Substantially Lower: Having a Global- Warming Potential (GWP) that is at least less than the
estimated North American industry average as demonstrated by their Environmental Product
Declaration (EPD).


U.S. Department of Homeland Security
Federal Emergency Management Agency
Washington, DC 20472

FEMA

March 21, 2023

MEMORANDUM FOR: FEMA Regional Administrators
Regions 1-10

ATTENTION: Federal Coordinating Officers
Regional Recovery Division Directors
Regional Mitigation Division Directors
Consolidated Resource Center Direc

FROM: Melissa K. Forbes
Assistant Administrator
Recovery Directorate, Office of Response and Recovery

Eric Letvin
Assistant Administrator for Mitigation (Acting)
Federal Insurance and Mitigation Administration, Kesilience

SUBJECT: Implementation of Inflation Reduction Act Section 70006(1) for
FEMA Public Assistance and Hazard Mitigation Assistance Programs

The purpose of this memorandum is to announce FEMA’s implementation of Section 70006(1) of
the Inflation Reduction Act of 2022 (IRA) for the Public Assistance (PA), Building Resilient
Infrastructure and Communities (BRIC), and Hazard Mitigation Grant Programs (HMGP).!

On August 16, 2022, the President signed the IRA into law. Section 70006 of the IRA authorizes
FEMA to provide financial assistance under sections 203(h)”, 404(a)?, and 406(b)* of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) for: “(1) costs associated with
low-carbon materials; and (2) incentives that encourage low-carbon and net-zero energy projects.”
Section 70006 authorities expire on September 30, 2026.

The IRA provides a valuable opportunity for FEMA to support state, tribal, territorial, and local
partners in their efforts to build resilient communities and reduce climate effects by incentivizing
investments in greenhouse-gas reduction strategies, such as the use of low-carbon materials, and
low-carbon and net-zero energy projects. Please see the attached definitions addendum for more
information regarding how FEMA will define key terms such as low-carbon materials. Information
on low-carbon projects, and net-zero energy projects will be provided in future guidance.

' Inflation Reduction Act of 2022, Pub. L. No. 117-169, § 70006, 136 Stat. 2087, available at:
https://w mn. v/bill/117th-congress/h il: x

? Building Resilient Infrastructure and Communities (BRIC) 42 U.S.C. § 5133(h)

3 Hazard Mitigation Grant Program (HMGP) 42 U.S.C. § 5170c(a).

4 Public Assistance (PA) Program 42 U.S.C. § 5172(b).

www. fema gov


For the purposes of this memo, FEMA defines low-carbon materials eligible for funding by PA,
HMGP, and BRIC, as concrete, asphalt, glass, and steel which have a Global Warming Potential

GWP) lower than the estimated industry average for similar products in North America as
demonstrated by their Environmental Product Declaration (EPD). A product-specific Type III (third-
party verified) EPD must be shown and reported in a third-party dataset. Use of a published and
verifiable dataset is required until superseded by notice of publicly available standards and/or
database issued by the Environmental Protection Agency (EPA), FEMA, the General Services
Administration (GSA), or other Federal Agency guidance.

IRA Section 70006(1) authorizes PA to reimburse ‘costs associated with low-carbon materials,’ even
when the costs are higher than those for conventional materials. This new authority applies to
disasters declared 60 days after the issuance of this memorandum. It is important to note that the use
of low-carbon materials is voluntary and based on the applicant’s discretion. However, applicants
who elect to use low-carbon materials on PA recovery projects must adhere to the FEMA definition
for low-carbon materials. Additionally, PA applicants who include costs associated with low-carbon
materials in their scopes of work, including capped grants and fixed cost estimates, must use low-
carbon materials. *

IRA Section 70006(1) authorizes the HMGP and BRIC programs to fund ‘costs associated with low-
carbon materials,’ even when the costs are higher than those for conventional materials. For HMGP
this is applicable for major disaster declarations issued 60 days after the issuance of this
memorandum, or for disasters with open application periods as of 60 days after the issuance of this
memorandum, provided all other program requirements are satisfied. The BRIC Program published
the Fiscal Year (FY) 2022 Notice of Funding Opportunity and issued an Alternative Cost-
Effectiveness Methodology Memo’ that may apply to projects that are subject to higher costs due to
incorporation of low-carbon materials.

