Congressional Research Service Report: 'Disaster Recovery Reform Act of 2018 – Implementation Updates for Select Provisions' (Part 2 of 2)

WASHINGTON, April 27 -- The Congressional Research Service issued the following report (No. R46776) entitled "The Disaster Recovery Reform Act of 2018: Implementation Updates for Select Provisions":

(Continued from Part 1 of 2)

Accountability and Oversight Provisions

Congress has the authority to require executive agencies to take specific actions through legislation, and to oversee executive agencies' fulfillment of assigned responsibilities by using the tools of congressional oversight./154 The following sections describe some of DRRA's provisions that support effective congressional oversight and increase FEMA's accountability and transparency.

Management Costs

Section 1215: Management Costs/155

DRRA Section 1215 amends Section 324 of the Stafford Act to expand the definition of "management cost" to include direct and indirect costs for both the state management costs and project level administrative costs./156 Section 1215 also establishes caps on the percentage of reimbursable management costs. For the Hazard Mitigation Grant Program (HMGP), reimbursable management costs cannot exceed 15% of the grant award, with not more than 10% retained by the state and not more than 5% provided to the sub-grantee. Reimbursable management costs for the PA program cannot exceed 12% of the total award amounts provided under Stafford Act Sections 403, 406, 407, and 502, with not more than 7% provided to the state, and not more than 5% provided to the sub-grantees.

Prior to DRRA's enactment, both FEMA and Congress debated various approaches to providing funding for the administrative costs associated with federal disaster assistance. The processes and procedures utilized by federal, state, and local agencies to determine eligible management costs related to disaster assistance generally includes two types of management costs: (1) state-level management costs associated with administering all the federal disaster assistance provided under the Stafford Act, and (2) sub-grantee management costs specific to individual eligible projects.

Management costs can generally be further broken down by costs associated with specific funding streams provided by the Stafford Act, such as the PA program and the HMGP.

Consequently, state grant recipients traditionally have management costs associated with administering funding provided by PA and HMGP broadly, and sub-grantees traditionally have management costs associated with specific projects awarded funding under PA and HMGP. A history of the rate calculations for PA and HMGP is included in Appendix A.

The implementation of the management cost provisions in Section 1215 of DRRA deviated from past FEMA policies on management costs for Stafford Act programs in some areas, while aligning with past practice in other areas.

* First, in implementing DRRA provisions, FEMA deviated from previous definitions of "management costs" by expanding the definition to include both state administrative costs and project-specific administrative costs. As discussed, this appears to be the first time FEMA defined "management costs" to be all encompassing of both state and sub-grantee administrative costs.

* Second, DRRA implementation deviated from past procedures by establishing a cap on the percentage rate for management costs rather than setting a flat percentage rate. Both the Disaster Mitigation Act of 2000 (DMA2K, P.L. 106390) and the FEMA voluntary, alternative recovery policy, Public Assistance Alternative Procedures for Direct Administrative Costs (DAC), provisions established a flat percentage rate, while DRRA set caps for the amounts that could be reimbursed for management costs.

* Third, DRRA implementation deviated from past practice by using the total PA and HMGP amount provided to the state, after insurance and other reductions, as the base amount for the percentage calculation. DMA2K applied the flat percentage to the federal share only, while a new voluntary, alternative recovery policy issued by FEMA used the full eligible project costs at the sub-grantee level, prior to insurance reductions./157

* Finally, FEMA deviated from previous approaches by not promulgating the management cost rates in regulations. In previous changes in the law discussed in more detail in Appendix A, FEMA issued both a Notice of Proposed Rulemaking and an Interim Final Rule in the Federal Register promulgating the proposed management cost rates./158

According to FEMA's latest DRRA implementation report, Section 1215 is "Implemented."/159 However, FEMA has not issued any notices in the Federal Register regarding implementation of DRRA's management cost percentage cap provisions. According to the FEMA DRRA Annual Report 2019 and other FEMA documents, as of February 2021, FEMA had only issued grant program guidance to implement the DRRA Section 1215 provisions./160 Unlike federal regulations, grant guidance can be changed by FEMA at any time and without public comment.

While agency discretion to adjust grant policy guidance without traditional rulemaking requirements may help FEMA adapt to the challenges created by the pandemic, only amending internal policy and documents, such as grant guidance, reduces transparency and accountability in DRRA implementation.

