The coronavirus disease 2019 (COVID-19) pandemic’s effects on states and communities have had a significant financial impact on organizations and governments working to protect the safety and well-being of individuals throughout the country. The Federal Emergency Management Agency (FEMA) has made funds available to support these efforts.
This article provides a brief background on the federal law authorizing FEMA Public Assistance Program funding, and will help you to understand whether your organization is eligible to receive this funding. It will also help to identify reimbursable work and costs, and provide a brief overview of the application process and timeline for obtaining FEMA Public Assistance Program funding.
Background
On March 13, 2020, President Donald Trump issued proclamations declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak,1 invoking the National Emergencies Act2 and the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act).3 These declarations, including those subsequently issued for each state, authorize FEMA to provide eligible applicants funding under the federal Public Assistance (PA) Program for Category B Emergency Protective Measures taken to respond to the COVID-19 pandemic. Through its PA Program, FEMA provides assistance to states, territories, tribes, local governments and certain private nonprofit (PNP) organizations.
The Stafford Act authorizes the President to provide federal assistance when the magnitude of an incident or threatened incident exceeds the affected state, territorial, Indian tribal and local government capabilities to respond or recover. For FEMA to provide assistance, the President must declare that an emergency or major disaster exists. While states or territories typically must request federal assistance under the Stafford Act, due to the unique circumstances of the COVID-19 pandemic, the nationwide emergency was declared without requiring action from states or territories.
For example, on March 20, 2020, the state of New York received a major disaster declaration (DR-4480) from FEMA for the COVID-19 pandemic.4, 5 The incident period is January 20, 2020, and continuing. In New York, the designated area is statewide (i.e., all counties). As with other states, the President’s action makes federal funding available on a cost-sharing basis (75 percent federal share) for Category B Emergency Protective Measures. In New York, specific funding amounts have not yet been indicated. The state agency responsible for working with applicants to submit requests for public assistance to FEMA is the New York State Department of Homeland Security and Emergency Services (DHSES).
Currently, FEMA’s Disaster Relief Fund is estimated to have approximately $70 billion available to fund disaster grants, which includes FEMA baseline funding from the balance in the Disaster Relief Fund ($35 billion as of February 29, 2020),6 and supplemental appropriations from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which provide an additional $45 billion for the Disaster Relief Fund.7
Who is eligible for FEMA PA Program funding?
As indicated, FEMA provides PA funding to eligible applicants, which include state and territorial governments, federally recognized Indian tribal governments, local governments, and certain types of PNP organizations.
To be an eligible applicant, the PNP must show that it has:
- A current ruling letter from the U.S. Internal Revenue Service granting tax exemption under Section 501(c), (d) or (e) of the Internal Revenue Code of 1954; or
- Documentation from the state substantiating it is a non-revenue-producing nonprofit entity organized or doing business under state law.8
Additionally, prior to determining whether the PNP is eligible, FEMA must first determine whether the PNP owns or operates an eligible facility. For PNPs, an eligible facility is one that provides eligible services, including:
- A critical service, which is defined as education, utility, emergency or medical;9
- A facility that provides noncritical but essential social services AND provides these services to the general public;10 or
- Certain types of facilities such as senior centers that restrict access in a manner clearly related to the nature of the facility but that are still considered to provide essential social services to the general public.
The New York Applicants Briefing provides the following helpful examples of eligible PNPs.11
Critical PNPs include:
- Nursing Homes
- Laboratories
- Rehab Centers That Provide Medical Care
- Hospitals and Emergency Care Facilities
- Fire/Rescue Emergency Services
- Educational Facilities (public or private) Including Colleges
Essential/Noncritical PNPs include:
- Community Centers
- Child Care Facilities
- Food Assistance Programs
- Performing Arts Facilities
- Senior Citizen Centers
- Homeless Shelters
- Houses of Worship
However, it is important to note that these lists are not exhaustive and there may be other types of PNPs that are potentially eligible.
What work and costs are eligible for FEMA PA Program funding?