While increased costs for low carbon materials are deemed reasonable under Title 2 Code of Federal
Regulations Section 200.404 due to the IRA authority, it is important to note that the other Cost
Principles in 2 CFR Part 200, subpart E will still apply, such as procurement and contracting
requirements. Federal law now explicitly allows FEMA to pay for qualifying low-carbon materials
thus, costs for materials that meet the low-carbon materials definition may (but not necessarily) be
greater than costs for conventional materials.

Under IRA Section 70006(2) FEMA may provide financial assistance under sections 203(h), 404(a),
and 406(b) of the Stafford Act for “incentives that encourage low-carbon and net-zero energy
projects.” The PA, HMGP, and BRIC Programs are developing guidance to implement incentives,
relative to each program’s authority. As these developments are finalized, more information will
become available about FEMA’s implementation of Section 70006(2).

If you have questions about the content of this memo, please contact Robert Pesapane, Acting
Director, Public Assistance Division, at robert.pesapane@fema.dhs.gov or Gerilee Bennett, Acting
Director, Hazard Mitigation Assistance Division, at gerilee.bennett(@fema.dhs.gov.

5 If capped grants under Stafford Act sections 422, 406, or 428 include additional costs for low-carbon materials in the
cost estimate, applicants must use the low-carbon materials they have proposed.

° See FEMA Alternative Cost-Effectiveness Methodology for Fiscal Year 2022 Building Resilient Infrastructure
Communities and Flood Mitigation Assistance Application Cycle on FEMA’s website.



Implementing the Inflation Reduction Act Section 70006(1)

SEC. 70006. FEMA BUILDING MATERIALS PROGRAM.

Through September 30, 2026, the Administrator of the Federal Emergency Management Agency may
provide financial assistance under sections 203(h), 404(a), and 406(b) of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5133(h), 42 U.S.C. 5170c(a), 42 U.S.C.
5172(b)) for—

(1) costs associated with low-carbon materials; and

(2) incentives that encourage low-carbon and net-zero energy projects.

Under the authorities of the Inflation Reduction Act Sections 60503 and 60506, the U.S.
Environmental Protection Agency (EPA) is directed to determine materials and products “that have
substantially lower levels of embodied greenhouse-gas emissions associated with all relevant stages
of production, use and disposal as compared to estimated industry averages of similar materials or
products.” On December 22, 2022 the EPA released its Interim Determination on Low-Carbon
Materials Under IRA 60503 and 60506. In consultation with EPA, FEMA determined to adopt
modified versions of the definitions and descriptions from the EPA’s Interim Determination. These
definitions and descriptions may be further modified based on guidance issued by the EPA to fit the
needs, mission, and existing authorities of FEMA. For the purposes of implementing the IRA
Section 70006(1), FEMA has determined to use the following definitions and descriptions for low-
carbon materials:

Low-Carbon Materials: Construction materials and products that “have substantially lower levels
of embodied greenhouse-gas emissions associated with all relevant stages of production, use, and
disposal, as compared to estimated industry averages of similar materials or products.”

e Low-carbon materials include concrete, asphalt, glass, and steel which have a Global
Warming Potential (GWP) that is lower than the estimated industry average for similar
products in North America as demonstrated by their Environmental Product Declaration
(EPD). A product-specific Type III (third-party verified) EPD must be shown and reported in
a third-party dataset. Use of a published and verifiable dataset is required until superseded by
notice of publicly available standards and/or database issued by the Environmental Protection
Agency (EPA), Federal Emergency Management Agency (FEMA), General Services
Administration (GSA), or other Federal Agency guidance.

e EPA’s Interim Determination focuses the low-carbon materials to the four major polluters
during production, which are concrete (and its component cement), asphalt, glass, steel, and
assemblies comprised of at least 80% of qualifying materials. Based on the EPA’s initial
review of state and local approaches and other research to-date, these materials offer the most
significant opportunities to address the embodied greenhouse-gas emissions of federal
construction projects. FEMA is currently limiting materials for funding consideration to these
four materials until further guidance from EPA, or other Federal Agency guidance, is
available.

Greenhouse Gas: The air pollutants carbon dioxide, hydrofluorocarbons, methane, nitrous oxide,
perfluorocarbons, and sulfur hexafluoride.