Reforming Disaster Recovery Act of 2019

Floor Speech

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Ms. WATERS. Mr. Speaker, I am providing this statement to explain the Reforming Disaster Recovery Act of 2019 (H.R. 3702), as ordered reported to the House of Representatives by the Committee on Financial Services, along with additional amendments made since committee consideration:

The Community Development Block Grant (CDBG), administered by the Department of Housing and Urban Development (HUD), is the federal government's largest and most widely available source of financial assistance for state and local government-directed neighborhood revitalization, housing rehabilitation, and economic development activities. One of the national objectives of the CDBG program allows communities and states to use program funds to address serious and immediate public health and safety threats. Accordingly, Congress has used the CDBG program's framework to provide additional assistance (CDBG-DR) for state and local recovery activities in the wake of presidentially- declared disasters. In response to a disaster, Congress must pass each supplemental CDBG-DR appropriation on a case-by- case basis. To date, Congress has appropriated $87 billion in CDBG-DR assistance.

CDBG-DR grants are generally governed by the underlying Housing and Community Development Act of 1974, (42 U.S. 5301 et. seq) (``CDBG statute'') and rules and the relevant supplemental appropriation act. A supplemental appropriation act providing disaster assistance typically identifies the amount appropriated, the period covered, the eligible uses of funds (to the extent that they are different from the underlying CDBG statute and rules), and the certifications required for assistance. For each supplemental appropriation, HUD publishes a corresponding Federal Register notice establishing the allocation of funds to eligible grantees and describing the rules, statutes, waivers, and alternative requirements that apply to allocations under the notice.

In July 2018, the HUD Office of Inspector General (HUD OIG) found that HUD's use of multiple Federal Register notices to administer CDBG-DR assistance created challenges for grantees. Specifically, HUD OIG found, among other challenges, that grantees had to navigate confusing and sometimes duplicative requirements contained in multiple notices. HUD OIG recommended that HUD codify the CD BG-DR program to: (1) establish a permanent framework for future disasters; (2) reduce the existing volume of Federal Register notices; (3) provide a standardized set of rules for all grantees; and (4) ensure that grants are closed in a timely manner. Further, the GAO has found that historically, disaster relief has been inequitably distributed among people of different races and ethnicities, economic classes, and homeownership status. As a result, some of the largest HUD fair housing settlements have come after major disasters, as states and localities receiving disaster recovery grants often did not serve affected families equitably.

H.R. 3702 adopts the HUD OIG recommendations by permanently authorizing the CDBG-DR program, as well as addressing concerns that have been raised about the administration of the program. Among other requirements, the bill would mandate that: (1) HUD allocate CDBG-DR funds within 60 days of a Congressional appropriation; (2) HUD coordinate with FEMA, and the Small Business Administration (SBA) to better improve data sharing; and (3) any CDBG-DR funded new construction, repair, or rehabilitation utilize minimum federal standards for flood risk mitigation and storm water protection as well as utilizing the latest national consensus-based building codes and standards for construction in hazard-prone areas. Additionally, H.R. 3702 would allow cities and counties with well-developed disaster relief resources to become precertified to receive funding more quickly and establish a reserve fund to be used to provide technical assistance and capacity building to help communities develop their action plans. The bill would also require HUD develop best practices that communities can use for disaster recovery.

The act includes two sections:

Section 1 states that the title of the bill is the Reforming Disaster Recovery Act of 2019.

Section 2 is entitled the. ``Community Development Block Grant Disaster Recovery Program.'' This section amends Title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.) by adding a new sections 123 and 124 to permanently authorize the CDBG-DR program and establish a CDBG-DR reserve fund.

The new section 123 is entitled ``CD BG-Disaster Recovery Assistance.'' Subsection (a) of the new section 123 authorizes the Secretary of Housing and Urban Development (HUD) to provide Community Development Block Grant-Disaster Recovery (CDBG-DR) assistances to States, including Puerto Rico, units of general local government, and Indian tribes for necessary expenses for authorized activities related to disaster relief, resiliency, long-term recovery, restoration of infrastructure and housing mitigation, and economic revitalization in the most impacted and distressed areas affected by Presidentially-declared disasters.