The implementation of DRRA management cost provisions in Section 1215 aligned with past FEMA policies and practices in some ways. First, FEMA continues to allow two types of management cost reimbursements: (1) the costs directly associated with specific PA or HMGP projects that can be itemized as part of the allowable project costs (i.e., project-specific management costs); and (2) the more general management costs associated with administration of federal funding that are not already reimbursed as project-specific expenses. Notably, however, the current implementation represents the first time that both types of management cost reimbursements have been combined under the expanded definition of "management costs" set forth in DRRA. Prior to DRRA, there was a clearer distinction between project-specific management costs and general management costs./161

The implementation of the expanded definition of "management costs" raises the risk of duplication of payments. There is also the possibility of increased administrative burden on the states to ensure that sub-grantees do not receive reimbursements twice for the same management cost by claiming the cost under a general management cost category and a project-specific management cost category. DRRA implementation also aligns with the past practice of providing management cost reimbursements separately for PA and HMGP. While FEMA initially proposed consolidating PA and HMGP management costs into a single grant award to the states, ultimately, the interim final rule continued to separate PA and HMGP management cost reimbursements and FEMA implemented different flat percentage rates depending on the program.162 While separating management costs by program possibly increases state and sub-grantee administrative burdens, combining the programs may create other concerns, such as reducing state flexibility in the use of funds and possibly generating divisive policy at the state and sub-state level.163 Considerations related to how the COVID-19 pandemic may affect the implementation of the DRRA Section 1215 can be found in the "DRRA Section 1215 Management Cost Caps During the Pandemic" section.

Timely Closeout Incentives

Section 1221: Closeout Incentives/164

Section 1221 of DRRA amends Section 705 of the Stafford Act to add a new section addressing challenges to disaster assistance grant closeouts by providing FEMA's Administrator authority to develop incentives and penalties to encourage state, local, and tribal governments to close out disaster assistance grants in a timely fashion. DRRA Section 1221 further directs FEMA's Administrator to issue regulations to implement procedures that "improve closeout practices and reduce the time to close disaster program awards."/165

According to the FEMA DRRA Annual Report 2019, this section's implementation is in progress./166 However, FEMA has developed incentives and penalties for Stafford Act program grant closeouts in previous grant guidance. In 2017, FEMA issued guidance on PA Alternative Procedures for direct administrative costs for eligible projects that provided an additional 1% closeout incentive to sub-grantees. Under the PA Alternative Procedures, sub-grantees could opt to receive management cost reimbursements based on 4% of the full eligible project costs prior to insurance reductions, and could receive the additional 1% closeout incentive if the projects were closed out within 90 days of the end of the period of performance./167 FEMA has also utilized penalties as a mechanism to encourage timely closeout. In 2020, FEMA issued grant guidance that withheld up to 3% of eligible management cost reimbursements from grantees until closeout documents were submitted by the grantee./168 FEMA may consider similar approaches in the implementation of DRRA Section 1221.

FEMA Accountability and Oversight

Section 1210: Duplication of Benefits/169

Section 312(a) of the Stafford Act prohibits "financial assistance to persons, business concerns, or other entities suffering losses as a result of a major disaster or emergency ... [for] which [they have] received financial assistance under any other program or from insurance or any other source."/170 Further, Stafford Act Section 312(c) states that the recipient of duplicative assistance is liable to the United States and that the agency that provided the duplicative assistance is responsible for debt collection.

While Section 312 is intended to prevent waste, fraud, and abuse, its application has led to financial hardships for some disaster victims. This can occur when individuals and households receive multiple sources of assistance to recover from an incident. For example, if a disaster victim has recovery needs that are not covered by insurance, they can receive assistance from FEMA and/or the Housing and Urban Development's (HUD's) Community Development Block Grant--Disaster Recovery (CDBG-DR), often in the form of a grant, as well as a disaster loan from the Small Business Administration's (SBA) Disaster Loan Program./171 The use of multiple recovery sources is allowable provided the assistance does not exceed the recipient's unmet recovery need. Generally, a duplication of benefit occurs when an agency provides disaster assistance that was another agency's primary responsibility, and the agency with primary responsibility later mistakenly provides recovery assistance for the same incident. Additionally, duplication may occur when multiple applicants in a household receive an award for the same item or type of assistance from another program, from insurance, or from any other recovery source.