Through the PA Program, FEMA provides grant funding for certain categories of emergency work and permanent work, depending on the type of disaster declared.12
Emergency work includes the following two categories that address an immediate threat:
- Category A Debris Removal
- Category B Emergency Protective Measures
Permanent work includes the following five categories for permanent restoration of damaged facilities and cost-effective hazard mitigation to protect the facilities from future damage:
- Category C Roads/bridges
- Category D Water control facilities
- Category E Buildings/equipment
- Category F Utilities
- Category G Parks, recreational and other facilities
To be eligible, costs must be:
- Directly tied to the performance of eligible work;
- Adequately documented;13
- Reduced by all applicable credits, such as insurance proceeds and salvage values;14
- Authorized and not prohibited under Federal, State, Territorial, Tribal or local government laws or regulations;
- Consistent with the Applicant’s internal policies, regulations, and procedures that apply uniformly to both Federal awards and other activities of the Applicant; and
- Necessary and reasonable to accomplish the work properly and efficiently.15
As indicated, the COVID-19 national emergency makes federal PA Program funding available for Category B Emergency Protective Measures. Category B Emergency Protective Measures include actions taken before, during and following a disaster to save lives, protect public health and safety, or eliminate immediate threat of significant damage to improve public health and property.16
Examples of emergency protective measures for the COVID-19 pandemic include:
- Virus testing
- Medical supplies and equipment
- Shelters or emergency care
- Provision of food, water, ice or other essential needs
- Security for temporary facilities
This list is by no means all-inclusive, and there may be some leeway for previously undefined measures that are feasible and necessary to address this unique situation.17
As a result, eligible applicants must clearly identify the work and how it is directly related to the COVID-19 event. For costs to be eligible, they must be incurred within the approved period of performance. In New York, for example, Category B project approval for the period of performance for this disaster began on January 20, 2020, and will end six months after the major disaster declaration date, which would be September 19, 2020. New York State has authority to extend that deadline by six months. Any further time extension would require approval from FEMA.18
Eligible costs include labor, equipment, materials, contracts and management costs. However, costs must be:
- Reasonable and necessary to accomplish the work
- Compliant with federal, state and local procurement requirements
- Reduced by any applicable credits such as insurance and other funding sources
It is important to note that all costs must be documented, must comply with appropriate guidelines, and must be reasonable and necessary to protect the public from the COVID-19 pandemic. For example, below is a checklist of critical paperwork to begin to collect:
✓ List of damages, emergency protective measures undertaken
✓ Insurance information
✓ List of paid staff, regular and overtime hours—dates and times
✓ Fringe benefits information
✓ List of equipment used, hours of operation—dates and times, miles driven
✓ List of materials and supplies purchased or used
✓ Copies of any contracts used for this event
✓ Procurement policies and documentation of compliance
What is the process/timeline for obtaining FEMA PA Program funding?
After the declaration of an emergency or major disaster in your state, the designated local agency (e.g., for New York, DHSES) will conduct applicant briefings to advise as to the process for determining eligibility and for submitting a request for public assistance (RPA) and also advise as to the deadline for submitting an RPA.
For example, in New York, applicant briefings are ongoing, there is currently no deadline to submit an RPA and there is currently no end date for the incident period. The diagram below sets forth the application process.
19
As indicated above, the first step is for applicants to have grants portal accounts established. Once your account is established, you will be able to submit your RPA in the portal. Once FEMA approves your RPA, you will be able to submit projects. Applicants will enter information on the project template, provide documentation as required by the template, provide a cost estimate and submit the project.
Due to the nature of this emergency, FEMA has indicated that it is simplifying the PA Program application process to address the magnitude of the event and allow eligible entities to receive funding more quickly. For example, FEMA has indicated it is developing a simplified online form for applicants to complete with which they may explain work activities, answer basic questions, provide limited supporting documentation and provide a cost estimate.20
If you believe your organization may be eligible for FEMA PA Program funding, we would encourage you to visit FEMA’s website to determine the local agency responsible for working with applicants to submit grants to confirm eligibility and begin the RPA process.
Please contact Meghan McNamara at mmcnamara@manatt.com with any questions about FEMA funding. FEMA is one of many resources available to help mitigate the financial impact of COVID-19. Manatt’s cross-disciplinary healthcare, corporate and finance team can guide you in identifying, applying for and accessing the funds for which your organization is eligible.
1 https://www.govinfo.gov/content/pkg/DCPD-202000156/pdf/DCPD-202000156.pdf; https://www.whitehouse.gov/wp-content/uploads/2020/03/LetterFromThePresident.pdf.
2 50 U.S.C. §§ 1601 et seq.
3 42 U.S.C. §§ 5121 et seq.
4 https://www.fema.gov/disaster/4480.
5 https://www.fema.gov/news-release/2020/03/20/president-donald-j-trump-approves-major-disaster-declaration-new-york.
6 https://www.fema.gov/media-library-data/1583536240087-66e61a00010a925981b4a5fdfd336cdd/Mar2020DisasterReliefFundReport.pdf.
7 CARES Act, Division B, Title VI, https://www.appropriations.senate.gov/imo/media/doc/Coronavirus%20Supplemental%20Appropriations%20Summary_FINAL.pdf.
8 44 C.F.R. § 203.221(f).
9 Stafford Act § 406(a)(3)(B); 42 U.S.C. § 5172; 44 C.F.R. § 206.221(e).
10 44 C.F.R. § 206.221(e)(7).
11 http://www.dhses.ny.gov/recovery/public/documents/DR4480-Applicants-Briefing-Pertinent-Info.pdf.
12 https://www.fema.gov/media-library-data/1525468328389-4a038bbef9081cd7dfe7538e7751aa9c/PAPPG_3.1_508_FINAL_5-4-2018.pdf, p. 19.
13 2 C.F.R. § 200.403(g).
14 FEMA is the payer of last resort. This means that all other funding provided on a project is taken into account first and deducted from the costs eligible for reimbursement under FEMA’s PA Program.
15 2 C.F.R. § 200.403.
16 44 C.F.R. § 206.225(a)(3).
17 http://www.dhses.ny.gov/recovery/public/documents/DR4480-Applicants-Briefing-Pertinent-Info.pdf.
18 Id.
19 https://www.fema.gov/news-release/2020/03/23/coronavirus-covid-19-pandemic-public-assistance-simplified-application.
20 Id.