Appendix E. Federal Funding for Incident Response

The costs associated with responding to chemical incidents vary depending on the size and scope of the incident and can be substantial. For example, it cost Exxon over $2 billion to clean up the Valdez oil spill, not including the criminal fines, punitive damages, natural resource damages, or other costs – estimated at approximately another $2 billion – associated with the spill.^[36] Few RPs would be able to fund cleanup activities at that magnitude; luckily most chemical releases are much smaller in scale. Still, federal financial support may be needed during response (and recovery).

Access to funding sources for chemical incident response activities varies depending on incident specifics, most notably, the extent of federal involvement in the response. For NCP responses, states are often responsible for some cost-sharing. If the President has not declared an emergency/major disaster under the Stafford Act, then funding is subject to the processes detailed in the National Response Framework Financial Management Support Annex; Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA); Clean Water Act (CWA); and Oil Pollution Act (OPA). However, if there is a presidential declaration under the Stafford Act, funding is subject to the processes and sources described in the Stafford Act.

Table 13: Federal Funding for Incident Response

Authority	Fund Source	Administered By	Coverage	Cap Amounts
Non-Stafford Act	Agency-appropriated Funds	Applicable Department/ Agency	All discharges or releases	As established by Congress
Non-Stafford Act	Responsible Party (RP)	RP	All discharges or releases as defined in CERCLA and CWA/OPA	As specified in CERCLA and CWA/OPA
Non-Stafford Act	Oil Spill Liability Trust Fund	USCG	Oil discharges only	$1 billion per incident of which no more than $500 million may be expended for natural resource damage assessments and claims
Non-Stafford Act	CERCLA (Superfund) Trust Fund	EPA	Chemical releases	$2M in total costs or 12 months in duration for federally funded “removal” response, unless certain statutory criteria are met
Stafford Act	Disaster Relief Fund	FEMA	Task initiated pursuant to ESF 10 or other ESF mission assignments	$5 million for emergency declarations. No limit for major disaster declarations

Some federal departments and agencies do not have designated funds to cover emergency and disaster operations. Nevertheless, they are expected to respond if the required operations fall within their statutory responsibilities. These agencies and departments must use agency-appropriated funds from their existing funding streams. If available funds are insufficient, agencies and departments may implement the Economy Act, which enables federal agencies to request goods and services from other federal agencies and to pay the costs of those goods and services.

Under CERCLA and the CWA, RPs are liable for the costs of responding to releases or substantial threats of release from their facilities/assets. RPs may voluntarily, or under an order, directive, or agreement, conduct response actions using their own funding.

The EPA may reimburse local governments for release related expenses. This program provides up to $25,000 per incident. Local governments must apply for reimbursement.

NCP-Related Funding Sources

To fund federal cleanup activities when RPs cannot fully cover the cost, Congress established two funds—the Oil Spill Liability Trust Fund (OSLTF) and the CERCLA (Superfund) Trust Fund.

The OSLTF is administered by the USCG National Pollution Funds Center (NPFC) for oil discharges, as defined by the CWA. Superfund is administered by the EPA for releases of hazardous substances, pollutants, and contaminants as defined by CERCLA (generally excluding oil).

Under both funds, other federal agencies can conduct reimbursable response support activities when directed/requested by the FOSC by entering into an interagency agreement with the EPA or USCG. For the OSLTF such agreements are called Pollution Removal Funding Authorizations (PRFAs). Again, states are often responsible for some cost-sharing in NCP-related responses.

The Stafford Act authorizes the federal government to deliver financial, technical, and logistical assistance to states and localities during major disasters or emergencies; the President is responsible for making the declaration that mobilizes Stafford Act funds. Both a major disaster declaration and an emergency declaration under the Stafford Act authorize supplemental federal funding. The President may declare an emergency for any occasion they believe requires federal assistance; emergency assistance is limited to $5 million. For natural catastrophes, the President may declare a major disaster. Natural catastrophes include hurricanes, tornadoes, earthquakes, volcanic eruptions, droughts, etc.^[37] as well as fires, floods, and explosions, regardless of cause. There is no assistance limit for major disasters.

FEMA is responsible for coordinating federal support under the Stafford Act, including financial support. This includes distribution of disaster funds to restore public infrastructure and reimbursement for recovery and response workers. Additionally, FEMA is responsible for reimbursing other federal agencies for their activities during response and recovery.

FEMA Grants

FEMA provides grant funding for pre- and post-emergency or -disaster related projects, such as critical recovery initiatives and innovative research. FEMA’s grants fall into three broad categories: hazard mitigation, preparedness, and resilience grants. Hazard mitigation grants fund risk reduction or removal activities before an incident or disaster occurs, such as annual funds for planning programs, flood damage reduction, facility retrofitting, and forest/grassland fire management. Preparedness grants fund non-disaster support for citizens and first responders, such as cybersecurity projects, public transportation systems, firefighters, law enforcement, and trainings. Two types of resilience grants are funded: dam safety grants and earthquake risk grants. Additional details on each type of grant can be found in eligibility requirement materials.

36.  EXXON SHIPPING CO. ET AL. v. BAKER ET AL., 200 U.S. 321,337 (2008) (Souter concurring opinion). Accessed 9/23/2020

37. For the complete list of eligible natural catastrophes, see section 102 of the Stafford Act (42 U.S.C 5122)