Congress can play an active role in shaping and reforming the nation’s approach to disaster resilience through drafting, amending, and overseeing disaster legislation and programs. It can aggregate the needs of different communities and direct policy (and appropriations) to meet those needs. Many members of Congress have a deep interest in the development and execution of disaster policy and programs for the benefit of their constituents, both individuals and businesses. However, meaningful changes to disaster legislation can often require significant time, effort, and political capital on behalf of a congressional member, and such initiatives frequently compete with other goals and priorities of individual members and committees. Given these constraints, when considering disaster legislation, it is important to examine carefully the effectiveness of current law, the ability for legislative modifications to improve disaster resilience, and the potential net effects of changes.
FINDING #6: MOST SIGNIFICANT CHANGES TO DISASTER LEGISLATION OCCUR AFTER A LARGE-SCALE DOMESTIC CATASTROPHE.
The most recent large-scale disaster reform effort occurred after Hurricane Katrina. The findings of the subsequent investigative bipartisan committee led to PKEMRA, which resulted in considerable changes to the federal system of emergency management. Several years later, Congress responded to Hurricane Sandy by authorizing additional improvements to the federal disaster response. The timing of these reforms reflects the reactive nature of legislation in this issue set. Members of Congress have many competing priorities, often guided by current events and constituent pressures. Therefore, major reform efforts are unlikely to result in meaningful legislative reform without a disaster or other major forcing event.1
That said, several key members of Congress, such as senators Mary Landrieu and David Vitter of Louisiana, frequently press for disaster management reform. Often representing communities that have already experienced—or are at higher risk for—natural disasters, these members and their staffs work to make relevant changes to legislation even without a major catastrophe trigger, reassessing reform effectiveness and providing “tweaks” in legislation to reflect specific lessons learned. For example, Senator Landrieu sponsored a provision in the 2013 Department of Homeland Security Appropriations Act to alter the formula for calculating the forgiveness of disaster loans from the SBA.2 Although this provision sought to provide relief for communities still struggling to repay loans from Hurricane Katrina, the adjustment will help future communities that may be affected by such extreme destruction. The continued efforts of these members and their staffs can focus the legislative branch on targeted improvements and provide oversight functions to help prevent the need for massive “overhaul” changes after the next major catastrophe.
FINDING #7: WHILE PKEMRA ADDRESSED THE NEED FOR INTEGRATION AND INTEROPERABILITY, RECENT LEGISLATIVE CHANGES—SUCH AS THOSE IN SRIA—HAVE FOCUSED ON INCREASING MANAGEMENT, EFFICIENCY, AND FLEXIBILITY IN DISASTER PREPAREDNESS AND RESPONSE.
In 2006, PKEMRA adjusted the structure of FEMA, redefined the federal role in supporting state and local governments, and allocated additional authorities and responsibilities to other federal agencies; it also resulted in significant amendments to the Stafford Act and the Homeland Security Act of 2002 (P.L. 107-296).3 The changes reflected the shift to greater interagency and intergovernmental communication, interoperability, and reliance increasingly emphasized after the September 11, 2001 terrorist attacks.4 In addition, a major focus of PKEMRA was to establish a unified national system for preparedness, incident management, response, and recovery.5
As government agencies began implementing these changes, and as subsequent disasters tested their effectiveness, additional management and efficiency gaps came to light. SRIA attempted to address some of these emergent gaps by outlining targeted legislative changes, including disaster declarations for tribal governments and pi lot programs for FEMA’s HMGP, dispute resolution, and public assistance alternative procedures.6 As the relevant departments and agencies implement and evaluate the authorized changes, Congress can, through its oversight role, determine whether the modifications have actually achieved the intended goals. For example, if public assistance pilot programs prove effective in saving time and costs while measurably fulfilling the requirements of the assigned mission, then legislators could consider authorizing their permanent use.
