Recovering Funds from Parties Liable: Stafford Act Authorities

Recovering Funds from Parties Liable: Stafford Act Authorities

June 14, 2024
Recovering Funds from Parties Liable: Stafford Act Authorities
Introduction
of the Comprehensive Environmental Response,
The Robert T. Stafford Disaster Relief and Emergency
Compensation, and Liability Act of 1980 (CERCLA, P.L.
Assistance Act (the Stafford Act; P.L. 93-288, as amended,
96-510) established financial liability for certain parties
42 U.S.C. §§5121 et seq.) authorizes the President to
held responsible for releases of hazardous substances into
provide federal response, recovery, and mitigation
the environment. While CERCLA established a liability
assistance for emergencies and major disasters. The
framework for releases of hazardous substances, debate
President has delegated most Stafford Act authorities to the
continued over the unresolved issue of liability for the full
Federal Emergency Management Agency (FEMA). Section
scope of disasters declared under the Disaster Relief Act.
317(a) of the Stafford Act enables the federal government
to recover funds from parties liable for an emergency or
The language in Section 317(a) first appeared in 1981 (S.
major disaster, as follows:
1216, 97th Congress). Then-FEMA Director Louis O.
Giuffrida testified that the bill would “solidify the ability of
Party Liable—Any person who intentionally causes
the Federal Government to recover Federal funds where
a condition for which Federal assistance is provided
disaster situations have been caused or aggravated by
under this Act or under any other Federal law as a
attributable entities” (Committee on Environment and
result of a declaration of a major disaster or
Public Works, Hearing on S. 1216, S. 1217 and S. 2250,
emergency under this Act shall be liable to the
97th Congress, 1st session, July 16 and 21, 1981). However,
United States for the reasonable costs incurred by
some raised concerns that proposals like S. 1216 could
the United States in responding to such disaster or
enable the federal government to hold state or local
emergency to the extent that such costs are
governments liable for failure to mitigate known hazards, or
for their efforts during the course of disaster response.
attributable to the intentional act or omission of
such person which caused such condition. Such
Following seven years of debate, Section 317(a) was
action for reasonable costs shall be brought in an
enacted on November 23, 1988, as part of the suite of
appropriate United States district court (Section
revisions codified as the Stafford Act. A second provision,
317(a); 42 U.S.C §5160(a)).
317(b), specified that a person providing care or assistance
Some recent disasters have renewed interest in authorities
in response to a disaster could not be held liable for the
like Section 317(a) that establish financial liability for
results of those actions, and was intended to redress the
disaster-related losses.
concerns that nonfederal governments might be held liable
for inadequate response measures (42 U.S.C §5160(b)).
Background and Legislative History
The federal government did not have specific statutory
Implementation
authority to recover funds from liable parties responsible
To recover costs under Section 317(a) from a potentially
for major disasters declared under the Disaster Relief Act of
liable party, the United States must file a claim in an
1960 (which preceded the Stafford Act). This caused
appropriate federal court. The U.S. Government
controversy when President John F. Kennedy declared
Accountability Office (GAO) reported that FEMA’s Office
major disasters under that act to provide assistance to
of Chief Counsel considers a number of factors before
remove a barge transporting liquid chlorine abandoned by
pursuing a claim, including:
Wyandotte Transportation Co. The federal government
sued Wyandotte Transportation Co. to recover funds
• Whether an intentional act (or omission) can be shown
expended on the barge removal and cleanup. In Wyandotte
to have caused an emergency or major disaster. FEMA
Transportation Co. v. United States, 389 U.S. 191,
reports that the agency relies on federal investigations to
Wyandotte argued, and the U.S. Supreme Court agreed, that
determine cause and intentionality.
the Disaster Relief Act of 1960 did not authorize the
government to reclaim funds from parties found liable for a
• The time and cost of litigation vs. the likelihood and size
presidentially-declared disaster. The Court held that the
of a potential award.
U.S. could recover its clean-up expenses in this case under
a different statute, the Rivers and Harbors Act of 1899.
• How recovered assistance may affect survivors and/or
the agency. For example, FEMA may consider the
The issue of financial liability for emergencies and disasters
solvency of the alleged responsible party and how that
regained momentum after President Jimmy Carter declared
may affect recovery of funds. (GAO-24-106558)
emergencies for several “man-made” incidents, including
the chemical contamination of the Love Canal community
FEMA could also recover funds from entities who received
by Hooker Chemical Company in 1978-79. The enactment
Stafford Act assistance in certain cases. FEMA reported to
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Recovering Funds from Parties Liable: Stafford Act Authorities
CRS that in cases where there is a party liable for causing
2021 Surfside Condominium Collapse
disaster-related damages, “the onus is on the entity or
GAO investigated the potential invocation of Section
persons who suffered damage and loss to pursue legal
317(a) to recover assistance provided under the Stafford
remedies.” If an entity recovered funds from such a liable
Act emergency declaration for the Surfside Condominium