In some cases, disaster victims have received repayment notifications long after they had already applied their assistance for recovery purposes./172 For some, repaying or appealing the duplication can be financially and emotionally burdensome. Critics argue that unintentional duplication stems, in part, from the procedural guidance outlined in 44 C.F.R. Sec.206.191 (known as a "delivery sequence"). The delivery sequence identifies duplication of benefits, and determines which agency must be repaid for the duplication. According to critics, the delivery sequence is confusing and lacks specificity. For example, HUD's CDBG-DR Program is often duplicated with other assistance sources, but is not listed in the delivery sequence (see Figure 1).

Content omitted: Figure 1. Delivery Sequence

To improve clarity and reduce confusion, Congress passed DRRA Section 1210(5)(A), requiring FEMA's Administrator, in coordination with relevant federal agencies, to provide a report with recommendations to improve "the comprehensive delivery of disaster assistance to individuals following a major disaster or emergency declaration."/173 On June 22, 2020, FEMA provided the report to Congress addressing each of the requirements, which are summarized below./174

Coordination Between Agencies

According to the report, FEMA has taken steps to improve disaster assistance coordination efforts between agencies. Some of the steps include:

* incident planning and exercises to enhance interagency collaboration and coordination and identify areas in need of improvement;

* unity of effort webinars on Emergency Support Function #6, the coordinating structure led by FEMA that organizes agencies and resources for mass care, emergency assistance, temporary housing, and human services;/175

* planning and leading the National Mass Care Exercise to ensure disaster assistance providers are collaborating and identifying potential flaws in assistance delivery;/176 and

* holding Individual Assistance (IA) symposiums that bring together federal, state, tribal, and territorial officials to enhance their knowledge of IA programs and policies and to build capacity for implementing IA during disaster operations.

Clarification of the Delivery Sequence and Interpretation of Stafford Act Section 312

The report did not substantively change the delivery sequence. Rather, it elaborated on the existing structure by describing in detail which assistance programs fall within each delivery sequence. The report also provided an organizational chart of the delivery sequence (see Figure B-1).

FEMA reported the following interpretations of Stafford Act Section 312:

* FEMA views individuals applying for IA with insurance coverage as being ineligible for a waiver under Section 1210 of DRRA;/177 and

* a CDBG-DR grantee is prohibited from making a blanket determination that CDBG-DR assistance does not duplicate another category or source of assistance. The Stafford Act requires an individualized review of each applicant to determine that the amount of assistance will not cause a duplication of benefits by exceeding the applicant's unmet needs. The report also stated that "CDBGDR grantees have discretion to develop policies and procedures that tailor their duplication of benefits analyses to their own programs and activities so long as the grantee's policies and procedures are consistent with duplication of benefits requirements."/178

Communications

According to the report, FEMA has taken or plans to take steps to improve communications to disaster assistance applicants. These include:

* developing standardized communication templates to provide information to disaster survivors in a more timely, relevant, and comprehensible manner;

* redesigning the FEMA.gov website to ensure it provides correct information using the most up-to-date and easy-to-use technology; and

* translating information on the FEMA website and news releases into other languages (including American Sign Language), if necessary, and activating language interpreters.

The new Computer Matching Agreements (CMA) with FEMA, HUD, and SBA clarify data sharing agreements between the agencies and address duplication of benefits./179 In addition to the CMA, in 2019, HUD launched a computer system that enables FEMA "to automatically transfer survivor data to HUD on a re-occurring basis." The system also "allows HUD to send data to FEMA about assistance that HUD has provided to an applicant in order to prevent duplication of benefits." Further, the system allows states, tribes, and territories to access the shared data./180 FEMA also "granted a small number of SBA employees full access to the FEMA National Emergency Management Information System (NEMIS) for additional data that may be needed during their loan review process," and enabled SBA to view specific FEMA information to determine which benefits those disaster survivors are receiving from FEMA./181 FEMA's data sharing efforts may help prevent duplication of benefits from occurring and make duplication notifications timelier. Greater delivery sequence detail may also help clarify agency roles and responsibilities with respect to duplication./182

