Public Assistance Appeals and Arbitrations, 53725-53748 [2020-16040]

Download as PDF Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs agencies to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards. This action modifies existing regulations to correct an error in the regulations and therefore involves technical standards previously established by EPA. The amendments to the regulations do not involve the application of new technical standards. EPA is continuing to use the technical standards previously established in its rules regarding the light-duty vehicle GHG standards for MYs 2017–2025. See 77 FR 62960 and 85 FR 25265. K. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations The EPA believes that this action does not have disproportionately high and adverse human health or environmental effects on minority populations, lowincome populations and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994). This regulatory action merely corrects previously established provisions that auto manufacturers use to demonstrate compliance for light-duty vehicles. List of Subjects in 40 CFR Part 600 Environmental protection, Administrative practice and procedure, Electric power, Fuel economy, Labeling, Reporting and recordkeeping requirements. Andrew Wheeler, Administrator. [FR Doc. 2020–17214 Filed 8–28–20; 8:45 am] khammond on DSKJM1Z7X2PROD with PROPOSALS BILLING CODE 6560–50–P VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 DEPARTMENT OF HOMELAND SECURITY Federal Emergency Management Agency 44 CFR Part 206 [Docket ID: FEMA–2019–0012] RIN 1660–AB00 Public Assistance Appeals and Arbitrations Federal Emergency Management Agency, DHS. ACTION: Notice of proposed rulemaking. AGENCY: The Federal Emergency Management Agency (FEMA) is proposing regulations to implement the new right of arbitration authorized by the Disaster Recovery Reform Act of 2018 (DRRA), and to revise its regulations regarding first and second Public Assistance appeals. DATES: Comments must be received no later than October 30, 2020. ADDRESSES: You may submit comments, identified by Docket ID: FEMA–2019– 0012, via the Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. SUMMARY: FOR FURTHER INFORMATION CONTACT: Shabnaum Amjad, Deputy Associate Chief Counsel, Regulatory Affairs, Office of Chief Counsel, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472. Phone: 202– 212–2398 or email: Shabnaum.Amjad@ fema.dhs.gov. SUPPLEMENTARY INFORMATION: I. Public Participation We encourage you to participate in this rulemaking by submitting comments and related materials. We will consider all comments and materials received during the comment period. If you submit a comment, identify the agency name and the Docket ID for this rulemaking, indicate the specific section of this document to which each comment applies, and give the reason for each comment. All submissions will be posted, without change, to the Federal e-Rulemaking Portal at www.regulations.gov, and will include any personal information you provide. Therefore, submitting this information makes it public. For more about privacy and the docket, visit https:// www.regulations.gov/ document?D=DHS-2018-0029-0001. Viewing comments and documents: For access to the docket to read PO 00000 Frm 00036 Fmt 4702 Sfmt 4702 53725 background documents or comments received, go to the Federal eRulemaking Portal at https:// www.regulations.gov. II. Background A. The Public Assistance Program Under the Public Assistance (PA) Program, authorized by the Robert T. Stafford Disaster Relief and Emergency Assistance Act 1 (Stafford Act), FEMA awards grants to eligible applicants to assist them in responding to and recovering from Presidentially-declared emergencies and major disasters. The recipient, as defined at 44 CFR 206.201(m), is the government to which a grant is awarded, and which is accountable for the use of the funds provided. Generally, the State for which the emergency or major disaster is declared is the recipient. The recipient can also be an Indian Tribal government. The applicant, as defined at 44 CFR 206.201(a), is a State agency, local government, or eligible private nonprofit organization submitting an application to the recipient for assistance under the recipient’s grant. The PA Program provides Federal funds for debris removal, emergency protective measures, and permanent restoration of infrastructure. When the President issues an emergency or major disaster declaration authorizing PA FEMA may accept applications from eligible applicants under the PA Program. To apply for a grant under the PA Program, the eligible applicant must submit a Request for PA to FEMA through the recipient. Upon award, the recipient notifies the applicant of the award, and the applicant becomes a subrecipient. FEMA uses Project Worksheets (PWs) to administer the PA Program. A FEMA Project Specialist develops PWs for large projects, working with a recipient representative and the applicant. A PW is the primary form used to document the location, damage description and dimensions, scope of work, and cost estimate for a project. Although large projects are funded on documented actual costs, work typically is not complete at the time of project formulation, PW development, and approval. Therefore, FEMA obligates large project grants based on estimated costs and relies on financial reconciliation at project closeout for final costs. The obligation process is the process by which FEMA makes funds available to the recipient. The funds reside in a 1 Disaster Relief Act of 1974, Public Law 93–288, 88 Stat. 143 (May 22, 1974), as amended, 42 U.S.C. 5121 et seq. E:\FR\FM\31AUP1.SGM 31AUP1 53726 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS Federal account until drawn down by the recipient and disbursed to the applicant, unless partially or otherwise deobligated for reasons including, but not limited to, discrepancies between estimated and actual costs, updated estimates, a determination that a prior eligibility determination was incorrect, additional funds received from other sources that could represent a prohibited duplication of benefits, or expiration of the period of performance. Occasionally, an applicant or recipient may disagree with FEMA regarding a determination related to their request for Public Assistance. Such disagreements may include, for instance, whether an applicant or recipient, facility, item of work, or project is eligible for Public Assistance; whether approved costs are sufficient to complete the work; whether a requested time extension was properly denied; whether a portion of the cost claimed for the work is eligible; or whether the approved scope of work is correct. In such circumstances, the applicant or recipient may appeal FEMA’s determination. 44 CFR 206.206. B. 44 CFR 206.206, Public Assistance Appeals Under the appeals procedures in 44 CFR 206.206, an eligible applicant, subrecipient, or recipient may appeal any determination made by FEMA related to an application for or the provision of Public Assistance. There are two levels of appeal. The first appeal is to the FEMA Regional Administrator. The second appeal is to the FEMA Assistant Administrator for Recovery at FEMA Headquarters. The applicant must file an appeal with the recipient within 60 calendar days of the applicant’s receipt of a notice from FEMA of the Federal determination that is being appealed. 44 CFR 206.206(c)(1). The applicant must provide documentation to support the position of the appeal. In this documentation, the applicant will specify the monetary amount in dispute and the provisions in Federal law, regulation, or policy with which the applicant believes FEMA’s initial action was inconsistent. 44 CFR 206.206(a). The recipient reviews and evaluates the appeal documentation. The recipient then prepares a written recommendation on the merits of the appeal and forwards that recommendation to the FEMA Regional Administrator within 60 calendar days of the recipient’s receipt of the appeal from the applicant. 44 CFR 206.206(c)(2). Recipients may make recipient-related appeals to the FEMA Administrator. VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 The FEMA Regional Administrator reviews the appeal and takes one of two actions: (1) Renders a decision on the appeal and informs the recipient of the decision; or (2) requests additional information. If the appeal is granted, the FEMA Regional Administrator takes appropriate action, such as approving additional funding or sending a Project Specialist to meet with the appellant to determine additional eligible funding. 44 CFR 206.206(c)(3). If the FEMA Regional Administrator denies the appeal, the applicant or recipient may submit a second appeal.2 The applicant must submit the second appeal to the recipient within 60 calendar days of receiving the notice of the FEMA Regional Administrator’s decision on the first appeal. The recipient must forward the second appeal with a written recommendation to the FEMA Regional Administrator within 60 calendar days of receiving the second appeal. 44 CFR 206.206(c)(2). The FEMA Regional Administrator will forward the second appeal for action to the FEMA Assistant Administrator for Recovery as soon as practicable. Recipients may make recipient-related second appeals to the FEMA Assistant Administrator for Recovery. The FEMA Assistant Administrator for Recovery at FEMA Headquarters reviews the second appeal and renders a decision or requests additional information from the applicant. In a case involving highly technical issues, FEMA may request an independent scientific or technical analysis by a group or person having expertise in the subject matter of the appeal. 44 CFR 206.206(d). Upon receipt of requested information and reports from the applicant, FEMA must render a decision on the second appeal within 90 calendar days. 44 CFR 206.206(c)(3). This decision constitutes the final administrative decision of FEMA. 44 CFR 206.206(e)(3). C. 44 CFR 206.209, Arbitration for Public Assistance Determinations Related to Hurricanes Katrina and Rita Under 44 CFR 206.209, applicants may request arbitration to resolve disputed PA applications under major disaster declarations for Hurricanes Katrina and Rita, pursuant to the authority of the American Recovery and Reinvestment Act of 2009 (ARRA).3 Pursuant to section 601 of the ARRA, FEMA promulgated 44 CFR 206.209 to establish arbitration procedures to 2 Introductory text of paragraph(a) of 44 CFR 206.206. 3 American Recovery and Reinvestment Act of 2009, Public Law 111–5, 123 Stat. 115 (Feb. 17, 2009), 26 U.S.C. 1 note. PO 00000 Frm 00037 Fmt 4702 Sfmt 4702 resolve outstanding disputes regarding PA projects over $500,000. The ARRA arbitration regulations are only available to the States of Louisiana, Mississippi, Alabama, and Texas under the following declarations: DR–1603, DR–1604, DR– 1605, DR–1606, and DR–1607. D. Former 44 CFR 206.210, Dispute Resolution Pilot Program The Sandy Recovery Improvement Act of 2013 4 (SRIA) authorized FEMA to conduct a Dispute Resolution Pilot Program (DRPP), which was in effect from August 16, 2013 to December 31, 2015. 78 FR 49950, Aug 16, 2013. FEMA promulgated regulations at 44 CFR 206.210 (since removed) to effectuate the pilot program. It included arbitration by an independent review panel to resolve disputes relating to PA projects, to facilitate an efficient recovery from major disasters. Applicants could choose to use for their second appeal either the DRPP or the review already offered under 44 CFR 206.206. Arbitration by an independent review panel was available only for disputes in an amount equal to or greater than $1,000,000 for projects with non-Federal cost share requirement (where, the subrecipient had a cost share requirement), and for applicants that had completed a first appeal pursuant to 44 CFR 206.206. The arbitration decisions under this section were to be binding upon the parties to the dispute, as required by section 1105(b)(2) of SRIA. Under section 1105 of SRIA, the authority to accept a request for arbitration pursuant to the DRPP sunset on December 31, 2015, and FEMA has since removed these regulations.5 FEMA did not receive any requests for arbitration pursuant to the DRPP. E. Arbitration Under the Disaster Recovery Reform Act of 2018 (DRRA) On October 5, 2018, the President signed into law the Disaster Recovery Reform Act of 2018 (DRRA).6 Section 1219 of DRRA, which amended Section 423(d) of the Stafford Act (42 U.S.C. 5189a), provides a right of arbitration to certain applicants of the PA Program that have a dispute concerning the eligibility for assistance or repayment of assistance. 4 Sandy Recovery Improvement Act of 2013, Public Law 113–2, 127 Stat. 43 (Jan. 29, 2013), 42 U.S.C. 5189a note. 5 See Removal of Dispute Resolution Pilot Program for Public Assistance Appeals, 83 FR 44238, Aug. 30, 2018. 6 Disaster Recovery Reform Act of 2018, Public Law 115–254, 132 Stat. 3186 (Oct. 5, 2018), 42 U.S.C. 5189a. E:\FR\FM\31AUP1.SGM 31AUP1 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules To request arbitration pursuant to the newly amended 42 U.S.C. 5189a, a PA applicant (1) must have a dispute arising from a disaster declared after January 1, 2016, (2) must be disputing an amount that exceeds $500,000 (or $100,000 for an applicant in a ‘‘rural area’’ with a population of less than 200,000 and outside of an urbanized area), and (3) must have submitted a first appeal pursuant to the requirements established under 44 CFR 206.206. Such applicants that receive a negative first appeal decision then have the option of submitting either a request for a second appeal or a request for arbitration. In addition, an applicant that has had a first appeal pending with FEMA for more than 180 calendar days may withdraw such appeal and submit a request for arbitration. Applicants that had a second appeal pending with FEMA as of October 5, 2018, from a disaster declared after January 1, 2016 may, if they meet the amount in dispute requirement of $500,000 (or $100,000 for rural areas), withdraw their second appeal and request arbitration. Following the DRRA’s enactment, FEMA individually notified applicants with pending second appeals that were eligible to withdraw those appeals and request arbitration. Applicants that are not eligible to request arbitration are (1) applicants that have received a second appeal determination from FEMA prior to October 5, 2018, and (2) applicants that were eligible to submit a second appeal prior to October 5, 2018, but did not do so within the 60 calendar days required by 44 CFR 206.206.7 As amended by Section 1219 of the DRRA, 42 U.S.C. 5189a(d) names the Civilian Board of Contract Appeals (CBCA) as the entity responsible for conducting these arbitrations. The CBCA has promulgated regulations at 48 CFR part 6106 establishing its arbitration procedures for such purpose. The CBCA also currently conducts arbitrations arising from Hurricanes Katrina and Rita under the ARRA regulations pursuant to an Inter-Agency Agreement between the CBCA and FEMA. khammond on DSKJM1Z7X2PROD with PROPOSALS III. Proposed Rule FEMA proposes to revise its current PA appeals regulation at 44 CFR 7 On December 18, 2018, FEMA implemented section 1219 of DRRA by posting a Fact Sheet on its website. After CBCA published their March 5, 2019 proposed rule, see 84 FR 7861, FEMA updated the: Section 1219 Public Assistance Appeals and Arbitration Fact Sheet on March 27, 2019. A link to the current Fact Sheet: https://www.fema.gov/ media-library/assets/documents/175821. Accessed May 15, 2020. VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 206.206 to add in the new right to arbitration under DRRA, in conjunction with some revisions to the current appeals process. The DRRA adds arbitration as a permanent alternative to a second appeal under the PA Program. Additionally, applicants that have had a first appeal pending with FEMA for more than 180 calendar days may withdraw such appeal and submit a request for arbitration. In both cases, the amount in dispute must be greater than $500,000, or greater than $100,000 for an applicant for assistance in a rural area. The other major proposed revisions to 44 CFR 206.206 include adding definitions; adding subparagraphs to clarify what actions FEMA may take and will not take while an appeal is pending and state that FEMA may issue separate guidance as necessary, similar to current 44 CFR 206.209(m); adding a finality of decision paragraph; requiring electronic submission for appeals and arbitrations documents; and clarifying overall time limits for first and second appeals. These proposed rules for arbitration are separate and distinct from the arbitration provisions located in 44 CFR 206.209. Applicants should also review the Civilian Board of Contract Appeals regulations at 48 CFR part 6101, Rules of Procedure of the Civilian Board of Contract Appeals, and 48 CFR part 6106, Rules of Procedure for Arbitration of Public Assistance Eligibility or Repayment, for additional CBCA rules of procedure. FEMA proposes to change the 44 CFR 206.206 section heading from ‘‘Appeals’’ to ‘‘Appeals and arbitrations,’’ since FEMA proposes new regulatory text to implement DRRA’s right of arbitration at § 206.206. Throughout this section, FEMA proposes to change references to the ‘‘Disaster Assistance Directorate’’ to the ‘‘Recovery Directorate.’’ The proposed changes are technical edits, as they represent past FEMA organizational changes. Also, throughout this section FEMA proposes to change all ‘‘dates’’ to ‘‘calendar dates’’ for clarity. Finally, since FEMA is proposing new arbitration regulations, FEMA is proposing that the first appeal, second appeal, and arbitration requirements are in separate paragraphs for clarity. Currently in § 206.206, FEMA’s first and second appeal requirements are comingled. A. Definitions (Proposed 44 CFR 206.206(a)) Currently, § 206.206 does not include any definitions. FEMA proposes to add the terms ‘‘Administrator,’’ ‘‘Amount in PO 00000 Frm 00038 Fmt 4702 Sfmt 4702 53727 dispute,’’ ‘‘Applicant,’’ ‘‘Final agency determination,’’ ‘‘Recipient,’’ ‘‘Rural area,’’ and ‘‘Urbanized area,’’ as follows. Administrator. FEMA proposes to define the term ‘‘Administrator’’ to mean the Administrator of the Federal Emergency Management Agency for clarity. Amount in dispute. FEMA proposes to define the term ‘‘Amount in dispute’’ to mean the difference between the amount of financial assistance sought for a Public Assistance project and the amount of financial assistance for which FEMA has determined such Public Assistance project is eligible. The DRRA amendments to 42 U.S.C. 5189a(d)(1) introduced the term ‘‘dispute,’’ and also added dollar thresholds that applicants must meet (which differ depending on the area of the country in which the applicant applies for assistance) in order to request arbitration. ‘‘Amount in dispute’’ is not used in the current appeals section, 44 CFR 206.206, because there is no required dollar threshold to appeal a decision. Accordingly, FEMA proposes to define the term ‘‘amount in dispute’’ because applicants seeking arbitration must state an amount in dispute as a prerequisite for the arbitration portion of proposed 44 CFR 206.206. A Project is a logical grouping of work required as a result of the declared major disaster or emergency. The scope of work and cost estimate for a project are documented on a PW. 44 CFR 206.201(k). Applicants and recipients cannot combine PWs together in order to obtain eligibility. FEMA makes PA determinations at the PW level. Facility means any publicly or privately owned building, works, system, or equipment, built or manufactured, or an improved and maintained natural feature. Land used for agricultural purposes is not a facility. 