Management Costs, 57869-57879 [E7-20035]
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[FR Doc. E7–19831 Filed 10–10–07; 8:45 am]
BILLING CODE 6560–50–P
DEPARTMENT OF HOMELAND
SECURITY
Federal Emergency Management
Agency
44 CFR Parts 206 and 207
[Docket ID FEMA–2006–0035]
RIN 1660–AA21
Management Costs
Federal Emergency
Management Agency, DHS.
ACTION: Interim final rule.
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AGENCY:
SUMMARY: This interim final rule
implements the management costs
provisions of the Robert T. Stafford
Disaster Relief and Emergency
Assistance Act. In so doing, it simplifies
and clarifies the method by which
FEMA contributes to costs incurred by
grantees and subgrantees in
implementing the Public Assistance and
Hazard Mitigation Grant programs and
establishes fixed management cost rates
for compensating eligible grantees and
subgrantees.
DATES: Effective Date: This rule is
effective on November 13, 2007.
Comment Date: Comments are due on
or before November 13, 2007.
ADDRESSES: You may submit comments,
identified by Docket ID FEMA–2006–
0035, by one of the following methods:
Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
E-mail: FEMA-RULES@dhs.gov.
Include Docket ID FEMA–2006–0035 in
the subject line of the message.
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Fax: 866–466–5370.
Mail/Hand Delivery/Courier: Rules
Docket Clerk, Office of Chief Counsel,
Federal Emergency Management
Agency, Room 835, 500 C Street, SW.,
Washington, DC 20472.
Instructions: All Submissions
received must include the agency name
and Docket ID. Regardless of the method
used for submitting comments or
material, all submissions will be posted,
without change, to the Federal
eRulemaking Portal at https://
www.regulations.gov, and will include
any personal information you provide.
Therefore, submitting this information
makes it public. You may wish to read
the Privacy Act notice that is available
on the Privacy and Use Notice link on
the Administration Navigation Bar of
www.regulations.gov.
Docket: For access to the docket to
read background documents or
comments received, go to the Federal
eRulemaking Portal at https://
www.regulations.gov. Submitted
comments may also be inspected at
Office of Chief Counsel, Federal
Emergency Management Agency, Room
835, 500 C Street, SW., Washington, DC
20472.
FOR FURTHER INFORMATION CONTACT:
Jonna M. Long, Office of the Chief
Financial Officer, Federal Emergency
Management Agency, PP 632, 500 C
Street, SW., Washington, DC 20472,
202–646–7057, (facsimile) (202) 646–
4268, or (e-mail) jonna.long@dhs.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
Under the provisions of the Robert T.
Stafford Disaster Relief and Emergency
Assistance Act (Stafford Act), 42 U.S.C.
5121–5206, and its implementing
regulations, the Federal Emergency
Management Agency (FEMA) has the
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authority to assist State and local
governments in carrying out their
responsibilities pursuant to a
Presidentially-declared major disaster or
emergency. Two of the major programs
authorized by the Stafford Act that
provide assistance to State and local
governments are the Public Assistance
(PA) program and the Hazard Mitigation
Grant Program (HMGP).
• PA, implemented at part 206
subparts G and H of this chapter,
provides funding through grants for
emergency protective measures, debris
removal, and repair, replacement, or
restoration of facilities not met by
insurance.
• HMGP, implemented at part 206
subpart N of this chapter, provides
funding through grants to undertake
sustained mitigation measures that will
reduce or permanently eliminate the
long-term risk to people and property
from natural hazards and their effects.
Sustained mitigation measures include
acquisition for open space, elevations of
flood prone properties, and wind or
seismic retrofitting of structures.
Section 324 of the Stafford Act, 42
U.S.C. 5165b, requires FEMA to
establish management cost rates for
grantees and subgrantees that will be
used to determine contributions for
management costs and to review those
management cost rates not later than 3
years after the date of establishment of
the rates and periodically thereafter.
‘‘Management costs,’’ for purposes of
this regulation, include any indirect
costs, any administrative expenses and
any other expenses not directly
chargeable to a specific project that are
reasonably incurred by a grantee or
subgrantee in administering and
managing a PA program or HMGP grant
award.
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Funding for management and
administrative costs for PA and HMGP
grantees and subgrantees is provided
currently through one of three
mechanisms:
• Associated costs, also known as the
Statutory Administrative Costs
Allowance or the ‘‘sliding scale,’’ under
section 406(f) of the Stafford Act (which
is repealed with the establishment of
management costs under this rule
pursuant to Pub. L. 106–390, sec.
202(b)(2)), which include:
Æ Extraordinary costs incurred by a
grantee for preparation of damage
survey reports, final inspection reports,
project applications, final audits, and
related field inspections by State
employees, such as overtime pay and
per diem and travel expense of such
employees, but not regular time; and
Æ Necessary costs incurred by a
subgrantee of requesting, obtaining, and
administering Federal disaster
assistance;
• State Management Costs, which
include regular time labor costs for
grantee and temporary employees,
contract costs, equipment and office
supplies, and communications costs;
and
• Grantee indirect costs, which are
costs incurred through a project that are
not directly related to it, such as
utilities, rent, and other overhead.
These three types of costs are
currently paid in accordance with
§ 206.228(a)(2) through 206.228(a)(3)(ii)
and 206.228(b) for PA, and
§ 206.439(b)(1) through (c)(2) for HMGP
which are revised by this interim final
rule.
The management cost rates set forth
in this regulation replace what FEMA
previously paid State and local
governments for associated costs
through the ‘‘sliding scale,’’ State
management costs, and grantee indirect
costs. Management cost funding will be
requested through the PA Project
Worksheet (PW) or HMGP project
application process. PWs and HMGP
project narratives are already submitted
by grantees. Any costs that can be
directly attributable to a project (at the
grantee or subgrantee levels) will
continue to be added directly to the PA
PW, or HMGP application for the
project.
II. Comments, Responses, and Changes
to the Proposed Rule
FEMA published a Notice of Proposed
Rulemaking (NPRM) (67 FR 56130,
August 30, 2002) proposing a
methodology for calculating the
management cost rates, and guidance for
the implementation of section 324 of the
Stafford Act. In the NPRM, FEMA
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proposed to implement section 324 of
the Stafford Act by creating an entirely
new grant program for management cost
funds, separate from grants awarded for
PA and HMGP. FEMA also proposed to
provide a set amount based on a
percentage of the Federal share of PA
and HMGP projections for a declaration.
That amount would be available for PA
and HMGP grant management and
administration, and for grantees and
subgrantees, and would allow grantees
the flexibility to distribute funds in a
manner representative of their priorities
for management of the two programs.
During the 30-day comment period,
FEMA received comments from 23
States, the U.S. Virgin Islands, 2
associations, and 1 consulting firm. All
comments were considered carefully in
formulating this interim final rule. A
summary of the comments received, as
well as FEMA’s responses, is set forth
below.
a. General Comments and Changes
1. Adequacy of Rates
FEMA received several comments
about the rates that were published in
the proposed rule, with many of the
commenters claiming the rates were
inadequate for effective program
management and that FEMA did not
accurately reflect costs not paid with
Federal funds. As the rates are based on
what FEMA historically paid grantees
and subgrantees for program
management, and historically, grantees
and subgrantees were able to administer
and manage PA and HMGP at that level
of funding, FEMA does not believe the
rates will be inadequate for future
program management.
FEMA acknowledges that the rates
prescribed may not cover all costs
incurred by a grantee. The Stafford Act,
however, in sections 101(b), 401, and
501(a), establishes the Federal
Government’s role in disaster response
and recovery as supplementing State
efforts in carrying out their
responsibilities; management cost funds
are contributions, not full funding.
FEMA believes that basing the rates on
historical Federal obligations is
appropriate and, as the rates will be
applied to the Federal share of program
projections, grantees and subgrantees
are reasonably expected to contribute at
least a comparable amount of
management cost funds to the nonFederal share.
In any case, as several commenters
noted, the funds that FEMA will
provide for management costs are only
meant to contribute to costs that are not
directly chargeable at the project level.
FEMA will continue to reimburse
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administrative or project management
costs that can be properly documented
and directly charged to the project.
2. Separate Indirect Costs
Several commenters were concerned
that the proposed funding for
management costs did not comport with
OMB Circular No. A–87 and part 13
which allow for the reimbursement of
indirect costs and part 13 because in the
proposed regulations separate payment
for indirect costs would not be allowed.
However, section 324 of the Stafford Act
defines management costs as including
indirect costs; therefore, separate
reimbursement for indirect costs is not
permitted, because doing so would be
duplicative.
3. Increased Costs Due to New Grant
Process
Some commenters were concerned
that the management cost rates as
calculated did not account for the
additional costs of application,
administrative, monitoring, and
reporting requirements of the new grant
program outlined in the proposed rule.
Since publication of the proposed rule,
and in response to comments, FEMA
has decided to implement section 324 of
the Stafford Act as part of the PA and
HMGP programs and not as a separate
grant program. The additional
requirements of a separate grant
program no longer apply.
4. Combined Rate for PA and HMGP
In the proposed rule, FEMA proposed
to provide a combined set amount that
would be available for both PA and
HMGP grant management and
administration to allow grantees the
flexibility to distribute funds in a
manner representative of their priorities
for management of the two programs.
Some commenters felt that providing
a set amount for a declaration that
would be available for PA and HMGP
did not provide the flexibility to
distribute the funds in a manner
representative of the grantee’s priorities
for management of the two programs,
but rather would be impractical and
create additional burden to program
managers. Because FEMA has decided
to implement section 324 of the Stafford
Act as part of PA and HMGP and not as
a separate grant program, these concerns
are moot. In this interim final rule,
FEMA is publishing three management
cost rates: One for PA pursuant to major
disaster declarations; one for HMGP
pursuant to major disaster declarations;
and one for PA pursuant to emergency
declarations.
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b. Section-by-Section Analysis
5. Combined Rate for Grantee and
Subgrantees
FEMA received a few comments
critical of its proposal to provide
management cost funds to grantees for
both grantee and subgrantee use. One
State commented that the process could
be very divisive unless State plans were
in place and accepted prior to
declaration. FEMA agrees; accordingly,
in the interim final rule, FEMA is
requiring States to outline their plans
for subgrantee treatment in the State
administrative plans required for PA
and HMGP.
Moreover, two States commented that
management cost funding
administration would be simplified if
subgrantee costs were based on project
award or the total cost of the project.
FEMA agrees that these are viable
options for States to consider.
Nevertheless, for the reasons set forth
below, FEMA has not changed the
combined rate concept.
FEMA’s relationship in PA and
HMGP is with the grantee; the grantee
has the direct relationship with its
subgrantees. FEMA believes that, just as
a grantee has the right and the ability to
determine cost-sharing requirements for
its subgrantees, it has the right and the
ability to determine reasonable
contributions for management costs that
cannot be directly charged to projects.
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6. Updated Calculation of Management
Cost Rates
In the proposed rule, FEMA
published rates for major disaster and
emergency declarations based on
obligations for major disasters and
emergencies declared in the 6-year
period 1995 through 2000 and
supplemented by data from States that
were able to provide information on
costs not reimbursed by FEMA. As
FEMA’s disaster processing systems
were not fully automated for that
period, data came from various sources.
In August 1998, FEMA implemented
its National Emergency Management
Information System (NEMIS). NEMIS
provides the capability to extract data
on sliding scale, State management cost,
and indirect costs obligations. In this
interim final rule, FEMA is publishing
three management cost rates: One for PA
pursuant to major disaster declarations;
one for HMGP pursuant to major
disaster declarations; and one for PA
pursuant to emergency declarations.
NEMIS data for major disasters and
emergencies declared in the six-year
period August 1998 through July 2004
were used to update the management
cost rate calculations.
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1. Definitions
FEMA received comments from five
States on § 207.2 of the proposed rule.
One commenter requested that FEMA
add a definition of ‘‘close out;’’ this was
done.
In the proposed rule, FEMA defined
‘‘lock-in’’ as the amount of management
cost funds available to a grantee for a
particular major disaster or emergency,
as FEMA determines at 30 days, 6
months, and after the final HMGP lockin. Two germane comments were
received on the definition of ‘‘lock-in.’’
One commenter suggested that large
projects that take more than 6 months
for FEMA approval would not be
factored into the rate and therefore the
amount available to the State would be
reduced. FEMA believes this is incorrect
as the amount of management cost
funding that will be made available will
be based on program projections—not
approved projects. Another comment
asserted that this ‘‘produces an even
harder financial hit to the grantee and
subgrantee’’ because current subgrantee
administrative costs are based on the
total obligation, not just the Federal
share. This disparity is addressed
because the percentage is based on what
FEMA paid out over a 6 year period,
including the funding paid to
subgrantees that is based on the total
project obligation, not just the Federal
share.
One State asked what the basis for the
management cost funding would be for
the HMGP when only Individual
Assistance (IA) and HMGP are declared.
Under an IA/HMGP declaration, the
HMGP management cost rate would be
provided for management of that
program based on the estimated
projections (Federal share) for the
HMGP program.
2. Applicability and Eligibility
FEMA received several comments
about the applicable date described in
§ 207.3. In the preamble of the proposed
rule, FEMA noted that the anticipated
implementation date was subject to
change. Progress toward
implementation was slowed by several
factors and the implementation date for
management costs has been changed
accordingly.
3. Responsibilities
One commenter suggested that, rather
than reviewing the rate no later than
three years after the rule is in effect,
FEMA should review after 1 year.
Because section 324 of the Stafford Act
requires FEMA to review the
management cost rates established not
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later than 3 years after the date of
establishment of the rates and
periodically thereafter, FEMA retains
the discretion to review sooner, if
necessary. Accordingly, this change was
not made.
Two States asked whether passthrough funding to subgrantees was
mandatory. The Stafford Act defines the
management cost rates as being for
grantees and subgrantees. FEMA has
added language to clarify the grantee’s
responsibility for determining the
amount or percentage of management
cost funding to be passed through to
subgrantees and ensuring that it
provides such funds to subgrantees.
Other States expressed concerns about
setting a fixed rate. However, the
Stafford Act requires FEMA to set
management cost rates to be used to
determine contributions for
management costs—full compensation
to a grantee or subgrantee is not
implicit. FEMA believes that the sharing
of costs—as PA and HMGP costs are
shared—leads to better fiscal
responsibility and accountability.
4. Determination of Management Costs
The title of this section has been
renamed ‘‘Determination of
management cost funding’’ to more
accurately reflect that what is being
determined is the amount of funding
that will be available for management
costs, not whether specific costs are
eligible as management costs.
Two comments were received about
the timing of, and adjustments to, the
lock-in amount. One commenter felt
that locking into a final amount at 9
months would cause unfair fiscal
burdens on grantees and subgrantees. In
the proposed rule, FEMA stated it
would determine the final lock-in
amount for management cost funding at
9 months or after the final HMGP lockin ceiling was determined, whichever
was later. After HMGP lock-in, the
projected amount of funding for that
program is set. FEMA believes that
locking into a management cost amount
after the HMGP ceiling is established
maximizes the amount available for
management costs. However, since the
HMGP ceiling is currently expected to
lock at 12 months, FEMA has changed
the final lock-in date for management
costs to 12 months or after HMGP lockin, whichever is later. The other
commenter suggested that the phased
lock-in process should allow for
increases as disaster cost estimates
change; the rule as written allows this.
Two States provided comments on the
$20 million cap proposed for the total
amount of management cost funds to be
provided pursuant to a single
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declaration. One State claimed that $20
million equated to a $453 million event,
which would not be out of the ordinary.
FEMA does not agree with this
calculation, as it assumes the $453
million was derived by calculating that
$20 million is 4.41 percent (the rate in
the proposed rule) of $453 million. In
this case, $453 million would indeed
represent combined PA and HMGP
projections; however, on average, PA
and HMGP represent approximately 58
percent of total disaster costs. Therefore,
$20 million in management cost funding
would approximately equal a $781
million event ($781 million × .58 = 453
million)—far more out of the ordinary.
The other State commented that ‘‘[t]he
identification of $20 million as the ‘‘not
to exceed’’ amount for management
costs appears to be the real reason for
this proposed rule.’’ FEMA disagrees
with this statement, as the rule is being
promulgated in response to a change in
law (section 324 of the Stafford Act, 42
U.S.C. 5165b).
Although FEMA is now providing
separate management cost rates and
funding for PA and HMGP as part of the
programs and not as a separate grant
program, the single cap for management
costs for the declaration has been
retained.
5. Eligible Use of Funds
Since publication of the proposed
rule, and in response to comments,
FEMA has changed the title of this
section to ‘‘Use of funds’’ to more
accurately reflect the content of the
section.
FEMA received a number of
comments and questions on this section,
many related to individual items that
were listed as ‘‘eligible’’ or ‘‘ineligible.’’
The items listed in the proposed rule
were not meant to be exhaustive, but
rather were to be representative of the
types of costs for which the use of
management cost funding would be
appropriate. In response to comments,
FEMA has determined that the lists are
not necessary. Instead, the interim final
rule states that all charges must be
related to administration of PA and
HMGP, must be properly documented,
and must be made in accordance with
§ 13.22.
FEMA received a number of questions
about the treatment of indirect costs.
Because the statutory definition of
management costs in section 324 of the
Stafford Act, 42 U.S.C. 5165b, includes
indirect costs, grantees and subgrantees
may not add such costs to project costs
or request reimbursement separately.
After the effective date of this interim
final rule, the only available mechanism
for reimbursement of indirect costs for
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PA and HMGP is use of management
cost funding provided in this section.
In the NPRM, FEMA proposed that
any management cost funds that were
not needed for a specific declaration
could be retained by the grantee or
subgrantee, upon approval of a spending
plan for improvement of the disaster
programs’ general financial and grants
management. Because such costs are
already eligible management costs, if
directly attributable to program
management for that declaration, FEMA
has determined there is no need for a
second spending plan. Any such
planned expenditures should be
included with the documentation
submitted to support the management
cost funding request and any
management cost funds not properly
expended in direct support of PA or
HMGP will be deobligated by FEMA.
6. Application Procedures
FEMA received several comments
about the proposed process and timing
for applying for management cost
funding. Because the requirements of a
separate grant program no longer apply,
the process for requesting management
cost funding is simplified. Accordingly,
FEMA has decided to implement
section 324 by continuing to use the
same application processes for
management costs as it is currently
using, rather than as a separate grant
program. That is, grantees will continue
to apply for PA management cost
funding using a PW and its associated
forms, if applicable, and for HMGP
management cost funding using a
project narrative.
Additionally, FEMA will not require
detailed justifications to support
management cost funding requests until
120 days after the date of declaration.
This change will alleviate the burden to
the grantee, at the busy time of initial
response and recovery, and afford the
opportunity for the grantee to provide a
more thorough and accurate request to
FEMA.
In the interim final rule, the
‘‘Application procedures’’ section has
been changed to ‘‘Procedures for
requesting management cost funding.’’
7. Grants Management Oversight
Since publication of the proposed
rule, and in response to comments,
FEMA has decided to implement
section 324 of the Stafford Act as part
of the PA and HMGP programs and not
as a separate grant program.
Subsequently, this section of the rule
has been changed to ‘‘Management cost
funding oversight.’’
In the proposed rule, FEMA stated
that management cost funds would need
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to be expended not later than 6 years
from the date of major disaster or
emergency declaration, or by 90 days
after grant closeout, whichever is
sooner. The 6 year limit was meant to
encourage proper grant management,
which includes timely grant closeout. In
response to comments asking for
additional time and after further
analysis, FEMA has changed the 6 year
limit to a maximum of 8 years for major
disaster declarations and 2 years for
emergency declarations, or 180 days
after the latest performance period date
of a non-management cost PA PW or
HMGP project narrative, respectively,
for both types of declarations,
whichever is sooner.
8. Declarations Before October 1, 2002
Since publication of the proposed
rule, FEMA has changed the
implementation date of section 324 of
the Stafford Act. Subsequently, § 207.9
of the rule has been changed to
‘‘Declarations before November 13,
2007.’’ This section includes provisions
on administrative and management
costs previously described in §§ 206.228
and 206.439.
FEMA received four comments
disagreeing with the provision in the
proposed rule that imposed a timeframe
on performance periods for declarations
made before implementation of section
324. In the interest of ensuring
responsible grant management practices
and moving towards consistency in the
administration of management and
administrative costs provided for the
affected programs, FEMA believes this
provision, which allows a reasonable
amount of time for grantees to comply,
is an appropriate and necessary
provision.
9. Review of Management Cost Rates
One State commented that it did not
believe the ‘‘solution to controlling
expenses is to adopt the flat rate
percentage as published and then go
back to the drawing board after this rule
is in effect’’ and suggested deleting the
periodic review and documentation
requirements. FEMA did not make this
change, as the Stafford Act requires the
review and documentation. Further,
section 324 of the Stafford Act is not a
‘‘solution to controlling expenses,’’ but
rather a simplification of the multiple
methods currently used to contribute to
grantee and subgrantee costs.
III. Regulatory Requirements
Administrative Procedure Act
Even though an NPRM has been
published, FEMA is publishing this
interim final rule rather than proceeding
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to a final rule to provide the public with
an additional opportunity to comment.
FEMA has opted to provide this
additional opportunity to comment
although the changes to the regulations
made in this interim rule are a logical
outgrowth of the proposed regulations
published in the NPRM and additional
opportunity for public comment is not
mandatory. As previously addressed in
this preamble, the substantive changes
to this regulation are as follows:
• Because of comments that raised
concerns of increased costs and
workload due to the creation of a new
grant process, FEMA revised the
regulations to incorporate management
cost funding into the existing PA and
HMGP programs.
• FEMA received comments from the
public concerned that providing a
combined set amount in management
cost funds that would be available for
both PA and HMGP would be
impractical and create additional
burden to program managers. Because of
these comments, FEMA has revised the
regulations to provide three
management cost rates: PA pursuant to
major disaster declarations; HMGP
pursuant to major disaster declarations;
and PA pursuant to emergency
declarations. Due to the availability of
better data provided by the use of the
National Emergency Management
Information System (NEMIS), in this
interim rule FEMA updated the
management cost rate calculations for
those three rates.
• FEMA received comments that
providing management cost funds to
grantees for both grantee and subgrantee
use could be divisive unless State plans
are in place and accepted prior to
declaration. FEMA agreed and revised
the regulation to require States to
outline their plans for subgrantee
treatment in the State administrative
plans already required for PA and
HMGP.
• The implementation date was
changed, as noted in the preamble to the
NPRM.
• In response to comments concerned
that locking into a final amount at 9
months would cause unfair fiscal
burdens, FEMA changed the final lockin date for management costs to 12
months or after HMGP lock-in,
whichever is later.
• FEMA received several comments
about the proposed process and timing
for applying for management cost
funding. As a response, FEMA will not
require detailed justifications to support
management cost funding requests until
120 days after the date of declaration to
alleviate the burden on the grantee and
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afford them the opportunity to provide
a more thorough and accurate request.
• In response to comments asking for
additional time to expend management
cost funds, FEMA extended the limit of
6 years from the date of major disaster
or emergency declaration or 90 days
after grant closeout, whichever is
sooner, to a maximum of 8 years for
major disaster declarations and 2 years
for emergency declarations, or 180 days
after the latest performance period date
of a non-management cost PA, PW or
HMGP project narrative, respectively,
for both types of declarations,
whichever is sooner.
Further, under 5 U.S.C. 553(b)(B)
FEMA finds that good cause exists for
not publishing a Supplemental Notice of
Proposed Rulemaking (SNPRM),
because publishing an SNPRM would be
contrary to public interest since
immediate action is needed to correct
weaknesses in awarding funds to cover
grantee operations associated with the
administration of PA and HMGP grants.
As stated earlier in the preamble to this
interim rule, Public Law 106–390,
section 202(b)(2), created section 324 of
the Stafford Act which becomes
effective when FEMA has promulgated
a management cost rate regulation (this
regulation). Until this regulation is
published, management cost funding is
provided pursuant to subsection 406(f)
of the Stafford Act, OMB Circular No.
A–87, and part 13.
In its ‘‘Review of FEMA Policy for
Funding Public Assistance
Administrative Costs’’ (GC–HQ–06–40)
dated April 28, 2006, FEMA was
advised by the Department of Homeland
Security Office of Inspector General
(OIG), that it should take immediate
action to implement section 324 of the
Stafford Act. This was reiterated in the
OIG’s ‘‘Review of FEMA Internal
Controls for Funding Administrative
Cost under State Management Grants’’
memorandum dated January 9, 2007
(OIG–07–21). This interim rule is
intended to establish management cost
rates to replace the administrative
allowance and state management grants
and address funding and related control
weaknesses immediately, while
continuing to take public comment and,
perhaps, further amend the regulations
in light of those comments.
Pursuant to 5 U.S.C. 553(d), FEMA is
making this rule effective 30 days after
publication in the Federal Register.
FEMA invites further comment from the
public on this interim final rule.
Congressional Review of Agency
Rulemaking
FEMA has sent this interim final rule
to the Congress and to the Government
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57873
Accountability Office under the
Congressional Review of Agency
Rulemaking Act, 5 U.S.C. 801–808. The
rule in not a ‘‘major rule’’ within the
meaning of that Act and will not result
in an annual effect on the economy of
100,000,000 or more. Moreover, it will
not result in a major increase in costs or
prices for consumers, individual
industries, Federal, State, or local
government agencies, or geographic
regions. Nor does FEMA expect that it
will have ‘‘significant adverse effects’’
on competition, employment,
investment, productivity, innovation, or
on the ability of United States-based
enterprises to compete with foreignbased enterprises.
National Environmental Policy Act
(NEPA)
FEMA explained when the proposed
rule was published that § 10.8(d)(2)(ii)
excludes this rule from the preparation
of an environmental assessment or
environmental impact statement, where
the rule relates to actions that qualify for
categorical exclusion under
§ 10.8(d)(2)(i), such as the provision of
funding for management costs. No
commenters disagreed with our
determination. FEMA has not prepared
an environmental assessment or
environmental impact statement for this
interim final rule.
Paperwork Reduction Act of 1995
In the proposed rule, FEMA proposed
to provide management cost funding
through a new grant program. Because
that new grant program would collect
new information from the public, FEMA
determined that it would be subject to
the Paperwork Reduction Act (PRA) of
1995, 44 U.S.C. 3501–3520, and
obtained Office of Management and
Budget (OMB) approval for Control
Number 1660–0063, Management Costs
information collection. As a result of
public comments and further analysis,
as discussed elsewhere in the preamble
of this interim rule FEMA has
withdrawn its proposal to create a new
grant program, and has decided to
implement section 324 of the Stafford
Act as part of the already existing PA
and HMGP programs. FEMA submitted
an OMB83D form on September 16,
2005 to discontinue OMB Control
Number 1660–0063, Management Costs
information collection; OMB approved
the discontinuance on September 21,
2005. FEMA no longer intends to collect
information with respect to that
proposed grant program.
In this interim rule, FEMA
implements section 324 by continuing
to use the same application processes
for management costs as it is currently
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using, rather than as a separate grant
program. That is, grantees will continue
to apply for PA management cost
funding using the Project Worksheet
(PW) and its associated forms, if
applicable, as already approved by
OMB. The PW and associated forms for
PA management cost funding are
approved under OMB Control Number
1660–017, Public Assistance Progress
Report and Program Forms information
collection which expires on October 31,
2008. HMGP management cost funding
would be provided using the project
narrative approved under OMB Control
Number 1660–0076, Hazard Mitigation
Grant Program Application and
Reporting information collection which
expires May 31, 2010.
Use of these collections under this
interim final rule does not impose
additional burden under those program
collections. By allowing grantees to
continue to request management cost
funding via the same processes with
which they are familiar, FEMA expects
that this rule will simplify the process
and reduce the burden to the public.
Regulatory Flexibility Act
Under the Regulatory Flexibility Act
(5 U.S.C. 601 et seq.), agencies must
consider the impact of their rulemakings
on ‘‘small entities’’ (small businesses,
small organizations and local
governments). When 5 U.S.C. 553
requires an agency to publish a notice
of proposed rulemaking, the Regulatory
Flexibility Act requires a regulatory
flexibility analysis for both the proposed
rule and the final rule if the rulemaking
could ‘‘have a significant economic
impact on a substantial number of small
entities.’’ The Act also provides that if
a regulatory flexibility analysis is not
required, the agency must certify in the
rulemaking document that the
rulemaking will not ‘‘have a significant
economic impact on a substantial
number of small entities.’’
This interim final rule affects grantees
that are State governments, or in certain
situations, Indian tribal governments. It
does not impact private sector entities.