Section 1224: Agency Accountability/183

Section 1224 of DRRA amends Title VI of the Stafford Act to add a new subsection on agency accountability. The new subsection requires the FEMA Administrator to publish information on select PA grant awards, mission assignments, monthly Disaster Relief Fund (DRF) obligations, select federal contracts, and select state-level contracts executed using PA funds to the FEMA website./184 According to FEMA, the agency already posts the required data and information on the FEMA.gov website, and FEMA updated its DRF monthly report to include the required information./185

The DRRA provisions requiring federal and grantee contract information remain in progress as FEMA updates its grant management systems to collect the required contract information./186 FEMA began an extensive grant system modernization initiative in 2015 when the agency implemented the Grants Management Modernization Program (GMM)./187 As part of GMM, FEMA is developing an IT platform known as FEMA Grants Outcomes (FEMA GO) that will be utilized by a variety of grant stakeholders. Even though the GMM has been underway for approximately six years, it is unclear when FEMA will complete the grant management system updates sufficient to collect and report on the contract data required by Section 1224.

Audit and Review Requirement for Reimbursement

Section of 1225: Audit of Contracts/188

Section 1225 of DRRA restricts FEMA's Administrator from reimbursing states, local, or tribal governments and certain nonprofit organizations for costs associated with activities pursuant to a contract that prohibits FEMA's Administrator or the Comptroller General of the United States from auditing or reviewing all aspects of the contract./189 According to FEMA, this provision has been implemented./190 FEMA updated the Procurement Disaster Assistance Team (PDAT) Field Manual in July 2020 to reflect this requirement./191

Prohibition on Recoupment

Section 1216: Flexibility/192

DRRA Section 1216(a) authorized FEMA to waive debts owed by individuals who received assistance through the Individuals and Households Program (IHP), which is a form of Individual Assistance, provided the debt does not involve fraud, a false claim, or misrepresentation by the debtor or party having an interest in the claim,/193 if certain requirements are met (see the "Four Required Conditions for a Waiver" text box for more information)./194 This expanded FEMA's discretion with regard to debt collection.

Additionally, DRRA Section 1216(b) established a three-year statute of limitations on FEMA's ability to recoup IHP assistance received more than three years before FEMA provided notice of intent to recoup the funds./195 According to a House Transportation and Infrastructure Committee report, this provision is intended to "ensure that FEMA initiates any collection actions as quickly as possible ... and provide more certainty to individuals recovering from disasters."/196

To support its implementation of DRRA Sections 1216(a) and (b), FEMA issued an instruction on May 14, 2019, updating its recoupment process for IA recipients./197 The instruction provides specific guidance on how a debtor can satisfy the four elements that must be met before a waiver may be granted per DRRA Section 1216(a)./198 It also notes, per DRRA Section 1216(b), that the "IAD [Individual Assistance Division] will prioritize reviews of potential debt nearing the end of the 3-year period."/199

* * *

Four Required Conditions for a Waiver

According to FEMA's "Instruction 116-1-2: Individuals and Households Program Recoupment," the following four conditions must be met before a waiver may be granted (emphasis was added to the quoted text below):

1. "The covered assistance was distributed based on FEMA error. Even in circumstances where no debtor fault exists, not all ineligible assistance results from FEMA error." For example, FEMA payments provided in advance of other funds, such as insurance, would not be considered to be assistance that was distributed based on FEMA error.

2. "There was no fault on behalf of the debtor. 'Fault' exists if, considering all circumstances, it is determined that the debtor knew or should have known that an error existed but failed to take action to have it corrected." For example, fault could be the result of a direct or indirect act or omission by the debtor that was "erroneous or inaccurate or otherwise wrong." Fault is also presumed if the debtor misuses FEMA assistance, including to pay expenses not caused by the disaster, or using funds "in a manner inconsistent with their intended use."

3. "The collection of the debt would be against equity and good conscience. ... The legal obligation to pay a debt to FEMA may be overcome by other consideration if enforcement of the debt would be unfair to the point of violating equity and good conscience." For example, if the collection of the debt would result in undue hardship, such as by depriving the debtor of basic necessities, it may be considered against equity and good conscience.

4. "There is no indication the debt involves fraud, the presentation of a false claim, or misrepresentation by the debtor or any party having an interest in the claim."

