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FEMA is proposing a rule to substantively revise the "Estimated cost of the assistance" disaster declaration factor that FEMA uses to review a Governor’s request for a major disaster under the Public Assistance Program. FEMA proposes revisions to this factor to more accurately assess the disaster response capabilities of the 50 States, the District of Columbia, and the U.S. territories (States), and to respond to the direction of Congress in the Disaster Recovery Reform Act of 2018, which requires FEMA to review its disaster declaration factors and update them via rulemaking, as appropriate.

Overall Description of Deadline: Not later than 2 years after the date of enactment of the Disaster Recovery Reform Act of 2018 (DRRA) (10/5/18), the Administrator of the Federal Emergency Management Agency (FEMA) must review and initiate a rulemaking to update the factors considered when evaluating a Governor's request for a major disaster declaration, including reviewing how FEMA estimates the cost of major disaster assistance, and consider other impacts on the capacity of a jurisdiction to respond to disasters.

Statement of Need:

Pursuant to 44 CFR 206.48(a), FEMA considers several factors when determining whether to recommend that the President declare a major disaster authorizing the Public Assistance (PA) program.^[1] FEMA proposes to amend the factor in 44 CFR 206.48(a)(1) for "estimated cost of the assistance," to raise the per capita indicator and the minimum threshold.^[2]

Since 1986, FEMA has evaluated the estimated cost of Federal and non-Federal public assistance against the statewide population and used a per capita dollar amount (set at $1 in 1986) as an indicator that a disaster may warrant Federal assistance. The per capita indicator remained at $1 until 1999, when the Agency began adjusting the indicator for inflation in 1999 and annually thereafter.^[3] Also in 1999, FEMA established a $1 million minimum threshold, meaning it would not recommend that the President authorize the PA program unless there was at least $1 million in damages resulting from the disaster and within the proposed area for Public Assistance. At the time, FEMA believed $1 million was a level of damage from which even the least populous States could recover with their own resources. FEMA has never increased the $1 million threshold. Additionally, FEMA also considers impacts at the local level and recent disasters in the 12 months prior to a declaration request to evaluate the impact to the State or locality.

The lack of increases to the per capita indicator from 1986 to 1999 has undercut the value of this factor as an indicator of State capacity given the 51 percent increase in inflation during that time. ⁴ In addition, a State fiscal capacity factor pegged to $1 per person in 1986 does not capture more sophisticated measurements of fiscal capacity available through consideration of a State’s total taxable resources. Accordingly, the current per capita indicator and minimum threshold do not provide an accurate measure of States’ capabilities to respond to disasters.

With respect to the minimum threshold, while FEMA determined in 1999 that every State could handle at least $1 million in damages with their own resources, that figure has also not increased with inflation or rising State budgets and expenditures.[5] As a result, FEMA may recommend that the President declare major disaster declarations for incidents that, with more accurate assessment, would be found to be well within a State’s financial capabilities to respond to on its own. FEMA proposes to adjust these factors so that it may more closely adhere to the law which authorizes Federal disaster assistance only when an event "is beyond the capabilities" of the State and affected local governments.[6]

FEMA proposes to increase the per capita indicator to account for increases in inflation from 1986 to 1999, and to adjust the individual States’ indicators by their total taxable resources. These changes will allow FEMA to more accurately gauge a State’s fiscal capacity by accounting for taxable resources other than the State’s population, such as business income, undistributed corporate profits, and out-of-state residents. FEMA also proposes to increase the minimum threshold by accounting for inflation from 1999 to 2019, and annually thereafter.

FEMA also proposes to use the U.S. Census Bureau’s annual population estimates produced under the Population Estimates Program instead of the decennial census population data produced every 10 years, which FEMA currently uses to calculate each State’s Cost of Assistance Indicator. By increasing the per capita indicator and the minimum threshold, and using more current population data, FEMA’s recommendation to the President will be a better informed and more accurate assessment of whether an incident exceeds State capabilities. The resulting reduction in disaster declarations for smaller incidents will allow FEMA to better focus its efforts and resources on larger disasters without the complications of reallocating resources from multiple smaller-scale commitments. Collectively, these changes would provide a better distribution of responsibilities between the States and the Federal Government, and will incentivize States to invest more in response, recovery, and mitigation capabilities, and lead to a more resilient and prepared Nation.  

[1] Under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) (42 U.S.C. 5170), the President may declare that a major disaster exists after finding, upon request by a State governor, that such disaster is beyond the capabilities of the State and affected local governments, and that Federal assistance is needed. FEMA receives the governor’s request and makes a recommendation to the President whether such a declaration is warranted. See 44 CFR 206.37.

[2] See 44 CFR 206.48(a). Other factors include: insurance coverage in force, hazard mitigation, and other Federal assistance programs. Id .

[3] The indicator was $1.50 in fiscal year 2019. See FEMA, Notice of Adjustment of Statewide per Capita Impact Indicator, 83 FR 53279 (Oct. 22, 2018).

[4] The April Consumer Price Index for All Urban Consumers was 108.6 and January 1999 CPI-U was 164.3. (164.3-108.6)/108.6 = 51.29%.  See Bureau of Labor Statistics, U.S. Department of Labor, Consumer Price Index, Archived Consumer Price Index Supplemental Files: Historical CPI-U, November 2019 (available for download at https://www.bls.gov/cpi/tables/supplemental-files/home.htm) .

[5] See Government Accountability Office (GAO), Federal Disaster Assistance: Improved Criteria Needed to Assess Eligibility and a Jurisdiction’s Capability to Respond and Recover On Its Own, GAO-12-838 (2012); Department of Homeland Security (DHS), Office of Inspector General (OIG), Opportunities to Improve FEMA’s Public Assistance Preliminary Damage Assessment Process, OIG-12-79 (2012).

[6] See section 401 of the Stafford Act (42 U.S.C. 5170).

Summary of the Legal Basis:

The legal basis for this rulemaking is section 1239 of Public Law 115-254, which states that not later than 2 years after the date of enactment of this Act (10/5/18), the Administrator shall review and initiate a rulemaking to update the factors considered when evaluating a Governor's request for a major disaster declaration, including reviewing how the Agency estimates the cost of major disaster assistance, and consider other impacts on the capacity of a jurisdiction to respond to disasters. 

Alternatives:

Anticipated Costs and Benefits:

FEMA estimates that this rulemaking would result in a decrease in yearly transfers from FEMA to PA recipients as a result of a decrease in declared disasters.  Additionally, this rulemaking would allow FEMA to more accurately determine if an incident would exceed a State’s capacity to respond, as well as allowing FEMA to focus efforts on larger-scale disasters more appropriate to a Federal-level response.

Risks: