The Stafford Act provides the financial framework for the federal disaster response. It is implemented through presidential declaration of an emergency. The basics of this process are outlined in report from CRS:
Keith Bea, Federal Stafford Act Disaster Assistance: Presidential Declarations, Eligible Activities, and Funding, CRS-RL33053, March 16, 2010 (August 29, 2005 version)
The Stafford Act provides governmental discretion immunity for most of its authority:
This article has several interesting implications:
http://www.heritage.org/research/reports/2010/04/federalizing-disasters-weakens-fema-and-hurts-americans-hit-by-catastrophes
Among them:
Is the stafford act too much of a “one size fits all” approach to federal disaster response and recovery? Perhaps “small” disasters distract FEMA and create overdependence for state and local government.