* * *

Additionally, FEMA added a waiver notice to all debt recoupment letters to instruct recipients on the waiver process./200 The information provided to individuals focuses on affirmations that they were not at fault (i.e., there was no "Misrepresentation," "Failure to Disclose," "Knowledge of Error," "Misuse," or "Other Fault"), and that collection of the debt would be against equity and good conscience (i.e., they must show they "gave up a benefit because of the overpayment, or ... changed ... [their] position for the worse because of the overpayment" or "[c]ollection of the overpayment would be unduly difficult, grossly unfair, or would prevent ... [them] or [their] family members from obtaining basic necessities")./201

DRRA Section 1216(c) changed the start of the three-year PA statute of limitations,/202 such that new administrative actions to recover payments cannot be initiated "after the date that is 3 years after the date of transmission of the final expenditure report for project completion [emphasis added]"/203 (rather than the final expenditure report for the disaster or emergency)./204 Prior to DRRA, FEMA could potentially recoup funding from projects completed and closed because the disaster was still open. The project-by-project statute of limitations may ease the administrative and financial burden that the management of disaster recovery programs places on state, territorial, and Indian tribal governments because it creates certainty as to the projects that may be subject to recoupment. It may also incentivize the timely closeout of PAprojects by state and local governments, which may also ease FEMA's administrative and financial burdens./205

To support its implementation of DRRA Section 1216(c), FEMA is currently updating its "Recovery Policy: Stafford Act Section 705, Disaster Grant Closeout Procedures."/206 The public comment period for the draft policy ended on December 10, 2020, and as of February 2021, FEMA was adjudicating the public comments, which are focused on questions such as "what will constitute certification by the grantee (recipient) of project completion that will represent the statute of limitations start date, for both large and small projects."/207 Congress could continue monitoring FEMA's efforts to update its guidance to reflect the change to the statute of limitations, as the DHS OIG recommended./208

Section of 1237: Certain Recoupment Prohibited/209

DRRA Section 1237 directs FEMA to deem certain disaster assistance to have been "properly procured, provided, and utilized" if FEMA deployed a technical assistance contractor to assist the local government with project activities and the technical assistance contractor provided inaccurate information to the local government, and the local government relied on the inaccurate information to make project management decisions./210 In cases where the project management decisions made under such conditions result in the withdrawal or de-obligation of disaster assistance after the DHS OIG conducts an audit of project costs, DRRA Section 1237 directs FEMA to restore the funding to the local government./211

According to FEMA, "this provision applied to a single instance for a single applicant in a single event"/212 and the provision was implemented pursuant to the agency directing the relevant FEMA Region to implement this provision for relevant PA projects, and by FEMA reinstating relevant PA project worksheets./213 Although it appears that FEMA has interpreted DRRA Section 1237 to apply solely to a specific recoupment,/214 the text of DRRA Section 1237 appears to be broad enough that should the provision's criteria be met in a future recoupment instance, FEMA would have the authority to restore funding. FEMA acknowledged that this could be the case, and that future instances where DRRA 1237 may apply will be evaluated on a case-by-case basis./215 Thus, FEMA's implementation of this provision is limited to a specific recoupment, and Congress may wish to consider whether to require FEMA to provide guidance that broadly implements DRRA Section 1237.

Even though Section 1237 provisions do not expressly stipulate an assumption of good faith on the part of relevant grant recipients, prohibitions on recoupment may encounter challenges when a grant recipient may be subject to prosecution. For example, in June 2020, the U.S. Department of Justice intervened in a lawsuit involving a FEMA technical assistance contractor who received more than $300 million under a FEMA contract to conduct site evaluations, prepare and review damage estimates, and make applicant eligibility determinations for PA funding./216 According to the U.S. Attorney's Office, the technical assistance contractor was "responsible for providing FEMA with truthful and accurate information," but the lawsuit alleges that the contractor knowingly submitted false claims on behalf of applicants seeking PA program funds./217 Additionally, the lawsuit alleges that "certain applicants falsely certified the accuracy of the information and are thus jointly and severally liable for false claims prepared and submitted by" the technical assistance contractor on their behalf. Although there has yet to be any determination of liability in that particular case, the lawsuit raises questions regarding implementation of recoupment prohibition provisions in general, and the extent to which such prohibitions might or might not protect disaster assistance recipients who may have knowingly submitted false claims for disaster funding.

