APPA opposes FEMA proposed disaster threshold

by Paul Ciampoli
APPA News Director
March 12, 2021

The American Public Power Association (APPA) recently voiced opposition to a Federal Emergency Management Agency (FEMA) disaster threshold Notice of Proposed Rulemaking (NOPR).

“Every year, public power utilities experience some degree of infrastructure damage due to events, such as ice storms, wildfires, tornadoes, floods, hurricanes, and earthquakes,” APPA said. “If this damage is severe enough to be declared a disaster by the President of the United States, recovery costs are eligible for reimbursement through grants from FEMA,” APPA said in its Feb. 12 comments submitted to FEMA.

These grants “can amount to millions of dollars and are critical to the ability of public power utilities to recover from disasters, making FEMA’s proposed changes an economically significant regulatory action of critical importance to APPA and its members.”

When determining whether to recommend the President declare a major disaster authorizing the public assistance program, FEMA proposes in the NOPR to raise the baseline per capita indicator (PCI) and to further adjust the PCI on a state-by-state basis depending on each state’s total taxable resources (TTR).

Specifically, it would adjust the PCI to reflect the failure to inflation adjust the PCI from 1986 to 1999 and further modify the PCI by multiplying it by the index of each state’s hypothetical TTR as estimated by the U.S. Department of Treasury.

While APPA supports FEMA’s goals to reduce the number of disasters to which it must respond and to see states and localities increase their ability to mitigate against, respond to, and recover from disasters, it opposes the NOPR as proposed because the bulk of the financial effects of the change would be borne largely by a handful of states.

In addition, the new thresholds “would abruptly and dramatically shift the number and size of disasters for which some states must prepare, while doing little to reduce the number of declared disasters in states with the highest incidence of disaster declarations,” APPA pointed out.

The NOPR taken as a whole “would simply shift the responsibility of disaster recovery from the federal government to states and localities when other existing federal policies are serving to make taking those responsibilities more costly.”

Moreover, the NOPR fails to take into consideration an admonition from Congress that FEMA should give greater consideration to severe local impact or recent multiple disasters, APPA said.

If FEMA intends to proceed with the NOPR, “we would strongly urge phasing it in over time to allow states to develop the operational and financial resources to fill in the gap left by the proposal,” APPA said.

 Second, federal tax policy was amended in 2017 with the specific intention of making it more costly for state and local governments to raise taxes and refinance existing debt, the trade group noted.

 FEMA should amend the NOPR to reflect the fact that the value of is reduced by the federal taxes imposed on state and local taxes on that TTR, APPA argued.

“Finally, FEMA must be mindful that states with greater resources also likely have proportionately greater responsibilities, taxing their ability to respond when smaller entities are adversely affected by events. APPA believes FEMA could address this issue by responding to Congress’ direction in the DRRA to give greater consideration to severe local impact or recent multiple disasters.”