Further, the result of this interim final
rule will be to reduce the administrative
burden on both grantees and the Federal
government by simplifying and
clarifying the application process, grant
administration, and reimbursement
methods for management and
administration costs by reducing the
current three methods and processes to
one. Further, grantees currently make
numerous petitions for payment.
Implementation of this interim final rule
is expected to reduce the number of
times grantees will need to petition to
receive payment for management costs.
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This interim final rule does not
impact the amount of funding available
for management costs, as the
percentages for reimbursement
proposed are based on historical average
obligations. Although there is a
proposed cap on the amount of
management costs that can be provided
per declaration, the interim final rule
provides a mechanism for waiver in
extraordinary circumstances.
Because this interim final rule does
not impact the amount of funds
provided to grantees, but simply
reduces the administrative burden to
State and Indian tribal government
grantees, FEMA certifies that it will not
have a significant economic impact on
a substantial number of small entities.
Executive Order 12866, Regulatory
Planning and Review
Under Executive Order 12866, 58 FR
51735, Oct. 4, 1993, a significant
regulatory action is subject to OMB
review and the requirements of the
Executive Order. The Executive Order
defines ‘‘significant regulatory action’’
as one that is likely to result in a rule
that may:
(1) Have an annual effect on the
economy of 100 million or more, or may
adversely affect in a material way the
economy, a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
State, local or tribal governments or
communities;
(2) Create a serious inconsistency or
otherwise interfere with an action taken
or planned by another agency;
(3) Materially alter the budgetary
impact of entitlements, grants, user fees,
or loan programs, or the rights and
obligations of recipients thereof; or
(4) Raise novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
set forth in the Executive Order.
This rule is not a ‘‘significant
regulatory action’’ under Executive
Order 12866; therefore, OMB has not
reviewed it under that Order. As FEMA
stated in the proposed rule, it would not
have an annual effect on the economy
of 100 million or more and FEMA
knows of no other conditions that
would qualify the rule as a ‘‘significant
regulatory action’’ within the definition
of section 3(f) of the Executive Order.
As explained in the Regulatory
Flexibility Act section, this interim final
rule does not impact the amount of
funding that will be provided by FEMA
for management costs. Rather, the
interim final rule simplifies and clarifies
the processing and administration of
management cost funding. The interim
final rule will reduce the administrative
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burden to both grantees and FEMA by
reducing the multiple methods of
reimbursement from three to one.
Further, grantees currently make
numerous petitions for payment.
Implementation of this interim final rule
will greatly reduce the number of times
grantees will need to petition to receive
payment for management costs.
This interim final rule does not
materially alter the budgetary impact of
the Public Assistance and Hazard
Mitigation grant programs as the amount
of funding available for management
costs under this interim final rule is
based on historical average obligations.
Although there is a proposed cap on the
amount of management costs that can be
provided per declaration, the interim
final rule provides a mechanism for
waiver in extraordinary circumstances.
Because this interim final rule
simplifies, clarifies, and reduces the
administrative burden to grantees and
FEMA, there are no additional costs due
to this regulatory action.
Executive Order 13132, Federalism
Executive Order 13132 sets forth
principles and criteria that agencies
must adhere to in formulating and
implementing policies that have
federalism implications, that is,
regulations that have ‘‘substantial direct
effects on the States, on the relationship
between the national government and
the States, or on the distribution of
power and responsibilities among the
various levels of government.’’ Federal
agencies must closely examine the
statutory authority supporting any
action that would limit the
policymaking discretion of the States,
and to the extent practicable, must
consult with State and local officials
before implementing any such action.
FEMA reviewed the proposed rule
under Executive Order 13132 and
determined that the rule did not have
‘‘substantial direct effects on the States’’
and therefore did not have the type of
federalism implications contemplated
by the Executive Order. Four
commenters disagreed, believing that
there would be a shift of power and
responsibilities. FEMA believes that the
interim final rule is consistent with the
terms of Executive Order 13132 in that
it ‘‘shall grant the States the maximum
administrative discretion possible’’ and
‘‘shall encourage States to develop their
own policies to achieve program
objectives’’ as directed by the Executive
Order. The interim final rule does not
significantly affect the rights, roles, and
responsibilities of States, involves no
additional preemption of State law, and
does not limit State policymaking
discretion.
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Executive Order 12898, Environmental
Justice
Under Executive Order 12898, Federal
Actions to Address Environmental
Justice in Minority Populations and
Low-Income Populations, 59 FR 7629,
Feb. 16, 1994, FEMA has undertaken to
incorporate environmental justice into
its policies and programs. The Executive
Order requires each Federal agency to
conduct its programs, policies, and
activities that substantially affect human
health or the environment in a manner
that ensures that those programs,
policies, and activities do not have the
effect of excluding persons from
participation in, denying persons the
benefits of, or subjecting persons to
discrimination because of their race,
color, or national origin. FEMA stated
when it published the proposed rule
that no action it could anticipate under
the proposed rule would have a
disproportionately high and adverse
human health effect on any segment of
the population. No commenter
disagreed with this determination and
accordingly, FEMA reiterates that the
requirements of the Executive Order do
not apply to this rule.
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Executive Order 13175, Consultation
and Coordination With Indian Tribal
Governments
Under Executive Order 13175, FEMA
may not issue a regulation that is not
required by statute, that significantly or
uniquely affects the communities of
Indian tribal governments, and that
imposes substantial direct compliance
costs on those communities, unless the
Federal Government provides the funds
necessary to pay the direct compliance
costs incurred by the tribal government,
or FEMA consults with those
governments.
This rule is required by statute, and,
as FEMA stated when the proposed rule
was published, it did not believe that
the rule would significantly and
uniquely affect the communities of
Indian tribal governments, or the
relationship between the Federal
Government and Indian tribes, or the
distribution of power and
responsibilities between the Federal
Government and Indian tribes.
Moreover, the rule did not impose
substantial direct compliance costs on
tribal governments, nor did it preempt
tribal law, impair treaty rights or limit
the self-governing powers of tribal
governments. FEMA received no
comments disagreeing with this
determination. The interim final rule
will also not significantly and uniquely
affect the communities of Indian tribal
governments, or the relationship
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between the Federal Government and
Indian tribes. Moreover, the rule does
not impose substantial direct
compliance costs on tribal governments,
nor does it preempt tribal law, impair
treaty rights or limit the self-governing
powers of tribal governments.
List of Subjects
44 CFR Part 206
Administrative costs, Administrative
practice and procedure, Disaster
assistance, Grant programs,
Management costs, Reporting and
recordkeeping requirements.
44 CFR Part 207
Administrative costs, Administrative
practice and procedure, Disaster
assistance, Grant programs,
Management costs, Reporting and
recordkeeping requirements.
I For the reasons set forth in the
preamble, the Federal Emergency
Management Agency amends 44 CFR
chapter I as set forth below:
PART 206—FEDERAL DISASTER
ASSISTANCE
1. Revise the part heading of 44 CFR
part 206 as set forth above:
I 2. The authority citation for part 206
is revised to read as follows:
I
Authority: Robert T. Stafford Disaster
Relief and Emergency Assistance Act, 42
U.S.C. 5121 through 5206; Reorganization
Plan No. 3 of 1978, 43 FR 41943, 3 CFR, 1978
Comp., p. 329; Homeland Security Act of
2002, 6 U.S.C. 101; E.O. 12127, 44 FR 19367,
3 CFR, 1979 Comp., p. 376; E.O. 12148, 44
FR 43239, 3 CFR, 1979 Comp., p. 412; E.O.
13286, 68 FR 10619, 3 CFR, 2003 Comp., p.
166.
3. Add new paragraph (b)(1)(iii)(K) to
§ 206.207 to read as follows:
I
§ 206.207 Administrative and audit
requirements.
*
*
*
*
*
(b) * * *
(1) * * *
(iii) * * *
(K) Determining the reasonable
percentage or amount of pass-through
funds for management costs provided
under 44 CFR part 207 that the grantee
will make available to subgrantees, and
the basis, criteria, or formula for
determining the subgrantee percentage
or amount.
*
*
*
*
*
I 4. Remove paragraphs (a)(2), (a)(3),
and (b); reserve paragraph (b);
redesignate paragraph (a)(4) as
paragraph (a)(2) and revise it; and add
new paragraph (a)(3) to § 206.228 to
read as follows:
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§ 206.228
57875
Allowable costs.
*
*
*
*
*
(a) * * *
(2) Force Account Labor Costs. The
straight- or regular-time salaries and
benefits of a subgrantee’s permanently
employed personnel are not eligible in
calculating the cost of eligible work
under sections 403 and 407 of the
Stafford Act, 42 U.S.C. 5170b and 5173.
For the performance of eligible
permanent restoration under section 406
of the Stafford Act, 42 U.S.C. 5172,
straight-time salaries and benefits of a
subgrantee’s permanently employed
personnel are eligible.
(3) Administrative and management
costs for major disasters and
emergencies will be paid in accordance
with 44 CFR part 207.
(b) [Reserved]
I 5. Add new paragraph (b)(4)(xiv) to
§ 206.437 to read as follows:
§ 206.437
State administrative plan.
*
*
*
*
*
(b) * * *
(4) * * *
(xiv) Determine the percentage or
amount of pass-through funds for
management costs provided under 44
CFR part 207 that the grantee will make
available to subgrantees, and the basis,
criteria, or formula for determining the
subgrantee percentage or amount.
*
*
*
*
*
I 6. Revise § 206.439 to read as follows:
§ 206.439
Allowable costs.
(a) General requirements for
determining allowable costs are
established in 44 CFR 13.22. Exceptions
to those requirements as allowed in 44
CFR 13.4 and 13.6 are explained in
paragraph (b) of this section.
(b) Administrative and management
costs for major disasters will be paid in
accordance with 44 CFR part 207.
I 7. Add part 207 to read as follows:
PART 207—MANAGEMENT COSTS
Sec.
207.1 Purpose.
207.2 Definitions.
207.3 Applicability and eligibility.
207.4 Responsibilities.
207.5 Determination of management cost
funding.
207.6 Use of funds.
207.7 Procedures for requesting
management cost funding.
207.8 Management cost funding oversight.
207.9 Declarations before November 13,
2007.
207.10 Review of management cost rates.
Authority: Robert T. Stafford Disaster
Relief and Emergency Assistance Act, 42
U.S.C. 5121 through 5206; Reorganization
Plan No. 3 of 1978, 43 FR 41943, 3 CFR, 1978
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Comp., p. 329; Homeland Security Act of
2002, 6 U.S.C. 101; E.O. 12127, 44 FR 19367,
3 CFR, 1979 Comp., p. 376; E.O. 12148, 44
FR 43239, 3 CFR, 1979 Comp., p. 412; E.O.
13286, 68 FR 10619, 3 CFR, 2003 Comp., p.
166.
§ 207.1
Purpose.
The purpose of this part is to
implement section 324 of the Robert T.
Stafford Disaster Relief and Emergency
Assistance Act (Stafford Act), 42 U.S.C.
5165b.
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§ 207.2
Definitions.
Cap means the maximum dollar
amount that may be provided to a
grantee for management cost funds for a
single declaration pursuant to § 207.5(c)
of this part.
Chief Financial Officer (CFO) is the
Chief Financial Officer of FEMA, or his/
her designated representative.
Cognizant Agency means the Federal
agency responsible for reviewing,
negotiating, and approving cost
allocation plans or indirect cost
proposals developed on behalf of all
Federal agencies. The Office of
Management and Budget (OMB)
publishes a listing of cognizant
agencies.
Grant means an award of financial
assistance making payment in cash,
property, or in kind for a specified
purpose, by the Federal Government to
an eligible grantee.
Grantee for purposes of this part
means the government to which a
Public Assistance (PA) or Hazard
Mitigation Grant Program (HMGP) grant
is awarded that is accountable for the
use of the funds provided. The grantee
is the entire legal entity even if only a
particular component of the entity is
designated in the grant award
document. Generally, the State is the
grantee. However, after a declaration, an
Indian tribal government may choose to
be a grantee, or may act as a subgrantee
under the State for purposes of
administering a grant under PA, HMGP,
or both. When an Indian tribal
government has chosen to act as grantee,
it will also assume the responsibilities
of a ‘‘grantee’’ under this part for the
purposes of administering management
cost funding.
Hazard Mitigation Grant Program
(HMGP) means the program
implemented at part 206, subpart N of
this chapter.
HMGP lock-in ceiling means the level
of HMGP funding available to a grantee
for a particular disaster declaration.
HMGP project narrative refers to the
request submitted for HMGP funding.
Indian tribal government is a
Federally recognized governing body of
an Indian or Alaska Native tribe, band,
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nation, pueblo, village, or community
that the Secretary of Interior
acknowledges to exist as an Indian tribe
under the Federally Recognized Tribe
List Act of 1994, 25 U.S.C. 479a. This
does not include Alaska Native
corporations, the ownership of which is
vested in private individuals.
Indirect Costs means costs that are
incurred by a grantee for a common or
joint purpose benefiting more than one
cost objective that are not readily
assignable to the cost objectives
specifically benefited.
Lock-in means the amount of
management cost funds available to a
grantee for PA or HMGP, respectively,
for a particular major disaster or
emergency, as FEMA determines at 30
days, 6 months, and 12 months or upon
calculation of the final HMGP lock-in
ceiling, whichever is later.
Management Costs means any
indirect costs, administrative expenses,
and any other expenses not directly
chargeable to a specific project that are
reasonably incurred by a grantee or
subgrantee in administering and
managing a PA or HMGP grant award.
For HMGP, management cost funding is
provided outside of Federal assistance
limits defined at § 206.432(b) of this
chapter.
Project refers to a project as defined
at § 206.201(i) of this chapter for PA or
eligible activities as defined at
§ 206.434(d) of this chapter for HMGP.
Project Worksheet (PW) refers to
FEMA Form 90–91, or any successor
form, on which the scope of work and
cost estimate for a logical grouping of
work required under the PA program as
a result of a declared major disaster or
emergency is documented.
Public Assistance (PA) means the
program implemented at part 206,
subparts G and H of this chapter.
Regional Administrator is the head of
a FEMA regional office, or his/her
designated representative, appointed
under section 507 of the Post-Katrina
Emergency Management Reform Act of
2006 (Pub. L. 109–295). The term also
refers to Regional Directors as discussed
in Part 2 of this chapter.
Stafford Act refers to the Robert T.
Stafford Disaster Relief and Emergency
Assistance Act, as amended (42 U.S.C.
