House Report 119-320 - DISASTER MANAGEMENT COSTS MODERNIZATION ACT

[House Report 119-320]
[From the U.S. Government Publishing Office]

119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-320

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DISASTER MANAGEMENT COSTS MODERNIZATION ACT

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October 3, 2025.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

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Mr. Graves, from the Committee on Transportation and Infrastructure,
submitted the following

R E P O R T

[To accompany H.R. 744]

[Including cost estimate of the Congressional Budget Office]

The Committee on Transportation and Infrastructure, to whom
was referred the bill (H.R. 744) to amend section 324 of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act
to incentivize States, Indian Tribes, and Territories to close
disaster recovery projects by authorizing the use of excess
funds for management costs for other disaster recovery
projects, having considered the same, reports favorably thereon
without amendment and recommends that the bill do pass.

C O N T E N T S

Page
Purpose of Legislation........................................... 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 2
Legislative History and Consideration............................ 3
Committee Votes.................................................. 3
Committee Oversight Findings and Recommendations................. 3
New Budget Authority and Tax Expenditures........................ 3
Congressional Budget Office Cost Estimate........................ 3
Performance Goals and Objectives................................. 5
Duplication of Federal Programs.................................. 5
Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits....................................................... 5
Federal Mandates Statement....................................... 5
Preemption Clarification......................................... 6
Advisory Committee Statement..................................... 6
Applicability to Legislative Branch.............................. 6
Section-by-Section Analysis of the Legislation, as Amended....... 6
Changes in Existing Law Made by the Bill, as Reported............ 6

Purpose of Legislation

The purpose of H.R. 744 is to amend section 324 of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act
to incentivize States, Indian Tribes, and Territories to close
disaster recovery projects by authorizing the use of excess
funds for management costs for other disaster recovery
projects.

Background and Need for Legislation

When managing Federal disaster declarations pursuant to the
Stafford Act, state and local government applicants coordinate
large grants through the Federal Emergency Management Agency
(FEMA). Applicants may utilize a percentage of their awards to
offset the administrative requirements of managing such
grants.\1\ Though applicants are increasingly administering
multiple Federal disaster declarations concurrently, management
costs are limited to each specific disaster.\2\
---------------------------------------------------------------------------
\1\42 U.S.C. Sec. 5165b.
\2\U.S. Gov't Accountability Office, Disaster Recovery, Actions
Needed To Improve The Federal Approach, GAO-23-104956 (Nov. 2022).
---------------------------------------------------------------------------
H.R. 744 allows grantees to utilize management costs across
all open disasters in their state and directs FEMA to allow
unspent management costs to be made available for a period of
five years from the date of eligibility for capacity building.
Currently, if an applicant does not spend to the caps set in
the law for management costs, it will forfeit any excess
administrative cost funding that is not utilized by the time
the disaster is closed. The legislation amends Section 324 of
the Stafford Act to make excess management costs received to
manage grants authorized by Sections 403, 404, 406, 407, or 502
eligible for building disaster response capacity or other
authorized mitigation activities.
Allowing the flexibility provided by this Act was proposed
in a 2022 Government Accountability Office report as a solution
to simplify Federal disaster recovery program requirements.\3\
Additionally, a report issued by the Congressionally authorized
Wildfire Mitigation and Management Commission recommended FEMA
allow state management costs to cover general program
management functions, instead of being tied to specific
events.\4\
---------------------------------------------------------------------------
\3\Id.
\4\USDA, ON FIRE: The Report of the Wildland Fire Mitigation and
Management Commission (Sept. 2023), available at https://www.usda.gov/
sites/default/files/documents/wfmmc-final-report-09-2023.pdf.
---------------------------------------------------------------------------

Hearings

For the purposes of rule XIII, clause 3(c)(6)(A) of the
118th Congress, the following hearing was used to develop or
consider H.R. 744:
On September 19, 2023, the Subcommittee on Economic
Development, Public Buildings and Emergency Management of the
Committee on Transportation and Infrastructure held a hearing
entitled, ``FEMA: The Current State of Disaster Readiness,
Response, and Recovery.''\5\ The Subcommittee received
testimony from the Honorable Deanne Criswell, Administrator,
FEMA.
---------------------------------------------------------------------------
\5\FEMA: The Current State of Disaster Readiness, Response, and
Recovery: Hearing Before the H. Comm. On Transp. And Infrastructure,
118th Cong. (Sept. 19, 2023).
---------------------------------------------------------------------------

Legislative History and Consideration

H.R. 744 was introduced in the United States House of
Representatives on January 28, 2025, by Mr. Neguse of Colorado
and referred to the Committee on Transportation and
Infrastructure. Within the Committee on Transportation and
Infrastructure, H.R. 744 was referred to the Subcommittee on
Economic Development, Public Buildings, and Emergency
Management. The Subcommittee on Economic Development, Public
Buildings, and Emergency Management was discharged from further
consideration of H.R. 744 on February 26, 2025.
The Committee considered H.R. 744 on February 26, 2025, and
ordered the measure to be reported to the House with a
favorable recommendation, without amendment, by voice vote.

