By: Sam Biddick
In 2021, Hurricane Ida hit the coast of Louisiana, causing over $2 billion in damages to more than a dozen parishes.[1] On average, Louisiana can expect a serious storm to make landfall on its coastline once every 2.8 years.[2]Climate change threatens to increase this number, and since the 1980s, there have been increasing numbers of active hurricanes and tropical storms in the North Atlantic area.[3] Furthermore, President Trump declared Covid-19 a nationwide emergency on March 13, 2020,[4] which was the first time in history that the United States has declared a nationwide disaster in response to a public health threat.[5] The President’s declaration along with the state declarations of disaster made FEMA’s Public Assistance funding available to these state and local governments.[6]
One of the programs through which FEMA funds recipients of natural disasters and emergencies is through its Public Assistance program, which provides supplemental grants to state, tribal, territorial, and local governments, as well as certain types of private non-profits, so that communities can quickly respond to and recover from major disasters or emergencies.[7] Public Assistance becomes available after a presidential declaration of an emergency or major disaster.[8]Public assistance awards account for a little less than half of all FEMA disaster relief funding, making the program the single largest disaster response program FEMA administers.[9] In order to qualify for these grants and loans, an entity must be either governmental—such as a state, territory, tribe, or municipality—or a private nonprofit organization.[10]The Public Assistance program allows FEMA to reimburse state and local governments and certain types of private nonprofit organizations for the costs of disaster-related debris removal, emergency protective measures to protect life and property, and permanent repair work to damaged or destroyed infrastructure.[11] FEMA can obligate funds once a project meets Stafford Act eligibility requirements. If a project qualifies, FEMA’s Public Assistance will reimburse applicants at least 75% of eligible costs.[12]
For a Public Assistance applicant to be eligible, they must be an entity in the government and non-profit categories described above. Before a government entity can receive a Public Assistance grant, the requesting state or tribe must have a FEMA-approved Mitigation Plan.[13] Additionally, the facility for which they are claiming must be the legal responsibility of that entity (and not under the specific authority of any federal agency); the facility must be located in the designated disaster area; the facility must be damaged by the declared disaster or emergency; and the facility must have been in active use and open to the general public at the time of the disaster.[14] There are further requirements for the work and related costs for applicants. To be eligible for Public Assistance funding, disaster recovery work performed must be required as a direct result of a major disaster event, located within a designated disaster area, and there must be the legal responsibility of an eligible Applicant.[15] The costs of such work must be reasonable and necessary to accomplish the work, compliant with federal, state and local requirements for procurement, and reduced by all applicable credits, such as insurance proceeds and salvage values.[16]
One of the main requirements for FEMA Public Assistance applications is compliance with the Stafford Act, the statutory authority for most Federal disaster response activities, especially as they pertain to FEMA and its programs. FEMA will only grant funds to ‘eligible’ facilities, and eligibility is conditional on insurance.[17] The Stafford Act requires any organization that receives Public Assistance funding from FEMA to obtain and maintain insurance coverage equal to or greater than the amount of eligible damage to the facility that receives Public Assistance, or what is known as the Obtain and Maintain (O & M) Requirement.[18] If an organization is unable to maintain that kind of insurance coverage, the Stafford Act authorizes the Commissioner of Insurance to grant an “Insurance Commissioner’s Certification” (ICC) to reduce the full O & M requirement.[19] The purpose of the ICC is a formal declaration that market conditions prevent the organization from obtaining and maintaining full insurance coverage, but that the organization has obtained the best insurance coverage it can under the circumstances, thus allowing the organization to still be eligible for future FEMA Public Assistance.[20] Eligibility in regards to insurance coverage can cut both ways since FEMA can reduce public assistance awards by the amount of insurance or other financial assistance received by an applicant, as well as by the amount the applicant was theoretically eligible to receive.[21] FEMA’s power to reduce awards or de-obligate funds continues even after a project is completed.[22] Therefore, public entities must be careful and exacting in insurance coverage since under-insured facilities may be deemed ineligible and over-insured facilities risk FEMA revoking obligated funds, possibly even after the project’s completion.
In order to streamline the Public Assistance program, FEMA established a threshold for projects considered “small” and provided for expedited processes for their funding.[23] In 1988, the small project maximum was $35,000, and in 2015, FEMA adjusted the threshold to $120,000.[24] This year, FEMA implemented a regulatory change to increase the Simplified Procedures threshold to $1 million.[25] The $1 million threshold applies to all projects under major disasters and emergencies declared on or after August 3, 2022, as well as to all unobligated PA projects in major disasters and emergencies declared between March 13, 2020, and August 3, 2022.[26]
These simplified procedures and the increased threshold maximum provide a new opportunity for governmental and non-profit organizations in the wake of emergencies and major disasters. For projects that FEMA deems ‘small,’ the simplified procedures remove the requirements for applicants to submit quarterly progress reports.[27] Furthermore, the simplified procedures allow FEMA to fund small projects based on estimates, expediting the receipt of disaster funds.[28]This decision was made to reduce administrative burdens, prevent wasted resources, and to speed up the closure of projects.[29] One of the major benefits for a ‘small’ project is that for small projects, FEMA obligates its entire share of the project up front based on estimates (as opposed to large projects, where FEMA obligates funds as costs are documented by the subgrantee).[30]
In sum, both governmental and private nonprofit entities can greatly benefit from FEMA’s Public Assistance program, and it is of the utmost importance that both entities fully understand and adhere to the requirements imposed by eligible applicants.