5121–5206).
State is any State of the United States,
the District of Columbia, Puerto Rico,
the Virgin Islands, Guam, American
Samoa, and the Commonwealth of the
Northern Mariana Islands.
Subgrantee means the government or
other legal entity to which a grantee
awards a subgrant and which is
accountable to the grantee for the use of
the funds provided. Subgrantees can be
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a State agency, local government,
private nonprofit organization, or Indian
tribal government.
§ 207.3
Applicability and eligibility.
Only PA and HMGP grantees with PA
and HMGP grants awarded pursuant to
major disasters and emergencies
declared by the President on or after
November 13, 2007 are eligible to apply
to FEMA for management cost funding
under this part.
§ 207.4
Responsibilities.
(a) General. This section identifies
key responsibilities of FEMA and
grantees in carrying out section 324 of
the Stafford Act, 42 U.S.C. 5165b. These
responsibilities are unique to the
administration of this part and are in
addition to common Federal
Government requirements of grantees
and subgrantees, consistent with OMB
circulars and other applicable
requirements, such as part 13 of this
chapter.
(b) FEMA. FEMA is responsible for:
(1) Determining the lock-in amount
for management costs in accordance
with § 207.5.
(2) Obligating funds for management
costs in accordance with § 207.5(b).
(3) Deobligating funds provided for
management costs not disbursed in
accordance with § 207.8(b).
(4) Reviewing management cost rates
not later than 3 years after this rule is
in effect and periodically thereafter.
(c) Grantee. The grantee must:
(1) Administer management cost
funds to ensure that PA and HMGP, as
applicable, are properly implemented
and closed out in accordance with
program timeframes and guidance.
(2) Determine the reasonable amount
or percentage of management cost
funding to be passed through to
subgrantees for contributions to their
costs for administering PA and HMGP
projects and ensure that it provides such
funds to subgrantees.
(3) Address procedures for subgrantee
management costs amount or percentage
determination, pass through, closeout,
and audit in the State administrative
plan required in § 206.207(b) of this
chapter for PA and § 206.437 of this
chapter for HMGP.
§ 207.5 Determination of management cost
funding.
(a) General. This section describes
how FEMA determines the amount of
funds that it will contribute under this
part for management costs for PA and/
or HMGP for a particular major disaster
or emergency.
(b) Lock-in. FEMA will determine the
amount of funds that it will make
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available for management costs by a
lock-in, which will act as a ceiling for
funds available to a grantee, including
its subgrantees.
(1) Not earlier than 30 days and not
later than 35 days from the date of
declaration, FEMA will provide the
grantee preliminary lock-in amount(s)
for management costs based on the
projections at that time of the Federal
share for financial assistance for PA and
HMGP, as applicable. In accordance
with § 207.7(c), FEMA will obligate 25
percent of the estimated lock-in
amount(s) to the grantee.
(2) For planning purposes, FEMA will
revise the lock-in amount(s) at 6 months
after the date of the declaration. In
accordance with § 207.7(e), FEMA may
obligate interim amount(s) to the
grantee.
(3) FEMA will determine the final
lock-in amount(s) 12 months after date
of declaration or after determination of
the final HMGP lock-in ceiling,
whichever is later. FEMA will obligate
the remainder of the lock-in amount(s)
to the grantee in accordance with
§ 207.7(f).
(4) Rates. (i) For major disaster
declarations, FEMA will determine the
lock-in for PA based on a flat percentage
rate of the Federal share of projected
eligible program costs for financial
assistance pursuant to sections 403, 406,
and 407 of the Stafford Act, 42 U.S.C.
5170b, 5172, and 5173, respectively, but
not including direct Federal assistance.
For major disaster declarations on or
after November 13, 2007, the PA rate
will be 3.34 percent.
(ii) For major disaster declarations,
FEMA will determine the lock-in for
HMGP based on a flat percentage rate of
the Federal share of projected eligible
program costs under section 404 of the
Stafford Act, 42 U.S.C. 5170c. For major
disaster declarations on or after
November 13, 2007, the HMGP rate will
be 4.89 percent.
(iii) For emergency declarations,
FEMA will determine the lock-in for PA
based on a flat percentage rate of the
Federal share of projected eligible
program costs for financial assistance
(sections 502 and 503 of the Stafford
Act, 42 U.S.C. 5192 and 5193,
respectively), but not including direct
Federal assistance. For emergency
declarations on or after November 13,
2007 the rate will be 3.90 percent.
(c) The dollar amount provided to a
grantee for management cost funds for a
single declaration will not exceed
20,000,000, except as described in
paragraphs (d) and (e) of this section.
(d) The grantee must justify in writing
to the Regional Administrator any
requests to change the amount of the
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lock-in or the cap, extend the time
period before lock-in, or request an
interim obligation of funding at the time
of the 6-month lock-in adjustment. The
Regional Administrator will recommend
to the Chief Financial Officer whether to
approve the extension, change, or
interim obligation. Extensions, changes
to the lock-in, or interim obligations
will not be made without the approval
of the Chief Financial Officer.
(e) The Chief Financial Officer may
change the amount of the lock-in or the
cap, or extend the time before lock-in,
if the Chief Financial Officer determines
that the projections used to determine
the lock-in were inaccurate to such a
degree that the change to the lock-in
would be material, or for other reasons
in his or her discretion that may
reasonably warrant such changes. The
Chief Financial Officer will not make
such changes without consultation with
the grantee and the Regional
Administrator.
§ 207.6
Use of funds.
(a) The grantee or subgrantee must use
management cost funds provided under
this part in accordance with § 13.22 of
this chapter and only for costs related to
administration of PA or HMGP,
respectively. All charges must be
properly documented in accordance
with § 207.8(f).
(b) Indirect costs may not be charged
directly to a project or reimbursed
separately, but rather are considered to
be eligible management costs under this
part.
(c) Activities and costs that can be
directly charged to a project with proper
documentation are not eligible for
funding under this part.
§ 207.7 Procedures for requesting
management cost funding.
(a) General. This section describes the
procedures to be used by the grantee in
requesting management cost funding.
(b) State Administrative Plan
Requirements. State administrative
plans, as required in § 206.207(b) of this
chapter for PA and § 206.437 of this
chapter for HMGP, must be amended to
include procedures for subgrantee
management costs amount or percentage
determination, pass through, closeout,
and audit, as required by § 207.4(c)(3)
before management cost funds will be
provided under this part.
(c) Initial Funding Request
Submission. Upon notification of the
preliminary lock-in amount(s) for
management costs based on the Federal
share of the projected eligible program
costs for financial assistance at that time
for PA and HMGP, as applicable, the
grantee must submit its initial
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57877
management cost funding request to the
Regional Administrator. FEMA must
receive the initial funding request before
it will provide any management cost
funds under this part.
(1) For PA management costs, funding
requests shall be submitted using a PW.
(2) For HMGP management costs,
funding requests shall be submitted
using an HMGP project narrative.
(d) Request Documentation. The
grantee is required to submit, no later
than 120 days after the date of
declaration, documentation to support
costs and activities for which the
projected lock-in for management cost
funding will be used. In extraordinary
circumstances, FEMA may approve a
request by a grantee to submit support
documentation after 120 days. FEMA
will work with the grantee to approve or
reject the request within 30 days of
receipt of the request. If the request is
rejected, the grantee will have 30 days
to resubmit it for reconsideration and
approval. FEMA will not obligate the
balance of the management costs lockin pursuant to a final funding request as
described in paragraph (f) of this section
or any interim amounts as allowed
under paragraph (e) of this section
unless the grantee’s documentation is
approved. The documentation must
include:
(1) A description of activities,
personnel requirements, and other costs
for which the grantee will use
management cost funding provided
under this part;
(2) The grantee’s plan for expending
and monitoring the funds provided
under this part and ensuring sufficient
funds are budgeted for grant closeout;
and
(3) An estimate of the percentage or
amount of pass-through funds for
management costs provided under this
part that the grantee will make available
to subgrantees, and the basis, criteria, or
formula for determining the subgrantee
percentage or amount (e.g., number of
projects, complexity of projects, X
percent to any subgrantee).
(e) Interim Funding Request. If the
grantee can justify a bona fide need for
an additional obligation of management
cost funds at 6 months, the grantee may
submit a request to the Regional
Administrator. Any interim obligations
by FEMA must be approved by the Chief
Financial Officer and will not exceed an
amount equal to 10 percent of the 6month lock-in amount, except in
extraordinary circumstances.
(f) Final Funding Request. Upon
notification of the final lock-in
amount(s), the grantee must submit a
final management cost funding request
to the Regional Administrator. Any
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necessary revisions to supporting
documentation must be attached to the
final funding request.
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§ 207.8 Management cost funding
oversight.
(a) General. The grantee has primary
responsibility for grants management
activities and accountability of funds
provided for management costs as
required by part 13 of this chapter,
especially §§ 13.20 and 13.36. The
grantee is responsible for ensuring that
subgrantees meet all program and
administrative requirements.
(b) Period of availability. (1) For major
disaster declarations, the grantee may
expend management cost funds for
allowable costs for a maximum of 8
years from the date of the major disaster
declaration or 180 days after the latest
performance period date of a nonmanagement cost PA PW or HMGP
project narrative, respectively,
whichever is sooner.
(2) For emergency declarations, the
grantee may expend management cost
funds for allowable costs for a
maximum of 2 years from the date of the
emergency declaration or 180 days after
the latest performance period of a nonmanagement cost PA PW, whichever is
sooner.
(3) The period of availability may be
extended only at the written request of
the grantee, with the recommendation of
the Regional Administrator, and with
the approval of the Chief Financial
Officer. The grantee must include a
justification in its request for an
extension, and must demonstrate that
there is work in progress that can be
completed within the extended period
of availability. In no case will an
extended period of availability allow
more than 180 days after the expiration
of any performance period extensions
granted under PA or HMGP for project
completion. FEMA will deobligate any
funds not liquidated by the grantee in
accordance with § 13.23 of this chapter.
(c) Reporting requirements. The
grantee must provide quarterly progress
reports on management cost funds to the
Regional Administrator as required by
the FEMA-State Agreement.
(d) Closeout. The grantee has primary
responsibility for the closeout tasks
associated with both the program and
subgrantee requirements. Complying
with each program’s performance period
requirement, the grantee must conduct
final inspections for projects, reconcile
subgrantee expenditures, resolve
negative audit findings, obtain final
reports from subgrantees and reconcile
the closeout activities of subgrantees
with PA and HMGP grant awards.
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14:49 Oct 10, 2007
Jkt 211001
(e) Audit requirements. Uniform audit
requirements in § 13.26 of this chapter
apply to all assistance provided under
this part.
(f) Document Retention. In
compliance with State law and
procedures and with § 13.42 of this
chapter, grantees must retain records,
including source documentation to
support expenditures/costs incurred for
management costs, for 3 years from the
date of submission of the final Financial
Status Report to FEMA that is required
for PA and HMGP. The grantee is
responsible for resolving questioned
costs that may result from audit findings
during the 3-year-record-retention
period and returning any disallowed
costs from ineligible activities.
§ 207.9
2007.
Declarations before November 13,
(a) General. This section describes
how FEMA provides administrative and
management cost funding for PA and
HMGP for major disasters or
emergencies declared before November
13, 2007.
(b) Eligible direct costs. Eligible direct
costs to complete approved activities are
governed by part 13 of this chapter. The
eligible direct costs for administration
and management of the program are
divided into two categories as follows:
(1) Grantee. (i) Statutory
administrative costs. FEMA may
provide funds to the grantee to cover the
extraordinary costs incurred in
preparing project worksheets or
applications, final inspection reports,
quarterly reports, final audits, and
related field inspections by State
employees, including overtime pay and
per diem and travel expenses, but not
including regular time for such
employees. FEMA will base the funds
on the following percentages of the total
amount of assistance provided (Federal
share) for all subgrantees in the State
under sections 403, 404, 406, 407, 502,
and 503 of the Stafford Act (42 U.S.C.
5170b, 5170c, 5172, 5173, 5192, and
5193, respectively):
(A) For the first 100,000 of total
assistance provided (Federal share), 3
percent of such assistance.
(B) For the next 900,000, 2 percent of
such assistance.
(C) For the next 4,000,000, 1 percent
of such assistance.
(D) For assistance over $5,000,000,
one-half of 1 percent of such assistance.
(ii) State management administrative
costs. Except for the items listed in
paragraph (b)(1)(i) of this section, other
administrative costs will be paid in
accordance with § 13.22 of this chapter.
The grantee and FEMA will share such
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costs under the cost share provisions of
applicable PA and HMGP regulations.
(2) Subgrantee. The grantee may
provide funds to the subgrantee to cover
necessary costs of requesting, obtaining,
and administering Federal disaster
assistance subgrants, based on the
following percentages of net eligible
costs under sections 403, 404, 406, 407,
502, and 503 of the Stafford Act (42
U.S.C. 5170b, 5170c, 5172, 5173, 5192,
and 5193, respectively), for an
individual applicant (applicants in this
context include State agencies):
(i) For the first $100,000 of net eligible
costs, 3 percent of such costs.
(ii) For the next $900,000, 2 percent
of such costs.
(iii) For the next $4,000,000, 1 percent
of such costs.
(iv) For those costs over $5,000,000,
one-half of 1 percent of such costs.
(c) Eligible indirect costs: (1) Grantee.
Indirect costs of administering the
disaster program are eligible in
accordance with the provisions of part
13 of this chapter and OMB Circular No.
A–87, if the grantee provides FEMA
with a current Indirect Cost Rate
Agreement approved by its Cognizant
Agency.
(2) Subgrantee. No indirect costs of a
subgrantee are separately eligible
because the percentage allowance in
paragraph (b)(2) of this section covers
necessary costs of requesting, obtaining
and administering Federal assistance.
(d) Availability.
(1) For major disaster declarations,
FEMA will reimburse grantee eligible
costs as described in this section at
(b)(1)(ii) and (c)(1) for a maximum of 8
years from the date of the major disaster
declaration or 180 days after the latest
performance period date of a nonmanagement cost PA PW or predecessor
form or HMGP project narrative,
respectively, whichever is sooner.
(2) For emergency declarations, FEMA
will reimburse grantee eligible costs as
described in this section at (b)(1)(ii) and
(c)(1) for a maximum of 2 years from the
date of the emergency declaration or 180
days after the latest performance period
of a non-management cost PA PW or
predecessor form, whichever is sooner.