Policy Considerations

The following sections address some additional potential DRRA implementation challenges and considerations that may be of interest to Congress, including enforcement of DRRA's implementation deadlines as established in the enacted legislation, and considerations related to DRRA's implementation in light of the federal response to the COVID-19 pandemic.

Enforcement of Implementation Deadlines

FEMA's Administrator is identified as the officer charged with implementing many of DRRA's provisions. In some cases, other federal entities or officers, such as the DHS OIG, are assigned responsibility for implementation. Many of the DRRA provisions do not include specific deadlines; however, in some instances, FEMA's Administrator or another federal entity is required to take specific actions (e.g., promulgation of regulations) by a specific date (e.g., not later than two years after the date of DRRA's enactment).

As noted above, some of DRRA's implementation deadlines have passed, yet FEMA is still working toward implementation. In some cases, FEMA is working through final comments before issuing its final guidance. In other cases, FEMA's ability to implement DRRA's provisions may be affected by the change in Administration that occurred following the inauguration of President Joseph R. Biden Jr. in January 2021./218 For example, FEMA extended the comment period for the rulemaking/219 undertaken pursuant to DRRA Provision 1239, citing the January 20, 2021, Biden Administration memorandum entitled "Regulatory Freeze Pending Review."/220

There are various avenues that Congress or other actors may pursue to enforce deadlines established in legislation, including congressional oversight and judicial review./221 As explained in CRS Report R45336, Agency Delay: Congressional and Judicial Means to Expedite Agency Rulemaking:

"Congress has a number of tools that it can use to combat agency delay. To encourage agencies to act in a timely fashion, Congress may set nonbinding time frames or statutory deadlines for particular agency actions, or impose penalties on agencies should they fail to meet those deadlines. Even if Congress does not impose any specific timing requirements for a required agency action, the agency still must act within a "reasonable time" under the [Administrative Procedures Act].

"Persons alleging unreasonable delay by agencies may sue in court to compel agency action. However, the recourse such individuals will have, if any, depends on the statutory scheme and the severity of the delay. In the absence of specific deadlines, most courts employ a multifactor balancing test to determine whether the agency's delay is "unreasonable"; this test examines, among other things, the length of the delay, the importance of the regulation at issue, and the interests harmed by the delay. Courts are generally deferential to agencies in this analysis. In other situations, such as when Congress has imposed a specific statutory deadline, courts are more willing to compel agency action, with some courts holding that an order compelling agency action is mandatory whenever a statutory deadline is violated."/222

To enforce DRRA's implementation deadlines, Congress has and may continue to use its oversight authority, including by conducting hearings,/223 and requiring FEMA to report on the agency's implementation progress for specific provisions. DRRA includes many such reporting requirements./224

DRRA Implementation Considering the COVID-19 Pandemic

The COVID-19 pandemic has presented significant challenges for all 50 states, 5 territories, the District of Columbia, and the federally recognized Indian tribal governments, as well as local governments, private and nonprofit organizations, and individuals and households. Because DRRA was enacted prior to the onset of the pandemic, the pandemic environment may affect the application of some of DRRA's provisions in unforeseen ways. Select examples of this are included below.

DRRA Section 1234 Available BRIC Funding Based on the Estimated Aggregate Amount of Funding Awarded for COVID-19

Despite the substantial increase in overall funding for pre-disaster mitigation, post-disaster mitigation, realized in the Hazard Mitigation Grant Program (HMGP) and Public Assistance (PA), still receives more resources. GAO found that most of the hazard mitigation funding obligated by FEMA from FY2010 though FY2018 was for post-disaster mitigation. Of the approximately $11.3 billion obligated during that period, 88% ($10 billion) was for post-disaster grants through HMGP and PA. FEMA's competitive pre-disaster grant programs, FMA and PDM, accounted for about 12% ($1.3 billion) of the total./225

The 6% Building Resilient Infrastructure and Communities (BRIC) set-aside has increased pre-disaster mitigation funding significantly. However, post-disaster mitigation, awarded through both HMGP and PA mitigation measures funded under Section 406 of the Stafford Act, still receives far more resources./226 Because HMGP and PA mitigation funds are only available to states following a major disaster declaration, they cannot be targeted at areas with greater risk of future losses. As a result, disasters determine, to a great extent, where the federal government invests in disaster resilience. This emphasis on post-disaster funding may not incentivize states sufficiently to mitigate future risks prior to a disaster occurring./227 The funding differential between pre-disaster and post-disaster mitigation could be further widened if FEMA were to award HMGP funding for the COVID-19 disaster declarations (described below)./228 Additionally, as described in more detail in the following section, FEMA's proposed rulemaking under DRRA Section 1239 could reduce available funding for both pre- and post-disaster mitigation.