Such tweaks to individual programs or management procedures often appeal to a majority of congressional members, provided that the changes reduce costs, improve efficiency, and do not adversely affect their constituents.7 However, tensions arise when reform efforts offer structural alterations that may potentially increase costs for disaster management. One such recommended change involves the addition of “catastrophic disasters” as a third category for presidential declarations. Some argue that “major disasters,” the larger of the two current categories, does not authorize sufficient funding and expediency for the response required by such devastating disasters as 9/11 or Hurricane Katrina.8 Advocates of this reform believe that predetermining increases in federal cost shares and grant and loan caps as well as simplified procedures for distributing funds and resources will enable the federal government to more expeditiously assist states and municipalities with response efforts.9 Opponents maintain that such a designation could overburden the federal government and disincentivize states to prepare sufficiently for catastrophes.10
While categorical designations can help make available forms of assistance easily identifiable, every disaster causes a unique amount of damage and requires different levels of aid. The underlying issue is how to provide sufficient flexibility and scalability in federal response efforts that conform to the size and effect of the disaster. The Stafford Act, as amended by PKEMRA and SRIA, provides flexibility for assistance through presidential discretion for: increasing spending caps and cost shares; expediting grant determination and delivery procedures; and allowing for in-lieu-of contributions for irrecoverable damage.11 Additionally, governors can request declarations before a forecast catastrophe causes damage, as in the case of Hurricane Sandy, which allows for the pre-positioning of resources and use of mitigation funds to reach affected areas without the normal requirement of a preliminary damage assessment.12
The focus on flexibility allows the federal government to provide the necessary amount of relief based upon preestablished metrics. However, some metrics, such as the weight of factors for determining public and individual assistance, still need to be addressed. For example, as of this writing, FEMA had not yet revised its individual assistance declaration factors, a requirement of SRIA.13 Since Congress authorized the change, it can use its oversight role to ensure the new factors provide a reasonable measurement of the effect of disasters on individual households. Furthermore, this approach allows Congress to promote a holistic model of resilience by requiring states and municipalities to meet certain criteria that trigger increased funding and expedited delivery of services. For instance, states must develop preapproved debris removal and hazard mitigation plans in order to receive enhanced assistance.14 This approach helps ensure cohesion in preparedness at all levels of government.
FINDING #8: CONGRESS HAS ALREADY TAKEN SOME STEPS TO REDUCE THE FEDERAL SHARE OF DISASTER RELIEF FUNDING. HOWEVER, THERE MAY BE ADDITIONAL METHODS FOR AVOIDING FUTURE DISASTER COSTS.
Although Congress has worked to increase efficiency and flexibility in disaster management and spending, the fact remains that the frequency and cost of disasters is rising exponentially.15 Additionally, given the pressure to reduce budgets, new approaches to spending are worth exploring. One area of concern is the federal share of covering losses after disasters. As mentioned earlier, Congress funds all federal disaster relief efforts authorized by the Stafford Act through the DRF. The DRF is a “no-year” account, which allows it to carry over funds for response and recovery activities each year.16 The executive branch determines the budget request by calculating the 10-year average of disaster costs, excluding incidents costing over $500 million, and accounting for rollover funds, pending recovery costs, and estimated recoveries of unobligated funds.17 Historically, this method of budgeting has been insufficient to meet the federal costs following disasters. Shortfalls forced Congress to pass supplemental appropriations for disaster relief in 17 of the 22 fiscal years between 1989 and 2010.18 The Budget Control Act of 2011 (BCA; P.L. 112-25) attempted to limit the overruns of the DRF by creating a cap on a newly designated “disaster relief” funding category.19 However, the BCA maintained the unlimited cap on “emergency” spending, previously used for all disaster supplemental funding. Hurricane Sandy revealed the new designation’s inability to limit spending as all supplemental outlays over the cap were simply designated “emergency” funds.20
The issue here is twofold. The Office of Management and Budget’s (OMB) current formula for requesting the DRF’s budget excludes disasters costing over $500 million, although the United States experienced an average of one such event per year from 2001 through 2012.21 Additionally, Congress’s attempt to limit spending proved in effective when a catastrophic disaster required robust response and recovery funding. Adjustments to the OMB calculation would more accurately reflect disaster costs, but asking members of Congress to potentially limit funding to their own states and districts will likely fall on deaf ears. To address this problem, the 1995 Senate Bipartisan Task Force on Funding Disaster Relief concluded that, in addition to establishing more stringent criteria for the provision of disaster assistance, emphasizing and incentivizing hazard mitigation and relying on insurance to a greater degree were two other options for reducing federal expenditures.22 A joint executive and legislative branch focus on the latter two options could satisfy the first, reducing costs of disasters at all levels and improving the resilience of communities.