(3) The reimbursement of grantee
eligible costs as described in this section
at (b)(1)(ii) and (c)(1) may be provided
by FEMA after the periods of
availability described in this section
only at the written request of the
grantee, with the recommendation of the
Regional Administrator, and with the
approval of the Chief Financial Officer.
The grantee must include a justification
in its request for further reimbursement,
and must demonstrate that there is work
in progress that can be completed
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Federal Register / Vol. 72, No. 196 / Thursday, October 11, 2007 / Rules and Regulations
within the extended period of
reimbursement. In no case will
reimbursement be provided after 180
days after the expiration of any
performance period extensions granted
under PA or HMGP for project
completion.
§ 207.10
rates.
Review of management cost
(a) FEMA will review management
cost rates not later than 3 years after this
rule is in effect and periodically
thereafter.
(b) In order for FEMA to review the
management cost rates established, and
in accordance with part 13 of this
chapter, the grantee and subgrantee
must document all costs expended for
management costs (including cost
overruns). After review of this
documentation, FEMA will determine
whether the established management
cost rates are adequate for the
administration and closeout of the PA
and HMGP programs.
Dated: October 4, 2007.
R. David Paulison,
Administrator, Federal Emergency
Management Agency.
[FR Doc. E7–20035 Filed 10–10–07; 8:45 am]
BILLING CODE 9110–49–P
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 12
[EB Docket No. 06–119; WC Docket No. 06–
63; FCC 07–177]
Recommendations of the Independent
Panel Reviewing the Impact of
Hurricane Katrina on Communications
Networks
Federal Communications
Commission.
ACTION: Final rule; petition for
reconsideration.
ebenthall on PRODPC61 with RULES
AGENCY:
SUMMARY: In this document, the Federal
Communications Commission
(Commission) considers petitions for
reconsideration and/or clarification
(Petitions) of the Order that adopted the
Commission’s rule, which required that
certain local exchange carriers (LECs)
and commercial mobile radio service
(CMRS) providers have an emergency
backup power source for all assets that
are normally powered from local AC
commercial power. The Commission
modifies its rules to address several
meritorious issues raised in the
petitions. These modifications will
facilitate carrier compliance and reduce
the burden on LECs and CMRS
providers, while continuing to further
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14:49 Oct 10, 2007
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important homeland security and public
safety goals.
DATES: The rules in 47 CFR 12.2
contains information collection
requirements that have not been
approved by the Office of Management
and Budget (OMB). The Federal
Communications Commission will
publish a document in the Federal
Register announcing the effective date.
FOR FURTHER INFORMATION CONTACT: Jean
Ann Collins, Deputy Division Chief,
Communications Systems Analysis
Division, Public Safety and Homeland
Security Bureau, Federal
Communications Commission at (202)
418–2792. For additional information
concerning the Paperwork Reduction
Act information collection requirements
contained in this document, send an
e-mail to PRA@fcc.gov or contact Judith
B. Herman at (202) 418–0214.
SUPPLEMENTARY INFORMATION: This is a
summary of the Commission’s Order on
Reconsideration in EB Docket No. 06–
119 and WC Docket No. 06–63, FCC 07–
177, adopted October 2, 2007, and
released October 4, 2007. The full text
of this document is available for public
inspection and copying on the
Commission’s Internet site at https://
www.fcc.gov. It is also available for
inspection and copying during regular
business hours in the FCC Reference
Center, Room CY–A257, 445 12th Street,
SW., Washington, DC 20554. This
document may also be purchased from
the Commission’s duplicating
contractor, Best Copy and Printing, Inc.,
Room CY–B402, 445 12th Street, SW.,
Washington, DC 20554, telephone (202)
488–5300, fax (202) 488–5563; or via
e-mail FCC@BCPIWEWEB.COM.
Alternative formats (computer diskette,
large print, audio cassette, and Braille)
are available to persons with disabilities
by sending an e-mail to FCC504@fcc.gov
or calling the Consumer and
Governmental Affairs Bureau at (202)
418–0530, TTY (202) 418–0432.
Synopsis of the Order on
Reconsideration
Background
In January 2006, Chairman Kevin J.
Martin established the Katrina Panel
pursuant to the Federal Advisory
Committee Act, Public Law 92–463, as
amended. The mission of the Katrina
Panel was to review the impact of
Hurricane Katrina on communications
infrastructure in the areas affected by
the hurricane and to make
recommendations to the Commission
regarding ways to improve disaster
preparedness, network reliability and
communications among first responders
such as police, fire fighters, and
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57879
emergency medical personnel. The
Katrina Panel submitted its report on
June 12, 2006. The Katrina Panel’s
report described the impact of the worst
natural disaster in the Nation’s history,
as well as the overall public and private
response and recovery efforts. The
Commission’s goal is to take the lessons
learned from that disaster and build
upon them to promote more effective,
efficient response and recovery efforts,
as well as heightened readiness and
preparedness.
The Commission issued a Notice of
Proposed Rulemaking (NPRM) on June
19, 2006 inviting comment on what
actions the Commission should take to
address the Katrina Panel’s
recommendations. On July 26, 2006, the
Commission issued a public notice
asking commenters to address the
applicability of the Katrina Panel’s
recommendations to all types of natural
disasters (e.g., earthquakes, tornadoes,
hurricanes, forest fires) as well as other
types of incidents (e.g., terrorist attacks,
influenza pandemic, industrial
accidents). The public notice also asked
parties to address whether the panel’s
recommendations are broad enough to
take into account the diverse
topography of our Nation, the
susceptibility of a region to a particular
type of disaster, and the multitude of
communications capabilities a region
may possess. The Commission received
over 100 comments and reply comments
in response to the NPRM. In June 2007,
the Commission released the Katrina
Panel Order directing the Public Safety
and Homeland Security Bureau (PSHSB)
to implement several of the
recommendations made by the
Independent Panel Reviewing the
Impact of Hurricane Katrina on
Communications Networks (Katrina
Panel). Among other things, the
Commission adopted a rule requiring
some communications providers to have
emergency/backup power. The backup
power rule adopted specifically states:
Local exchange carriers (LECs),
including incumbent LECs (ILECs) and
competitive LECs (CLECs), and
commercial mobile radio service
(CMRS) providers must have an
emergency backup power source for all
assets that are normally powered from
local AC commercial power, including
those inside central offices, cell sites,
remote switches and digital loop carrier
system remote terminals. LECs and
CMRS providers should maintain
emergency backup power for a
minimum of 24 hours for assets inside
central offices and eight hours for cell
sites, remote switches and digital loop
carrier system remote terminals that are
normally powered from local AC
E:\FR\FM\11OCR1.SGM
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Agencies
[Federal Register Volume 72, Number 196 (Thursday, October 11, 2007)]
[Rules and Regulations]
[Pages 57869-57879]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-20035]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY
Federal Emergency Management Agency
44 CFR Parts 206 and 207
[Docket ID FEMA-2006-0035]
RIN 1660-AA21
Management Costs
AGENCY: Federal Emergency Management Agency, DHS.
ACTION: Interim final rule.
-----------------------------------------------------------------------
SUMMARY: This interim final rule implements the management costs
provisions of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act. In so doing, it simplifies and clarifies the method by
which FEMA contributes to costs incurred by grantees and subgrantees in
implementing the Public Assistance and Hazard Mitigation Grant programs
and establishes fixed management cost rates for compensating eligible
grantees and subgrantees.
DATES: Effective Date: This rule is effective on November 13, 2007.
Comment Date: Comments are due on or before November 13, 2007.
ADDRESSES: You may submit comments, identified by Docket ID FEMA-2006-
0035, by one of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov. Follow the
instructions for submitting comments.
E-mail: FEMA-RULES@dhs.gov. Include Docket ID FEMA-2006-0035 in the
subject line of the message.
Fax: 866-466-5370.
Mail/Hand Delivery/Courier: Rules Docket Clerk, Office of Chief
Counsel, Federal Emergency Management Agency, Room 835, 500 C Street,
SW., Washington, DC 20472.
Instructions: All Submissions received must include the agency name
and Docket ID. Regardless of the method used for submitting comments or
material, all submissions will be posted, without change, to the
Federal eRulemaking Portal at https://www.regulations.gov, and will
include any personal information you provide. Therefore, submitting
this information makes it public. You may wish to read the Privacy Act
notice that is available on the Privacy and Use Notice link on the
Administration Navigation Bar of www.regulations.gov.
Docket: For access to the docket to read background documents or
comments received, go to the Federal eRulemaking Portal at https://
www.regulations.gov. Submitted comments may also be inspected at Office
of Chief Counsel, Federal Emergency Management Agency, Room 835, 500 C
Street, SW., Washington, DC 20472.
FOR FURTHER INFORMATION CONTACT: Jonna M. Long, Office of the Chief
Financial Officer, Federal Emergency Management Agency, PP 632, 500 C
Street, SW., Washington, DC 20472, 202-646-7057, (facsimile) (202) 646-
4268, or (e-mail) jonna.long@dhs.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
Under the provisions of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (Stafford Act), 42 U.S.C. 5121-5206, and its
implementing regulations, the Federal Emergency Management Agency
(FEMA) has the authority to assist State and local governments in
carrying out their responsibilities pursuant to a Presidentially-
declared major disaster or emergency. Two of the major programs
authorized by the Stafford Act that provide assistance to State and
local governments are the Public Assistance (PA) program and the Hazard
Mitigation Grant Program (HMGP).
PA, implemented at part 206 subparts G and H of this
chapter, provides funding through grants for emergency protective
measures, debris removal, and repair, replacement, or restoration of
facilities not met by insurance.
HMGP, implemented at part 206 subpart N of this chapter,
provides funding through grants to undertake sustained mitigation
measures that will reduce or permanently eliminate the long-term risk
to people and property from natural hazards and their effects.
Sustained mitigation measures include acquisition for open space,
elevations of flood prone properties, and wind or seismic retrofitting
of structures.
Section 324 of the Stafford Act, 42 U.S.C. 5165b, requires FEMA to
establish management cost rates for grantees and subgrantees that will
be used to determine contributions for management costs and to review
those management cost rates not later than 3 years after the date of
establishment of the rates and periodically thereafter. ``Management
costs,'' for purposes of this regulation, include any indirect costs,
any administrative expenses and any other expenses not directly
chargeable to a specific project that are reasonably incurred by a
grantee or subgrantee in administering and managing a PA program or
HMGP grant award.
[[Page 57870]]
Funding for management and administrative costs for PA and HMGP
grantees and subgrantees is provided currently through one of three
mechanisms:
Associated costs, also known as the Statutory
Administrative Costs Allowance or the ``sliding scale,'' under section
406(f) of the Stafford Act (which is repealed with the establishment of
management costs under this rule pursuant to Pub. L. 106-390, sec.
202(b)(2)), which include:
[cir] Extraordinary costs incurred by a grantee for preparation of
damage survey reports, final inspection reports, project applications,
final audits, and related field inspections by State employees, such as
overtime pay and per diem and travel expense of such employees, but not
regular time; and
[cir] Necessary costs incurred by a subgrantee of requesting,
obtaining, and administering Federal disaster assistance;
State Management Costs, which include regular time labor
costs for grantee and temporary employees, contract costs, equipment
and office supplies, and communications costs; and
Grantee indirect costs, which are costs incurred through a
project that are not directly related to it, such as utilities, rent,
and other overhead.
These three types of costs are currently paid in accordance with
Sec. 206.228(a)(2) through 206.228(a)(3)(ii) and 206.228(b) for PA,
and Sec. 206.439(b)(1) through (c)(2) for HMGP which are revised by
this interim final rule.
The management cost rates set forth in this regulation replace what
FEMA previously paid State and local governments for associated costs
through the ``sliding scale,'' State management costs, and grantee
indirect costs. Management cost funding will be requested through the
PA Project Worksheet (PW) or HMGP project application process. PWs and
HMGP project narratives are already submitted by grantees. Any costs
that can be directly attributable to a project (at the grantee or
subgrantee levels) will continue to be added directly to the PA PW, or
HMGP application for the project.
II. Comments, Responses, and Changes to the Proposed Rule
FEMA published a Notice of Proposed Rulemaking (NPRM) (67 FR 56130,
August 30, 2002) proposing a methodology for calculating the management
cost rates, and guidance for the implementation of section 324 of the
Stafford Act. In the NPRM, FEMA proposed to implement section 324 of
the Stafford Act by creating an entirely new grant program for
management cost funds, separate from grants awarded for PA and HMGP.
FEMA also proposed to provide a set amount based on a percentage of the
Federal share of PA and HMGP projections for a declaration. That amount
would be available for PA and HMGP grant management and administration,
and for grantees and subgrantees, and would allow grantees the
flexibility to distribute funds in a manner representative of their
priorities for management of the two programs.
During the 30-day comment period, FEMA received comments from 23
States, the U.S. Virgin Islands, 2 associations, and 1 consulting firm.
All comments were considered carefully in formulating this interim
final rule. A summary of the comments received, as well as FEMA's
responses, is set forth below.
a. General Comments and Changes
1. Adequacy of Rates
FEMA received several comments about the rates that were published
in the proposed rule, with many of the commenters claiming the rates
were inadequate for effective program management and that FEMA did not
accurately reflect costs not paid with Federal funds. As the rates are
based on what FEMA historically paid grantees and subgrantees for
program management, and historically, grantees and subgrantees were
able to administer and manage PA and HMGP at that level of funding,
FEMA does not believe the rates will be inadequate for future program
management.
FEMA acknowledges that the rates prescribed may not cover all costs
incurred by a grantee. The Stafford Act, however, in sections 101(b),
401, and 501(a), establishes the Federal Government's role in disaster
response and recovery as supplementing State efforts in carrying out
their responsibilities; management cost funds are contributions, not
full funding. FEMA believes that basing the rates on historical Federal
obligations is appropriate and, as the rates will be applied to the
Federal share of program projections, grantees and subgrantees are
reasonably expected to contribute at least a comparable amount of
management cost funds to the non-Federal share.
In any case, as several commenters noted, the funds that FEMA will
provide for management costs are only meant to contribute to costs that
are not directly chargeable at the project level. FEMA will continue to
reimburse administrative or project management costs that can be
properly documented and directly charged to the project.
2. Separate Indirect Costs
Several commenters were concerned that the proposed funding for
management costs did not comport with OMB Circular No. A-87 and part 13
which allow for the reimbursement of indirect costs and part 13 because
in the proposed regulations separate payment for indirect costs would
not be allowed. However, section 324 of the Stafford Act defines
management costs as including indirect costs; therefore, separate
reimbursement for indirect costs is not permitted, because doing so
would be duplicative.
