Since 1989, the federal government has spent over $96.1 billion for disaster assistance provided by the Federal Emergency Management Agency (FEMA). Because of the unforeseeable nature of disasters, predicting the level of federal disaster assistance presents a fiscal management challenge. In June 1998, the Director of FEMA at that time, James Lee Witt, noted the challenge of forecasting the costs of federal disaster assistance. Over the past ten years, FEMA has received $2.9 billion in regular (non-emergency) appropriations for Disaster Relief. In contrast, $21.9 billion have been provided in supplemental appropriations. Congress continues to be challenged with finding ways to manage the costs of disasters. Hazard mitigation can potentially reduce federal costs by decreasing the level of damage from future disasters. Of the $96.1 billion expended for disaster assistance since 1989, FEMA allocated $4.4 billion for hazard mitigation activities to prevent or ease the impact of natural disasters. This report provides an overview and discussion of federal hazard mitigation assistance. Historically, Congress has taken an ad hoc approach to enacting legislation for the provision of disaster relief. From 1803 to 1938, Congress passed 128 separate acts providing disaster assistance. Each legislative action occurred after the disaster for which federal assistance was provided. In 1950, Congress recognized that there was a need to prepare in advance for disasters. During debates concerning enactment of the Federal Disaster Relief Act (Disaster Relief Act of 1950), Members indicated a desire to authorize federal assistance before an event without the need for ad hoc legislation. What we are dealing with here is emergencies that are bound to happen from time to time and without warning. The right thing to do is to make preparations in advance, as this bill does, so that the disasters, wherever they may arise, can be handled promptly in an intelligent and well-thought-out way, rather than wait until the last moment and then try to figure out some sort of improvised relief which is usually too little and too late. The Disaster Relief Act of 1950 was significant because it shifted the primary decision-making for federal disaster assistance from the Congress to the President. Subsequent legislation and amendments continue to influence the role of the President and the states in federal disaster assistance. Once the President approves a disaster declaration, states may have access to federal funds for hazard mitigation. Hazard mitigation provisions in federal disaster assistance provide a basis for an analysis of the fiscal challenges and shifting federal role in disasters. This report discusses aspects of the Hazard Mitigation Grant Program (HMGP) that present challenges to federal fiscal management and raise questions regarding the federal role in hazard mitigation. Efforts to mitigate the impact of natural hazards have been undertaken for decades. In the earliest history of community planning, leaders would consider the possible risks from flooding when deciding where to locate buildings along a body of water. Earthquakes, mud slides, hurricanes, wildfires, and other extreme weather events also pose a hazard to communities. Today, the challenges of mitigating the impacts of hazards are more complicated. Communities are increasingly confronted with natural disasters that are devastating and costly, and public officials are being challenged with providing for the safety of established communities. Mitigation is an activity designed to reduce the impacts from such hazards or events. The Federal Emergency Management Agency (FEMA) defines mitigation as follows: Mitigation is defined as any sustained action taken to reduce or eliminate long-term risk to life and property from a hazard event. Mitigation, also known as prevention (when done before a disaster), encourages long-term reduction of hazard vulnerability. The goal of mitigation is to decrease the need for response as opposed to simply increasing the response capability. Mitigation can save lives and reduce property damage, and should be cost-effective and environmentally sound. This, in turn, can reduce the enormous cost of disasters to property owners and all levels of government. In addition, mitigation can protect critical community facilities, reduce exposure to liability, and minimize community disruption. Mitigation activities are generally categorized as structural and nonstructural. Structural mitigation activities may include physical changes to a structure or development of standards such as building codes and material specifications. Physical changes to a structure could include retro-fitting a building to be more resistant to wind-hazards or earthquakes, or elevating a structure to reduce flood damage. Nonstructural activities may include community planning initiatives such as developing land-use zoning plans, disaster mitigation plans, and flood plans. Other nonstructural community activities may include participating in insurance programs and developing warning systems. Federal disaster mitigation assistance provides funding for both structural and nonstructural mitigation activities. A primary source of federal disaster mitigation assistance is the Hazard Mitigation Grant Program (HMGP), authorized by Section 404 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act). Major disasters have often driven federal disaster assistance legislation. Early legislation provided federal disaster assistance on a case by case basis in reaction to a disaster event. As disasters increased in