Subsection (b) of the new section 123 provides that when allocating funding, the Secretary of HUD is required to include an additional amount of funding for mitigation that is not less than 45 percent of the amount allocated to a grantee for unmet needs. The Secretary of HUD must allocate funds to grantees within 60 days of the date of enactment of an Act making funds available for disaster assistance. The deadline for allocation of CD BG-DR funds shall not apply if the Federal Emergency Management Agency (FEMA) has not made sufficient information available to the Secretary of HUD regarding relevant unmet recovery needs to make allocations in accordance with the deadline. The Secretary of HUD must notify Congress of progress on or delay in receiving the necessary information within 60 days following the declaration of a major disaster and monthly thereafter until all necessary information is received. The Secretary of HUD is required to disburse funding allocated to a grantee, but only if the grantee is in substantial compliance with the requirements of this section.

The new subsection (b) also requires the Secretary of HUD to coordinate with other agencies, including FEMA, and the SBA, to obtain data on recovery needs when necessary regarding disaster benefits, and share with FEMA and make publicly available, all data collected, possessed, or analyzed during the course of a disaster recovery for which assistance was provided.

This new subsection (b) also requires that funds made available must be used in accordance with section 312 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended by section 1210 of the Disaster Recovery Reform Act of 2018 (Division D, Public Law 115-254), and such rules as may be prescribed. Households having the lowest incomes must be prioritized for assistance under this section until all unmet needs are satisfied for families having an income of up to 120 percent of the median for the area. In any case in which a CDBG-DR grantee provides assistance that duplicates benefits, the new subsection (b) requires that the grantees bear responsibility for absorbing such cost of any duplicative assistance and return that amount to the grantee's account or be subject to remedies for noncompliance under Section 111 of the Housing and Community Development Act of 1974. In carrying out this subsection, the Secretary of HUD shall protect personally identifiable information.

Subsection (c) of the new section 123 provides that no later than 90 days after the allocation of funds, the grantee must submit a plan to the Secretary of HUD for approval detailing the proposed use of all funds, which shall include how the funds will be used to address disaster relief, identification of officials administering the disaster funds, an agreement to share data with Federal agencies, and a plan for ensuring compliance with the Fair Housing Act. The new subsection (c) also requires the Secretary of HUD to specify criteria for approval of a grantee's disaster assistance plan, including approval of substantial amendments to the plan. The Secretary of HUD shall disapprove a plan if (1) the Secretary determines that the plan does not meet the approval criteria, (2) the Secretary determines that the plan does not provide equitable allocation of resources between infrastructure and housing projects or between homeowners, rents and persons experiencing homelessness, (3) the Secretary determines that the plan does not provide a credible plan for ensuring compliance with the Fair Housing Act, (4) the Secretary determines that the plan does not prioritize the one-for-one replacement of damaged federally subsidized affordable housing, or (5) the Secretary determines the plan does not provide applicants for assistance notice by the grantee of the applicant's right to appeal any adverse action or inaction.

In developing the action plan, the new subsection (c) provides that grantees, at a minimum, must (1) consult with affected stakeholders, including residents, local governments, and public housing authorities, to assess needs, (2) publish the plan, including online for at least 14 days, (3) ensure equal access to individuals with disabilities or with limited English proficiency, and (4) publish the plan in a way that allows stakeholders a reasonable opportunity to review and provide feedback on the plan. In the event of a disapproved plan, the Secretary of HUD shall permit a grantee to revise and resubmit its plan. The Secretary of HUD shall approve or disapprove a plan within 60 days of the plan being submitted. If a plan is disapproved, within 15 days after the disapproval, the Secretary shall inform the applicant of the reasons for disapproval and the actions the applicant could take to meet the criteria for approval. Applicants have 45 days following the date of the disapproval to submit amendments or resubmit the action plan to the Secretary of HUD. The Secretary of HUD has 30 days to approve or disapprove the plan amendment or resubmission. The Secretary of HUD shall ensure that all grant agreements are executed within 60 days of approval of the grantee's plan.

Subsection (d) of the new section 123 requires the Secretary of HUD to develop and maintain a system to ensure that each grantee has an approved process for financial controls and procurement, and adequate procedures to ensure all eligible families and individuals are approved for and provided assistance, as well as to prevent duplication of benefits and detect waste, fraud and abuse, and to maintain publicly accessible websites that make available information regarding all disaster recovery activities. The Secretary must provide, by regulation or guideline, a method for qualitatively and quantitively evaluating compliance. As a condition of making any grant, the Secretary of HUD shall certify in advance that the grantee has the proper financial processes and procedures in place.

Subsection (e)(I) of the new section 123 provides that a grantee may not use less than seven percent but no more than 10 percent of its grant funds for administrative fees. The Secretary of HUD may establish a series of percentage limitations on a grantee's administrative fees, but only if such limitations are based on the amount of grant funds received, such series limitation is lower for grantees receiving a greater amount of grant funds and higher for grantees receiving a lesser amount of grant funds, and in no case may a grantee use more than 10 percent of grant funds for administrative fees. Subsection (e)(2) provides that amounts under this section may not be used for activities reimbursable by FEMA or the Army Corps of Engineers.