3. Increased Costs Due to New Grant Process
Some commenters were concerned that the management cost rates as
calculated did not account for the additional costs of application,
administrative, monitoring, and reporting requirements of the new grant
program outlined in the proposed rule. Since publication of the
proposed rule, and in response to comments, FEMA has decided to
implement section 324 of the Stafford Act as part of the PA and HMGP
programs and not as a separate grant program. The additional
requirements of a separate grant program no longer apply.
4. Combined Rate for PA and HMGP
In the proposed rule, FEMA proposed to provide a combined set
amount that would be available for both PA and HMGP grant management
and administration to allow grantees the flexibility to distribute
funds in a manner representative of their priorities for management of
the two programs.
Some commenters felt that providing a set amount for a declaration
that would be available for PA and HMGP did not provide the flexibility
to distribute the funds in a manner representative of the grantee's
priorities for management of the two programs, but rather would be
impractical and create additional burden to program managers. Because
FEMA has decided to implement section 324 of the Stafford Act as part
of PA and HMGP and not as a separate grant program, these concerns are
moot. In this interim final rule, FEMA is publishing three management
cost rates: One for PA pursuant to major disaster declarations; one for
HMGP pursuant to major disaster declarations; and one for PA pursuant
to emergency declarations.
[[Page 57871]]
5. Combined Rate for Grantee and Subgrantees
FEMA received a few comments critical of its proposal to provide
management cost funds to grantees for both grantee and subgrantee use.
One State commented that the process could be very divisive unless
State plans were in place and accepted prior to declaration. FEMA
agrees; accordingly, in the interim final rule, FEMA is requiring
States to outline their plans for subgrantee treatment in the State
administrative plans required for PA and HMGP.
Moreover, two States commented that management cost funding
administration would be simplified if subgrantee costs were based on
project award or the total cost of the project. FEMA agrees that these
are viable options for States to consider. Nevertheless, for the
reasons set forth below, FEMA has not changed the combined rate
concept.
FEMA's relationship in PA and HMGP is with the grantee; the grantee
has the direct relationship with its subgrantees. FEMA believes that,
just as a grantee has the right and the ability to determine cost-
sharing requirements for its subgrantees, it has the right and the
ability to determine reasonable contributions for management costs that
cannot be directly charged to projects.
6. Updated Calculation of Management Cost Rates
In the proposed rule, FEMA published rates for major disaster and
emergency declarations based on obligations for major disasters and
emergencies declared in the 6-year period 1995 through 2000 and
supplemented by data from States that were able to provide information
on costs not reimbursed by FEMA. As FEMA's disaster processing systems
were not fully automated for that period, data came from various
sources.
In August 1998, FEMA implemented its National Emergency Management
Information System (NEMIS). NEMIS provides the capability to extract
data on sliding scale, State management cost, and indirect costs
obligations. In this interim final rule, FEMA is publishing three
management cost rates: One for PA pursuant to major disaster
declarations; one for HMGP pursuant to major disaster declarations; and
one for PA pursuant to emergency declarations. NEMIS data for major
disasters and emergencies declared in the six-year period August 1998
through July 2004 were used to update the management cost rate
calculations.
b. Section-by-Section Analysis
1. Definitions
FEMA received comments from five States on Sec. 207.2 of the
proposed rule. One commenter requested that FEMA add a definition of
``close out;'' this was done.
In the proposed rule, FEMA defined ``lock-in'' as the amount of
management cost funds available to a grantee for a particular major
disaster or emergency, as FEMA determines at 30 days, 6 months, and
after the final HMGP lock-in. Two germane comments were received on the
definition of ``lock-in.'' One commenter suggested that large projects
that take more than 6 months for FEMA approval would not be factored
into the rate and therefore the amount available to the State would be
reduced. FEMA believes this is incorrect as the amount of management
cost funding that will be made available will be based on program
projections--not approved projects. Another comment asserted that this
``produces an even harder financial hit to the grantee and subgrantee''
because current subgrantee administrative costs are based on the total
obligation, not just the Federal share. This disparity is addressed
because the percentage is based on what FEMA paid out over a 6 year
period, including the funding paid to subgrantees that is based on the
total project obligation, not just the Federal share.
One State asked what the basis for the management cost funding
would be for the HMGP when only Individual Assistance (IA) and HMGP are
declared. Under an IA/HMGP declaration, the HMGP management cost rate
would be provided for management of that program based on the estimated
projections (Federal share) for the HMGP program.
2. Applicability and Eligibility
FEMA received several comments about the applicable date described
in Sec. 207.3. In the preamble of the proposed rule, FEMA noted that
the anticipated implementation date was subject to change. Progress
toward implementation was slowed by several factors and the
implementation date for management costs has been changed accordingly.
3. Responsibilities
One commenter suggested that, rather than reviewing the rate no
later than three years after the rule is in effect, FEMA should review
after 1 year. Because section 324 of the Stafford Act requires FEMA to
review the management cost rates established not later than 3 years
after the date of establishment of the rates and periodically
thereafter, FEMA retains the discretion to review sooner, if necessary.
Accordingly, this change was not made.
Two States asked whether pass-through funding to subgrantees was
mandatory. The Stafford Act defines the management cost rates as being
for grantees and subgrantees. FEMA has added language to clarify the
grantee's responsibility for determining the amount or percentage of
management cost funding to be passed through to subgrantees and
ensuring that it provides such funds to subgrantees.
Other States expressed concerns about setting a fixed rate.
However, the Stafford Act requires FEMA to set management cost rates to
be used to determine contributions for management costs--full
compensation to a grantee or subgrantee is not implicit. FEMA believes
that the sharing of costs--as PA and HMGP costs are shared--leads to
better fiscal responsibility and accountability.
4. Determination of Management Costs
The title of this section has been renamed ``Determination of
management cost funding'' to more accurately reflect that what is being
determined is the amount of funding that will be available for
management costs, not whether specific costs are eligible as management
costs.
Two comments were received about the timing of, and adjustments to,
the lock-in amount. One commenter felt that locking into a final amount
at 9 months would cause unfair fiscal burdens on grantees and
subgrantees. In the proposed rule, FEMA stated it would determine the
final lock-in amount for management cost funding at 9 months or after
the final HMGP lock-in ceiling was determined, whichever was later.
After HMGP lock-in, the projected amount of funding for that program is
set. FEMA believes that locking into a management cost amount after the
HMGP ceiling is established maximizes the amount available for
management costs. However, since the HMGP ceiling is currently expected
to lock at 12 months, FEMA has changed the final lock-in date for
management costs to 12 months or after HMGP lock-in, whichever is
later. The other commenter suggested that the phased lock-in process
should allow for increases as disaster cost estimates change; the rule
as written allows this.
Two States provided comments on the $20 million cap proposed for
the total amount of management cost funds to be provided pursuant to a
single
[[Page 57872]]
declaration. One State claimed that $20 million equated to a $453
million event, which would not be out of the ordinary. FEMA does not
agree with this calculation, as it assumes the $453 million was derived
by calculating that $20 million is 4.41 percent (the rate in the
proposed rule) of $453 million. In this case, $453 million would indeed
represent combined PA and HMGP projections; however, on average, PA and
HMGP represent approximately 58 percent of total disaster costs.
Therefore, $20 million in management cost funding would approximately
equal a $781 million event ($781 million x .58 = 453 million)--far more
out of the ordinary.
The other State commented that ``[t]he identification of $20
million as the ``not to exceed'' amount for management costs appears to
be the real reason for this proposed rule.'' FEMA disagrees with this
statement, as the rule is being promulgated in response to a change in
law (section 324 of the Stafford Act, 42 U.S.C. 5165b).
Although FEMA is now providing separate management cost rates and
funding for PA and HMGP as part of the programs and not as a separate
grant program, the single cap for management costs for the declaration
has been retained.
5. Eligible Use of Funds
Since publication of the proposed rule, and in response to
comments, FEMA has changed the title of this section to ``Use of
funds'' to more accurately reflect the content of the section.
FEMA received a number of comments and questions on this section,
many related to individual items that were listed as ``eligible'' or
``ineligible.'' The items listed in the proposed rule were not meant to
be exhaustive, but rather were to be representative of the types of
costs for which the use of management cost funding would be
appropriate. In response to comments, FEMA has determined that the
lists are not necessary. Instead, the interim final rule states that
all charges must be related to administration of PA and HMGP, must be
properly documented, and must be made in accordance with Sec. 13.22.
FEMA received a number of questions about the treatment of indirect
costs. Because the statutory definition of management costs in section
324 of the Stafford Act, 42 U.S.C. 5165b, includes indirect costs,
grantees and subgrantees may not add such costs to project costs or
request reimbursement separately. After the effective date of this
interim final rule, the only available mechanism for reimbursement of
indirect costs for PA and HMGP is use of management cost funding
provided in this section.
In the NPRM, FEMA proposed that any management cost funds that were
not needed for a specific declaration could be retained by the grantee
or subgrantee, upon approval of a spending plan for improvement of the
disaster programs' general financial and grants management. Because
such costs are already eligible management costs, if directly
attributable to program management for that declaration, FEMA has
determined there is no need for a second spending plan. Any such
planned expenditures should be included with the documentation
submitted to support the management cost funding request and any
management cost funds not properly expended in direct support of PA or
HMGP will be deobligated by FEMA.
6. Application Procedures
FEMA received several comments about the proposed process and
timing for applying for management cost funding. Because the
requirements of a separate grant program no longer apply, the process
for requesting management cost funding is simplified. Accordingly, FEMA
has decided to implement section 324 by continuing to use the same
application processes for management costs as it is currently using,
rather than as a separate grant program. That is, grantees will
continue to apply for PA management cost funding using a PW and its
associated forms, if applicable, and for HMGP management cost funding
using a project narrative.
Additionally, FEMA will not require detailed justifications to
support management cost funding requests until 120 days after the date
of declaration. This change will alleviate the burden to the grantee,
at the busy time of initial response and recovery, and afford the
opportunity for the grantee to provide a more thorough and accurate
request to FEMA.
In the interim final rule, the ``Application procedures'' section
has been changed to ``Procedures for requesting management cost
funding.''
7. Grants Management Oversight
Since publication of the proposed rule, and in response to
comments, FEMA has decided to implement section 324 of the Stafford Act
as part of the PA and HMGP programs and not as a separate grant
program. Subsequently, this section of the rule has been changed to
``Management cost funding oversight.''
In the proposed rule, FEMA stated that management cost funds would
need to be expended not later than 6 years from the date of major
disaster or emergency declaration, or by 90 days after grant closeout,
whichever is sooner. The 6 year limit was meant to encourage proper
grant management, which includes timely grant closeout. In response to
comments asking for additional time and after further analysis, FEMA
has changed the 6 year limit to a maximum of 8 years for major disaster
declarations and 2 years for emergency declarations, or 180 days after
the latest performance period date of a non-management cost PA PW or
HMGP project narrative, respectively, for both types of declarations,
whichever is sooner.
8. Declarations Before October 1, 2002
Since publication of the proposed rule, FEMA has changed the
implementation date of section 324 of the Stafford Act. Subsequently,
Sec. 207.9 of the rule has been changed to ``Declarations before
November 13, 2007.'' This section includes provisions on administrative
and management costs previously described in Sec. Sec. 206.228 and
206.439.
FEMA received four comments disagreeing with the provision in the
proposed rule that imposed a timeframe on performance periods for
declarations made before implementation of section 324. In the interest
of ensuring responsible grant management practices and moving towards
consistency in the administration of management and administrative
costs provided for the affected programs, FEMA believes this provision,
which allows a reasonable amount of time for grantees to comply, is an
appropriate and necessary provision.
9. Review of Management Cost Rates
One State commented that it did not believe the ``solution to
controlling expenses is to adopt the flat rate percentage as published
and then go back to the drawing board after this rule is in effect''
and suggested deleting the periodic review and documentation
requirements. FEMA did not make this change, as the Stafford Act
requires the review and documentation. Further, section 324 of the
Stafford Act is not a ``solution to controlling expenses,'' but rather
a simplification of the multiple methods currently used to contribute
to grantee and subgrantee costs.
III. Regulatory Requirements
Administrative Procedure Act
Even though an NPRM has been published, FEMA is publishing this
interim final rule rather than proceeding
[[Page 57873]]
to a final rule to provide the public with an additional opportunity to
comment. FEMA has opted to provide this additional opportunity to
comment although the changes to the regulations made in this interim
rule are a logical outgrowth of the proposed regulations published in
the NPRM and additional opportunity for public comment is not
mandatory. As previously addressed in this preamble, the substantive
changes to this regulation are as follows:
Because of comments that raised concerns of increased
costs and workload due to the creation of a new grant process, FEMA
revised the regulations to incorporate management cost funding into the
existing PA and HMGP programs.
FEMA received comments from the public concerned that
providing a combined set amount in management cost funds that would be
available for both PA and HMGP would be impractical and create
additional burden to program managers. Because of these comments, FEMA
has revised the regulations to provide three management cost rates: PA
pursuant to major disaster declarations; HMGP pursuant to major
disaster declarations; and PA pursuant to emergency declarations. Due
to the availability of better data provided by the use of the National
Emergency Management Information System (NEMIS), in this interim rule
FEMA updated the management cost rate calculations for those three
rates.
FEMA received comments that providing management cost
funds to grantees for both grantee and subgrantee use could be divisive
unless State plans are in place and accepted prior to declaration. FEMA
agreed and revised the regulation to require States to outline their
plans for subgrantee treatment in the State administrative plans
already required for PA and HMGP.
The implementation date was changed, as noted in the
preamble to the NPRM.
In response to comments concerned that locking into a
final amount at 9 months would cause unfair fiscal burdens, FEMA
changed the final lock-in date for management costs to 12 months or
after HMGP lock-in, whichever is later.
FEMA received several comments about the proposed process
and timing for applying for management cost funding. As a response,
FEMA will not require detailed justifications to support management
cost funding requests until 120 days after the date of declaration to
alleviate the burden on the grantee and afford them the opportunity to
provide a more thorough and accurate request.
In response to comments asking for additional time to
expend management cost funds, FEMA extended the limit of 6 years from
the date of major disaster or emergency declaration or 90 days after
grant closeout, whichever is sooner, to a maximum of 8 years for major
disaster declarations and 2 years for emergency declarations, or 180
days after the latest performance period date of a non-management cost
PA, PW or HMGP project narrative, respectively, for both types of
declarations, whichever is sooner.
