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The Disaster Recovery Reform Act of 2018

Natural disasters, oftentimes unavoidable, can have a catastrophic impact on individuals, communities, and the world. Following a significantly disruptive hurricane and wildfire season in 2017, the Federal Emergency Management Agency (FEMA) worked with Congress to consider what could be done to improve assistance before, during, and after a disaster.

In the fall of 2018, President Donald J. Trump signed the Disaster Recovery Reform Act (DRRA) into law. This new legislation has streamlined the functionality of FEMA and enhanced its benefit to disaster applicants by implementing an array of proactive measures to address and plan for disasters.

Via the DRRA, Congress sought to enable disaster applicants to build more resilient infrastructure and communities through increased funding, stronger building codes, and streamlined administrative procedures. Many of the provisions take effect retroactively to August 1, 2017, to bolster recovery efforts for Hurricanes Harvey, Irma, and Maria.

Below is a summary of what the Disaster Recovery Reform Act does:

A New National Infrastructure Pre-Disaster Hazard Mitigation Grant Program

  • The new program, Building Resilient Infrastructure & Communities (BRIC), replaces the Pre-Disaster Mitigation Grant program funded through fluctuating annual appropriations.
    • BRIC is funded through 6% set aside from the Disaster Relief Fund.
    • FEMA is eliciting public opinion on development of this new program.
    • In June 2019, FEMA is hosting four webinars regarding the topic areas key to BRIC program implementation, allowing for further citizen and stakeholder engagement.
  • Increased investment towards hazard mitigation is now allocated by a statute eliminating the need for separate legislative appropriation.

Amendments to the Stafford Act (FEMA Public Assistance Program)

  • Removes the reduction of assistance for alternate projects
    • Applicants may now elect to pursue alternate projects without facing a federal cost share reduction.
  • Limits a flood insurance deduction to one building within a multi-structure campus for disasters declared between January 1, 2016, and December 31, 2018
  • Prohibits required participation in the Public Assistance Alternative Procedures pilot program. As a special exception, Puerto Rico applicants have been required to opt into the program as a condition of assistance.
  • Creates a presumption within the Public Assistance Alternative Procedures for Permanent Work (Section 428) that a fixed-cost estimate certified by a licensed engineer and accepted by the FEMA administrator is “presumed to be reasonable and eligible cost”

Management Costs

  • The Stafford Act defined “management costs” as indirect and administrative expenses not applicable for reimbursement towards a specific project.
  • FEMA allows the state recipient a set percentage of funding for management costs that can trickle down to subrecipients. Of similar benefit to subrecipients are Direct Administrative Costs that are directly applicable to specific projects.
  • The DRRA consolidates all the above into management costs and establishes the following percentage rates for allowable funding:
    • FEMA Hazard Mitigation Grant Program under Section 404 to receive up to 15% of total amount of grant award
      • Recipient: up to 10%; subrecipient: up to 5%
    • FEMA Public Assistance Program funding for Sections 403, 406, 407, and 502 to receive up to 12% of total award under cited sections
      • Recipient: up to 7%; subrecipient: up to 5%
    • This revision shifts accountability over the administrative responsibilities associated with disaster grants to state recipients and applicants.
  • Codes & Standards
    • The Stafford Act allowed for reimbursement of eligible costs for repairs/rebuilding based on pre-disaster design, codes, and specifications (at time of disaster).
    • The DRRA amends the Stafford Act to fund work consistent with current codes and specifications “for the purpose of protecting health, safety, and general welfare of a facility’s users against disasters.”
      • Applies retroactively to disasters declared on or after August 1, 2017, or disasters in which the cost estimate has not yet been finalized on project basis or is under appeal
    • Right of Arbitration with the Civilian Board of Contract Appeals (CBCA)
      • DRRA Section 1219 provides for applicants with the right of arbitration (“Section 423 Arbitration”) to dispute FEMA determination of application.
      • Eligibility criteria
        • Dispute related to disaster declared after January 1, 2016
        • Dispute amount exceeds $500K (or $100K in rural areas)
        • Applicant filed first-level appeal with FEMA pursuant to time requirements set by 44 C.F.R. sec. 206.206
      • Defined time limit for filing second appeal
      • FEMA addresses the following fees: arbitration panel, retained expert, and arbitration facility fees
    • Closeout Incentives
      • Intended to motivate applicants to advance their projects and grant programs to closeout in a timelier manner through incentives or penalties that have yet to be fully defined

FEMA’s implementation of the DRRA necessitates modifications to existing policies (e.g., the Recovery Policy on Stafford Act Section 705), the FEMA Policy Guide, and the Public Assistance Program itself. As these gradual changes take place, GP Strategies will monitor FEMA’s issuance of policy interpretations and post them in additional blogs as they become available.

This legislation facilitates and encourages increased resiliency opportunities for communities to explore. Although we’ll never be able to eliminate disasters completely, these revisions will help communities take action sooner to be better prepared to respond to and recover quicker when a disaster strikes.

For further questions or inquiries, please contact:
Ondina C. Mendoza
Resilience & Recovery Support | (850) 238-0611 (office)

About the Authors

Josh Norman
Mr. Norman is the Director of Emergency Management for GP Strategies. He is a highly experienced Recovery Manager leading major engagements for the City of New Orleans Katrina Recovery, the State of Texas, Massachusetts, Florida, and South Carolina. As a pioneer in the field of Recovery Management services, Mr. Norman has supported the National Advisory Council Stafford Act Sub-Committee on policy changes to Debris, Emergency Protective Measures and Alternate and Improved Projects.

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