The new subsection (e)(3) also provides that the Secretary of HUD may use one percent of CD BG-DR appropriated amounts exceeding $1 billion for administrative costs, of which, under new subsection (e)(4), 15 percent of that amount shall be transferred to the HUD IG for audits, reviews, oversight, evaluation, and investigations relating to amounts made available for use under this section. The new subsection (e)(5) authorizes the lesser of 0.1 percent or $15 million for capacity building and technical assistance.

This new subsection (e)(6) provides that each grantee shall use not less than 15 percent of funds for comprehensive mitigation planning, except that the Secretary may establish a lower percentage for grantees receiving a grant exceeding $1 billion. Under the new subsection (e), each grantee must ensure that comprehensive mitigation plans are coordinated and aligned with existing comprehensive, land use, transportation, and economic development plans, and specifically analyze multiple types of hazard exposures and risks. Each grantee must also coordinate and align mitigation planning with other mitigation projects funded by FEMA, the Army Corps of Engineers, the Forest Service, and other relevant agencies. Mitigation planning funds can be used to purchase data and development or updating of risk mapping for all relevant hazards. The new subsection (e)(6) also directs Grantees to prioritize the expenditure of mitigation dollars for programs and projects primarily benefitting low- and moderate-income households with the greatest risk of harm from natural disasters.

The new subsection (e)(7) provides that after consultation with the FEMA Administrator, the Secretary of HUD shall make no CDBG-DR funds available for the construction, reconstruction, or installation of any infrastructure or residential, commercial or public buildings in hazard-prone areas that does not, at a minimum, comply with the lasts published editions of relevant national consensus-based codes, and specifications and standards referenced therein, except that the new subsection (e) provides that nothing that in the new section 123 prohibits grantees from requiring higher standards. The new subsection (e) provides that compliance with this section may be certified by a registered design professional.

The new subsection (e)(7) also provides a number of definitions of key terms used. ``Hazard-prone areas'' are defined as areas identified by the Secretary of HUD, in consultation with the FEMA Administrator, at risk from natural hazards that threaten property damage or health, safety, and welfare, such as floods, wildfires, earthquakes, tornados and high winds. The Secretary may consider future risks and the likelihood such risks may pose to protecting property, and health, safety, and general welfare when determining or modifying a hazard-prone area. ``Latest published editions'' is defined, with respect to national consensus-based codes, and specifications and standards referenced therein, the two most recent published editions, including amendments that were adopted by State, local, tribal, or territorial governments to incorporate the latest hazard-resistant designs and establish criteria for the design, construction, and maintenance of structures for the purpose of protecting the health, safety and general welfare of people against disasters.

The new subsection (e)(8) provides that the Secretary of HUD shall require than any structure that is located in a special flood hazard area, and that is newly constructed or substantially improved using CDBG-DR funds must be elevated with the lowest floor, including the basement, at least two feet above the base flood level, except that critical facilities, including hospitals, nursing homes, and other public facilities providing social and economic lifelines (as defined by the Secretary of HUD), must be elevated 3 feet above the base flood level or higher if required by the previous section. The new subsection (e)(8) also provides that for existing structures consisting of multi-family housing and row houses, the Secretary of HUD shall consult with the FEMA Administrator and provide for alternative forms of mitigation (apart from elevation) and shall exempt flood level requirements for those structures that meet the standards of the alternative form of mitigation.

Subsection (f) of the new section 123 provides that in administering any CDBG-DR funds, the Secretary of HUD may not allow a grantee to use its funds outside the scope of its original application, may not permit a grantee to amend a plan to retroactively approve a beneficiary's use of funds other than for approved activities, and shall prohibit a grantee from delegating the responsibility for inherent government functions.

Subsection (g) of the new section 123 provides that the Secretary shall require each grantee to provide ongoing training to its staff and sub-grantees regarding grant management.

Subsection (h) of the new section 123 provides that in procuring property or services paid for with CDBG-DR funds, a grantee shall follow its own procurement processes and procedures or must comply with such processes or procedures established through regulation by the Secretary of HUD. A grantee's processes and procedures must (1) provide for a full and open competition and require cost or price analysis, (2) include requirements for sub-grantees, (3) specify methods of procurement and their applicability, (4) include standards of conduct for employees, and (5) ensure that all purchase orders and contracts include any clause required by Federal Statute, Executive Order, or implementing regulation. The new subsection (h) provides that if the Secretary of HUD finds that a grantee's procurement processes and procedures do not comply with this section, the Secretary shall provide the grantee with specific written notice of the elements of noncompliance, provide the grantee a reasonable period of time to come into compliance, and allow the grantee to proceed with procuring property and services only if the Secretary determines the grantee is making a good faith effort to effectuate compliance with this section.