Further, under 5 U.S.C. 553(b)(B) FEMA finds that good cause exists
for not publishing a Supplemental Notice of Proposed Rulemaking
(SNPRM), because publishing an SNPRM would be contrary to public
interest since immediate action is needed to correct weaknesses in
awarding funds to cover grantee operations associated with the
administration of PA and HMGP grants. As stated earlier in the preamble
to this interim rule, Public Law 106-390, section 202(b)(2), created
section 324 of the Stafford Act which becomes effective when FEMA has
promulgated a management cost rate regulation (this regulation). Until
this regulation is published, management cost funding is provided
pursuant to subsection 406(f) of the Stafford Act, OMB Circular No. A-
87, and part 13.
In its ``Review of FEMA Policy for Funding Public Assistance
Administrative Costs'' (GC-HQ-06-40) dated April 28, 2006, FEMA was
advised by the Department of Homeland Security Office of Inspector
General (OIG), that it should take immediate action to implement
section 324 of the Stafford Act. This was reiterated in the OIG's
``Review of FEMA Internal Controls for Funding Administrative Cost
under State Management Grants'' memorandum dated January 9, 2007 (OIG-
07-21). This interim rule is intended to establish management cost
rates to replace the administrative allowance and state management
grants and address funding and related control weaknesses immediately,
while continuing to take public comment and, perhaps, further amend the
regulations in light of those comments.
Pursuant to 5 U.S.C. 553(d), FEMA is making this rule effective 30
days after publication in the Federal Register. FEMA invites further
comment from the public on this interim final rule.
Congressional Review of Agency Rulemaking
FEMA has sent this interim final rule to the Congress and to the
Government Accountability Office under the Congressional Review of
Agency Rulemaking Act, 5 U.S.C. 801-808. The rule in not a ``major
rule'' within the meaning of that Act and will not result in an annual
effect on the economy of 100,000,000 or more. Moreover, it will not
result in a major increase in costs or prices for consumers, individual
industries, Federal, State, or local government agencies, or geographic
regions. Nor does FEMA expect that it will have ``significant adverse
effects'' on competition, employment, investment, productivity,
innovation, or on the ability of United States-based enterprises to
compete with foreign-based enterprises.
National Environmental Policy Act (NEPA)
FEMA explained when the proposed rule was published that Sec.
10.8(d)(2)(ii) excludes this rule from the preparation of an
environmental assessment or environmental impact statement, where the
rule relates to actions that qualify for categorical exclusion under
Sec. 10.8(d)(2)(i), such as the provision of funding for management
costs. No commenters disagreed with our determination. FEMA has not
prepared an environmental assessment or environmental impact statement
for this interim final rule.
Paperwork Reduction Act of 1995
In the proposed rule, FEMA proposed to provide management cost
funding through a new grant program. Because that new grant program
would collect new information from the public, FEMA determined that it
would be subject to the Paperwork Reduction Act (PRA) of 1995, 44
U.S.C. 3501-3520, and obtained Office of Management and Budget (OMB)
approval for Control Number 1660-0063, Management Costs information
collection. As a result of public comments and further analysis, as
discussed elsewhere in the preamble of this interim rule FEMA has
withdrawn its proposal to create a new grant program, and has decided
to implement section 324 of the Stafford Act as part of the already
existing PA and HMGP programs. FEMA submitted an OMB83D form on
September 16, 2005 to discontinue OMB Control Number 1660-0063,
Management Costs information collection; OMB approved the
discontinuance on September 21, 2005. FEMA no longer intends to collect
information with respect to that proposed grant program.
In this interim rule, FEMA implements section 324 by continuing to
use the same application processes for management costs as it is
currently
[[Page 57874]]
using, rather than as a separate grant program. That is, grantees will
continue to apply for PA management cost funding using the Project
Worksheet (PW) and its associated forms, if applicable, as already
approved by OMB. The PW and associated forms for PA management cost
funding are approved under OMB Control Number 1660-017, Public
Assistance Progress Report and Program Forms information collection
which expires on October 31, 2008. HMGP management cost funding would
be provided using the project narrative approved under OMB Control
Number 1660-0076, Hazard Mitigation Grant Program Application and
Reporting information collection which expires May 31, 2010.
Use of these collections under this interim final rule does not
impose additional burden under those program collections. By allowing
grantees to continue to request management cost funding via the same
processes with which they are familiar, FEMA expects that this rule
will simplify the process and reduce the burden to the public.
Regulatory Flexibility Act
Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.),
agencies must consider the impact of their rulemakings on ``small
entities'' (small businesses, small organizations and local
governments). When 5 U.S.C. 553 requires an agency to publish a notice
of proposed rulemaking, the Regulatory Flexibility Act requires a
regulatory flexibility analysis for both the proposed rule and the
final rule if the rulemaking could ``have a significant economic impact
on a substantial number of small entities.'' The Act also provides that
if a regulatory flexibility analysis is not required, the agency must
certify in the rulemaking document that the rulemaking will not ``have
a significant economic impact on a substantial number of small
entities.''
This interim final rule affects grantees that are State
governments, or in certain situations, Indian tribal governments. It
does not impact private sector entities. Further, the result of this
interim final rule will be to reduce the administrative burden on both
grantees and the Federal government by simplifying and clarifying the
application process, grant administration, and reimbursement methods
for management and administration costs by reducing the current three
methods and processes to one. Further, grantees currently make numerous
petitions for payment. Implementation of this interim final rule is
expected to reduce the number of times grantees will need to petition
to receive payment for management costs.
This interim final rule does not impact the amount of funding
available for management costs, as the percentages for reimbursement
proposed are based on historical average obligations. Although there is
a proposed cap on the amount of management costs that can be provided
per declaration, the interim final rule provides a mechanism for waiver
in extraordinary circumstances.
Because this interim final rule does not impact the amount of funds
provided to grantees, but simply reduces the administrative burden to
State and Indian tribal government grantees, FEMA certifies that it
will not have a significant economic impact on a substantial number of
small entities.
Executive Order 12866, Regulatory Planning and Review
Under Executive Order 12866, 58 FR 51735, Oct. 4, 1993, a
significant regulatory action is subject to OMB review and the
requirements of the Executive Order. The Executive Order defines
``significant regulatory action'' as one that is likely to result in a
rule that may:
(1) Have an annual effect on the economy of 100 million or more, or
may adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local or tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs, or the rights and obligations of
recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
This rule is not a ``significant regulatory action'' under
Executive Order 12866; therefore, OMB has not reviewed it under that
Order. As FEMA stated in the proposed rule, it would not have an annual
effect on the economy of 100 million or more and FEMA knows of no other
conditions that would qualify the rule as a ``significant regulatory
action'' within the definition of section 3(f) of the Executive Order.
As explained in the Regulatory Flexibility Act section, this
interim final rule does not impact the amount of funding that will be
provided by FEMA for management costs. Rather, the interim final rule
simplifies and clarifies the processing and administration of
management cost funding. The interim final rule will reduce the
administrative burden to both grantees and FEMA by reducing the
multiple methods of reimbursement from three to one. Further, grantees
currently make numerous petitions for payment. Implementation of this
interim final rule will greatly reduce the number of times grantees
will need to petition to receive payment for management costs.
This interim final rule does not materially alter the budgetary
impact of the Public Assistance and Hazard Mitigation grant programs as
the amount of funding available for management costs under this interim
final rule is based on historical average obligations. Although there
is a proposed cap on the amount of management costs that can be
provided per declaration, the interim final rule provides a mechanism
for waiver in extraordinary circumstances.
Because this interim final rule simplifies, clarifies, and reduces
the administrative burden to grantees and FEMA, there are no additional
costs due to this regulatory action.
Executive Order 13132, Federalism
Executive Order 13132 sets forth principles and criteria that
agencies must adhere to in formulating and implementing policies that
have federalism implications, that is, regulations that have
``substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government.'' Federal
agencies must closely examine the statutory authority supporting any
action that would limit the policymaking discretion of the States, and
to the extent practicable, must consult with State and local officials
before implementing any such action.
FEMA reviewed the proposed rule under Executive Order 13132 and
determined that the rule did not have ``substantial direct effects on
the States'' and therefore did not have the type of federalism
implications contemplated by the Executive Order. Four commenters
disagreed, believing that there would be a shift of power and
responsibilities. FEMA believes that the interim final rule is
consistent with the terms of Executive Order 13132 in that it ``shall
grant the States the maximum administrative discretion possible'' and
``shall encourage States to develop their own policies to achieve
program objectives'' as directed by the Executive Order. The interim
final rule does not significantly affect the rights, roles, and
responsibilities of States, involves no additional preemption of State
law, and does not limit State policymaking discretion.
[[Page 57875]]
Executive Order 12898, Environmental Justice
Under Executive Order 12898, Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations, 59 FR 7629, Feb. 16, 1994, FEMA has undertaken to
incorporate environmental justice into its policies and programs. The
Executive Order requires each Federal agency to conduct its programs,
policies, and activities that substantially affect human health or the
environment in a manner that ensures that those programs, policies, and
activities do not have the effect of excluding persons from
participation in, denying persons the benefits of, or subjecting
persons to discrimination because of their race, color, or national
origin. FEMA stated when it published the proposed rule that no action
it could anticipate under the proposed rule would have a
disproportionately high and adverse human health effect on any segment
of the population. No commenter disagreed with this determination and
accordingly, FEMA reiterates that the requirements of the Executive
Order do not apply to this rule.
Executive Order 13175, Consultation and Coordination With Indian Tribal
Governments
Under Executive Order 13175, FEMA may not issue a regulation that
is not required by statute, that significantly or uniquely affects the
communities of Indian tribal governments, and that imposes substantial
direct compliance costs on those communities, unless the Federal
Government provides the funds necessary to pay the direct compliance
costs incurred by the tribal government, or FEMA consults with those
governments.
This rule is required by statute, and, as FEMA stated when the
proposed rule was published, it did not believe that the rule would
significantly and uniquely affect the communities of Indian tribal
governments, or the relationship between the Federal Government and
Indian tribes, or the distribution of power and responsibilities
between the Federal Government and Indian tribes. Moreover, the rule
did not impose substantial direct compliance costs on tribal
governments, nor did it preempt tribal law, impair treaty rights or
limit the self-governing powers of tribal governments. FEMA received no
comments disagreeing with this determination. The interim final rule
will also not significantly and uniquely affect the communities of
Indian tribal governments, or the relationship between the Federal
Government and Indian tribes. Moreover, the rule does not impose
substantial direct compliance costs on tribal governments, nor does it
preempt tribal law, impair treaty rights or limit the self-governing
powers of tribal governments.
List of Subjects
44 CFR Part 206
Administrative costs, Administrative practice and procedure,
Disaster assistance, Grant programs, Management costs, Reporting and
recordkeeping requirements.
44 CFR Part 207
Administrative costs, Administrative practice and procedure,
Disaster assistance, Grant programs, Management costs, Reporting and
recordkeeping requirements.
0
For the reasons set forth in the preamble, the Federal Emergency
Management Agency amends 44 CFR chapter I as set forth below:
PART 206--FEDERAL DISASTER ASSISTANCE
0
1. Revise the part heading of 44 CFR part 206 as set forth above:
0
2. The authority citation for part 206 is revised to read as follows:
Authority: Robert T. Stafford Disaster Relief and Emergency
Assistance Act, 42 U.S.C. 5121 through 5206; Reorganization Plan No.
3 of 1978, 43 FR 41943, 3 CFR, 1978 Comp., p. 329; Homeland Security
Act of 2002, 6 U.S.C. 101; E.O. 12127, 44 FR 19367, 3 CFR, 1979
Comp., p. 376; E.O. 12148, 44 FR 43239, 3 CFR, 1979 Comp., p. 412;
E.O. 13286, 68 FR 10619, 3 CFR, 2003 Comp., p. 166.
0
3. Add new paragraph (b)(1)(iii)(K) to Sec. 206.207 to read as
follows:
Sec. 206.207 Administrative and audit requirements.
* * * * *
(b) * * *
(1) * * *
(iii) * * *
(K) Determining the reasonable percentage or amount of pass-through
funds for management costs provided under 44 CFR part 207 that the
grantee will make available to subgrantees, and the basis, criteria, or
formula for determining the subgrantee percentage or amount.
* * * * *
0
4. Remove paragraphs (a)(2), (a)(3), and (b); reserve paragraph (b);
redesignate paragraph (a)(4) as paragraph (a)(2) and revise it; and add
new paragraph (a)(3) to Sec. 206.228 to read as follows:
Sec. 206.228 Allowable costs.
* * * * *
(a) * * *
(2) Force Account Labor Costs. The straight- or regular-time
salaries and benefits of a subgrantee's permanently employed personnel
are not eligible in calculating the cost of eligible work under
sections 403 and 407 of the Stafford Act, 42 U.S.C. 5170b and 5173. For
the performance of eligible permanent restoration under section 406 of
the Stafford Act, 42 U.S.C. 5172, straight-time salaries and benefits
of a subgrantee's permanently employed personnel are eligible.
(3) Administrative and management costs for major disasters and
emergencies will be paid in accordance with 44 CFR part 207.
(b) [Reserved]
0
5. Add new paragraph (b)(4)(xiv) to Sec. 206.437 to read as follows:
Sec. 206.437 State administrative plan.
* * * * *
(b) * * *
(4) * * *
(xiv) Determine the percentage or amount of pass-through funds for
management costs provided under 44 CFR part 207 that the grantee will
make available to subgrantees, and the basis, criteria, or formula for
determining the subgrantee percentage or amount.
* * * * *
0
6. Revise Sec. 206.439 to read as follows:
Sec. 206.439 Allowable costs.
(a) General requirements for determining allowable costs are
established in 44 CFR 13.22. Exceptions to those requirements as
allowed in 44 CFR 13.4 and 13.6 are explained in paragraph (b) of this
section.
(b) Administrative and management costs for major disasters will be
paid in accordance with 44 CFR part 207.
0
7. Add part 207 to read as follows:
PART 207--MANAGEMENT COSTS
Sec.