44 CFR 206.201(c). FEMA must consider the amount in dispute at the PW level, rather than by facility (as one PW could encompass multiple facilities) or by appeal (which could consolidate multiple PWs, thereby increasing the amount in dispute). Applicant. FEMA proposes to define the term ‘‘Applicant’’ to refer to the definition at 206.201(a) for the sake of consistency within the program. Final agency determination. FEMA proposes to define the term ‘‘Final agency determination’’ to mean the decision of FEMA, if the applicant or recipient does not submit a first appeal within the time limits provided for in paragraph (b)(1)(ii)(A) of proposed § 206.206; or the decision of FEMA, if the applicant or recipient withdraws the pending appeal and does not file a E:\FR\FM\31AUP1.SGM 31AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS 53728 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules request for arbitration within 30 calendar days of the withdrawal of the pending appeal; or the decision of the FEMA Regional Administrator, if the applicant or recipient does not submit a second appeal within the time limits provided for in paragraph (b)(2)(ii)(A) of proposed § 206.206. This term was introduced by the DRRA amendments to 42 U.S.C. 5189a(d)(5)(B) and requires a definition. The purpose of the proposed definition is to clearly state when a FEMA determination is final and thus no longer ripe for any additional review through FEMA’s administrative appeal process or arbitration under the DRRA. Using ‘‘final agency determination’’ to replace the current term ‘‘final administrative decision,’’ used in § 206.206(e)(3), will align FEMA’s regulation with the language introduced by the DRRA amendments at 42 U.S.C. 5189a(d)(5)(B). Recipient. FEMA proposes to define the term ‘‘Recipient’’ to refer to the definition at § 206.201(m) for the sake of consistency within the program. Rural area. FEMA proposes to define the term ‘‘Rural area’’ to mean an area with a population of less than 200,000 outside an urbanized area. As amended by the DRRA, 42 U.S.C. 5189a(d)(4) defines this term. FEMA makes PA determinations at the PW level. Therefore, considerations of the amount in dispute and rural/ urban status must be done at the PW level, rather than by facility (as one PW could encompass multiple facilities) or by appeal (which could consolidate multiple PWs. If a PW encompasses multiple facilities, and those facilities happen to be in both rural and urbanized areas, then FEMA will consider the entire PW as ‘‘rural.’’ Urbanized area. FEMA proposes to define the term ‘‘Urbanized area’’ to mean the area as identified by the United States Census Bureau. The Census Bureau defines an ‘‘urbanized area’’ as an area that consists of densely settled territory that contains 50,000 or more people.8 The DRRA amendments to 42 U.S.C. 5189a(d)(4) introduced this term and it requires a definition. FEMA proposes to defer to the Census Bureau definition, which meets FEMA’s needs for determining eligibility for an arbitration. B. Appeals and Arbitrations (Proposed 44 CFR 206.206(b) Introductory Paragraph) For the introductory paragraph of § 206.206(b), FEMA proposes to state 8 See ‘‘Qualifying Urban Areas for the 2010 Census, 77 FR 18651, Mar. 27, 2012. VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 that an eligible applicant or recipient may appeal or an eligible applicant may arbitrate any determination previously made related to an application for or the provision of Public Assistance according to the procedures of proposed § 206.206. This language is similar to the current regulation at § 206.206 introductory paragraph. FEMA proposes changing ’’ applicant, subrecipient, or recipient’’ to ‘‘applicant or recipient’’ since the definition of applicant at § 206.201(a) includes subrecipient. FEMA proposes changing ‘‘Federal assistance’’ to ‘‘Public Assistance’’ to clarify that appeal and arbitration procedures only apply to Public Assistance. Additionally, FEMA proposes to add ‘‘or an eligible applicant may arbitrate’’ to the proposed § 206.206(b) introductory paragraph, since the current § 206.206 only discusses an appeal and 42 U.S.C. 5189a requires applicants to have the choice to either request an arbitration or a second appeal. FEMA also proposes to replace ‘‘procedures below’’ with ‘‘procedures of this section’’ for clarity. C. First Appeal (Proposed 44 CFR 206.206(b)(1)) In the introductory paragraph of proposed paragraph (b)(1), FEMA states that the applicant must make a first appeal in writing and submit it electronically through the recipient to the Regional Administrator. The current regulation (at 44 CFR 206.206(a)) does not require submission electronically, but states submissions must be in writing. FEMA proposes this revision to the current regulation to accurately track the transmittal/receipt of appeals for the purposes of establishing deadlines for second appeal and arbitration. The revision removes the mandatory language that the recipient ‘‘shall review and evaluate’’ all subrecipient appeals before submission to the Regional Administrator. Instead, FEMA proposes that the recipient must include a written recommendation on the applicant’s appeal with the electronic submission of the applicant’s first appeal to the Regional Administrator. To include a recommendation on the applicant’s appeal, the recipient must review and evaluate the appeal. Accordingly, FEMA proposes striking the review and the evaluation portion of the sentence as superfluous. FEMA’s proposed language regarding the mandatory recommendation includes electronic submission to the Regional Administrator. Again, the change to electronic submissions is to accurately track the transmittal/receipt of recommendations for the purposes of PO 00000 Frm 00039 Fmt 4702 Sfmt 4702 establishing deadlines for second appeals and arbitrations. FEMA is proposing a requirement that the recipient provide a recommendation on the applicant’s appeal due to the recipient’s grant management responsibilities and fiscal accountability for all PA grants under a major disaster declaration, including its commitment to comply with the applicable cost share requirement.9 The recipient has a responsibility to ensure all applicants abide by grant and cost share requirements, so in this capacity FEMA believes that the recipient should make a recommendation on the substance of the applicant’s first appeal. The final sentence of proposed paragraph (b)(1) is currently the third sentence in paragraph 206.206(a), which states that the recipient may make recipient-related appeals to the Regional Administrator. In proposed paragraph (b)(1)(i), FEMA states the requirements of a first appeal, which must include all documented justification supporting the applicant or recipient’s position; the specific amount in dispute, as applicable; and the specific provisions in Federal law, regulation, or policy with which the applicant or recipient believes the FEMA determination was inconsistent. This is consistent with the current regulation in § 206.206(a), except that FEMA proposes to change ‘‘initial action’’ to ‘‘FEMA determination.’’ This change clarifies what the ‘‘initial action’’ actually is and aligns the regulation with the terminology the program now uses. As such, no substantive change is intended. Similarly, FEMA proposes to change ‘‘monetary figure in dispute’’ to ‘‘amount in dispute, as applicable’’ so that we could use one term for both appeals and arbitrations, plus for clarity. Currently, FEMA allows an applicant, subrecipient, or recipient to appeal a provision of assistance without providing a monetary figure. (E.g. time extension requests, scope of work change requests, etc.) Therefore, FEMA has proposed ‘‘amount in dispute, as applicable’’ to replace the current regulations of ‘‘monetary figure in 9 All grants FEMA administers must comply with the government-wide rules governing all Federal assistance. These rules, set out at 2 CFR part 200, apply to FEMA awards to recipients as well as to subawards under the FEMA award, which a recipient, as pass-through entity, awards to subrecipients. These rules govern administrative and grants management requirements, cost principles, and audit requirements. FEMA Manual 205–0–1, ‘‘Grants Management,’’ as a whole serves to explain key requirements of 2 CFR part 200 as they pertain to FEMA assistance. The following regulations cover FEMA’s cost share requirement: 44 CFR 206.36(c)(5), 206.44, and 206.203(b). E:\FR\FM\31AUP1.SGM 31AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules dispute.’’ Also, the current regulation uses the term ‘‘appellant’’ instead of ‘‘applicant or recipient’’ for the requirement of specifying the provisions in Federal law, regulation, or policy in dispute. FEMA’s reason for changing from ‘‘appellant’’ to ‘‘applicant or ‘‘recipient’’ is for consistency in terminology and no substantive change is intended. Finally, in keeping with principles of transparency and plain language, FEMA proposes to replace ‘‘shall’’ with ‘‘must’’ in the last sentence of current § 206.206(a) and reorganizing the last sentence by separating it into subparagraphs (b)(1)(i)(A) through (C). Proposed paragraph (b)(1)(ii) addresses time limits for first appeals. Under proposed paragraph (b)(1)(ii)(A), the applicant may make a first appeal through the recipient within 60 calendar days from the date of the FEMA determination that is the subject of the appeal, and the recipient must electronically forward to the Regional Administrator the applicant’s first appeal with a recommendation within 120 calendar days from the date of the FEMA determination that is the subject of the appeal. FEMA proposes to change the term ‘‘appellant’’ to ‘‘applicant’’ for consistency in terminology; no substantive change is intended. FEMA also proposes to change ‘‘after receipt of a notice of the action that is being appealed’’ to ‘‘from the date of the FEMA determination that is the subject of the appeal’’ to enable FEMA to accurately track the transmittal/receipt of appeals. The proposed revision removes the mandatory language that the recipient ‘‘will review’’ the first appeal. In order for the recipient to provide a written recommendation, the recipient must review the appeal, so the deleted language is superfluous. FEMA proposes adding a requirement that the recipient forward the applicant’s appeal and the recipient’s recommendation electronically to the Regional Administrator. The proposed change to electronic submissions is to accurately track the transmittal/receipt of appeals for the purposes of establishing deadlines for second appeal and arbitration. Finally, under proposed paragraph (b)(1)(ii)(A), FEMA proposes to state that FEMA will deny all first appeals it receives from the recipient more than 120 calendar days from the date of the FEMA determination that is the subject of the appeal. This addition is added for clarity to explain what occurs if an applicant misses the deadline. This addition is not a new deadline. Currently, 44 CFR 206.206(c)(1) allows an applicant 60 days to file an appeal VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 and paragraph 206.206(c)(2) allows a recipient to review and forward an applicant’s appeals along with a written recommendation within 60 days. FEMA has combined the two 60-day deadlines into a 120-calendar days deadline. Under proposed paragraph (b)(1)(ii)(B), within 90 calendar days following receipt of a first appeal, if there is a need for additional information, the Regional Administrator will provide electronic notice to the recipient and applicant. This is consistent with the current regulations, with the added requirement for electronic notification and simultaneous notification of the applicant. FEMA also proposes for clarity to state that if there is no need for additional information, then FEMA will not provide notification. Finally, FEMA also proposes to state that the Regional Administrator will generally allow the recipient 30 calendar days to provide any additional information. This is consistent with the current regulation, except that the current regulation does not include the 30-calendar day timeframe, but rather states that the Regional Administrator will include a date by which the information must be provided. This change is to better allow FEMA to issue timely determinations on first appeal. The proposed regulations, at (b)(1)(ii)(B) and (C), have split the current regulations into two paragraphs. Under proposed paragraph (b)(1)(ii)(C), FEMA will require the Regional Administrator to provide electronic notice of the disposition of the appeal to the applicant and recipient within 90 calendar days of receipt of the appeal or within 90 calendar days following the receipt of additional information or following expiration of the period for providing the information. The proposed regulations reorganize the word order of the current regulation and adds the following phrase ‘‘within 90 calendar days of receipt of the appeal’’ for clarification. Additionally, proposed paragraph (b)(1)(ii)(C) adds the requirement to provide electronic notice of the disposition of the appeal, removes the requirement that it be ‘‘in writing,’’ and includes simultaneous notification of the applicant. The change to electronic submissions is to accurately track the transmittal/receipt of appeals for the purposes of establishing deadlines for second appeal and arbitration. Currently, FEMA may receive submissions several ways, including electronically, through courier delivery, and through the United States (U.S.) mail. Proposed paragraph (b)(1)(iii) addresses technical advice and states PO 00000 Frm 00040 Fmt 4702 Sfmt 4702 53729 that in appeals involving highly technical issues, the Regional Administrator may, at his or her discretion, submit the appeal to an independent scientific or technical person or group having expertise in the subject matter of the appeal for advice or recommendation. The period for technical review may be in addition to other allotted time periods. Within 90 calendar days of the report, the Regional Administrator will provide electronic notice of the disposition of the appeal to the recipient and applicant. This is consistent with the current regulation at 44 CFR 206.206(d), except for the requirement to electronically notify the recipient and provide simultaneous notice to the applicant. FEMA proposes to add a new paragraph regarding the effect of an appeal in proposed paragraph (b)(1)(iv). Proposed paragraph (b)(1)(iv)(A) states that FEMA will take no action to implement any determination pending an appeal decision from the Regional Administrator, subject to the exceptions in paragraph (b)(1)(iv)(B) of proposed § 206.206. This section is added to provide clarity to an appellant as to what actions FEMA will not take and what actions FEMA may take while an appeal is pending. It does not alter any current FEMA practices or procedures, nor does the rule limit any rights an appellant has regarding their appeal. In proposed paragraph (b)(1)(iv)(B), FEMA states that, notwithstanding (b)(1)(iv)(A), FEMA may suspend funding (referring to 2 CFR 200.338); defer or disallow other claims questioned for reasons also disputed in the pending appeal; or take other action to recover, withhold, or offset funds if specifically authorized by statute or regulation. As stated above, this section is added to provide clarity to an appellant as to what actions FEMA will not take and what actions FEMA may take while an appeal is pending and does not alter any of FEMA’s current practices or procedures or limit any rights an appellant has regarding their appeal. As stated in the current regulation in the final sentence of § 206.206(c)(3), if the Regional Administrator grants an appeal, the Regional Administrator will take appropriate implementing action(s). This language is now in proposed paragraph (b)(1)(v). In proposed paragraph (b)(1)(vi), FEMA states that FEMA may issue separate guidance as necessary to supplement paragraph (b)(1). This language arises from 44 CFR 206.209(m) and is carried over to this proposed regulation for consistency. Since FEMA has separated first appeal, second E:\FR\FM\31AUP1.SGM 31AUP1 53730 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS appeal, and arbitration requirements into separate paragraphs for clarity, FEMA proposes adding a guidance subparagraph to the first and second appeal paragraphs for consistency. FEMA already provides guidance for first appeals in the Public Assistance Program and Policy Guide, FP–104– 009–2 (April 2018). FEMA likewise provides guidance for staff implementing appeals procedures in Recovery Directorate Manual Public Assistance Program Appeal Procedures (Version 4) Approval Date: March 29, 2016. As such, proposed paragraph (b)(1)(vi) will not alter current practice. D. Second Appeal (Proposed 44 CFR 206.206(b)(2)) The introductory paragraph to proposed § 206.206(b)(2) states that if the Regional Administrator denies a first appeal in whole or in part, the applicant may make a second appeal in writing and submit it electronically through the recipient to the Assistant Administrator for the Recovery Directorate. This is consistent with the current regulation, except for the addition of the requirement to submit electronically. This requirement ensures the accurate and clear tracking of transmittal dates of appeals for the purposes of establishing deadlines for arbitrations. In addition, the current regulation refers to the ‘‘Assistant Administrator for the Disaster Assistance Directorate.’’ The title of this position is now the ‘‘Assistant Administrator for the Recovery Directorate;’’ the proposed regulation reflects this new title. The second to last sentence under the introductory paragraph to proposed § 206.206(b)(2) states that the recipient must include a written recommendation on the applicant’s appeal with the electronic submission of the applicant’s second appeal to the Assistant Administrator for the Recovery Directorate. This is consistent with FEMA’s current implementation of § 206.206(c)(2). FEMA’s proposed language regarding the mandatory recommendation includes electronic submission to the Assistant Administrator for the Recovery Directorate. Again, the change to electronic submissions is to accurately track the transmittal/receipt of recommendations for the purposes of establishing deadlines. The last sentence under the introductory paragraph to proposed § 206.206(b)(2) states that the recipient may make recipient-related second appeals to the Assistant Administrator for the Recovery Directorate. This is consistent with the current third sentence in paragraph 206.206(a) that VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 the recipient may make recipient-related appeals to the Regional Administrator. In proposed paragraph (b)(2)(i), FEMA states the requirements of a second appeal, which must include all documented justification supporting the applicant or recipient’s position; the specific amount in dispute, as applicable; and the specific provisions in Federal law, regulation, or policy with which the applicant or recipient believes the FEMA determination was inconsistent. This is consistent with the current regulation, with the substitution of ‘‘FEMA determination’’ for ‘‘initial action’’ and ‘‘appellant’’ for ‘‘applicant or recipient’’ for clarity as described above. Also consistent with the proposed paragraph (b)(1)(i) described above, FEMA proposes replacing ‘‘monetary figure in dispute’’ with ‘‘amount in dispute, as applicable,’’ since FEMA allows an applicant or recipient to appeal a FEMA determination that does not concern a monetary figure. Additionally, FEMA proposes again to change ‘‘appellant’’ to ‘‘applicant or recipient’’ in this paragraph for consistency of terminology, and replacing ‘‘shall’’ with ‘‘must’’ for purposes of plain language. FEMA finally proposes reorganizing the last sentence by separating it into subparagraphs (b)(2)(i)(A)–(b)(2)(i)(C). Proposed paragraph (b)(2)(ii) addresses time limits for second appeals. Under proposed paragraph (b)(2)(ii)(A), if the Regional Administrator denies a first appeal in whole or in part, the applicant may make a second appeal through the recipient within 60 calendar days from the date of the Regional Administrator’s first appeal decision and the recipient must electronically forward to the Assistant Administrator for the Recovery Directorate the applicant’s second appeal with a recommendation within 120 calendar days from the date of the Regional Administrator’s first appeal decision. FEMA will deny all second appeals it receives from the recipient more than 120 calendar days from the date of the Regional Administrator’s first appeal decision. This proposed language allows the recipient the same level of review and involvement in the second appeal process as they have with the first appeals process, which is consistent with how FEMA currently implements § 206.206, and emphasizes that FEMA will deny all second appeals it receives from the recipient more than 120 calendar days from the date of the Regional Administrator’s first appeal decision. This addition is not a new deadline. Currently, 44 CFR PO 00000 Frm 00041 Fmt 4702 Sfmt 4702 206.206(c)(1) allows an applicant 60 days to file an appeal and paragraph 206.206(c)(2) allows a recipient to review and forward an applicant’s appeals along with a written recommendation within 60 days. FEMA has combined the two 60-day deadlines into a 120-calendar day deadline. Proposed paragraph (b)(2)(ii)(B) states that within 90 calendar days following receipt of a second appeal, if there is a need for additional information, the Assistant Administrator for the Recovery Directorate will provide electronic notice to the recipient and applicant. If there is no need for additional information, then FEMA will not provide notification. The Assistant Administrator for the Recovery Directorate will generally allow the recipient 30 calendar days to provide any additional information. This is consistent with the current regulation, except that the current regulation does not include the 30-calendar day time limit or simultaneous notification of the applicant. Proposed paragraph (b)(2)(ii)(C) states that the Assistant Administrator for the Recovery Directorate will provide electronic notice of the disposition of the appeal to the recipient and applicant within 90 calendar days of receipt of the appeal or within 90 calendar days following the receipt of additional information or following expiration of the period for providing the information. This is consistent with the current regulations except for the requirement that the notice be provided electronically, and the simultaneous notification of the applicant. Again, the change to electronic submission is to accurately track the transmittal/receipt. Proposed paragraph (b)(2)(iii) states that in appeals involving highly technical issues, the Assistant Administrator for the Recovery Directorate may, at his or her discretion, submit the appeal to an independent scientific or technical person or group having expertise in the subject matter of the appeal for advice or recommendation. The paragraph further states that the period for this technical review may be in addition to other allotted time periods and within 90 calendar days of receipt of the report, the Assistant Administrator for the Recovery Directorate will provide electronic notice of the disposition of the appeal to the recipient and applicant. Proposed paragraph (b)(2)(iii) has been added to this section to be consistent with proposed paragraph (b)(1)(iii), which mirrors this section for first appeals. Proposed paragraph (b)(2)(iv) addresses the effect of an appeal and has E:\FR\FM\31AUP1.SGM 31AUP1 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS been added to this section to be consistent with the proposed paragraph in (b)(1)(iv), which mirrors this section for first appeals. Proposed paragraph (b)(2)(v) states that if the Assistant Administrator for the Recovery Directorate grants an appeal, the Assistant Administrator for the Recovery Directorate will direct the Regional Administrator to take appropriate implementing action(s). Proposed paragraph (b)(2)(v) has been added to this section for consistency with the proposed paragraph in (b)(1)(v), which mirrors this section for first appeals. Proposed paragraph (b)(2)(vi) addresses guidance and has been added to this section for consistency with the proposed paragraph (b)(1)(vi), which mirrors this section for first appeals. E. Arbitration (Proposed 44 CFR 206.206(b)(3)) Proposed paragraph 206.206(b)(3)(i) states that an applicant may request arbitration from the CBCA if there is a disputed agency determination arising from a major disaster declared on or after January 1, 2016. This is consistent with the requirements set forth in 42 U.S.C. 5189a(d), as amended by Section 1219 of the DRRA. The proposed paragraph sets forth additional requirements for eligibility to request arbitration, stating in (b)(3)(i)(B) that the amount in dispute is greater than $500,000, or greater than $100,000 for an applicant for assistance in a rural area; and in (b)(3)(i)(C) that the Regional Administrator has either denied a first appeal decision or received a first appeal but not rendered a decision within 180 calendar days of receipt. These eligibility requirements are consistent with the requirements set forth in 42 U.S.C. 5189a(d). FEMA added proposed paragraph (b)(3)(ii) to clarify that arbitration is in lieu of a second appeal. The proposed regulatory text clarifies that an applicant cannot submit a second appeal after requesting arbitration. Proposed paragraph 206.206(b)(3)(iii) details how applicants may request arbitration. Proposed paragraph 206.206(b)(3)(iii)(A) states that an applicant may initiate arbitration by submitting an electronic request simultaneously to the recipient, CBCA, and FEMA. See 48 CFR part 6106 (CBCA’s ‘‘Rules of Procedure for Arbitration of PA Eligibility or Repayment’’). Proposed paragraph 206.206(b)(3)(iii)(B)(1) states that an applicant must submit a request for arbitration within 60 calendar days from the date of the Regional Administrator’s first appeal decision. This proposed rule VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 is consistent with 42 U.S.C. 5189a(d)(5)(A). FEMA is proposing in paragraph 206.206(b)(3)(iii)(B)(1) a 60 calendar day deadline for submission of requests for arbitration. FEMA is proposing 60 calendar days to be consistent with the submission time limits for second appeals. Proposed paragraph 206.206(b)(3)(iii)(B)(2) provides that if the first appeal was timely submitted, and the Regional Administrator has not rendered a decision within 180 calendar days of receiving the appeal, an applicant may electronically submit a withdrawal of the pending appeal simultaneously to the recipient, the FEMA Regional Administrator, and the CBCA. The applicant may then submit a request for arbitration within 30 calendar days from the date of the withdrawal of the pending appeal. This proposed language describes the right to arbitration consistent with 42 U.S.C. 5189a(d)(5)(A) and adds a 30-day deadline to ensure that applicants make requests for arbitration promptly. Since the applicant will have already received 60 calendar days when they initially filed their appeal, FEMA believes that allowing 30 calendar days to request arbitration following withdrawal of their appeal is a sufficient submission period. If the applicant does not request arbitration within 30 calendar days after withdrawing their pending appeal, then the decision of FEMA becomes the final agency determination. Proposed paragraph 206.206(b)(3)(iii)(C) states that the request for arbitration must contain a written statement that specifies the amount in dispute, all documentation supporting the position of the applicant, the disaster number, and the name and address of the applicant’s authorized representative or counsel. This rule is consistent with 42 U.S.C. 5189a(d)(5)(A), which refers to the arbitration process established under the authority of section 601 of ARRA codified at 44 CFR 206.209.10 Proposed paragraph 206.206(b)(3)(iv) states that expenses for each party will be paid by the party who incurred the expense. This is consistent with 42 U.S.C. 5189a(d)(5)(A). Since 42 U.S.C. 5189a(d)(1) requires the Civilian Board of Contract Appeals to conduct arbitrations, CBCA’s regulations state that the CBCA arbitrates at no cost to the parties. (See 48 CFR 6106.606.) Proposed paragraph 206.206(b)(3)(v) states that FEMA may issue separate 10 American Recovery and Reinvestment Act of 2009, Public Law 111–5, 123 Stat. 115 (Feb. 17, 2009), 26 U.S.C. 1 note. PO 00000 Frm 00042 Fmt 4702 Sfmt 4702 53731 guidance as necessary to supplement paragraph (b)(3). This proposed rule is consistent with 42 U.S.C. 5189a(d)(5)(A) and directly corresponds to language contained in 44 CFR 206.209(m). F. Finality of Decision (Proposed 44 CFR 206.206(c)) Proposed paragraph 206.206(c) states that a FEMA final agency determination or a decision of the Assistant Administrator for the Recovery Directorate on a second appeal constitutes a final decision of FEMA. In the alternative, a decision of the majority of the CBCA panel constitutes a final decision, binding on all parties. See 48 CFR 6106.613. (CBCA’s Decision; finality regulation.) Final decisions are not subject to further administrative review. This is consistent with the provision in 42 U.S.C. 5189a(d)(1) that CBCA decisions are binding. The purpose of this paragraph is to clarify that an applicant cannot appeal, arbitrate, or pursue any administrative remedy for any matter for which FEMA has issued a final agency determination or a second appeal decision; or regarding which the CBCA has issued an arbitration decision. G. Removal of Current 44 CFR 206.206(e), Transition FEMA proposes removing current paragraphs 206.206(e)(1) and (2) as they are no longer necessary for this section. FEMA proposes removing current paragraph 206.206(e)(3) because FEMA proposes defining ‘‘final agency determination’’ in § 206.206(a). Using the proposed term ‘‘final agency determination’’ to replace the current term ‘‘final administrative decision,’’ used in § 206.206(e)(3), will align FEMA’s regulation with the language introduced by Congress in 42 U.S.C. 5189a(d)(5)(B), offering consistency with the statute. IV. Regulatory and Statutory Analyses A. Executive Order 12866, as Amended, Regulatory Planning and Review, Executive Order 13563, Improving Regulation and Regulatory Review; and Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs Executive Orders 12866 (‘‘Regulatory Planning and Review’’) and 13563 (‘‘Improving Regulation and Regulatory Review’’) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety E:\FR\FM\31AUP1.SGM 31AUP1 53732 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 13771 (‘‘Reducing Regulation and Controlling Regulatory Costs’’) directs agencies to reduce regulation and control regulatory costs and provides that ‘‘for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.’’ The Office of Management and Budget (OMB) has designated this rule as a nonsignificant regulatory action, under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed it. Due to this non-significant determination, this rule is also exempt from the requirements of Executive Order 13771. See the OMB Memorandum titled ‘‘Guidance Implementing Executive Order 13771, titled ‘Reducing Regulation and Controlling Regulatory Costs’ ’’ (April 5, 2017.) FEMA is proposing this rule to implement a new right of arbitration authorized by DRRA, and to revise its regulations regarding first and second PA appeals. FEMA’s PA Program provides Federal grant assistance to government organizations and eligible private nonprofit (PNP) organizations following a Presidential disaster declaration. The PA Program is administered through a coordinated effort between FEMA, States, or federally recognized Tribes and local governments or eligible PNPs (subrecipients). Need for Regulatory Action Under current regulations, when FEMA determines that an applicant or recipient is ineligible for PA funding, or if the applicant or recipient disputes the amount awarded, FEMA has implemented a process to appeal the decision. First, the applicant or recipient can appeal to the FEMA Regional Administrator. If the applicant or recipient does not submit a second appeal within 60 days, the result of the first appeal is the final agency determination. If the applicant or recipient is not satisfied with the result of the first appeal, they can submit a second appeal to the FEMA Assistant Administrator for the Recovery Directorate. The result of the second appeal is a final decision of FEMA. FEMA is proposing in this rule to implement provisions for arbitration in lieu of a second appeal, or in cases VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 where an applicant has had a first appeal pending with FEMA for more than 180 calendar days. Applicants choosing arbitration would have their case heard by a panel of judges with the CBCA. A decision by the majority of the CBCA panel constitutes a final decision that would be binding on all parties. Final decisions would not be subject to further administrative review. Pursuant to 42 U.S.C. 5189a, as amended by section 1219 of the DRRA, to request arbitration, an applicant (1) must have a dispute arising from a disaster declared after January 1, 2016; (2) must be disputing an amount that exceeds $500,000 (or $100,000 for an applicant in a ‘‘rural area’’ with a population of less than 200,000 and outside of an urbanized area); and, (3) must have submitted a first appeal and has either received a denial of the first appeal or has not received a decision after 180 calendar days. This proposed rule would directly affect applicants or recipients disputing FEMA PA eligibility determinations or disputing the amount awarded for PA projects. Applicants would be required to submit appeals through their State, or in the case of a Tribal declaration,11 their Tribal government (recipients). The recipient would then forward the request to the FEMA Regional Administrator, along with a recommendation for a first appeal. If an applicant has not received a decision on their first appeal after 180 days and meets the other two previously-outlined criteria, they may withdraw the first appeal and request arbitration. Alternatively, if the applicant does not agree with the Regional Administrator’s decision on the first appeal, they may either submit a second appeal to the FEMA Assistant Administrator for the Recovery Directorate or request arbitration. A panel of judges with the CBCA would hear any arbitration cases. The applicant would send a representative and possibly expert witnesses to the arbitration hearing. The recipient would also send a representative to support the applicant. FEMA representatives and expert witnesses would also attend the hearing to defend FEMA’s determination. The proposed rule would codify regulations for the appeals and arbitration process as directed by 42 U.S.C. 5189a(d)(5). Applicants are eligible for arbitration for disputes arising from major disasters declared on or after January 1, 2016. This process is 11 Tribes may choose to apply for PA independently as a recipient (tribal declaration) or may submit through their State as a subrecipient. PO 00000 Frm 00043 Fmt 4702 Sfmt 4702 already available, and eligible applicants have been notified of this option.12 As amended by Section 1219 of the DRRA, 42 U.S.C. 5189a(d) names the CBCA as the entity responsible for conducting these arbitrations. The CBCA has promulgated regulations at 48 CFR part 6106 establishing its arbitration procedures for such purpose. FEMA is proposing in paragraph 206.206(b)(3)(iii)(B) a 60 calendar day deadline for submitting requests for arbitration. FEMA is proposing this as FEMA does not want different submission time limits for second appeals and arbitrations. Rather, FEMA believes that there should be consistency between the time to request arbitration and the time to submit second appeals for administrative ease and to reduce potential confusion amongst applicants. Affected Population The proposed rule would affect PA applicants arising from major disaster declarations. Specifically, applicants that (1) submitted a first appeal and received a negative decision, or, (2) have a first appeal pending for more than 180 days and wish to withdraw the appeal in favor of arbitration. Applicants may only request arbitration for disputes in excess of $500,000, or $100,000 in rural areas, and for disputes that arise from