Currently, because of the COVID-19 disaster declarations, the amount of funding set aside in the Disaster Relief Fund for pre-disaster mitigation is significantly larger than FEMA's initial expectations when the BRIC program was established. FEMA's initial estimates suggested that as much as $3.7 billion could be provided for BRIC as a result of the COVID-19 major disaster declarations./229 As of February 28, 2021, there was $1.055 billion set aside in the DRF for pre-disaster mitigation./230

Hazard Mitigation Grant Program Funding for the COVID-19 Disasters

HMGP funding is awarded as a formula grant triggered by a major disaster declaration or FMAG declaration./231 Virtually every state, territory, and tribal government requested HMGP funding for the COVID-19 disasters. These requests have been under review since March 2020,/232 despite support from congressional offices to approve these requests,/233 and are still under review by the Biden Administration./234 According to FEMA, there are no other instances of a major disaster declaration where HMGP funding was not awarded./235

Additional information on the BRIC program is included in the "Section 1234: National Public Infrastructure Pre-Disaster Hazard Mitigation" section.

DRRA Section 1239 Rulemaking and the Adoption of Total Taxable Resources

As noted, the ongoing COVID-19 pandemic and its lasting effects may affect some DRRA provisions once they are implemented. For example, the rule revising PA cost of assistance estimates required by DRRA Section 1239 proposes to "increase the per capita indicator to account for increases in inflation ... and to adjust the individual States' indicators by their Total Taxable Resources (TTR)."/236 FEMA began estimating how this new rule may affect SLTT governments before the onset of the COVID-19 pandemic. The pandemic response efforts and the economic effects of the pandemic have negatively affected SLTT government finances,/237 and may affect their TTR. TTR data, however, lags two years behind the current calendar year./238 Depending on when the rule is finalized, the TTR data may or may not accurately reflect the state's ability to manage disaster response and recovery without federal assistance.

Additionally, the guidance for the recently updated rule for evaluating a governor's request for IA pursuant to a major disaster declaration accommodates this challenge by permitting states to provide supplemental information explaining why TTR data may not accurately reflect the state's ability to respond to and recover from the disaster./239 It is unclear how this potential challenge may be resolved for the PA rule.

Given these factors, Congress is likely to consider how the proposed higher PA thresholds may affect the likelihood of a major disaster being declared, particularly for states with relatively high reported income flows./240 Further, Congress may review the public meetings and comments on the proposed rulemaking to consider the burdens placed on SLTT governments.

Additional information can be found in the "Section 1239: Cost of Assistance Estimates" section.

DRRA Section 1215 Management Cost Caps During the Pandemic

DRRA Section 1215 establishes caps on state and sub-state grantee reimbursements for management costs./241 FEMA implemented this provision by issuing several grant program guidance documents./242 Notably, these documents were issued before the COVID-19 pandemic caused significant changes in state and local government disaster response activities. Establishing caps on management cost reimbursements at both the state and the sub-grantee level potentially reduces the flexibility for state and local governments to respond to unexpected disaster events.

For example, prior to the pandemic, FEMA issued guidance on the DRRA management cost provisions that provided the following list of management activities that would be eligible for reimbursement:

These activities may include, but are not limited to:

a. Preliminary Damage Assessments,

b. Meetings regarding the PA Program or overall PA damage claim,

c. Organizing PA damage sites into logical groups,

d. Preparing correspondence,

e. Site inspections,

f. Travel expenses,

g. Developing the detailed site-specific damage description,

h. Evaluating Section 406 hazard mitigation measures,

i. Preparing Small and Large Projects,

j. Reviewing PWs,

k. Collecting, copying, filing, or submitting documents to support a claim,

l. Requesting disbursement of PA funds,

m. Training./243

The list of activities detailed in this guidance reflects the types of grant management activities that states and sub-grantees would undertake in administering PA grant projects. However, administering FEMA funding provided for the pandemic presents unique management challenges that likely increase the overall disaster grant management costs incurred by states and subgrantees. For example, in November 2020, FEMA issued a policy that states "work and associated costs to support the distribution and administration of COVID-19 vaccines may be eligible for PA."/244 Given that this is the first time PA funding has been used for nationwide vaccine distribution, the associated management costs for such activities is unclear. Generally, management costs are higher when implementing a new program compared to administering awards under an existing program.