Chapters 3 and 5 cover many of the potential options for emphasizing hazard mitigation, including the role Congress can play. Therefore, this section will address Congress’s role in promoting disaster insurance. Figure 4.1 reveals that although insured losses from natural disasters have increased at approximately twice the rate of all economic losses from natural disasters, the gap for expensive disaster years, such as 2005 and 2012, still leaves roughly $100 billion and $50 billion, respectively, of losses uninsured.23
Members of Congress have introduced legislation with the intent of increasing the role of insurance in disaster relief funding. In March 2013, Representative Albio Sires of New Jersey introduced the Homeowners and Taxpayers Protection Act, which would establish a national catastrophe fund supported by premiums from state insurance to reinsure those plans and provide a backstop for protecting residential property from all hazards.24 Proponents of this concept believe it will limit the cost burden on the federal government in the event of a catastrophe and prevent continued dramatic increases to homeowners insurance.25 Meanwhile, opponents argue that a federal focus on strict land use and other mitigation policies would better serve taxpayers, since such a fund would expose policy-holders to underwriting risks.26 Spreading risk among homeowners in the United States with government-established contract requirements versus allowing reinsurance companies to set standards and pool policyholders around the world illustrates the key differences between the schools of thought. One expert stated that while establishing a national catastrophe fund may have intellectual appeal, U.S. citizens may also be weary of creating another large government program.27 The stalled state of Representative Sires’s bill, along with the provision in the Homeowner Flood Insurance Affordability Act of 2014 that authorizes the NFIP administrator to secure private reinsurance for the program, demonstrate a tendency toward a privatized backstop approach for disasters.28
The NFIP illustrates some of the fundamental issues facing insurers in keeping up with the escalating economic losses from disasters. Legislators have adjusted the NFIP framework twice in the past two years in attempts to balance the need to charge rates based upon actual risk with the desire to keep premiums affordable for affected home and business owners. The result reflects a dilemma between insolvency and the decision of many owners to forgo coverage, either way increasing the taxpayers’ burden of disaster costs. The challenge of increasing the risk pool while maintaining actuarially sound rates to provide sufficient coverage has led Congress to encourage reducing risk on the front end through incentivizing mitigation for policyholders.29 Continuing this trend will potentially reduce cost estimates in insurance calculations, helping to counter the increased risk from disaster frequency and magnitude and potentially lowering premiums. Additionally, Congress promotes coverage by barring the use of in-lieu-of contributions by state and local governments and nonprofits on uninsured buildings in designated Special Flood Hazard Areas (SFHAs).30 While current legislation bars uninsured homeowners in SFHAs from receiving federal assistance, Congress could further encourage local governments in those areas to buy insurance by limiting the eligibility of uninsured public infrastructure damaged by floods to receive post-disaster grants.31
The difficulty in measuring true risk and providing actuarially sound rates presents another issue for the program. Developing an exact science that can account for every factor of a property’s location is extremely complex. Federal executive and legislative branch officials have indicated the accuracy challenges in the NFIP’s flood mapping efforts, which exemplifies the frustration over rising premiums.32 In addition to the questions over risk and premium rates, one expert noted that the NFIP has become more of a land use policy tool than an insurance program.33 This insight raises the question of the value of maintaining livable coastlines, marshlands, and other flood-prone zones. The fact that marine-related industries account for one of every six U.S. jobs and over one-third of the U.S. gross national product originates in coastal regions reveals the importance of considering economic impact along with risk.34 Striking a balance between maximizing the economic benefits of an area and minimizing perverse incentives for property owners to create a sustainable environment that can withstand, adapt, and rapidly recover from disasters presents a difficult challenge for communities.
Another potential opportunity for reducing federal cost shares involves the examination of liabilities for relief efforts related to man-made disasters. For the Deepwater Horizon oil spill in 2010, British Petroleum covered a large part of the recovery cost, spending over $14 billion on response and cleanup alone through the end of 2013.35 Additionally, Exxon paid $2.1 billion in cleanup costs from the Exxon Valdez oil spill in 1989.36 While these companies voluntarily agreed to pay these large sums, under OPA 90, private companies are only liable for removal costs and damages up to $350 million for onshore facilities and deepwater ports, $75 million for other offshore facilities, and $22 million for large vessels.37 Since these limits pale in comparison to the costs of potential catastrophes, not all private companies may prepare the financial resources necessary to cover the difference between obligated payments and total costs. Since the burden would then fall upon the federal government and taxpayers, Congress may wish to reexamine the thresholds for private-sector liability in the event of man-made disasters.
Members of Congress must choose wisely among the reform measures to propose and defend. A number of factors play into the decisionmaking process. Congressional efforts should include input from all affected agencies, levels of government, businesses, and individuals, outline any necessary funding mechanisms, and support a policy of disaster resilience through risk reduction, efficiency, and cost savings. By considering these factors and their accompanying nuances, legislators can make effective changes to major pieces of legislation that authorize and fund disaster preparedness and response efforts.
1. Study participant, one-on-one, not-for-attribution interview, April 2014.
2. Senator Mary Landrieu, “Landrieu Announces Over $5.6 Million in Disaster Loans Forgiven for Lafourche, Washington Parishes,” press release, March 5, 2014, http://www.landrieu.senate.gov/?p=press_release&id=4264.
3. Post-Katrina Emergency Management Reform Act (PKEMRA) of 2006, Public Law No: 109-295, 120 STAT. 1394-1463 (2006).
4. Study participant, one-on-one, not-for-attribution interview, April 2014.
5. PKEMRA.
6. Sandy Recovery Improvement Act (SRIA) of 2013, Public Law No: 113-2, 127 STAT. 39-50 (2013).
7. Study participant, one-on-one, not-for-attribution interview, April 2014.
8. Bruce R. Lindsay and Francis X. McCarthy, “Consideration for a Catastrophic Declaration: Issues and Analysis,” Congressional Research Service, July 6, 2011, 5, https://www.fas.org/sgp/crs/homesec/R41884.pdf.