207.1 Purpose.
207.2 Definitions.
207.3 Applicability and eligibility.
207.4 Responsibilities.
207.5 Determination of management cost funding.
207.6 Use of funds.
207.7 Procedures for requesting management cost funding.
207.8 Management cost funding oversight.
207.9 Declarations before November 13, 2007.
207.10 Review of management cost rates.
Authority: Robert T. Stafford Disaster Relief and Emergency
Assistance Act, 42 U.S.C. 5121 through 5206; Reorganization Plan No.
3 of 1978, 43 FR 41943, 3 CFR, 1978
[[Page 57876]]
Comp., p. 329; Homeland Security Act of 2002, 6 U.S.C. 101; E.O.
12127, 44 FR 19367, 3 CFR, 1979 Comp., p. 376; E.O. 12148, 44 FR
43239, 3 CFR, 1979 Comp., p. 412; E.O. 13286, 68 FR 10619, 3 CFR,
2003 Comp., p. 166.
Sec. 207.1 Purpose.
The purpose of this part is to implement section 324 of the Robert
T. Stafford Disaster Relief and Emergency Assistance Act (Stafford
Act), 42 U.S.C. 5165b.
Sec. 207.2 Definitions.
Cap means the maximum dollar amount that may be provided to a
grantee for management cost funds for a single declaration pursuant to
Sec. 207.5(c) of this part.
Chief Financial Officer (CFO) is the Chief Financial Officer of
FEMA, or his/her designated representative.
Cognizant Agency means the Federal agency responsible for
reviewing, negotiating, and approving cost allocation plans or indirect
cost proposals developed on behalf of all Federal agencies. The Office
of Management and Budget (OMB) publishes a listing of cognizant
agencies.
Grant means an award of financial assistance making payment in
cash, property, or in kind for a specified purpose, by the Federal
Government to an eligible grantee.
Grantee for purposes of this part means the government to which a
Public Assistance (PA) or Hazard Mitigation Grant Program (HMGP) grant
is awarded that is accountable for the use of the funds provided. The
grantee is the entire legal entity even if only a particular component
of the entity is designated in the grant award document. Generally, the
State is the grantee. However, after a declaration, an Indian tribal
government may choose to be a grantee, or may act as a subgrantee under
the State for purposes of administering a grant under PA, HMGP, or
both. When an Indian tribal government has chosen to act as grantee, it
will also assume the responsibilities of a ``grantee'' under this part
for the purposes of administering management cost funding.
Hazard Mitigation Grant Program (HMGP) means the program
implemented at part 206, subpart N of this chapter.
HMGP lock-in ceiling means the level of HMGP funding available to a
grantee for a particular disaster declaration.
HMGP project narrative refers to the request submitted for HMGP
funding.
Indian tribal government is a Federally recognized governing body
of an Indian or Alaska Native tribe, band, nation, pueblo, village, or
community that the Secretary of Interior acknowledges to exist as an
Indian tribe under the Federally Recognized Tribe List Act of 1994, 25
U.S.C. 479a. This does not include Alaska Native corporations, the
ownership of which is vested in private individuals.
Indirect Costs means costs that are incurred by a grantee for a
common or joint purpose benefiting more than one cost objective that
are not readily assignable to the cost objectives specifically
benefited.
Lock-in means the amount of management cost funds available to a
grantee for PA or HMGP, respectively, for a particular major disaster
or emergency, as FEMA determines at 30 days, 6 months, and 12 months or
upon calculation of the final HMGP lock-in ceiling, whichever is later.
Management Costs means any indirect costs, administrative expenses,
and any other expenses not directly chargeable to a specific project
that are reasonably incurred by a grantee or subgrantee in
administering and managing a PA or HMGP grant award. For HMGP,
management cost funding is provided outside of Federal assistance
limits defined at Sec. 206.432(b) of this chapter.
Project refers to a project as defined at Sec. 206.201(i) of this
chapter for PA or eligible activities as defined at Sec. 206.434(d) of
this chapter for HMGP.
Project Worksheet (PW) refers to FEMA Form 90-91, or any successor
form, on which the scope of work and cost estimate for a logical
grouping of work required under the PA program as a result of a
declared major disaster or emergency is documented.
Public Assistance (PA) means the program implemented at part 206,
subparts G and H of this chapter.
Regional Administrator is the head of a FEMA regional office, or
his/her designated representative, appointed under section 507 of the
Post-Katrina Emergency Management Reform Act of 2006 (Pub. L. 109-295).
The term also refers to Regional Directors as discussed in Part 2 of
this chapter.
Stafford Act refers to the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, as amended (42 U.S.C. 5121-5206).
State is any State of the United States, the District of Columbia,
Puerto Rico, the Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands.
Subgrantee means the government or other legal entity to which a
grantee awards a subgrant and which is accountable to the grantee for
the use of the funds provided. Subgrantees can be a State agency, local
government, private nonprofit organization, or Indian tribal
government.
Sec. 207.3 Applicability and eligibility.
Only PA and HMGP grantees with PA and HMGP grants awarded pursuant
to major disasters and emergencies declared by the President on or
after November 13, 2007 are eligible to apply to FEMA for management
cost funding under this part.
Sec. 207.4 Responsibilities.
(a) General. This section identifies key responsibilities of FEMA
and grantees in carrying out section 324 of the Stafford Act, 42 U.S.C.
5165b. These responsibilities are unique to the administration of this
part and are in addition to common Federal Government requirements of
grantees and subgrantees, consistent with OMB circulars and other
applicable requirements, such as part 13 of this chapter.
(b) FEMA. FEMA is responsible for:
(1) Determining the lock-in amount for management costs in
accordance with Sec. 207.5.
(2) Obligating funds for management costs in accordance with Sec.
207.5(b).
(3) Deobligating funds provided for management costs not disbursed
in accordance with Sec. 207.8(b).
(4) Reviewing management cost rates not later than 3 years after
this rule is in effect and periodically thereafter.
(c) Grantee. The grantee must:
(1) Administer management cost funds to ensure that PA and HMGP, as
applicable, are properly implemented and closed out in accordance with
program timeframes and guidance.
(2) Determine the reasonable amount or percentage of management
cost funding to be passed through to subgrantees for contributions to
their costs for administering PA and HMGP projects and ensure that it
provides such funds to subgrantees.
(3) Address procedures for subgrantee management costs amount or
percentage determination, pass through, closeout, and audit in the
State administrative plan required in Sec. 206.207(b) of this chapter
for PA and Sec. 206.437 of this chapter for HMGP.
Sec. 207.5 Determination of management cost funding.
(a) General. This section describes how FEMA determines the amount
of funds that it will contribute under this part for management costs
for PA and/or HMGP for a particular major disaster or emergency.
(b) Lock-in. FEMA will determine the amount of funds that it will
make
[[Page 57877]]
available for management costs by a lock-in, which will act as a
ceiling for funds available to a grantee, including its subgrantees.
(1) Not earlier than 30 days and not later than 35 days from the
date of declaration, FEMA will provide the grantee preliminary lock-in
amount(s) for management costs based on the projections at that time of
the Federal share for financial assistance for PA and HMGP, as
applicable. In accordance with Sec. 207.7(c), FEMA will obligate 25
percent of the estimated lock-in amount(s) to the grantee.
(2) For planning purposes, FEMA will revise the lock-in amount(s)
at 6 months after the date of the declaration. In accordance with Sec.
207.7(e), FEMA may obligate interim amount(s) to the grantee.
(3) FEMA will determine the final lock-in amount(s) 12 months after
date of declaration or after determination of the final HMGP lock-in
ceiling, whichever is later. FEMA will obligate the remainder of the
lock-in amount(s) to the grantee in accordance with Sec. 207.7(f).
(4) Rates. (i) For major disaster declarations, FEMA will determine
the lock-in for PA based on a flat percentage rate of the Federal share
of projected eligible program costs for financial assistance pursuant
to sections 403, 406, and 407 of the Stafford Act, 42 U.S.C. 5170b,
5172, and 5173, respectively, but not including direct Federal
assistance. For major disaster declarations on or after November 13,
2007, the PA rate will be 3.34 percent.
(ii) For major disaster declarations, FEMA will determine the lock-
in for HMGP based on a flat percentage rate of the Federal share of
projected eligible program costs under section 404 of the Stafford Act,
42 U.S.C. 5170c. For major disaster declarations on or after November
13, 2007, the HMGP rate will be 4.89 percent.
(iii) For emergency declarations, FEMA will determine the lock-in
for PA based on a flat percentage rate of the Federal share of
projected eligible program costs for financial assistance (sections 502
and 503 of the Stafford Act, 42 U.S.C. 5192 and 5193, respectively),
but not including direct Federal assistance. For emergency declarations
on or after November 13, 2007 the rate will be 3.90 percent.
(c) The dollar amount provided to a grantee for management cost
funds for a single declaration will not exceed 20,000,000, except as
described in paragraphs (d) and (e) of this section.
(d) The grantee must justify in writing to the Regional
Administrator any requests to change the amount of the lock-in or the
cap, extend the time period before lock-in, or request an interim
obligation of funding at the time of the 6-month lock-in adjustment.
The Regional Administrator will recommend to the Chief Financial
Officer whether to approve the extension, change, or interim
obligation. Extensions, changes to the lock-in, or interim obligations
will not be made without the approval of the Chief Financial Officer.
(e) The Chief Financial Officer may change the amount of the lock-
in or the cap, or extend the time before lock-in, if the Chief
Financial Officer determines that the projections used to determine the
lock-in were inaccurate to such a degree that the change to the lock-in
would be material, or for other reasons in his or her discretion that
may reasonably warrant such changes. The Chief Financial Officer will
not make such changes without consultation with the grantee and the
Regional Administrator.
Sec. 207.6 Use of funds.
(a) The grantee or subgrantee must use management cost funds
provided under this part in accordance with Sec. 13.22 of this chapter
and only for costs related to administration of PA or HMGP,
respectively. All charges must be properly documented in accordance
with Sec. 207.8(f).
(b) Indirect costs may not be charged directly to a project or
reimbursed separately, but rather are considered to be eligible
management costs under this part.
(c) Activities and costs that can be directly charged to a project
with proper documentation are not eligible for funding under this part.
Sec. 207.7 Procedures for requesting management cost funding.
(a) General. This section describes the procedures to be used by
the grantee in requesting management cost funding.
(b) State Administrative Plan Requirements. State administrative
plans, as required in Sec. 206.207(b) of this chapter for PA and Sec.
206.437 of this chapter for HMGP, must be amended to include procedures
for subgrantee management costs amount or percentage determination,
pass through, closeout, and audit, as required by Sec. 207.4(c)(3)
before management cost funds will be provided under this part.
(c) Initial Funding Request Submission. Upon notification of the
preliminary lock-in amount(s) for management costs based on the Federal
share of the projected eligible program costs for financial assistance
at that time for PA and HMGP, as applicable, the grantee must submit
its initial management cost funding request to the Regional
Administrator. FEMA must receive the initial funding request before it
will provide any management cost funds under this part.
(1) For PA management costs, funding requests shall be submitted
using a PW.
(2) For HMGP management costs, funding requests shall be submitted
using an HMGP project narrative.
(d) Request Documentation. The grantee is required to submit, no
later than 120 days after the date of declaration, documentation to
support costs and activities for which the projected lock-in for
management cost funding will be used. In extraordinary circumstances,
FEMA may approve a request by a grantee to submit support documentation
after 120 days. FEMA will work with the grantee to approve or reject
the request within 30 days of receipt of the request. If the request is
rejected, the grantee will have 30 days to resubmit it for
reconsideration and approval. FEMA will not obligate the balance of the
management costs lock-in pursuant to a final funding request as
described in paragraph (f) of this section or any interim amounts as
allowed under paragraph (e) of this section unless the grantee's
documentation is approved. The documentation must include:
(1) A description of activities, personnel requirements, and other
costs for which the grantee will use management cost funding provided
under this part;
(2) The grantee's plan for expending and monitoring the funds
provided under this part and ensuring sufficient funds are budgeted for
grant closeout; and
(3) An estimate of the percentage or amount of pass-through funds
for management costs provided under this part that the grantee will
make available to subgrantees, and the basis, criteria, or formula for
determining the subgrantee percentage or amount (e.g., number of
projects, complexity of projects, X percent to any subgrantee).
(e) Interim Funding Request. If the grantee can justify a bona fide
need for an additional obligation of management cost funds at 6 months,
the grantee may submit a request to the Regional Administrator. Any
interim obligations by FEMA must be approved by the Chief Financial
Officer and will not exceed an amount equal to 10 percent of the 6-
month lock-in amount, except in extraordinary circumstances.
(f) Final Funding Request. Upon notification of the final lock-in
amount(s), the grantee must submit a final management cost funding
request to the Regional Administrator. Any
[[Page 57878]]
necessary revisions to supporting documentation must be attached to the
final funding request.
Sec. 207.8 Management cost funding oversight.
(a) General. The grantee has primary responsibility for grants
management activities and accountability of funds provided for
management costs as required by part 13 of this chapter, especially
Sec. Sec. 13.20 and 13.36. The grantee is responsible for ensuring
that subgrantees meet all program and administrative requirements.
(b) Period of availability. (1) For major disaster declarations,
the grantee may expend management cost funds for allowable costs for a
maximum of 8 years from the date of the major disaster declaration or
180 days after the latest performance period date of a non-management
cost PA PW or HMGP project narrative, respectively, whichever is
sooner.
(2) For emergency declarations, the grantee may expend management
cost funds for allowable costs for a maximum of 2 years from the date
of the emergency declaration or 180 days after the latest performance
period of a non-management cost PA PW, whichever is sooner.
(3) The period of availability may be extended only at the written
request of the grantee, with the recommendation of the Regional
Administrator, and with the approval of the Chief Financial Officer.
The grantee must include a justification in its request for an
extension, and must demonstrate that there is work in progress that can
be completed within the extended period of availability. In no case
will an extended period of availability allow more than 180 days after
the expiration of any performance period extensions granted under PA or
HMGP for project completion. FEMA will deobligate any funds not
liquidated by the grantee in accordance with Sec. 13.23 of this
chapter.
(c) Reporting requirements. The grantee must provide quarterly
progress reports on management cost funds to the Regional Administrator
as required by the FEMA-State Agreement.
(d) Closeout. The grantee has primary responsibility for the
closeout tasks associated with both the program and subgrantee
requirements. Complying with each program's performance period
requirement, the grantee must conduct final inspections for projects,
reconcile subgrantee expenditures, resolve negative audit findings,
obtain final reports from subgrantees and reconcile the closeout
activities of subgrantees with PA and HMGP grant awards.
(e) Audit requirements. Uniform audit requiremen