Subsection (i) of the new section 123 provides that funding made available under this section shall not be considered relevant to the non-disaster CDBG formula allocations. Except for those statutes that relate to fair housing, nondiscrimination, labor standards and the environment, subsection (j) of the new section 123 authorizes the Secretary of HUD to waive or specify alternative requirements for any statute or regulation when the Secretary makes a public finding that there is good cause that the waiver or the alternative requirement would be consistent with the overall goal of CDBG-DR. The new subsection (j) provides that any waiver shall not take effect before the expiration of the five-day period beginning upon the publication of notice in the Federal Register of such waiver, and that the Secretary of HUD shall not reduce the percentage of CDBG-DR funds that must be used for activities that benefit persons of low and moderate income to less than 70 percent, unless the Secretary specifies that there is compelling need and that funds are not necessary to address the housing needs of low- and moderate-income residents.

Subsection (k) of the new section 123 provides that grantees may adopt, without review or public comment, any environment review approved by a Federal agency

Subsection (l) of the new subsection 123 provides that for each major disaster for which CDBG-DR assistance is made available under this section, the Secretary of HUD shall collect information regarding all recovery efforts and shall make the information available to the public, while ensuring personally identifiable information is not made publicly available. Under this subsection, the Secretary of HUD may make full and unredacted information available to academic and research institutions to study the equitable distribution of recovery funds, adherence to civil right protections, and other areas.

Subsection (m) of the new subsection 123 provides that the Secretary of HUD shall direct the Office of Community Planning and Development to collaborate with the Office of Policy Development and Research to identify best practices for grantees on issues related to disaster recovery to be published by the Secretary of HUD as a compilation. After disseminating the compilation, the Secretary of HUD must issue regulations that establishes requirements grantees must follow when using best practices to qualify for expedited review and approval. The guidance must establish standard language grantees can include in their action plans and standardized programs and activities based on best practices.

Subsection (n) of the new section 123 requires the Secretary of HUD to establish a program under this subsection to pre-certify eligible grantees for assistance. To be eligible for precertification, a locality shall demonstrate compliance with the requirement of this section and shall have previously received CDBG-DR assistance in connection with two or more Presidentially-declared disasters. The pre- certification shall be effective for a term of 10 years.

Subsection (o) of the new section 123 requires the Secretary of HUD to recapture any unused CDBG-DR funds if the grantee notifies the Secretary that it has completed all activities provided under the grant or the grantee has not spent all or part of the appropriated funds within 6 years. Under the new subsection (o) the Secretary of HUD may, subject to authority provided in advance by appropriations Act, transfer unused funds to the Secretary of the Treasury for deposit into the Community Development Block Grant Disaster Recovery Reserve Fund established under section 124, except that the Secretary of HUD may permit the grantee to retain amounts needed to close out the grant. Under the new subsection (o), the Secretary of HUD is required to extend the time period by not more than four years if the Secretary of HUD waives the six-year time requirement and submits a written justification to the House and Senate Committees on Appropriations. Under the new subsection (o), after the initial extension period, the Secretary may provide an additional extension of no more than four years to insular areas and shall provide additional technical assistance to help increase capacity within the insular area receiving the extension and submit a written justification for the extension to the House and Senate Committees on Appropriations.

Subsection (p) of the new section 123 provides a number of definitions applicable to the new section.

New section 124 is entitled ``Community Development Block Grant Disaster Recovery Reserve Fund.'' This section establishes the Community Development Block Grant Disaster Recovery Reserve Fund, which shall consist of amounts appropriated to the Reserve Fund or recaptured funds as specified under this section. Funds shall be available only for providing technical assistance and capacity building for grantees to facilitate disaster recovery planning and increase capacity to administer assistance.

New section 124 also provides that the Secretary of HUD shall issue proposed rules to carry out sections 123 and 124 within six months of H.R. 3702 being enacted, and issue final regulations within 12 months of H.R. 3702 being enacted.

H.R. 3702 is an important step in putting forward a framework for HUD to address disasters that affect communities across the United States. I commend Representative Green and Representative Wagner for their dedicated efforts to bring this bill before the House, and I urge all members to support this legislation.

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