Committee Votes

Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires each committee report to include the
total number of votes cast for and against on each record vote
on a motion to report and on any amendment offered to the
measure or matter, and the names of those members voting for
and against.
No record votes were requested during consideration of H.R.
744.

Committee Oversight Findings and Recommendations

With respect to the requirements of clause 3(c)(1) of rule
XIII of the Rules of the House of Representatives, the
Committee's oversight findings and recommendations are
reflected in this report.

New Budget Authority and Tax Expenditures

Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives does not apply where a cost estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974 has been timely submitted prior to the filing of the
report and is included in the report. Such a cost estimate is
included in this report.

Congressional Budget Office Cost Estimate

With respect to the requirement of clause 3(c)(3) of rule
XIII of the Rules of the House of Representatives and section
402 of the Congressional Budget Act of 1974, the Committee has
received the enclosed cost estimate for H.R. 744 from the
Director of the Congressional Budget Office:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

H.R. 744 would allow state and local governments that
receive disaster assistance from the Federal Emergency
Management Agency (FEMA) to repurpose unused funds that were
originally allocated for management costs to increase their
administrative capacity to prepare for, recover from, or
mitigate the effects of future disasters. Under current law,
unused funds generally are returned to the Disaster Relief Fund
and used for disaster recovery. Those governments could retain
unused funds from amounts appropriated after enactment for
disasters that are declared on or after enactment of H.R. 744.
Those funds would not be available for repurposing until a
grant has reached its closeout date, which occurs at the
completion of all projects funded by the grant, and would then
remain available for five years from that point.
The bill also would require the Government Accountability
Office (GAO), within six months of enactment, to report to the
Congress on the amount of management costs incurred over the
past five years, how those amounts were used by state and local
governments, and whether the amounts set aside to cover
management costs are appropriate.
Using information from FEMA and state and local officials
in the disaster response field, CBO expects that smaller
states--particularly those with smaller budgets for disaster
recovery--would be most likely to repurpose unused funds to
hire permanent staff. Based on an analysis of historic
obligations for disaster recovery, CBO expects that the amount
of funds available to repurpose in 2025 would be small, because
most grants are available for several years after a disaster
has occurred. The amount of funding available for repurposing
would grow steadily over time, as more grants are closed out.
In total, CBO expects that over time between 10 and 20 smaller
states would each hire or retain an additional one to four
employees to perform work related to disaster response and
preparedness, at an average cost of about $100,000 per
employee. CBO expects that those governments also would
repurpose funds for other activities that would build
administrative capacity, such as training, outreach, and
creating disaster response plans. In total, CBO estimates that
implementing this provision would cost $15 million over the
2025-2030 period. Estimated costs would continue to increase
after 2030, as more funds become available for repurposing.
CBO estimates that the GAO report would cost less than
$500,000 in 2025.
Any related spending would be subject to the availability
of appropriated funds.
The costs of the legislation, detailed in Table 1, fall
within budget function 450 (community and regional
development).

TABLE 1.--ESTIMATED INCREASES IN SPENDING SUBJECT TO APPROPRIATION UNDER H.R. 744
----------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
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2025 2026 2027 2028 2029 2030 2025-2030
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Estimated Authorization.............................. 1 1 2 3 5 5 17
Estimated Outlays.................................... * 1 2 3 4 5 15
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* = between zero and $500,000.

The CBO staff contact for this estimate is Jon Sperl. The
estimate was reviewed by H. Samuel Papenfuss, Deputy Director
of Budget Analysis.

Phillip L. Swagel,
Director, Congressional Budget Office.

Performance Goals and Objectives

With respect to the requirement of clause 3(c)(4) of rule
XIII of the Rules of the House of Representatives, the
performance goal and objective of this legislation is to
incentivize States, Indian Tribes, and Territories to close
disaster recovery projects by authorizing the use of excess
funds for management costs for other disaster recovery
projects.

Duplication of Federal Programs

Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee finds that no provision
of H.R. 744 establishes or reauthorizes a program of the
Federal government known to be duplicative of another Federal
program, a program that was included in any report from the
Government Accountability Office to Congress pursuant to
section 21 of Public Law 111-139, or a program related to a
program identified in the most recent Catalog of Federal
Domestic Assistance.