9. Ibid., 17.
10. Ibid.
11. Jared T. Brown, Francis X. McCarthy, and Edward C. Liu, “Analysis of the Sandy Recovery Improvement Act of 2013,” Congressional Research Service, March 11, 2013, https://www.fas.org/sgp/crs/misc/R42991.pdf.
12. Craig Fugate, “One Year Later: Examining the Ongoing Recovery from Hurricane Sandy,” statement before the Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Emergency Management, Intergovernmental Affairs and the District of Columbia, November 6, 2013, http://www.hsgac.senate.gov/subcommittees/emdc/hearings/one-year-later-examining-the-ongoing-recovery-from-hurricane-sandy.
13. FEMA, “Sandy Recovery Improvement Act (SRIA): Dashboard as of March 4, 2014,” 2, http://www.fema.gov/media-library-data/1394046446758-34696cbb069e0eaf6d96ceef10ec57e0/SRIA+Dashboard+030414_508.pdf.
14. Brown, McCarthy, and Liu, “Analysis of the SRIA,” 13; Ibid., 18.
15. See Chapter 2.
16. McCarthy, “Federal Stafford Act Disaster Assistance,” 18.
17. Bruce R. Lindsay, William L. Painter, and Francis X. McCarthy, “An Examination of Federal Disaster Relief under the Budget Control Act,” Congressional Research Service, November 8, 2013, 2–3, https://www.fas.org/sgp/crs/misc/R42352.pdf.
18. BuildStrong Coalition, “Testimony Of the BuildStrong Coalition Submitted to the United States Senate Homeland Security and Government Affairs Subcommittee on Emergency Management, Intergovernmental Relations, and the District of Columbia, Hearing on ‘The Role of Mitigation in Reducing Federal Expenditures for Disaster Response,’ ” May 14, 2014, 5, http://www.hsgac.senate.gov/subcommittees/emdc/hearings/the-role-of-mitigation-in-reducing-federal-expenditures-for-disaster-response.
19. Lindsay, Painter, and McCarthy, “Federal Disaster Relief under the BCA,” 7.
20. Ibid., 13.
21. Ibid., 4.
22. McCarthy, “Federal Stafford Act Disaster Assistance,” 24.
23. Aon Benfield, “Annual Global Climate and Catastrophe Report” (Chicago: Impact Forecasting, 2014), http://thoughtleadership.aonbenfield.com/Documents/20140113_ab_if_annual_climate_catastrophe_report.pdf.
24. H.R. 1101, Homeowners and Taxpayers Protection Act of 2013, http://www.gpo.gov/fdsys/pkg/BILLS-113hr1101ih/pdf/BILLS-113hr1101ih.pdf.
25. James Loy, “Sandy One Year Later: How to Prepare for the Next Storm,” CQ Roll Call, November 1, 2013, http://www.rollcall.com/news/sandy_one_year_later_how_to_prepare_for_the_next_storm_commentary-228812-1.html.
26. Herb Jackson, “Sandy Relief Fund Is Fodder for Growing Storm among Insurers,” The Record, March 31, 2013, http://www.northjersey.com/news/nj-state-news/sandy-relief-fund-is-fodder-for-growing-storm-among-insurers-1.564938.
27. Study participant, one-on-one, not-for-attribution interview, August 2014.
28. Homeowner Flood Insurance Affordability Act of 2014, 128 STAT. 1025.
29. Ibid., 128 STAT. 1026.
30. Stafford Act, Title IV, § 406 (c)(1)(C)(ii).
31. FEMA, “National Strategy Recommendations: Future Disaster Preparedness” (Washington, DC: DHS, September 6, 2013), 13, http://www.fema.gov/media-library-data/bd125e67fb2bd37f8d609cbd71b835ae/FEMA+National+Strategy+Recommendations+(V4).pdf.
32. Miller, “The Role of Mitigation in Reducing Federal Expenditures for Disaster Response.”
33. Study participant, one-on-one, not-for-attribution interview, August 2014.
34. National Oceanic and Atmospheric Association, “Ocean,” http://www.noaa.gov/ocean.html.
35. British Petroleum, “Gulf of Mexico Restoration,” http://www.bp.com/en/global/corporate/gulf-of-mexico-restoration.html.
36. Mark A. Cohen, “A Taxonomy of Oil Spill Costs” (Washington, DC: Resources for the Future, June 2010), 4, http://www.rff.org/Documents/RFF-BCK-Cohen-DHCosts.pdf.
37. Oil Pollution Act of 1990 (OPA 90), P.L. 101-3801; 33 U.S. Code 2704(a).