party and received disaster assistance for the same costs,
Collapse in June 2021. FEMA reported that the agency
FEMA would require the entity to return funds to FEMA,
would collaborate with the Department of Justice to
per Stafford Act Section 312 (42 U.S.C §5155, which
determine whether it may file a claim if a person
prohibits the provision of federal assistance for costs
intentionally caused the building to collapse, but not if
covered by private insurance or other sources). For
investigations found the collapse was attributed solely to
example, FEMA could recover funds from nonfederal
negligent design or maintenance (GAO-24-106558).
governments and nonprofits who receive awards through
the Public Assistance program and later receive settlements
Maui 2023 Wildfires
from liable parties to cover the costs of the same damage
Following wildfires in August 2023, the County of Maui
for which Public Assistance was provided.
filed suit against Hawaiian Electric Companies and Maui
Electric Company, alleging that the entities “caused and/or
Statute limits FEMA’s authority to recover funds from
contributed to the ignition and spread of the Maui Fires and
individuals who receive Stafford Act assistance and
the failure to warn the public of same.” In the event that a
subsequently recover funds from a third party in litigation.
party is found liable for intentionally causing the wildfires,
Such funds may be considered a duplicative overpayment
FEMA could attempt to recover assistance provided to state
that constitutes a debt owed to FEMA. However, Section
and local government entities and nonprofits. FEMA wrote
5602(a)(1) of the James M. Inhofe National Defense
to CRS that a finding of “negligence would not trigger
Authorization Act for Fiscal Year 2023 (P.L. 117-263)
application” of Section 317(a) as the authority is limited to
directed FEMA to waive debts owed to the United States by
parties who intended to cause conditions that resulted in an
individuals or households that received Stafford Act
emergency or disaster.
assistance “if such assistance is subject to a claim or legal
action,” including those specified under Section 317(a).
Policy Considerations
The history and implementation of Stafford Act Section
Relevant Incidents and Invocations
317(a) may be relevant to debates over whether the federal
government can—and should—attempt to recoup costs of
California Wildfires, 2015-2018
federal assistance from parties held liable for disasters.
On October 17, 2019, FEMA filed three claims in the
Considerations include:
Pacific Gas & Electric Co. (PG&E) Chapter 11 bankruptcy
case pending in the U.S. Bankruptcy Court for the Northern
High Threshold for Implementation
District of California following findings by the California
The statute requires that the agency can only recover costs
Department of Forestry and Fire Protection that PG&E
if an intentional act or omission caused a condition that
transmission lines caused the fires. FEMA pursued $3.9
resulted in a specific declared emergency or disaster—a
billion to recover the costs of assistance provided in
requirement that has “rarely been met” (GAO-24-106558).
response to the 2015 Butte Fire, the 2017 California
This high standard may help third parties manage their legal
Wildfires, and the 2018 Camp Fire, in accordance with
and financial risks as they operate in areas prone to
Section 317(a) and Section 312 of the Stafford Act.
disasters in a warming climate (e.g., utilities serving rural
areas prone to wildfires during hotter, drier summers). By
In this case, FEMA explained that as a responsible steward
the same logic, the provision may not incentivize
of public funds, it was required to pursue recovery of such
potentially liable parties to mitigate the risk of causing an
assistance, including from survivors whose settlement funds
expensive disaster, or minimize the financial risks borne by
duplicated Stafford Act awards.
the government in such cases. The challenges of
implementing Section 317(a) may additionally raise
Backlash from elected officials and survivors followed
concern over FEMA’s ability to responsibly steward federal
FEMA’s announcement. Forty Members of the House of
disaster relief funds.
Representatives wrote then-FEMA Administrator Peter
Gaynor requesting that FEMA reconsider its decision to
FEMA’s Reputation and Recovery of Assistance
pursue funds from the PG&E settlement, given that the
FEMA’s attempt to recover funds from the 2015-2018
action could reduce survivors’ claims.
wildfires in California sparked criticism, including from
survivors and their representatives. Some Members of
FEMA later settled its claim for a reduced amount of $1
Congress warned that FEMA’s claims upon the PG&E
billion to be paid from the Fire Victim Trust Fund
settlement “betray[ed] ... promises” made to survivors, and
established to compensate tort victims that filed claims in
could thus diminish “FEMA’s reputation as an honest and
the bankruptcy. FEMA subordinated its claim to individual
fair partner.” The waiver enacted in the James M. Inhofe
wildfire survivors, and reports that it expects to complete
National Defense Authorization Act may help FEMA avoid
this process by the end of 2024. FEMA reports that it has
future controversies surrounding the potential to recover
not taken any other actions to recover disaster assistance
assistance provided to individual survivors. FEMA may still
costs of these wildfires under Section 317(a).
face criticism for pursuing claims on the basis of assistance
provided to disaster-affected governments and nonprofits.
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Recovering Funds from Parties Liable: Stafford Act Authorities

Erica A. Lee, Specialist in Emergency Management and
Disaster Recovery
IF12689

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