COVID-19 and Public Assistance under the Stafford Act

In March, President Trump declared a national emergency in response to the coronavirus outbreak, or COVID-19, in the United States. Among the many laws activated by this national emergency announcement was the Stafford Disaster Relief and Emergency Assistance Act (“Stafford Act”). The Stafford Act is most often invoked to address losses associated with natural disasters such as hurricanes, floods, fires, etc. Although the use of the Stafford Act for the ongoing COVID-19 pandemic response is unusual, the Stafford Act does allow the President to make two types of declarations: 1) an “emergency” under 42 U.S.C. § 5191, which is defined as “any occasion or instance for which, in the determination of the President, federal assistance is needed to supplement state and local efforts and capabilities to save lives”; and 2) a “major disaster” under 42 U.S.C. § 5170, which  “means any natural catastrophe.” “Emergencies” under the Stafford Act involve narrower forms of relief, whereas “major disasters” contemplate broader relief. For instance, for “major disasters,” it is not uncommon to have federal assistance provided that encompasses direct assistance to individuals and additional support such as crisis counseling services, relocation assistance, food distribution, and legal aid services, among other things.

Here, the President unilaterally declared a nationwide “emergency” under the Stafford Act. The Stafford Act emergency declaration for COVID-19 authorized only one form of assistance: public assistance emergency protective measures. Emergency protective measures encompass a wide range of activities. According to a FEMA news release on the COVID-19 emergency declaration, reimbursable activities may include “activation of State Emergency Operations Centers, National Guard costs, law enforcement, and other measures necessary to protect public health and safety.” Despite this relief, any “major disaster” declaration by the President had to be requested by governors of states or tribal chief executives. Many states, and some territories, have already requested and received a “major disaster” declaration at this time. Indeed, FEMA and the President are announcing “major disaster” declarations on a regular basis, at the time of this client update. Thus, the relief available as a result of these declarations, and future declarations and modifications, could likely change over time. 

What do these various declarations mean for those entities or parties who may be eligible for financial assistance? It means that all government agencies, units of local government, governmental-type special districts or political subdivisions, and all private non-profit organizations performing critical services (i.e. education, utilities, emergency services, or medical services) or non-critical but essential social services to the public (i.e. nursing homes, shelters, etc.) should immediately act in a manner that anticipates a request for financial assistance under Stafford Act. These actions include, among other things:
 

1. documenting costs (including labor and time) associated with emergency measures, or measures taken as a result of COVID-19 to save lives, protect public health and safety, protect improved property, and eliminate or lessen the immediate threat of additional damage;
2. determining which of the eligible entities’ activities fall within FEMA's guidelines for reimbursement and if FEMA or their state or other local emergency agencies impose any additional requirements for reimbursement of those activities;
3. communicating with their local or state emergency management agency concerning eligibility for federal reimbursement and the process for documenting and submitting claims. This would include understanding how the state or local agency through which reimbursement is being run wants costs collected and recorded as well how reimbursement will work;
4. collecting documentation reflecting direction or guidance from state and local officials taken to undertake emergency protective measures and record all potentially reimbursable costs associated with such measures to protect public health and safety.  Documentation of issues now will be critical if an issue arises later;
5. keeping track of what other, if any, other assistance is obtained or can be obtained related to COVID-19 costs, because FEMA usually will not permit duplicate reimbursement of costs available from another source, including insurance; and
6. following existing procurement policies and procedures as well as determining what additional action needs to occur to comply with procurement requirements imposed on recipients of Federal funding under OMB's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The federal procurement rules include certain exceptions to the typical requirement for competitive procurements, but those exceptions are limited, and FEMA has protocols to pull back money that is not spent in compliance with these rules.

Eligible entities are strongly advised to seek the advice of experienced legal counsel and experienced forensic accountants to assist them with their Stafford Act claim.  Ice Miller LLP is one of the few law firms in the Midwest with experience assisting clients with Stafford Act claims. Prospective applicants should also note that even if relief can be obtained pursuant to the Stafford Act, that aid can sometimes be “de-obligated” or subject to audit. There are also numerous potential hurdles and complicating factors, such as the availability of other means of obtaining financial assistance, insurance coverage issues, eligibility for assistance from other federal agencies, and administrative challenges associated with demonstrating the reasonableness of costs that are incurred, and demonstrating compliance with procurement standards.

If you have questions, please feel free to contact Brent W. Huber (brent.huber@icemiller.com) or Freedom S.N. Smith (freedom.smith@icemiller.com) at Ice Miller LLP.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.