Congressional Earmarks, Limited Tax Benefits, and Limited
Tariff Benefits

In compliance with clause 9 of rule XXI of the Rules of the
House of Representatives, this bill, as reported, contains no
Congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of the rule
XXI.

Federal Mandates Statement

The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act (Public Law 104-4).

Preemption Clarification

Section 423 of the Congressional Budget Act of 1974
requires the report of any Committee on a bill or joint
resolution to include a statement on the extent to which the
bill or joint resolution is intended to preempt state, local,
or tribal law. The Committee finds that H.R. 744 does not
preempt any state, local, or tribal law.

Advisory Committee Statement

No advisory committees within the definition of Section
5(b) of the appendix to Title 5, United States Code, are
created by this legislation.

Applicability to Legislative Branch

The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act (Public Law
104-1).

Section-by-Section Analysis of the Legislation, as Amended

Section 1. Short title

This section titles the bill as the ``Disaster Management
Costs Modernization Act''.

Section 2. Use of excess funds for management costs

This section amends Section 324 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act to allow for the
use of excess management cost funds for activities associated
with building capacity to prepare for, recover from, or
mitigate the impacts of a major disaster or emergency and to
pay for management costs associated with any major disaster,
emergency, disaster preparedness measure or mitigation
activity. The section makes the excess funds available up to
five years after the date on which the excess funds were made
available. This section also requires the Comptroller General
of the United States to review the managements costs set aside.

Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):

Changes in Existing Law Made by the Bill, as Reported

ROBERT T. STAFFORD DISASTER RELIEF AND
EMERGENCY ASSISTANCE ACT

* * * * * * *

TITLE III--MAJOR DISASTER AND EMERGENCY
ASSISTANCE ADMINISTRATION

* * * * * * *

SEC. 324. MANAGEMENT COSTS.

(a) Definition of Management Cost.--In this section, the term
``management cost'' includes any indirect cost, any direct
administrative cost, and any other administrative expense
associated with a specific project under a major disaster,
emergency, or disaster preparedness or mitigation activity or
measure.
(b) Establishment of Management Cost Rates.--
(1) In general.--Notwithstanding any other provision
of law (including any administrative rule or guidance),
the President shall by regulation implement management
cost rates, for grantees and subgrantees, that shall be
used to determine contributions under this Act for
management costs.
(2) Specific management costs.--The Administrator of
the Federal Emergency Management Agency shall [provide
the following percentage rates] provide--
(A) excess funds for management costs as
described in subsection (c); and
(B)the following percentage rates, in
addition to the eligible project costs, to
cover direct and indirect costs of
administering the following programs:
[(A)] (i) Hazard mitigation.--A
grantee under section 404 may be
reimbursed not more than 15 percent of
the total amount of the grant award
under such section of which not more
than 10 percent may be used by the
grantee and 5 percent by the subgrantee
for such costs.
[(B)] (ii) Public assistance.--A
grantee under sections 403, 406, 407,
and 502 may be reimbursed not more than
12 percent of the total award amount
under such sections, of which not more
than 7 percent may be used by the
grantee and 5 percent by the subgrantee
for such costs.
(c) Use of Excess Funds for Management Costs.--
(1) Definition.--In this subsection, the term
``excess funds for management costs'' means the
difference between--
(A) the amount of the applicable specific
management costs authorized under subsection
(b)(1) and subsection (b)(2)(B); and
(B) as of the date on which the grant award
is closed, the amount of funding for management
costs activities expended by the grantee or
subgrantee receiving the financial assistance
for costs described in subparagraph (A).
(2) Availability of excess funds for management
costs.--The President may make available to a grantee
or subgrantee receiving financial assistance under
section 403, 404, 406, 407, or 502 any excess funds for
management costs.
(3) Use of funds.--Excess funds for management costs
made available to a grantee or subgrantee under
paragraph (2) may be used for--
(A) activities associated with building
capacity to prepare for, recover from, or
mitigate the impacts of a major disaster or
emergency declared under section 401 or 501,
respectively; and
(B) management costs associated with any--
(i) major disaster;
(ii) emergency;
(iii) disaster preparedness measure;
or
(iv) mitigation activity or measure
authorized under section 203, 204, 205,
or 404.
(4) Availability.--Excess funds for management costs
made available to a grantee or subgrantee under
paragraph (2) shall remain available to the grantee or
subgrantee until the date that is 5 years after the
date on which the excess funds for management costs are
made available under paragraph (2).
[(c)] (d) Review.--The President shall review the management
cost rates established under subsection (b) not later than 3
years after the date of establishment of the rates and
periodically thereafter.

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