major disasters declared on or after January 1, 2016. Summary of Regulatory Changes FEMA proposes to revise its current PA appeals regulation at 44 CFR 206.206 to add in the new right to arbitration under DRRA, in conjunction with some revisions to the current appeals process. DRRA adds arbitration as a permanent alternative to a second appeal under the PA Program, or for applicants that have had a first appeal pending with FEMA for more than 180 calendar days that may withdraw such appeal and submit a request for arbitration, provided the dispute is in excess of $500,000, or $100,000 in rural areas, and for disputes that arise from major disasters declared on or after January 1, 2016. The other major proposed revisions to 44 CFR 206.206 include adding definitions; adding subparagraphs to clarify what actions FEMA may take and will not take while 12 On December 18, 2018, FEMA implemented section 1219 of DRRA by posting a Fact Sheet on its website. After CBCA published their March 5, 2019 proposed rule, see 84 FR 7861, FEMA updated the: Section 1219 Public Assistance Appeals and Arbitration Fact Sheet (3–27–19). A link to the current Fact Sheet: https://www.fema.gov/medialibrary/assets/documents/175821. Accessed May 15, 2020. E:\FR\FM\31AUP1.SGM 31AUP1 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules an appeal is pending and state that FEMA may issue separate guidance as necessary, similar to current 44 CFR 206.209(m); adding a finality of decision paragraph; requiring electronic submission for appeals and arbitrations documents; and clarifying overall time limits for first and second appeals. khammond on DSKJM1Z7X2PROD with PROPOSALS Assumptions This analysis uses the following assumptions: • All monetary values are presented in 2018 dollars. FEMA used the Bureau of Labor Statistics (BLS) Consumer Price Index for All Urban Consumers (CPI–U): U.S. city average, all items, by month, Annual Average as published May 2019.13 • This proposed rule does not apply to emergency disaster declarations. Thus, FEMA only included major disaster declarations in this analysis. • FEMA assumes the length of time for an arbitration case is based on the hearing location. • FEMA used 2018 wage rates for all parties involved in arbitration cases. Baseline Following guidance in OMB Circular A–4, FEMA assesses the impacts of this proposed rule against a pre-statutory baseline. The pre-statutory baseline is an assessment of what the world would look like if the relevant statute(s) had not been adopted. In this instance, FEMA has been accepting arbitration cases since the implementation of DRRA, and retroactive to January 1, 2016. Since the statute has already been implemented and because this rule is not making additional substantive changes, the rule has no cost or benefits related to the new right of arbitration. The benefit of this rule is making information publicly available in the CFR for transparency and to prevent any confusion on the most up-to-date arbitration process. Currently, FEMA has no permanent regulations for arbitrations outside of Hurricanes Katrina and Rita. Since the passage of the DRRA, certain PA applicants under declarations since January 1, 2016 may request arbitration pursuant to 42 U.S.C. 5189a(d). On June 21, 2019, CBCA published a final rule (see 84 FR 29085) and FEMA has published a corresponding fact sheet. Between January 1, 2016 and May 7, 2020, FEMA received 15 14 requests for arbitration. Five of these cases are still 13 Accessed and downloaded June 17, 2019. https://www.bls.gov/cpi/tables/supplemental-files/ historical-cpi-u-201905.pdf. 14 The number of arbitration requests was provided by FEMA’s Office of Chief Counsel Disaster Disputes Branch as of May 7, 2020. VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 in progress, so FEMA does not have available data on the outcome of these cases. Of the 10 closed cases, FEMA prevailed in 6 cases, the applicant prevailed in 3 cases, and the applicant withdrew from the arbitration process prior to a decision in 1 case. Of the four cases involving PNPs, FEMA prevailed in three cases and the applicant prevailed in one case. These figures will continue to change as FEMA continues to receive arbitration requests. While arbitration is available for disaster declarations retroactive to January 1, 2016, the process did not become available to applicants until FEMA published guidance in December 2018, and FEMA did not begin receiving arbitration requests until March 7, 2019. This means that FEMA only has 14 months of historical data, and therefore, FEMA also relies on older arbitration regulations as a proxy for the expected number of arbitration cases arising out of this proposed rule. FEMA previously had regulations permitting arbitrations arising from disaster declarations for Superstorm Sandy. No applicants requested arbitration pursuant to these regulations. The authority for these arbitrations has sunset and FEMA has since removed the regulations. FEMA has regulations, at 44 CFR 206.209, permitting arbitrations arising from disaster declarations for Hurricanes Katrina and Rita. This regulation is only available for PA applicants under Hurricane Katrina and Rita disaster declarations. The number of arbitrations submitted under this authority and the process relied on to conduct these arbitrations provide insight to project the number of arbitration cases in this proposed rule. While the Katrina/Rita arbitration regulations have some key differences from the proposed regulations, such as time frames and allowing applicants to request arbitration in lieu of first appeals, it is the best historical data that FEMA has available to estimate the number of expected arbitration cases for this proposed rule. FEMA recognizes that the regulations at 44 CFR 206.209 have a 30 day time limit for submitting arbitration requests; whereas, FEMA is proposing a 60 calendar-day time limit for arbitrations under this proposed rule. FEMA does not know the impact that these additional 30 days may have on the number of arbitrations submitted. Number of Potential Arbitration Cases In addition to reviewing the limited historical data available on the 15 arbitration cases, FEMA also examined the number of arbitrations submitted PO 00000 Frm 00044 Fmt 4702 Sfmt 4702 53733 from the Hurricane Katrina and Rita disasters pursuant to 44 CFR 206.209, in lieu of filing a first appeal, from 2009 through 2017 to derive an estimate on the number of arbitration cases that applicants might submit per year pursuant to 42 U.S.C. 5189a(d). Pursuant to 42 U.S.C. 5189(d)(5)(A), arbitrations authorized by the DRRA must follow the process established in 44 CFR 206.209 for Katrina and Rita arbitrations, so FEMA relied on the annual average percentage of cases submitted under this regulation as a basis for estimating the number of cases that would arise for this proposed rule. The authority to arbitrate in lieu of filing a first appeal for Hurricanes Katrina and Rita became available in February 2009 and 2017 is the latest calendar year where complete data was available at the time of this analysis. Applicants could arbitrate in lieu of a first appeal only if the amount of the project was greater than $500,000.15 During this period, applicants submitted a total of 75 arbitrations and a total 290 first appeals.16 From this available data, applicants chose arbitration in lieu of a first appeal 26 percent of the time ((75 ÷ 290) × 100 = approximately 26 percent). Pursuant to 42 U.S.C. 5189(d)(5)(B), arbitration is authorized by the DRRA in lieu of a second appeal where the dispute is more $500,000, or $100,000 for rural areas. For second appeals estimates, FEMA looked at all PA appeals from 2009 through 2017, rather than just the appeals resulting from Hurricanes Katrina and Rita since a second appeal was available to all applicants. FEMA found that there were 801 17 second appeals submitted. Of that total, FEMA had data on the amount in dispute for 559 appeals. FEMA applied the proposed urban/rural and minimum 15 Please note that arbitration cases for Hurricanes Katrina and Rita are not bound by a threshold for rural areas as is proposed by this rule. FEMA does not know if this limitation would result in more or less cases filed. 16 Data on appeals and arbitrations is provided by FEMA’s Office of Chief Counsel Disaster Disputes Branch. Not all of these first appeals would have been eligible for arbitration. To be eligible for arbitration, the amount in dispute would have had to have been greater than $500,000. FEMA does not have amount in dispute data available for these cases, so the arbitration percentage may be overstated. 17 During the period of 2009–2017, 801 second level appeals were submitted. FEMA has amount in dispute data for 559 cases. The amount in dispute for 242 cases was not available. FEMA does not have the amount in dispute data on the 242 cases because FEMA did not maintain electronic records for appeals prior to 2015. Prior to 2015, this data was manually entered into a database with many fields left blank. Therefore, the percentages used for estimates for this proposed rule are based on a total of 559 cases. E:\FR\FM\31AUP1.SGM 31AUP1 53734 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules ((261÷ 559) × 100 = approximately 47 percent). FEMA then applied the arbitration rate of 47 percent from the Katrina and Rita arbitrations to the number of project amount requirements to these appeals and found that 261 or 47 percent would have been eligible for arbitration under this proposed rule 18 second appeals that would have been eligible under this proposed rule, by year, from 2009 to 2017 as shown in Table 1. TABLE 1—TOTAL AND ANNUAL AVERAGE ESTIMATED ARBITRATION CASES PER YEAR Number of second appeals CY 2009 2010 2011 2012 2013 2014 2015 2016 2017 Expected number of arbitration cases Percent choosing arbitration ............................................................................................................... ............................................................................................................... ............................................................................................................... ............................................................................................................... ............................................................................................................... ............................................................................................................... ............................................................................................................... ............................................................................................................... ............................................................................................................... 122 92 107 93 102 82 43 83 77 47 47 47 47 47 47 47 47 47 26 26 26 26 26 26 26 26 26 15 11 13 11 12 10 5 10 9 Total ........................................................................................................ 801 .......................... ........................ 96 Average .................................................................................................. 89 .......................... ........................ 11 Based on experience from the arbitrations conducted for Hurricanes Katrina and Rita, costs from this proposed rule would arise mainly from travel expenses; opportunity costs of time for the applicant and applicant’s representatives, recipient’s representatives, and FEMA’s representatives; and contract costs for applicants and FEMA to retain legal counsel and experts. Cost estimates are based on the expected number of arbitration cases per year. Since FEMA does not reimburse for applicant arbitration expenses, FEMA does not have data on the expenses incurred by applicants who have arbitrated from Hurricanes Katrina and Rita to serve as a proxy for this proposed rule. Other provisions of the proposed rule, such as timeframe requirements, electronic filing requirements, technical advice and clarifications would not have associated costs. FEMA does not expect the electronic filing requirement to have associated costs since nearly all applicants have access to internet and email, and most submit arbitration requests through their attorneys. The proposed timeframe requirements would align the submission deadlines for arbitration and appeals and would not place additional burdens on the applicants. FEMA currently provides technical advice as needed, so this would not be a new practice under this proposed rule. The arbitration process is highly customizable for the applicant. The applicant may choose to use an attorney, or several attorneys to represent them during the arbitration process. The applicant may also choose not to hire legal representation at all. Additionally, the applicant may use any number of expert witnesses or none. Because of the variability in the way arbitrations are conducted, FEMA is presenting what it considers a typical case upon which to base its cost estimates. This ‘‘typical case’’ is based on recent experience with the 15 arbitration already cases filed. Generally, the applicant will use one or two attorneys and at least one expert witness. However, the arbitration process is extremely flexible, and an applicant can use whatever resources it thinks would be most appropriate for its case. For example, in one case, the applicant hired several non-local attorneys for representation. In another case, the arbitration was conducted via written reports only, and no hearing was conducted. Costs to the CBCA are not discussed in this analysis. CBCA promulgated their own regulations regarding their procedures for FEMA arbitration cases. Under DRRA, CBCA will be responsible for covering the costs of conducting arbitration hearings. All other parties including the applicant, the recipient, and FEMA would be responsible for covering their own expenses. The proposed rule does not mandate any costs for the applicant or recipient. The arbitration process would be entirely voluntary on the part of the applicant. Applicants would choose to request arbitration, if they determine that the cost of arbitration is justified by the potential benefits. 18 Out of 559 cases, 166 had an amount in dispute greater than $500,000 and would be eligible regardless of the urban/rural classification. 193 cases were for amounts between $100,000 and $500,000, of which 95 were classified as rural. 261 (166 + 95 = 261) cases out of 559, or 47 percent would have met the eligibility requirements for arbitration in lieu of a second appeal. 19 Out of 3,778 first appeals between 2009 and 2017, 1,834 or 49 percent lasted longer than 180 days. ((1,834 ÷ 3,778) × 100 = 49 percent). Based on historical data from 2009 through 2017 and case data from 44 CFR 206.209, FEMA estimates that there would be an average of 11 arbitration cases in lieu of a second appeal per year under the proposed rule. The option to withdraw a first appeal and request arbitration was not available under 44 CFR 206.209, so FEMA could not use this historical data 19 to estimate the number of arbitration cases after a first appeal withdrawal. However, arbitration has been available under 42 U.S.C. 5189a(d)(5) since January 1, 2016. So far, 15 cases were submitted, with two submitted for a first appeal lasting more than 180 days. Based on this limited data, FEMA estimates that 13.3 percent of arbitration cases would result from a withdrawal of a first appeal. ((2 ÷ 15) × 100 = 13.3 percent). Applying the 13.3 percent rate to the annual average number of expected arbitration cases would result in one additional arbitration case per year (13.3 percent × 11 cases = 1.46, rounded to one case). Therefore, FEMA estimates an average of 12 arbitration cases per year (11 + 1 = 12 arbitrations per year). Costs khammond on DSKJM1Z7X2PROD with PROPOSALS Percent eligible under proposed rule VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 PO 00000 Frm 00045 Fmt 4702 Sfmt 4702 E:\FR\FM\31AUP1.SGM 31AUP1 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules This analysis estimates a range of potential costs based on the applicant’s or recipient’s use of attorneys for representation. The proposed rule would not require attorneys to represent any party for arbitration. However, FEMA would be represented by attorneys at any arbitration hearing. The costs to the applicant, recipient, and FEMA would be due to travel and opportunity cost of time and contract costs for legal counsel and experts. To estimate the opportunity cost of time, FEMA assumed that each case would take each party 46.5 hours 20 (rounded to 47 hours) to prepare for the hearing, attend the hearing, and for post hearing work. Hearings have historically lasted two working days, or 16 hours.21 Additional time would be required for travel as is discussed later in this analysis. FEMA also assumes that each party would make use of expert witnesses in support of their case. Additionally, FEMA generally pays for a court reporter. khammond on DSKJM1Z7X2PROD with PROPOSALS Opportunity Cost of Time A typical arbitration request requires the work of several people, including lawyers to represent the applicants, a court reporter to take a transcript of the hearing, and State, local, Tribal, or PNP managers who are responsible for compiling and submitting the original PA request. Applicants will also typically supply expert witnesses when making their case to the CBCA panel. FEMA used General and Operations Managers to represent State, Tribal, local, and PNP managers. Many PA projects involve repair or replacement of buildings and infrastructure, so FEMA assumes that Engineers would be the most likely occupation used as expert witnesses. FEMA used hourly wage rates from the Bureau of Labor Statistics Occupational Employment Statistics for the following occupations: Lawyers (SOC 23–1011), $69.34; Court Reporters (SOC 23–2091), $30.00; Engineers (SOC 17–2000), $47.71; and General and Operations Managers (SOC 11–1021) $59.56.22 To account for employee benefits, FEMA used a wage multiplier of 1.46,23 resulting in fully-loaded 20 Based on information provided by FEMA Office of Chief Counsel Disaster Disputes Branch. 21 Based on information provided by FEMA Office of Chief Counsel Disaster Disputes Branch. 