[1] Federal Disaster Assistance in Louisiana Exceeds $2 Billion Two Months after Hurricane Ida, FEMA (Oct. 28, 2021), https://www.fema.gov/press-release/20211028/federal-disaster-assistance-louisiana-exceeds-2-billion-two-months-after [https://perma.cc/PM8G-NASN].
[2] David M. Roth, Louisiana Hurricane History, NOAA, 7 (2010), http://www.wpc.ncep.noaa.gov/research/lahur.pdf [https://perma.cc/SHX6-D9BC].
[3] Angela Colbert, A Force of Nature: Hurricanes in a Changing Climate, NASA (June 1, 2022) https://climate.nasa.gov/news/3184/a-force-of-nature-hurricanes-in-a-changing-climate/#:~:text=Since%20the%201980s%2C%20the%20hurricane,are%20from%20natural%20climate%20variations [https://perma.cc/5NCS-XG44].
[4] Covid-19 Disaster Declarations, FEMA, https://www.fema.gov/disaster/coronavirus/disaster-declarations [https://perma.cc/93P6-H4GU] (last visited Sept. 23, 2022).
[5] Robert Nichols et al., Planning for Coronavirus FEMA Public Assistance Program Arbitrations Before The Civilian Board Of Contract Appeals: Guidelines For Local Governments, Tribes, And Private Nonprofit Organizations, 20-9 Briefing Papers 1 (Aug. 2020), https://www.westlaw.com/Document/Ib88b5e31fe3311eab452ff52c66ceaba/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=cblt1.0 [https://perma.cc/UYS4-U653].
[6] Id.
[7] Assistance for Governments and Private Non-Profits After a Disaster, FEMA, https://www.fema.gov/assistance/public [https://perma.cc/3PDP-SX75] (last visited Sept. 23, 2022).
[8] Process of Public Assistance Grants, FEMA, https://www.fema.gov/assistance/public/process [https://perma.cc/D7KY-A33N] (last visited Sept. 23, 2022).
[9] Jared T. Brown & Daniel J. Richardson, FEMA’s Public Assistance Grant Program: Background and Considerations for Congress, Congressional Research Service (Apr. 16, 2015), https://crsreports.congress.gov/product/pdf/R/R43990 [https://perma.cc/S7AQ-HRBY].
[10] See Assistance for Governments and Private Non-Profits After a Disaster, supra note 7; 42 U.S.C. §§ 5170(a)-(b), 5192.
[11] What is FEMA Public Assistance?, FEMA, https://www.fema.gov/press-release/20210318/what-fema-public-assistance#:~:text=FEMA’s%20Public%20Assistance%20is%20a,upon%20their%20policies%20and%20procedures [https://perma.cc/F5QM-PP2F] (last visited Sept. 23, 2022).
[12] Id.
[13] Erin J. Greten & Ernest B. Abbott, Representing States, Tribes, and Local Governments Before, During, and After A Presidentially-Declared Disaster, 48 Urb. Law. 489, 504 (2016).
[14] Public Assistance (PA) Grant Program, Governor’s Off. of Homeland Sec. and Emergency Preparedness, https://gohsep.la.gov/GRANTS-INDEX/DISASTER-RELATED-GRANTS/FEMA-PA [https://perma.cc/N9XJ-MZNS] (last visited Sept. 23, 2022).
[15] Id.
[16] Id.
[17] 44 C.F.R. § 206.253(b) (2022); 44 C.F.R. § 206.252 (2022).
[18] The Stafford Act, la. Dep’t of Ins., https://www.ldi.la.gov/consumers/resources-publications/resources/stafford-act [https://perma.cc/FZ4X-GDXU] (last visited Sept. 23, 2022).
[19] Id.
[20] Id.
[21] 42 U.S.C.A. § 5155(c).
[22] See Office of Facility Planning & Control, CBCA 5393-FEMA, 17-1 ¶ 36,718 (citing Baldwin Cty. Bd. of Supervisors, CBCA 2018-FEMA, 2010 WL 6233669 (Sept. 15, 2010)).
[23] FEMA Increases Public Assistance Small Project Maximum to $1 Million, FEMA (Aug. 4, 2022) https://www.fema.gov/press-release/20220804/fema-increases-public-assistance-small-project-maximum-1-million [https://perma.cc/HP9K-2JSM].
[24] Id.
[25] Id.
[26] Id.
[27] Id.
[28] Id.
[29] Id.
[30] 42 U.S.C. § 5189.