For easy printing, download the Disaster Recovery, Hazard Mitigation, and the Stafford Act Issue Brief.
Background
Most emergencies are handled at the local level, without assistance from the state or federal government. However, major disasters or emergencies disrupt the normal functioning of governments and communities and, so special federal measures are necessary and appropriate to expedite the rendering of aid, emergency services, and recovery. This public assistance is primarily provided and overseen by the Federal Emergency Management Agency (FEMA) under authorization of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Pub. Law 93-288, as amended). The Stafford Act also authorizes FEMA to provide assistance in planning for disasters and emergencies and in disaster mitigation planning, design, and investments.
Categories of assistance that public power utilities generally receive include debris removal, emergency protective measures, and utility restoration and reconstruction. Public power utilities also receive assistance in planning and design for hazard mitigation and in making disaster mitigation investments. However, given the appropriate life-safety emphasis on getting power restored as quickly as possible, the ability to pause to consider how to rebuild systems with increased resiliency is often impaired. As a result, while FEMA has provided roughly $12 billion in hazard mitigation funding since 1989, just $435 million was for electric utility protective measures—and of that $435 million, roughly $185 million was for public power utility protective measures (rural electric cooperatives received the remaining $250 million), according to an American Public Power Association (APPA or Association) analysis of FEMA data.
In some instances, FEMA will decide that public assistance was not appropriate after payment has already been made. In those instances, it can seek to recover (or “deobligate”) such payments either directly or through an administrative offset of future federal payments. Deobligation can result because FEMA has discovered that the type of project is not appropriate, that the payment was duplicative, or quite often, because the recipient failed to follow federal procurement rules when making purchases with assistance funds. These rules can be found in the Federal Acquisition Regulation (FAR), a 1,917-page document that includes requirements related to: competition and acquisition planning; contracting methods and contracting types; socioeconomic programs; general contracting requirements; special contracting categories; and contract management. Meeting these requirements is difficult in any instance, more so when normal governmental functions have been disrupted by a major disaster or emergency. Nonetheless, FEMA routinely seeks to deobligate funds based upon failure to follow these rules. In fact, the Department of Homeland Security’s Office of Inspector General has said that if procurement requirements are not followed, FEMA can and should seek deobligation “even if costs were otherwise reasonable, and the grantee or subgrantee otherwise accomplished the purpose of the grant” (OIG-16-126-D, Sept. 2, 2016).
Currently, FEMA must notify a recipient within three years of the completion of disaster recovery if it wants to make a direct recovery. There is, however, no time limit on administrative recoveries. As a result, states, tribal governments, and localities, including public power utilities, can find FEMA coming back for funds long-since spent many years after the disaster. FEMA seeking deobligation a decade after the fact is not unheard of.
Congressional Action
More than 150 bills amending the Stafford Act have been introduced in the 115th Congress, but except for seven bills providing supplemental appropriations for FEMA, none have been signed into law. Of particular interest to public power is the Disaster Assistance Improvement Act (H.R. 1678/S. 709), introduced in March 2017 by Rep. Lois Frankel (D-FL) and Senator Bill Nelson (D-FL). (On July 27, 2017, Senator Marco Rubio (R-FL) introduced substantially similar legislation (S. 1641).) The bill would amend the Stafford Act to provide that that the current-law three-year statute of limitations applies to both direct and administrative recoveries. The bill would also amend the Stafford Act to have the “clock” for the three-year limit begin upon the transmission of the final expenditure report for the specific project (rather than the final report for an entire disaster). H.R. 1678 was passed by the House unanimously on May 23, 2017. Since then, the provisions of H.R. 1678/S. 709 have been incorporated into several bills, including the Disaster Recovery Reform Act (DRRA). In turn, DRRA has been included in H.R. 4, the FAA Reauthorization Act of 2018 (which passed the House on April 27, 2018); and has been passed by the Senate Committee on Homeland Security and Governmental Affairs as S. 3041.
DRRA is primarily focused on improving disaster mitigation for residential structures. However, in addition to the three-year statute of limitations provision, it includes a number of provisions of interest to public power, including a specification that qualifying mitigation investments can include “installing electrical transmission or distribution utility pole structures with poles that are resilient to extreme wind and combined ice and wind loadings.” DRRA also requires FEMA to provide annual guidance and training to states, tribal governments, localities, first responders, and utility companies on the need to prioritize assistance—including power restoration—to hospitals, nursing homes, and other long-term care facilities. The latter is not particularly necessary—public power utilities already know to prioritize these facilities. However, in so far as FEMA guidance states that electric power restoration is critical to these facilities, FEMA itself may do a better job of working to facilitate power restoration. Finally, DRRA also allows aid recipients to request an arbitration process for disputes with FEMA over eligibility for assistance or repayment of assistance.
American Public Power Association Position
APPA strongly supports a three-year statute of limitations for direct and administrative recoveries of public assistance grants. Good stewardship of public resources is one of the reasons public power utility retail rates are lower—and reliability is higher—than for any other electric utility sector. Seeking to recoup FEMA grants years after the fact goes beyond good stewardship and effectively shifts the cost of federal disaster assistance onto the backs of states and localities, oftentimes for simple record keeping errors. In contrast, a real three-year statute of limitations holds recipients accountable for meeting the terms of their grants, while also holding FEMA accountable for completing its review of such grants within a reasonable period of time.
Additionally, APPA would like to see improvements to the Stafford Act beyond those already incorporated into DRRA. For example, the Association proposes a safe harbor from FAR requirements for debris removal and emergency protective measures. Under this proposal, state, tribe, or local government compliance with state, tribal, or local government procurement requirements that promote full and open competition would constitute compliance with federal procurement requirements for purposes of the Stafford Act.
APPA also believes FEMA and lawmakers should consider ways to make it easier to use disaster mitigation funds to improve electric power system resiliency. Again, while electric power restoration is fundamental to all recoveries, a small fraction of FEMA mitigation grants have been for electric utility protective measures. For example, mitigation funds are extremely limited and so projects that would otherwise qualify may not receive FEMA assistance. A utility can shelve the project and wait for another disaster to try to receive mitigation funds, but under FEMA rules, a utility that proceeds with the project is no longer eligible for mitigation funds in the future. In theory, this is because FEMA cannot accurately make a cost-benefit analysis once a project is begun. In reality, this serves to encourage a delay in investment when reasonable compromises balancing concerns can be found.
Finally, FEMA should be given greater flexibility to provide assistance for complex events. For example, in a forest fire disaster, transmission lines blown down by fire-driven winds are not eligible for assistance.