22 U.S. Bureau of Labor Statistics. National Occupational Employment and Wage Estimates United States. May 2018. Accessed May 20, 2020. https://www.bls.gov/oes/2018/may/oes_nat.htm. 23 BLS Employer Costs for Employee Compensation, Table 1, December 2018 located at https://www.bls.gov/news.release/archives/ecec_ 03192019.pdf. The loaded wage factor is equal to the total compensation of $36.32 divided by the VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 hourly wages of $101.24 for Lawyers, $43.80 for Court Reporters, $69.66 for Engineers, and $86.96 for General and Operations Managers. FEMA used the 2018 hourly wage tables for the Washington-BaltimoreArlington, DC–MD–VA–WV–PA 24 locality rate for FEMA employees participating in arbitration cases. Based on current FEMA practice, FEMA assumes that GS–13 employees would perform both legal and other services for an arbitration case and the work would be reviewed by a manager at the GS–15 level. The hourly GS–13 Step 5 salary was $52.66, and the hourly GS–15 step 5 salary was $73.20. In order to account for the benefits paid by employers, FEMA used a 1.46 multiplier to calculate loaded wage rates of $76.88 for a GS–13 Federal employee and $106.87 for a GS–15 Federal employee. Travel Arbitration cases are heard by a panel of judges of the CBCA, which is based in Washington, DC. The arbitration process is very customizable, so applicants can choose to have the hearings locally, where a CBCA judge would travel to their location, and FEMA would also send its representatives. Alternatively, cases could be heard at the CBCA, and the applicant would travel to Washington, DC, along with any lawyers and expert witnesses. Finally, the applicant could choose to have the CBCA review documents, and nobody would be required to travel. Because PA applicants are located throughout the U.S. and can be travelling from any location within the U.S., FEMA used average nationwide travel costs to estimate the travel costs for this rule. The U.S. General Service Administration (GSA) provides guidance on travel policy, hotel rates, and meals and incidentals for Federal employees. FEMA used GSA data on hotel prices and per diem rates to estimate travel expense costs of attending a hearing in person.25 Because data on travel expenses for non-Federal wages and salary of $24.91. Values for the total compensation and wages and salary are for civilian workers in the all workers occupational group. Accessed April 29, 2019. 24 U.S. Office of Personnel Management. 2018 General Schedule (GS) Locality Pay Tables. Accessed May 22, 2020. https://www.opm.gov/ policy-data-oversight/pay-leave/salaries-wages/ salary-tables/18Tables/html/DCB_h.aspx. 25 U.S. General Services Administration. ‘‘FY 2018 Per Diem Rates for District of Columbia .’’ Accessed on May 18, 2020. Standard CONUS rate used for lodging and MI&E. https://www.gsa.gov/ travel/plan-book/per-diem-rates/per-diem-rateslookup/?action=perdiems_report&state=DC&fiscal_ year=2018&zip=&city=. Per diem rates are calendar year instead of fiscal year. PO 00000 Frm 00046 Fmt 4702 Sfmt 4702 53735 employees is not available, FEMA used the Federal lodging and per diem rates for applicants travelling to Washington DC to attend hearings. According to GSA, in 2018, the average price of a hotel room in the U.S. in the Washington, DC was $219 per night and outside of Washington, DC was $93 per night. The per diem rate for meals and incidentals on the first and last travel days is $52 and $69 for other travel day(s) in Washington, DC. Similarly, the per diem rates for meals and incidentals on the first and last day is $39 and $51 for the other days outside of Washington, DC. The U.S. Department of Transportation (DOT) provides information on the price of domestic airfare.26 According to the Bureau of Transportation Statistics, the annual cost of an average domestic flight within the United States, the average airfare was $350 roundtrip.27 The total travel costs for applicants attending hearings in Washington, DC would be $1,249 per person ($350 average airfare + ($219 hotel in DC × 3 nights) + ($69 meals and incidentals × 2 days of stay) + ($52 meals and incidentals × 2 travel days)) = $1,249). Expert Witnesses FEMA assumes that each party would make use of expert witnesses to support their case. The expert witnesses would be required to travel to the hearing at the expense of the party that hired them. Based on historical experience, preparing for the hearing is estimated to take 20 hours, the duration of the hearing is estimated to be 16 hours and the travel time is estimated at 11 hours for a total of 47 hours for a hearing in Washington, DC, the opportunity costs of time for one expert witness to attend a hearing would be $3,274 ($69.66 × 47 hours). Thus, the total cost for one expert witness’ travel and opportunity cost of time is $4,523 ($1,249 + $3,274). Table 2 shows the detailed the costs of an expert witness. To provide a range of estimates since cases vary, a hearing at the applicant’s location for an expert witness would cost $2,508 ($69.66 × 36 hours). 26 Bureau of Transportation Statistics. ‘‘Annual Fares 1995–2019 3Q 2019’’ (.xlsx) March 23, 2020. U.S. Department of Transportation. https:// www.bts.gov/sites/bts.dot.gov/files/ Annual%20Fares%2019952019%203Q%202019.xlsx. 27 The airfare was adjusted to 2018 dollars and excludes airline tickets under $50. E:\FR\FM\31AUP1.SGM 31AUP1 53736 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules TABLE 2—ESTIMATED COST PER EXPERT WITNESS, WASHINGTON, DC HEARING [2018$] Round trip flight Three nights of lodging at $219 per night Meals and incidentals Total travel expenses Opportunity costs of time for a hearing in Washington, DC Total expert witness cost (A) (B) (C) (D) = (A + B + C) (E) (D + E) $350 ..................................................................................... $657 $242 $1,249 $3,274 $4,523 Cost for the Applicant The total cost for the applicant includes travel expenses (round trip flight, three nights of lodging, and meals and incidentals) and opportunity costs of time for the applicant, the applicant’s representatives, and the expert witnesses. The total travel expenses for the applicant and the representative would be $2,498 ($1,249 × 2 personnel = $2,498), if the hearing is held in Washington DC. As previously discussed in this analysis, costs include 47 hours for hearing preparation, attending the hearing, and post hearing work, plus 11 hours of travel time for applicants and the applicant’s representative. FEMA notes that an applicant can choose not to bring a representative or an applicant’s representative could be one attorney or in some cases more than one attorney. To provide a range of costs, FEMA analyzes the typical case where one attorney or no attorneys are present. If the applicant’s representative is an attorney, the opportunity costs of time would be $10,916 ($101.24 per hour wages for a lawyer × 58 hours) + ($86.96 per hour wages for a general and operations manager × 58 hours) = $10,916). If the applicant does not use an attorney as their representative, the opportunity costs of time would be $10,087 (2 general and operations managers at $86.96 each × 58 hours = $10,087). Table 3 shows the range of total costs to the applicant. TABLE 3—RANGE OF APPLICANT COSTS—WASHINGTON, DC HEARING [2018$] Opportunity cost of time 1 Attorney and 1 Non-Attorney .................................................................................................... 2 Non-Attorneys ........................................................................................................................... The total cost to the applicant if they were to travel to Washington, DC for a hearing with a representative and two expert witnesses, ranges from $21,631 ((2 expert witnesses at a cost of $4,523 each) + $12,585 recipient cost) to $22,460 ((2 expert witnesses at $4,523 each) + $13,414 recipient and attorney cost). For a local hearing, the costs to the applicant would include 47 hours of opportunity costs of time for the applicant and representative (assuming the representative is local), and 36 hours of opportunity costs of time to attend the hearing for two expert witnesses (assuming the expert witnesses are local) and would range from $13,190 ((2 general and operations managers at $86.96 each × 47 hours) + (2 expert witnesses at $69.66 each × 36 hours) = $13,190) to $13,861 (($86.96 for a $10,916 10,087 Travel $2,498 2,498 Total $13,414 12,585 general and operations manager × 47 hours) + ($101.24 for an attorney × 47 hours) + (2 expert witnesses at $69.66 each × 36 hours) = $13,861) depending on who the recipient uses as a representative. Table 4 shows the range of total costs for an applicant for hearings held at the applicant’s location. TABLE 4—APPLICANT COSTS—LOCAL HEARING [2018$] Expert witnesses khammond on DSKJM1Z7X2PROD with PROPOSALS 1 Attorney and 1 Non-Attorney .................................................................................................... 2 Non-Attorneys ........................................................................................................................... Cost for the Recipient The recipient would not present information in the arbitration case, but would send one or more representatives in a supporting role for the applicant. VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 The cost per arbitration case for the recipient, is the opportunity costs of time for the representative totaling $10,087 (2 general and operations managers at $86.96 each × 58 hours = $10,087) and travel expenses $2,498 (2 PO 00000 Frm 00047 Fmt 4702 Sfmt 4702 $5,016 5,016 Opportunity cost of time $8,845 8,174 Total $13,861 13,190 representatives × $1,249) of those attending the hearing in Washington, DC. As shown in table 5, the total cost to the recipient would be $12,585 if the hearing was held in Washington, DC. E:\FR\FM\31AUP1.SGM 31AUP1 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules 53737 TABLE 5—ESTIMATED RECIPIENT COSTS, WASHINGTON, DC HEARING [2018$] Opportunity cost of time Travel Total General and Operations Managers ............................................................................................. $10,087 $2,498 $12,585 For a local hearing, two representatives would spend 47 hours on the case and the cost to the recipient would be $8,174 (2 general and operations managers at $86.96 each × 47 hours = $8,174). of subjects, for example soil degradation or building construction. Arbitration hearings do not require transcription services. However, FEMA has historically hired a court reporter for hearings and provided the transcript to the CBCA for their records. FEMA would continue to pay for a court reporter for the duration of a hearing under the proposed rule. The opportunity costs of time for the court reporter services for a transcript would be $701 per arbitration case ($43.80 per hour wages for Court Reporters × 16 hours of arbitration time = $701). The estimated total cost to FEMA, including staff time, expert witnesses and transcript services, would be $24,289 per case. Table 6 presents the cost of each component by opportunity cost of time and other costs. Cost to Government/FEMA FEMA would require two attorneys for a typical arbitration case, a GS–13 step 5 attorney and a GS–15 step 5 supervisory attorney, to review and to prepare a response to the request for arbitration. Based on historical experience, the two attorneys’ total time from preparation to post hearing is 47 hours.28 The opportunity costs of time of the attorneys, including preparation and review of a case, is $8,636 (($76.88 GS 13 Step 5 attorney × 47 hours) + ($106.87 GS 15 Step 5 Supervisory Attorney × 47) hours = $8,636). Based on historical experience, FEMA would also require four non-attorneys (e.g., GS–13 Step 5 program analysts) to support the arbitration case only for the duration of the hearing. The opportunity costs of time associated with the program analysts would be $4,920 (4 GS 13 Step 5 program analysts at $76.88 each × 16 hours = $4,920). Thus, the total opportunity costs of time for all six FEMA personnel would be $13,556. FEMA would also call their own expert witnesses to attend the hearing. Based on historical experience, FEMA assumes that it would use four expert witnesses per case for a total of $10,032 ($2,508 cost per expert witness × 4 expert witnesses = $10,032). The expert witnesses provide testimony on a range TABLE 6—ESTIMATED FEMA COSTS—WASHINGTON, DC HEARING [2018$] Cost for four expert witnesses Cost of court reporter Cost for FEMA employees (2 attorneys and 4 program analysts) Total per-case cost to FEMA $10,032 ........................................................................................................................................ $701 $13,556 $24,289 previously mentioned and would be $1,249 per person for a total of $2,498, if 2 attorneys travel to the applicant’s location. Additionally, FEMA estimates that the time would increase to 58 hours due to 11 hours of travel time for the attorneys totaling (2 attorneys at $106.87 For a hearing at the applicant’s location, FEMA representatives would need to travel to the location of the hearing. Costs for a local hearing would be higher due to paying for travel time as well as actual travel costs. Travel costs are estimated using the figures each × 58 hours) $12,397 plus $4,920 for non-travelling program analysts resulting in a total cost of $17,317. The estimated costs to FEMA for a local hearing are presented in Table 7. TABLE 7—ESTIMATED FEMA COSTS—LOCAL khammond on DSKJM1Z7X2PROD with PROPOSALS [2018$] Cost for four expert witnesses Cost of court reporter Opportunity costs of time for FEMA employees Travel costs (2 attorneys) Total per-case cost to FEMA $10,032 ............................................................................................................ $701 $ 17,317 $2,498 $30,548 In addition to these costs, FEMA’s PA Program would also hire an Arbitration Coordinator at the GS–13 Step 5 level with an annual salary of $109,900.With the 1.46 multiplier for a fully loaded wage rate, the additional cost to FEMA would be $160,454 per year. Therefore, the annual total costs to FEMA range from $184,743 ($160,454 + $24,289) if the hearing is held in Washington, DC to $191,002 ($160,454 + $30,548) if the hearing is held at the applicant’s location. 28 Based on information provided by FEMA Office of Chief Counsel Disaster Disputes Branch. VerDate Sep<11>2014 22:16 Aug 28, 2020 Jkt 250001 PO 00000 Frm 00048 Fmt 4702 Sfmt 4702 E:\FR\FM\31AUP1.SGM 31AUP1 53738 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules Total Costs The total cost per case vary based on who the applicant uses as a representative, and whether the hearing is held in Washington, DC or local to the applicant. Government and FEMA costs would be higher for a hearing held local to the applicant, and likewise, applicant and recipient costs would be higher if the hearing was held in Washington, DC. FEMA estimates that the total costs per case to range between $51,912 and $59,343. Table 8 presents the range of estimated costs per arbitration case. TABLE 8—TOTAL COST PER CASE [2018$] FEMA Low .................................................................................................................. High .................................................................................................................. As established earlier in this analysis, FEMA estimate an average of 12 arbitration cases per year. Therefore, FEMA estimates the total annual costs to range between $783,398 ((12 cases × $30,548 per case) + $160,454 for a new FEMA employee + (12 × $13,190 per Applicant $30,548 24,289 case for applicant) + (12 × $8,174 per case for the recipient)= $783,398) (low) and $872,462((12 cases × $24,289 per case) + $160,454 for a new FEMA employee + (12 × $22,460 per case for the applicant) + (12 × $12,585 for the recipient)= $872,462) (high). Table 9 $13,190 22,460 Recipient $8,174 12,585 Total $51,912 59,334 shows the estimated total costs per year of this proposed rule. The low cost estimate assumes that all hearings would be held at the applicant’s location, while the high estimate assumes hearings would be held in Washington, DC. TABLE 9—TOTAL COST PER YEAR FOR 12 CASES [2018$] FEMA Low .................................................................................................................. High .................................................................................................................. $527,030 451,922 Applicant $158,280 269,520 Recipient $98,088 151,020 Total $783,398 872,462 Tables 10 and 11 show the total 10year costs and 10-year costs annualized at 3 percent and 7 percent. TABLE 10—10-YEAR COST TOTALS USING 3 PERCENT AND 7 PERCENT DISCOUNT RATES [Low Estimate, 2018$] Year Applicant costs FEMA costs Recipient costs Total costs Annual costs discounted at 3% 1 Annual costs discounted at 7% 1 1 ............................................................... 2 ............................................................... 3 ............................................................... 4 ............................................................... 5 ............................................................... 6 ............................................................... 7 ............................................................... 8 ............................................................... 9 ............................................................... 10 ............................................................. $527,030 527,030 527,030 527,030 527,030 527,030 527,030 527,030 527,030 527,030 $158,280 158,280 158,280 158,280 158,280 158,280 158,280 158,280 158,280 158,280 $98,088 98,088 98,088 98,088 98,088 98,088 98,088 98,088 98,088 98,088 $783,398 783,398 783,398 783,398 783,398 783,398 783,398 783,398 783,398 783,398 $759,896 737,099 714,986 693,536 672,730 652,548 632,972 613,983 595,564 577,697 $728,560 677,561 630,132 586,023 545,001 506,851 471,371 438,375 407,689 379,151 Total .................................................. 5,270,300 1,582,800 980,880 7,833,980 6,651,012 5,370,714 Annualized ........................................ ........................ ........................ ........................ ........................ 783,398 783,398 1 The annualized amounts for 7 percent and 3 percent are equal in this table because the amounts for each year are identical and the first year is discounted. khammond on DSKJM1Z7X2PROD with PROPOSALS TABLE 11—10-YEAR COST TOTALS USING 3 PERCENT AND 7 PERCENT DISCOUNT RATES [High Estimate, 2018$] Year 1 2 3 4 FEMA costs ............................................................... ............................................................... ............................................................... ............................................................... VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 $451,922 451,922 451,922 451,922 PO 00000 Frm 00049 Applicant costs Recipient costs $269,520 269,520 269,520 269,520 Fmt 4702 Sfmt 4702 $151,020 151,020 151,020 151,020 Total costs $872,462 872,462 872,462 872,462 E:\FR\FM\31AUP1.SGM 31AUP1 Annual costs discounted at 3% 1 $846,288 820,899 796,273 772,384 Annual costs discounted at 7% 1 $811,390 754,593 701,771 652,647 53739 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules TABLE 11—10-YEAR COST TOTALS USING 3 PERCENT AND 7 PERCENT DISCOUNT RATES—Continued [High Estimate, 2018$] Year Applicant costs FEMA costs Recipient costs Total costs Annual costs discounted at 3% 1 Annual costs discounted at 7% 1 5 ............................................................... 