https://www.federalregister.gov/d/2020-27094/p-138

10/ https://www.federalregister.gov/d/2020-27094/p-66

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The proposed rule can be viewed at: https://www.regulations.gov/document/FEMA-2020-0038-0001

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