frequency, scope, and cost, Congress reconsidered this approach and passed legislation that would pro-actively establish guidelines for federal disaster assistance. The Disaster Relief Act of 1974 (Disaster Relief Act), and subsequent amendments, established the basis for current federal disaster assistance. Most of the amendments to the Disaster Relief Act were enacted in response to a series of major disasters: Hurricane Carla in 1962, Hurricane Betsy in 1965, Hurricane Agnes in 1972, and a devastating earthquake in Alaska in 1964. These disasters caused considerable loss of life and property. The Disaster Relief Act of 1950 reduced the need to pass legislation each time a disaster occurred. While there was no longer a need to address each disaster individually, Congress was still concerned with the loss of life and increasing federal costs attributed to disasters. Hazard mitigation legislation provided a mechanism to enable Congress to address the impacts of disasters. While the Disaster Relief Act was intended to reduce the need for case by case disaster legislation, Congress continued to amend legislation to ease the impact of disasters. Congress took the first step in easing the impact from disasters after a series of hurricanes and flood events in the 1960s and 1970s that resulted in a significant increase in federal disaster spending. These events prompted Congress to introduce legislation to encourage hazard mitigation activities. In an effort to alleviate the costs of future disasters through mitigation, Congress amended the 1974 Disaster Relief Act in 1988. The amendment renamed the Disaster Relief Act as the Stafford Act and established the HMGP. The amendment provided federal funds at a 50 percent cost-share and established the maximum federal funding available based on 10 percent of the estimated grants made under Section 406 of the Stafford Act. The purpose of the HMGP is to reduce the loss of life and damage to property in future disasters. The HMGP provides grants for long-term hazard mitigation projects after a major disaster declaration. A major disaster declaration is issued by the President under the authority of the Stafford Act. Once a Presidential declaration has been made, hazard mitigation assistance is available and project applications can be submitted. Long-term mitigation projects may include elevating properties, acquiring properties and converting them to open space, retrofitting buildings, and constructing floodwall systems to protect critical facilities. Additional mitigation projects may be eligible. While the 1988 amendment established the foundation of hazard mitigation, the devastating disasters of the 1980s and 1990s led Congress to reassess the role of HMGP. Federal spending for disaster assistance under the Stafford Act continued to increase from 1989 to 1993, with total spending exceeding $7.6 billion. During this time, federal disaster assistance was largely attributed to hurricanes, earthquakes, and flood events. Hurricanes Hugo, Andrew, and Iniki, and widespread flooding in the Midwest, shifted the national focus on the need to reduce the risks related to disasters. After the Midwest floods in 1993, Congress once again evaluated hazard mitigation. The Hazard Mitigation and Relocation Assistance Act of 1993 (Mitigation Act of 1993) resulted in a significant change in the HMGP. While the program authorized funds for hazard mitigation, many cash-strapped states were unable to provide the 50% match necessary to implement an HMGP project. As a way to encourage states to utilize hazard mitigation funding, the federal cost-share for the HMGP was increased. The Mitigation Act of 1993 increased the federal cost-share from 50 percent to 75 percent and increased the amount of HMGP funding by changing the formula. The statute also raised the ceiling of the program. The formula percentage used to determine the level of funding for HMGP was increased to 15 percent and the basis for funding was extended from just public assistance grant expenditures to all grant expenditures under Title IV of the Stafford Act, excepting administrative costs. The Mitigation Act of 1993 also added property acquisition and relocation assistance provisions to the Stafford Act to encourage the purchase of properties and conversion to open space in areas affected by the Midwest floods in 1993 and subsequent floods. This was a landmark shift in the prioritization of hazard mitigation as part of the total federal disaster assistance package and it is discussed in greater detail in the "Funding Formula" section of this report. In January 1994, a devastating earthquake in Northridge, California killed sixty people, injured over 7,000 people, and damaged over 40,000 buildings. This disaster, in addition to significant flooding and a series of hurricanes in other states, generated renewed interest in hazard mitigation. The FEMA administration wanted to see an increase in mitigation activities while the appropriators were looking for cost-saving measures. In response to these needs, Congress increased, once again, the ceiling on federal assistance under Section 404. The Disaster Mitigation Act of 2000 (DMA 2000) increased the percentage cap by adding a provision that a state may be eligible for up to 20 percent of the total of public and individual assistance funds authorized for the disaster if the state has a FEMA-approved enhanced mitigation plan in place prior to the disaster. This provision encouraged states to develop mitigation plans and to implement mitigation projects designed to reduce future federal disaster assistance costs.