6 ............................................................... 7 ............................................................... 8 ............................................................... 9 ............................................................... 10 ............................................................. 451,922 451,922 451,922 451,922 451,922 451,922 269,520 269,520 269,520 269,520 269,520 269,520 151,020 151,020 151,020 151,020 151,020 151,020 872,462 872,462 872,462 872,462 872,462 872,462 749,212 726,736 704,934 683,786 663,272 643,374 606,962 564,475 524,962 488,215 454,040 422,257 Total .................................................. 4,519,220 2,595,200 1,510,200 8,724,620 7,407,158 5,981,312 Annualized ................................. ........................ ........................ ........................ ........................ 872,462 872,462 1 The annualized amounts for 7 percent and 3 percent are equal in this table because the amounts for each year are identical and the first year is discounted. FEMA believes that it would not have any implementation or familiarization costs. FEMA currently has an arbitration process that is very similar to the proposed rule for cases arising from Hurricanes Katrina and Rita. FEMA has already notified eligible applicants, dating back to January 1, 2016 of their eligibility for arbitration under DRRA section 1219. Further, applicants would not have familiarization costs because the process for requesting arbitration would consist of an email request and would use materials previously submitted in the application for PA funding. khammond on DSKJM1Z7X2PROD with PROPOSALS Benefits The benefits of this proposed rule would be qualitative in nature, and would apply mostly to the applicant. FEMA believes that this proposed rule would further its mission of supporting State, Tribal, and local governments, as well as eligible PNPs by offering them an alternative procedure for disputing PA eligibility and funding decisions. Applicants retain the option to submit a second appeal. The proposed rule would offer an alternative that the applicant may see as more impartial because the arbitration cases would be heard by CBCA judges, as opposed to second appeals that would continue to be conducted entirely within FEMA. Additionally, applicants would have the opportunity to present their case in person and call expert witnesses to support their claims. These two options would allow applicants to choose the course that would be most appropriate to their circumstances. Customization Applicants may select arbitration, if they consider this process more customizable. The arbitration process would provide applicants with the opportunity to appear in person before VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 an impartial panel and present evidence as to why they are disputing a FEMA determination. Applicants can also retain expert witnesses to provide support to their position. Expert witnesses provide testimony within their technical specialty to assist the arbitration panel in understanding the underlying work for which FEMA ultimately decides eligibility. Additionally, applicants would have the opportunity to respond in real time to evidence presented by FEMA, allowing them more control over the dispute than they might have under a second appeal. Applicants may opt to hire an expert witness in arbitration to help present the disputed information in a manner more favorable to the applicant. The ability to hire expert witnesses may provide applicants with additional utility and may be an incentive to select arbitration. The proposed rule would also allow applicants to present the same technical documentation in both the appeals and arbitration procedures. An applicant who submits a first appeal, but elects to withdrawal in favor of arbitration may opt to reuse the information in the request for arbitration that was previously submitted in the first appeal. Applicants may gain utility from the convenience of reusing documents. favor for the applicant in less than 20 percent of Katrina/Rita arbitrations.30 The applicant may nevertheless perceive they have a better opportunity to gain additional Federal funding through arbitration. Applicants would select arbitration as their case would be heard by a third party, rather than an appeal process that is conducted entirely by FEMA. Applicants would perceive a more impartial system, if the forum encourages both parties to solicit discussion rather than ‘‘paper’’ based appeals. Applicants would expect that impartiality would best achieve their objective of a fair resolution. Tables 12 and 13 analyze the historical outcomes from second appeals and arbitration from 44 CFR 206.209. Because of the unpredictable nature and unique circumstances of every disaster, these figures may not be representative of future outcomes, as the outcomes are based on the arbitration policies for Hurricanes Rita and Katrina and the unique circumstances of each case. TABLE 12—SECOND APPEALS OUTCOMES [2009–2017] Second appeal outcome Impartiality It is not possible to quantify an applicant’s increased utility due to perceived impartiality. The purpose of arbitration is to create a process to resolve the issues in a manner satisfactory to all parties. Based on past cases, FEMA has granted or partially granted 23 percent of the second appeals submitted by applicants.29 CBCA has found in favor or partially in 29 Based on information provided by FEMA Office of Chief Counsel Disaster Disputes Branch. PO 00000 Frm 00050 Fmt 4702 Sfmt 4702 Number of cases Percent Granted ....................... Denied ......................... Partially Granted ......... Active ........................... Other 1 ......................... 118 445 67 1 170 14.7 55.6 8.4 0.1 21.2 Total ..................... 801 100 1 The category of Other includes appeal decision not available, remand, rescind, arbitration, and withdrawn. 30 Based on information provided by FEMA Office of Chief Counsel Disaster Disputes Branch. E:\FR\FM\31AUP1.SGM 31AUP1 53740 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules TABLE 13—ARBITRATION OUTCOMES UNDER 44 CFR 206.209 TABLE UNDER 13—ARBITRATION OUTCOMES 44 CFR 206.209—Continued [2009–2017] Arbitration outcome [2009–2017] Number of cases Percent Number of cases Arbitration outcome Total ..................... Binding Decision without CBCA ................. In Favor of FEMA ........ In Favor of Applicant ... Partial in Favor of Applicant ...................... Withdrawn ................... Other 2 ......................... 3 17 10 4.0 22.7 13.3 31 3 11 41.3 4.0 14.7 75 Percent 100 2 The category of Other includes other decision, dismissed, and ongoing cases. Transfers FEMA is unable to quantify transfers due to this proposed rule. Transfers would arise from the possibility that FEMA may award a different amount of grant funding under the arbitration process than it would under current regulations that only allow for a second appeal. However, it would be speculative for FEMA to make an estimate as to the potential changes in grant disbursement due to the proposed rule. Impacts Table 14 summarizes the costs, benefits, and transfer impacts from the proposed rule. TABLE 14—OMB CIRCULAR A–4 ACCOUNTING TABLE Estimates Units Category Low estimate Benefits: Annualized Monetized ...................................................... $0 $0 0 Annualized Quantified ...................................................... Qualitative ......................................................................... Costs: Annualized Monetized ...................................................... Annualized Quantified ...................................................... Year dollar $0 $0 0 Discount rate 2018 2018 10 Years. 10 Years. 7% 3% 10 Years. 10 Years. 0 0 • Additional option for review of PA projects and decisions. • Greater perception of impartiality in the arbitration process. • Ability to customize arbitration process. $783,398 $783,398 0 0 $ 872,462 $4872,462 0 0 2018 2018 • Longer time frame to resolve disputes under arbitration option. Transfers Possible changes to PA grant disbursements. Wages .............................................................................. Growth .............................................................................. Uncertainty Analysis The estimates of the costs of the proposed rule are subject to uncertainty due to the uniqueness of each arbitration case. The cost estimates can vary widely depending on complexity and other factors. As a result, the cost estimate could be overstated or understated. There are several sources of uncertainty in this analysis: The number of eligible applicants, the proposed deadlines for filing, and the potential number of arbitration cases. Major disasters do not occur on a regular time interval. The severity of the disaster would affect the number of applicants that decide to apply for funding in the PA Program. The number of eligible applicants can vary year-to-year. Historical data used in this analysis was based on the arbitration process for VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 FEMA expects 9 arbitration cases per year from small entities with an estimated cost of between $13,190 and $22,460 per small entity. None. None. Hurricanes Katrina and Rita, which is different in a couple of key respects from the proposed arbitration process. While the cost shares for Katrina and Rita were 100 percent, cost shares for future disaster declarations may be as high as 25 percent for applicants. Because Katrina/Rita applicants were not required to pay for any portion of their project cost, they had an incentive to apply for more costly projects and pursue arbitration when denied. Future disasters with a cost share may lead applicants to be more conservative in applying for PA projects, which may result in fewer arbitration requests than was indicated in the primary estimate. Additionally, the timeframe for submitting arbitration requests under 44 CFR 206.209 was 30 days. However, FEMA is proposing a 60 day submission deadline for arbitration submissions under DRRA requirements to align with PO 00000 Frm 00051 Period covered 7% 3% Qualitative ................................................................................ Effects: Small Entities .................................................................... khammond on DSKJM1Z7X2PROD with PROPOSALS High estimate Fmt 4702 Sfmt 4702 the current 60 day submission timeframe for second appeals. This additional time may affect the number of arbitration cases submitted in the future, but FEMA cannot reliably predict these impacts at this time. Alternatives FEMA considered several alternative regulatory approaches to the requirements in the proposed rule. The alternatives included: (1) Not issuing a mandatory regulation; (2) proposing an alternate definition of rural; and (3) not requiring electronic submission. FEMA did not consider a no-action alternative. The DRRA mandates FEMA to promulgate a rule allowing the option of arbitration in lieu of a second appeal and specifies the CBCA as the arbitration administrator. As such, FEMA must pursue a regulatory action. E:\FR\FM\31AUP1.SGM 31AUP1 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules FEMA considered using OMB’s nonmetropolitan area definition as an alternate definition of the term ‘‘rural.’’ OMB’s nonmetropolitan area is defined as areas outside the boundaries of metropolitan areas. Nonmetropolitan areas are outside the boundaries of metropolitan areas and are further subdivided into two types: 1. Micropolitan (micro) areas, which are nonmetro labor-market areas centered on urban clusters of 10,000–49,999 persons and defined with the same criteria used to define metro areas. 2. All remaining counties, often labeled ‘‘noncore’’ counties because they are not part of ‘‘core-based’’ metro or micro areas. OMB defines metropolitan areas to include: khammond on DSKJM1Z7X2PROD with PROPOSALS 1. Central counties with one or more urbanized areas; urbanized areas are denselysettled urban entities with 50,000 or more people. 2. Outlying counties that are economically tied to the core counties as measured by labor-force commuting. Outlying counties are included if 25 percent of workers living in the county commute to the central counties, or if 25 percent of the employment in the county consists of workers coming out from the central counties—the so-called ‘‘reverse’’ commuting pattern. FEMA did not recommend using the OMB’s definition because it combines rural area populations into Metropolitan counties. The OMB definition would also result in some rural areas such as the Grand Canyon being considered a metropolitan county. This alternative would not result in reducing the impact on small entities, while accomplishing the stated objective of the rule. FEMA considered not requiring applicants to submit a request for arbitration electronically. Current practices allow FEMA to accept hard copy submissions (through U.S. Mail or other means) for first and second appeals. In addition, FEMA currently accepts electronic submissions for requests for arbitration under 44 CFR 206.209. FEMA chose this alternative, as it would provide FEMA with enhanced ability to track and establish deadlines in the arbitration process. CBCA’s rule requires applicants to use an electronic method to submit their documentation and request for arbitration to CBCA. Thus, FEMA believes requiring electronic submission would not pose an undue burden on most applicants. B. Regulatory Flexibility Act The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) and Executive Order 13272 (67 FR 53461, Aug. 16, 2002) require agency review of proposed and final rules to assess their impact on small entities. An agency must prepare VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 an initial regulatory flexibility analysis (IRFA) unless it determines and certifies that a rule, if promulgated, would not have a significant economic impact on a substantial number of small entities. FEMA does not believe this proposed rule will have a significant economic impact on a substantial number of small entities. However, FEMA is publishing this IRFA to aid the public in commenting on the potential small business impacts of the proposed requirements in this NPRM. FEMA invites all interested parties to submit data and information regarding the potential economic impact on small entities that would result from the adoption of this NPRM. FEMA will consider all comments received during the public comment period when making a final determination. In accordance with the Regulatory Flexibility Act, an IFRA must contain the following statements, including descriptions of the reason(s) for the rulemaking, its objective(s), the affected small entities, any additional burden for book or record keeping and other compliance requirements; any Federal rules that duplicate, overlap, or conflict with the rulemaking, and significant alternatives considered. The following sections address these subjects individually in the context of this proposed rule. 1. A Description of the Reasons why Action by the Agency Is Being Considered PA helps State and local governments respond to and recover from the challenges faced during major disasters and emergencies. To support State and local governments facing those challenges, Congress passed DRRA. Under the PA Program, as authorized by the Stafford Act, FEMA awards grants to eligible applicants to assist them in responding to and recovering from Presidentially-declared emergencies and major disasters. The recipient, as defined at 44 CFR 206.201(m), is the government to which a grant is awarded, and which is accountable for the use of the funds provided. Generally, the State for which the emergency or major disaster is declared is the recipient. The recipient can also be an Indian Tribal government. The applicant, as defined at 44 CFR 206.201(a), is a State agency, local government, or eligible private nonprofit organization submitting an application to the recipient for assistance under the State’s grant. The PA Program provides Federal funds for debris removal, emergency protective measures, repair and replacement of roads and bridges, PO 00000 Frm 00052 Fmt 4702 Sfmt 4702 53741 utilities, water treatment facilities, public buildings, and other infrastructure. When the President declares an emergency or major disaster declaration authorizing disbursement of funds through the PA Program, that presidential declaration automatically authorizes FEMA to accept applications from eligible applicants under the PA Program. To apply for a grant under the PA Program, the eligible applicant must submit a Request for PA to FEMA through the recipient. Upon award, the recipient notifies the applicant of the award, and the applicant becomes a subrecipient. The DRRA requires FEMA to promulgate a regulation providing applicants with a right of arbitration under FEMA’s PA Program. Applicants currently have a right to arbitration to dispute FEMA eligibility determinations associated with Hurricanes Katrina and Rita; see 44 CFR 206.209. The proposed rule would expand the scope by allowing applicants to request arbitration for disputes under all disaster declarations after January 1, 2016 that are above certain dollar amount thresholds. The proposed rule would grant applicants an additional method of recourse. 2. A Succinct Statement of the Objectives of, and Legal Basis for, the Proposed Rule The proposed rule would implement section 1219 of the DRRA by providing applicants with a right to arbitration for the PA Program under major disaster declarations. Pursuant to section 1219, to request arbitration a PA applicant (1) must have a dispute arising from a disaster declared after January 1, 2016, (2) must be disputing an amount that exceeds $500,000 (or $100,000 for an applicant in a ‘‘rural area’’ with a population of less than 200,000 outside an urbanized area), and (3) must have submitted a first appeal pursuant to the time requirements established in 44 CFR 206.206. Accordingly, FEMA is initiating a rulemaking to amend appeals regulation at 44 CFR 206.206 to add in the new right to arbitration under DRRA. The proposed rule would revise appeals procedures and establish arbitration procedures. 