Although FEMA officials may broaden the list of eligible management activities to accommodate unexpected expenses, the statutory cap on management costs prohibits the reimbursement of any management costs in excess of the capped amount. Consequently, it is possible that unusual management expenses associated with the pandemic may not be reimbursed. For example, there were likely unforeseen administrative costs associated with state and local grant management personnel administering grant projects while on mandatory telework. When combined with traditional disaster assistance grant management costs, these additional costs may cause overall management costs to exceed DRRA's management cost caps.

Additionally, the pandemic has not necessitated large-scale repair and replacement construction work, as could be needed following a natural disaster. Instead, it has required the purchase of supplies, such as personal protective equipment (PPE), which are smaller by comparison, but may require similar levels of administration and management costs. The administrative burden of managing the pandemic costs therefore may exceed traditional natural disaster levels, while the total dollar amount of grant awards may be lower under a pandemic disaster declaration. Given that the allowable reimbursement for management costs is based on the total award amount, it is possible that management costs to administer federal disaster assistance during a pandemic exceed the allowable amount under the DRRA management cost percentage caps. Congress may wish to consider whether waiver authority for the FEMA management cost caps would be necessary for events such as a pandemic.

Concluding Observations

The full effects of recently issued guidance and policies and regulatory changes remain to be determined. For example, the first application period for the new Building Resilient Infrastructure and Communities Grant Program closed at the end of January 2021, and any state, territory, or federally recognized tribe that had a major disaster declaration in the seven years prior to the application start date was eligible to apply for a portion of BRIC's $500 million--subject to the program funding caps. The COVID-19 major disaster declarations alone ensured the eligibility of all 50 states, 5 territories, the District of Columbia, and 1 federally recognized tribal government in FY2020. It remains to be seen which entities will be awarded BRIC funding,/245 and whether the projects completed with the funding will address BRIC's pre-disaster mitigation priorities.

Congress may continue overseeing the implementation of DRRA's provisions through hearings or other inquiries to ensure that the post-DRRA changes to disaster assistance programs and policies fulfill congressional intent. Congress may also review the effectiveness and impacts of FEMA's DRRA-related regulations and policy guidance, including assessing the effects of DRRA-related changes to federal assistance for past and future disasters, and other grant programs. The implementation of some DRRA provisions may directly affect the implementation of other provisions. For example, there could be a connection between FEMA's Public Assistance rulemaking and funding available for pre-disaster mitigation. FEMA has begun the rulemaking process to revise the factors that are evaluated when determining whether to authorize a request for a major disaster declaration authorizing PA. Although DRRA requires FEMA to give greater consideration to severe local impacts and recent disasters when considering PA requests, the rulemaking is focused on revising the PA cost of assistance estimates. FEMA proposed to increase the cost of assistance thresholds that must be met in order for states and territories to receive PA for permanent work. As a result, less costly disasters may not receive PA. It remains to be determined whether this may, in fact, reduce the number of incidents that are determined to be eligible for a major disaster declaration because the rule has not yet been issued and the President retains discretion to approve such requests. Ultimately, however, if the number of declared major disasters decreases, federal assistance for state, territorial, tribal, and local response and recovery could decline, which, in turn, could reduce funding for programs such as BRIC that receive a percentage of the estimated aggregate amount of funding awarded./246 Thus, the effect of the PA rulemaking could directly affect funding to support pre-disaster mitigation and resiliency.

Disaster preparedness, mitigation, prevention, protection, response, and recovery operate on a sort of cyclical continuum,/247 and some DRRA provisions, such as those just mentioned, are interconnected in their potential effects. Issues of continuing congressional interest include the interconnected effects of these provisions as they are implemented, and whether these regulatory changes create outcomes that meet congressional intent. As novel disasters arise, Congress may continue evaluating whether the Stafford Act and FEMA have the authority and capacity to adequately support disaster response and recovery.

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View figure, footnotes and full text of the report at https://crsreports.congress.gov/product/pdf/R/R46776