On June 2, 2021, the Federal Emergency Management Agency (FEMA) issued version 2 of its policy on Stafford Act § 705, Disaster Grant Closeout Procedures. Stafford Act § 705 (42 U.S.C. § 5205) contains two important subsections:
The Disaster Recovery Reform Act of 2018 (the "DRRA") amended the Stafford Act, including § 705 (we previously wrote about the DRRA here). FEMA's updated policy addresses those changes.
FEMA's revised policy on § 705 clarifies:
Although not new to the policy with this iteration, it is worth repeating that failure to comply with any of the three elements § 705(c) will make the statute's protection inapplicable, even if FEMA's reason for the recoupment is wholly unrelated to the noncompliance. For example, if FEMA finds that an emergency sole source procurement was not justified, FEMA may take the position that the conditions of § 705(c) have not been met and can take back any funds associated with the subgrant for any reason. Similarly, an applicant who fails to obtain and maintain insurance on a facility after drawing down funds to repair it, could later face deobligation for an applicant eligibility problem, having lost the protection of § 705(c). The protection offered by § 705(c) is deceivingly fragile. FEMA's position that any noncompliance with any term of the grant eviscerates the protection provided by §705(c) has not yet been subjected to judicial review.