3. A Description of and, Where Feasible, an Estimate of the Number of Small Entities to Which the Proposed Rule Will Apply ‘‘Small entity’’ is defined in 5 U.S.C. 601. The term ‘‘small entity’’ can have the same meaning as the terms ‘‘small business,’’ ‘‘small organization,’’ and ‘‘small governmental jurisdiction.’’ E:\FR\FM\31AUP1.SGM 31AUP1 53742 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS Section 601(3) defines a ‘‘small business’’ as having the same meaning as ‘‘small business concern’’ under Section 3 of the Small Business Act (SBA). This includes any small business concern that is independently owned and operated and is not dominant in its field of operation. Section 601(4) defines a ‘‘small organization’’ as any not-for-profit enterprise which is independently owned and operated and is not dominant in their field of operation. Section 601(5) defines ‘‘small governmental jurisdiction’’ as governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than 50,000. The SBA also stipulates in its size standards of how large an entity may be and still be classified as a ‘‘small entity.’’ These small business size standards are matched to industries described in the North American Industry Classification System (NAICS) to determine if an entity is considered small. This proposed rule does not place any requirements on small entities. It does, however, offer them an alternative means to dispute FEMA’s determination for PA eligibility. If the entity chooses to dispute a PA determination, and they select arbitration rather than a second appeal, they would be responsible for their share of the cost of the arbitration process. All small entities would have to meet the proposed requirements to be eligible for arbitration. FEMA identified 3,778 applicants for FEMA’s PA Program that would be eligible for arbitration under the proposed requirements for the time frame from 2009 through 2017. FEMA used Slovin’s formula and a 90 percent confidence interval to determine the sample size.31 FEMA sampled 97 of these applicants and found that 73 (75 percent) met the definition of a small entity based on the population size of local governments (less than 50,000 population),32 or PNPs based on size standards set by the SBA.33 The remaining 24 entities were not found to be considered as small entities. Eligible small entities included 70 small government agencies and three PNP 31 Slovin’s formula is n = N/(1 + N *e ∧2). Therefore, 3,778/(1 + 3,778 * 0.1∧2) = 97 (rounded). 32 Information on population sizes was obtained using the U.S. Census Bureau’s City and Town Population Totals 2010–2018. Available at https:// www.census.gov/data/tables/time-series/demo/ popest/2010s-total-cities-and-towns.html. 33 Small Business Administration. ‘‘Table of Size Standards’’ (.xlxs). Available at https:// www.sba.gov/document/support--table-sizestandards. Revenue and employment information for individual PNP’s was obtained from PNP websites. VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 organizations. Based on information presented in the Executive Orders 12866 and 13563, FEMA estimates 12 arbitration cases per year. If 75 percent of these are small entities, FEMA estimates 9 arbitration requests per year from small entities with an average cost of between $13,190 and $22,460 per case. Nine small entities may not represent a substantial number of small entities impacted by this proposed rule and FEMA does not believe the costs imposed to these small entities are significant. FEMA welcomes any comments from the public on the number of small entities presented in this analysis and any impacts imposed onto them by this proposed rule. 4. A Description of the Projected Reporting, Recordkeeping and Other Compliance Requirements of the Proposed Rule, Including an Estimate of the Classes of Small Entities Which Will Be Subject to the Requirement and the Type of Professional Skills Necessary for Preparation of the Report or Record Arbitration—As an alternative to the appeal process, applicants may request arbitration of the disputed determination. To be eligible for Section 423 arbitration, a PA applicant’s request must meet all three of the following conditions: (1) The amount in dispute arises from a disaster declared after January 1, 2016; (2) the disputed amount exceeds $500,000 (or $100,000 if the applicant is in a ‘‘rural area,’’ defined as having a population of less than 200,000 living outside an urbanized area); and (3) the applicant submitted a first appeal with FEMA pursuant to the requirements established in 44 CFR 206.206. The applicant must submit a Request for Arbitration to the recipient, CBCA, and FEMA. The Request for Arbitration must contain a written statement, which specifies the amount in dispute, all documentation supporting the position of the applicant, the disaster number, and the name and address of the applicant’s authorized representative or counsel. FEMA estimates that it would take an applicant 2 hours to complete the Request for Arbitration (these 2 hours are accounted for in the economic analysis through the 47 hours of hearing preparation time for applicants) with a wage rate of $86.96 for a general and operations manager. FEMA estimates the opportunity cost of time for completing the request would be $173.92 per applicant. With an estimated 9 cases per year, FEMA estimates the total burden for completing the request at $1,565 per year. The person completing the request PO 00000 Frm 00053 Fmt 4702 Sfmt 4702 would need to be familiar with PA regulations and policies. 5. An Identification, to the Extent Practicable, of all Relevant Federal Rules Which May Duplicate, Overlap, or Conflict With the Proposed Rule FEMA’s regulations on appeals, found at 44 CFR 206.206, are still in effect and provide the required process for submitting first and second appeals.34 Applicants must submit a request for a first appeal prior to submitting a request for arbitration. Applicants may submit a request for arbitration or a second appeal, but not both. Section of 1219 of DRRA requires CBCA to conduct the arbitrations. Accordingly, applicants that request arbitration to dispute a FEMA determination must also meet the CBCA electronic submission requirement. There are overlapping provisions between FEMA’s proposed rule and CBCA’s final rule.35 Applicants should also see CBCA regulations at 48 CFR parts 6101 and 6106 for additional procedures for requesting arbitration. 6. A Description of Any Significant Alternatives to the Proposed Rule Which Accomplish the Stated Objectives of Applicable Statutes and Which Minimize Any Significant Economic Impact of the Proposed Rule on Small Entities The alternatives included: (1) Using another definition for ‘‘rural’’ and (2) not requiring electronic submission. FEMA considered using OMB’s nonmetropolitan area definition as an alternate definition of the term ‘‘rural.’’ OMB’s nonmetropolitan area is defined as areas outside the boundaries of metropolitan areas and are further subdivided into two types: 1. Micropolitan (micro) areas, which are nonmetro labor-market areas centered on urban clusters of 10,000– 49,999 persons and defined with the same criteria used to define metro areas. 2. All remaining counties, often labeled ‘‘noncore’’ counties because they are not part of ‘‘core-based’’ metro or micro areas. OMB defines metropolitan areas to include: 1. Central counties with one or more urbanized areas; urbanized areas are densely-settled urban entities with 50,000 or more people. 2. Outlying counties that are economically tied to the core counties 34 A link to the current Fact Sheet: https:// www.fema.gov/media-library/assets/documents/ 175821. Accessed May 15, 2020. 35 A copy of CBCA’s final rule can be found online at: https://www.govinfo.gov/content/pkg/FR2019-06-21/pdf/2019-13081.pdf. Accessed July 22, 2019. E:\FR\FM\31AUP1.SGM 31AUP1 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS as measured by labor-force commuting. Outlying counties are included if 25 percent of workers living in the county commute to the central counties, or if 25 percent of the employment in the county consists of workers coming out from the central counties—the so-called ‘‘reverse’’ commuting pattern. FEMA did not recommend using the OMB’s definition as it combines rural area populations into Metropolitan counties. The OMB definition would also result in some rural areas such as the Grand Canyon being considered a metropolitan county. This alternative would not result in reducing the impact on small entities while accomplishing the stated objective of the rule. FEMA considered not requiring electronic submission. Current practices allow FEMA to accept physical mail for appeals. In addition, FEMA currently accepts electronic submissions for requests for arbitration under 44 CFR 206.209. As CBCA provided an electronic address for applicants to submit their request for arbitration and documentation, applicants must use electronic method if they choose the arbitration process. Thus, FEMA believes requiring electronic submission would not pose an additional undue burden on applicants that are considered small entities. Conclusion FEMA is interested in the potential impacts from this rule on small businesses and requests public comment on these potential impacts. If you think that this rule will have a significant economic impact on you, your business, or organization, please submit a comment to the docket at the address under ADDRESSES in this proposed rule. In your comment, explain why, how, and to what degree you think this rule will have an economic impact. FEMA does not believe this proposed rule will have a significant economic impact on a substantial number of small entities. However, FEMA is publishing this IRFA to aid the public in commenting on the potential small business impacts of the proposed requirements in this NPRM. FEMA invites all interested parties to submit data and information regarding the potential economic impact on small entities that would result from the adoption of this NPRM. C. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 658, 1501–1504, 1531– 1536, 1571 (the Act), pertains to any notice of proposed rulemaking which implements any rule that includes a Federal mandate that may result in the VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million (adjusted annually for inflation) or more in any one year. If the rulemaking includes a Federal mandate, the Act requires an agency to prepare an assessment of the anticipated costs and benefits of the Federal mandate. The Act also pertains to any regulatory requirements that might significantly or uniquely affect small governments. Before establishing any such requirements, an agency must develop a plan allowing for input from the affected governments regarding the requirements. Exemptions from the Act are found at 2 U.S.C. 1503, they include any regulation or proposed regulation that ‘‘provides for emergency assistance or relief at the request of any State, local, or tribal government or any official of a State, local, or tribal government.’’ Thus, FEMA finds this rule to be exempt from the Act. Additionally, FEMA has determined that this rule would not result in the expenditure by State, local, and Tribal governments, in the aggregate, nor by the private sector, of $100 million or more (adjusted annually for inflation) in any one year because of a Federal mandate, and it would not significantly or uniquely affect small governments. Therefore, no actions are deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995. D. Paperwork Reduction Act of 1995 As required by the Paperwork Reduction Act of 1995 (PRA), Public Law 104–13, 109 Stat. 163, (May 22, 1995) (44 U.S.C. 3501 et seq.), an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number. In this proposed rule, FEMA is seeking a revision to the already existing collection of information, OMB Control Number 1660–0017. The annual cost to the Federal Government is decreasing from $1,920,626 to $1,890,650. The decrease to the cost to the Federal Government occurred since we deleted $29,976 in arbitration travel costs; as, we do not have to include them per the PRA exceptions for civil & administrative actions. See 44 U.S.C. 3518(c). This proposed rule serves as the 60-day comment period for this proposed change pursuant to 5 CFR 1320.12. FEMA invites the public to comment on the proposed collection of information. Collection of Information Title: PA Program. PO 00000 Frm 00054 Fmt 4702 Sfmt 4702 53743 Type of information collection: Revision of a currently approved collection. OMB Number: 1660–0017. Form Forms: FEMA Form 009–0–49 Request for Public Assistance; FEMA Form 009–0–91 Project Worksheet (PW); FEMA Form 009–0–91A Project Worksheet (PW)—Damage Description and Scope of Work Continuation Sheet; FEMA Form 009–0–91B Project Worksheet (PW)—Cost Estimate Continuation Sheet; FEMA Form 009– 0–91C Project Worksheet (PW)—Maps and Sketches Sheet; FEMA Form 009– 0–91D Project Worksheet (PW)—Photo Sheet; FEMA Form 009–0–120 Special Considerations Questions; FEMA Form 009–0–121 PNP Facility Questionnaire; FEMA Form 009–0–123 Force Account Labor Summary Record; FEMA Form 009–0–124 Materials Summary Record; FEMA Form 009–0–125 Rented Equipment Summary Record; FEMA Form 009–0–126 Contract Work Summary Record; FEMA Form 009–0– 127 Force Account Equipment Summary Record; FEMA Form 009–0– 128 Applicant’s Benefits Calculation Worksheet; FEMA Form 009–0–111, Quarterly Progress Report; FEMA Form 009–0–141, FAC–TRAX System. Abstract: The information collected is utilized by FEMA to make determinations for PA grants based on the information supplied by the respondents. Affected Public: State, local, or Tribal Government. Estimated Number of Respondents: 1,012. Estimated Number of Responses: 398,068. Estimated Total Annual Burden Hours: 466,025. The proposed rule to implement section 423 arbitration would not impact the total number of responses or burden hours. FEMA proposes to add a new paragraph to 44 CFR 206.206 to add a right of arbitration for applicants. The proposed regulation would provide applicants an additional choice in FEMA’s appeals and arbitration processes: Applicants must choose either submitting a second appeal or submitting a request for arbitration. Or, an applicant may select arbitration if the Regional Administrator has received a first appeal, but has not rendered a decision within 180 calendar days of receipt. There is no change to the number of responses due to the proposed rule, as applicants can only choose one option. FEMA estimated it will take approximately 2 hours to prepare a letter for appeal or arbitration. This estimate is based on the assumption that E:\FR\FM\31AUP1.SGM 31AUP1 53744 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules most of the information necessary for preparing the appeal or arbitration request is found in the existing Project Worksheet. Recipients will also provide a recommendation per each applicant request for an appeal or arbitration. The total number of recommendations would not change because of the proposed rule. FEMA estimates it will take approximately 1 hour to prepare a recommendation. Currently, the estimated time to complete a request and submit a letter of recommendation for an appeal is three hours. FEMA also estimates the time to complete a request and submit a letter of recommendation for arbitration would also be three hours. The applicant could re-use the same information from the request for an appeal or arbitration and the recipient would review similar information in providing its recommendation. The proposed rule would not impact the estimate of the burden hours. Table A.12 provides estimates of annualized cost to respondents for the hour burdens for the collection of information. ESTIMATED ANNUALIZED BURDEN HOURS AND COSTS Number of respondents Type of respondent Form name/form No. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. FEMA Form 009–0–49, Request for PA/. FEMA Form 009–0–91, Project Worksheet (PW) and a Request for Time Extension. FEMA Form 009–0–91A Project Work Sheet (PW) Damage Description and Scope of Work. FEMA Form 009–0–91B, Project Worksheet (PW) Cost Estimate Continuation Sheet and Request for additional funding for Cost Overruns. FEMA Form 009–0–91C Project Worksheet (PW) Maps and Sketches Sheet. FEMA Form 009–0–91D Project Worksheet (PW) Photo Sheet. FEMA Form 009–0–120, Special Considerations Questions/. FEMA Form 009–0–128, Applicant’s Benefits Calculation Worksheet/. FEMA Form 009–0–121, PNP Facility Questionnaire. FEMA Form 009–0–123, Force Account Labor Summary Record. FEMA Form 009–0–124, Materials Summary Record/. FEMA Form 009–0–125, Rented Equipment Summary Record. FEMA Form 009–0–126, Contract Work Summary Record/. FEMA Form 009–0–127, Force Account Equipment Summary Record/. State Administrative Plan and State Plan Amendments/No Form. FEMA Form 009–0–111, Quarterly Progress Report. Request for Appeals or Arbitrations & Recommendation/No Forms. Request for Arbitration & Recommendation resulting from Hurricanes Katrina or Rita/No Form. FEMA Form 009–0–141, FAC–TRAX System. Total ............... ............................................................... State, Local or Tribal Government. ................................ State, Local or Tribal Government. State Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. Number of responses per respondent Total No. of responses Avg. burden per response (in hours) Total annual burden (in hours) Avg. hourly wage rate Total annual respondent cost 56 129 7,224 0.25 1,806 $63.52 $114,717 56 840 47,040 1.50 70,560 63.52 4,481,971 56 784 43,904 1.50 65,856 63.52 4,183,173 56 784 43,904 1.3333 58,537 63.52 3,718,283 56 728 40,768 1.50 61,152 63.52 3,884,375 56 728 40,768 1.50 61,152 63.52 3,884,375 56 840 47,040 0.50 23,520 63.52 1,493,990 56 784 43,904 0.50 21,952 63.52 1,394,391 56 94 5,264 0.50 2,632 63.52 167,185 56 94 5,264 0.50 2,632 63.52 167,185 56 94 5,264 0.25 1,316 63.52 83,592 56 94 5,264 0.50 2,632 63.52 167,185 56 94 5,264 0.50 2,632 63.52 167,185 56 94 5,264 0.25 1,316 63.52 83,592 56 1 56 8.00 448 63.52 28,457 56 4 224 100.00 22,400 63.52 1,422,848 56 9 504 3.00 1,512 63.52 96,042 4 5 20 3.00 60 63.52 3,811 56 913 51,128 1.25 63,910 63.52 4,059,563 1,012 .................... 398,068 .................... 466,025 .................... 29,601,921 khammond on DSKJM1Z7X2PROD with PROPOSALS Note: The ‘‘Avg. Hourly Wage Rate’’ for each respondent includes a 1.46 multiplier to reflect a fully-loaded wage rate. Estimated Total Annual Respondent Cost: $29,601,921. Estimated Respondents’ Operation and Maintenance Costs: N/A. Estimated Respondents’ Capital and Start-Up Costs: N/A. Estimated Total Annual Costs to the Federal Government: $1,890,650. E. Privacy Act Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must determine VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 whether implementation of a proposed regulation will result in a system of records. A ‘‘record’’ is any item, collection, or grouping of information about an individual that is maintained by an agency, including, but not limited to, his/her education, financial transactions, medical history, and criminal or employment history and that contains his/her name, or the identifying number, symbol, or other identifying particular assigned to the PO 00000 Frm 00055 Fmt 4702 Sfmt 4702 individual, such as a finger or voice print or a photograph. See 5 U.S.C. 552a(a)(4). A ‘‘system of records’’ is a group of records under the control of an agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual. An agency cannot disclose any record which is contained in a system of records except by following specific procedures. E:\FR\FM\31AUP1.SGM 31AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules In accordance with DHS policy, FEMA has completed a Privacy Threshold Analysis (PTA) for this proposed rule. DHS has determined that this proposed rulemaking does not affect the 1660–0017 OMB Control Number’s current compliance with the E-Government Act of 2002 or the Privacy Act of 1974, as amended. As a result, DHS has concluded that the 1660–0017 OMB Control Number is covered by the DHS/FEMA/PIA–013 Grants Management Programs Privacy Impact Assessment (PIA). Additionally, DHS has decided that the 1660–0017 OMB Control Number is covered by the DHS/FEMA—009 Hazard Mitigation, Disaster Public Assistance, and Disaster Loan Programs System of Records, 79 FR 16015, Mar. 24, 2014 System of Records Notice (SORN). of arbitration authorized by the DRRA, and to revise FEMA’s regulations regarding first and second PA appeals. These changes are to implement statutory requirements and to amend existing regulation without changing its environmental effect, consistent with Catex A3, as defined in DHS Instruction Manual 023–01–001–01 (Rev. 01), Appendix A. No extraordinary circumstances exist that will trigger the need to develop an EA or EIS. See DHS Instruction Manual 023–01–001–01 V(B)(2). An EA will not be prepared because a catex applies to this rulemaking action and no extraordinary circumstances exist. F. National Environmental Policy Act of 1969 (NEPA) Section 102 of the National Environmental Policy Act of 1969 (NEPA), 83 Stat. 852 (Jan. 1, 1970) (42 U.S.C. 4321 et seq.) requires agencies to consider the impacts of their proposed actions on the quality of the human environment. The Council on Environmental Quality’s (CEQ) procedures for implementing NEPA, 40 CFR parts 1500 through 1508, require Federal agencies to prepare Environmental Impact Statements (EISs) for major Federal actions significantly affecting the quality of the human environment. Each agency can develop categorical exclusions (catexes) to cover actions that have been demonstrated to not typically trigger significant impacts to the human environment individually or cumulatively. Agencies develop environmental assessments (EAs) to evaluate those actions that are ineligible for an agency’s catexes and which have the potential to significantly impact the human environment. At the end of the EA process, the agency will determine whether to make a Finding of No Significant Impact (FONSI) or whether to initiate the EIS process. Rulemaking is a major Federal action subject to NEPA. The list of catexes at DHS Instruction Manual 023–01–001– 01 (Revision 01), ‘‘Implementation of the National Environmental Policy Act (NEPA),’’ Appendix A, includes a catex for the promulgation of certain types of rules, including rules that implement, without substantive change, statutory or regulatory requirements and rules that interpret or amend an existing regulation without changing its environmental effect. (Catex A3(b) and (d)). The purpose of this rule is to propose regulations to implement the new right Executive Order 13175, ‘‘Consultation and Coordination With Indian Tribal Governments,’’ 65 FR 67249, Nov. 9, 2000, applies to agency regulations that have Tribal implications, that is, regulations that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. Under this Executive Order, to the extent practicable and permitted by law, no agency will promulgate any regulation that has Tribal implications, that imposes substantial direct compliance costs on Indian Tribal governments, and that is not required by statute, unless funds necessary to pay the direct costs incurred by the Indian Tribal government or the Tribe in complying with the regulation are provided by the Federal Government, or the agency consults with Tribal officials. The purpose of this rule is to propose regulations to implement the new right of arbitration authorized by 42 U.S.C. 5189a(d) and to revise FEMA’s regulations regarding first and second PA appeals. Current regulations at 44 CFR 206.206 only provide regulatory guidance on a first and second PA appeal process, but not arbitration. The other major proposed revisions to 44 CFR 206.206 include adding definitions; adding subparagraphs to clarify what actions FEMA may take and will not take while an appeal is pending and state that FEMA may issue separate guidance as necessary, similar to current 44 CFR 206.209(m); adding a finality of decision paragraph; requiring electronic submission for appeals and arbitrations documents; and clarifying overall timeframe limits for first and second appeals. VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 G. Executive Order 13175, Consultation and Coordination With Indian Tribal Governments PO 00000 Frm 00056 Fmt 4702 Sfmt 4702 53745 Under the proposed rule, Indian Tribes have the same opportunity to participate in arbitrations as other eligible applicants; however, given the participation criteria required under 42 U.S.C. 5189a(d) and its voluntary nature, FEMA anticipates a very small number, if any Indian Tribes, will participate in the new proposed permanent right of arbitration. FEMA also anticipates a very small number of Indian Tribes will be affected by the other major revisions to 44 CFR 206.206. As a result, FEMA does not expect this proposed rule to have a substantial direct effect on one or more Indian tribes or impose direct compliance costs on Indian Tribal governments. Additionally, since FEMA anticipates a very small number, if any Indian Tribes will participate in the arbitration portion of the proposed rule nor will be affected by the rest of the proposed revisions to 44 CFR 206.206, FEMA does not expect the regulations to have substantial direct effects on the relationship between the Federal Government and Indian Tribes or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. H. Executive Order 13132, Federalism A rule has implications for federalism under Executive Order 13132 ‘‘Federalism’’ (64 FR 43255, Aug. 10, 1999), if it has a substantial direct effect 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. FEMA has analyzed this proposed rule under Executive Order 13132 and determined that it does not have implications for federalism. I. Executive Order 12630, Taking of Private Property This rule will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, ‘‘Governmental Actions and Interference With Constitutionally Protected Property Rights’’ (53 FR 8859, Mar. 18, 1988). J. Executive Order 12898, Environmental Justice Executive Order 12898 ‘‘Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations’’ (59 FR 7629, Feb. 16, 1994), mandates that Federal agencies identify and address, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority and E:\FR\FM\31AUP1.SGM 31AUP1 53746 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules low-income populations. It 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 benefit of, or subjecting persons to discrimination because of their race, color, or national origin or income level. The purpose of this rule is to propose regulations to implement the new right of arbitration authorized by the DRRA in 42 U.S.C. 5189a(d) and to revise FEMA’s regulations regarding first and second PA appeals. Current regulations, at 44 CFR 206.206, only provide regulatory guidance on a first and second PA appeal process, but not arbitration. The other major proposed revisions to 44 CFR 206.206 include adding definitions; adding subparagraphs to clarify what actions FEMA may take and will not take while an appeal is pending and state that FEMA may issue separate guidance as necessary, similar to current 44 CFR 206.209(m); adding a finality of decision paragraph; requiring electronic submission for appeals and arbitrations documents; and clarifying overall timeframe limits for first and second appeals. There are no adverse effects and no disproportionate effects on minority or low-income populations. K. Executive Order 12988, Civil Justice Reform This proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, ‘‘Civil Justice Reform’’ (61 FR 4729, Feb. 7, 1996), to minimize litigation, eliminate ambiguity, and reduce burden. khammond on DSKJM1Z7X2PROD with PROPOSALS L. Executive Order 13045, Protection of Children From Environmental Health Risks and Safety Risks This proposed rule will not create environmental health risks or safety risks for children under Executive Order 13045, ‘‘Protection of Children From Environmental Health Risks and Safety Risks’’ (62 FR 19885, Apr. 23, 1997). M. Congressional Review of Agency Rulemaking Under the Congressional Review of Agency Rulemaking Act (CRA), 5 U.S.C. 801–808, before a rule can take effect, the Federal agency promulgating the rule must submit to Congress and to the Government Accountability Office (GAO) a copy of the rule; a concise general statement relating to the rule, including whether it is a major rule; the proposed effective date of the rule; a copy of any cost-benefit analysis; VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 descriptions of the agency’s actions under the Regulatory Flexibility Act and the Unfunded Mandates Reform Act; and any other information or statements required by relevant executive orders. FEMA will send this rule to the Congress and to GAO pursuant to the CRA, if the rule is finalized. The rule is not a ‘‘major rule’’ within the meaning of the CRA. It will not have an annual effect on the economy of $100,000,000 or more; 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; and it will not have significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets. List of Subjects in 44 CFR Part 206 Administrative practice and procedure, Coastal zone, Community facilities, Disaster assistance, Fire prevention, Grant programs-housing and community development, Housing, Insurance, Intergovernmental relations, Loan programs-housing and community development, Natural resources, Penalties, Reporting and recordkeeping requirements. For the reasons stated in the preamble, the Federal Emergency Management Agency proposes to amend 44 CFR part 206 as follows: PART 206—FEDERAL DISASTER ASSISTANCE 1. The authority citation for part 206 continues to read as follows: ■ Authority: Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121 through 5207; Homeland Security Act of 2002, 6 U.S.C. 101 et seq.; Department of Homeland Security Delegation 9001.1. ■ 2. Revise § 206.206 to read as follows: § 206.206 Appeals and arbitrations. (a) Definitions. The following definitions apply to this section: Administrator means the Administrator of the Federal Emergency Management Agency. Amount in dispute means the difference between the amount of financial assistance sought for a Public Assistance project and the amount of financial assistance for which FEMA has determined such Public Assistance project is eligible. Applicant refers to the definition at § 206.201(a). PO 00000 Frm 00057 Fmt 4702 Sfmt 4702 Final agency determination means: (1) The decision of FEMA, if the applicant or recipient does not submit a first appeal within the time limits provided for in paragraph (b)(1)(ii)(A) of this section; or (2) The decision of FEMA, if the applicant or recipient withdraws the pending appeal and does not file a request for arbitration within 30 calendar days of the withdrawal of the pending appeal; or (3) The decision of the FEMA Regional Administrator, if the applicant or recipient does not submit a second appeal within the time limits provided for in paragraph (b)(2)(ii)(A) of this section. Recipient refers to the definition at § 206.201(m). Rural area means an area with a population of less than 200,000 outside an urbanized area. Urbanized area means the area as identified by the United States Census Bureau. (b) Appeals and Arbitrations. An eligible applicant or recipient may appeal or an eligible applicant may arbitrate any determination previously made related to an application for or the provision of Public Assistance according to the procedures of this section. (1) First Appeal. The applicant must make a first appeal in writing and submit it electronically through the recipient to the Regional Administrator. The recipient must include a written recommendation on the applicant’s appeal with the electronic submission of the applicant’s first appeal to the Regional Administrator. The recipient may make recipient-related appeals to the Regional Administrator. (i) Content. A first appeal must: (A) Contain all documented justification supporting the applicant or recipient’s position; (B) Specify the amount in dispute, as applicable; and (C) Specify the provisions in Federal law, regulation, or policy with which the applicant or recipient believes the FEMA determination was inconsistent. (ii) Time Limits. (A) The applicant may make a first appeal through the recipient within 60 calendar days from the date of the FEMA determination that is the subject of the appeal and the recipient must electronically forward to the Regional Administrator the applicant’s first appeal with a recommendation within 120 calendar days from the date of the FEMA determination that is the subject of the appeal. FEMA will deny all first appeals it receives from the recipient more than 120 calendar days from the date of the E:\FR\FM\31AUP1.SGM 31AUP1 khammond on DSKJM1Z7X2PROD with PROPOSALS Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules FEMA determination that is the subject of the appeal. (B) Within 90 calendar days following receipt of a first appeal, if there is a need for additional information, the Regional Administrator will provide electronic notice to the recipient and applicant. If there is no need for additional information, then FEMA will not provide notification. The Regional Administrator will generally allow the recipient 30 calendar days to provide any additional information. (C) The Regional Administrator will provide electronic notice of the disposition of the appeal to the applicant and recipient within 90 calendar days of receipt of the appeal or within 90 calendar days following the receipt of additional information or following expiration of the period for providing the information. (iii) Technical Advice. In appeals involving highly technical issues, the Regional Administrator may, at his or her discretion, submit the appeal to an independent scientific or technical person or group having expertise in the subject matter of the appeal for advice or recommendation. The period for this technical review may be in addition to other allotted time periods. Within 90 calendar days of receipt of the report, the Regional Administrator will provide electronic notice of the disposition of the appeal to the recipient and applicant. (iv) Effect of an Appeal. (A) FEMA will take no action to implement any determination pending an appeal decision from the Regional Administrator, subject to the exceptions in paragraph (b)(1)(iv)(B) of this section. (B) Notwithstanding paragraph (b)(1)(iv)(A) of this section, FEMA may: (1) Suspend funding (see 2 CFR 200.338); (2) Defer or disallow other claims questioned for reasons also disputed in the pending appeal; or (3) Take other action to recover, withhold, or offset funds if specifically authorized by statute or regulation. (v) Implementation. If the Regional Administrator grants an appeal, the Regional Administrator will take appropriate implementing action(s). (vi) Guidance. FEMA may issue separate guidance as necessary to supplement paragraph (b)(1) of this section. (2) Second Appeal. If the Regional Administrator denies a first appeal in whole or in part, the applicant may make a second appeal in writing and submit it electronically through the recipient to the Assistant Administrator for the Recovery Directorate. The recipient must include a written VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 recommendation on the applicant’s appeal with the electronic submission of the applicant’s second appeal to the Assistant Administrator for the Recovery Directorate. The recipient may make recipient-related second appeals to the Assistant Administrator for the Recovery Directorate. (i) Content. A second appeal must: (A) Contain all documented justification supporting the applicant or recipient’s position; (B) Specify the amount in dispute, as applicable; and (C) Specify the provisions in Federal law, regulation, or policy with which the applicant or recipient believes the FEMA determination was inconsistent. (ii) Time Limits. (A) If the Regional Administrator denies a first appeal in whole or in part, the applicant may make a second appeal through the recipient within 60 calendar days from the date of the Regional Administrator’s first appeal decision and the recipient must electronically forward to the Assistant Administrator for the Recovery Directorate the applicant’s second appeal with a recommendation within 120 calendar days from the date of the Regional Administrator’s first appeal decision. FEMA will deny all second appeals it receives from the recipient more than 120 calendar days from the date of the Regional Administrator’s first appeal decision. (B) Within 90 calendar days following receipt of a second appeal, if there is a need for additional information, the Assistant Administrator for the Recovery Directorate will provide electronic notice to the recipient and applicant. If there is no need for additional information, then FEMA will not provide notification. The Assistant Administrator for the Recovery Directorate will generally allow the recipient 30 calendar days to provide any additional information. (C) The Assistant Administrator for the Recovery Directorate will provide electronic notice of the disposition of the appeal to the recipient and applicant within 90 calendar days of receipt of the appeal or within 90 calendar days following the receipt of additional information or following expiration of the period for providing the information. (iii) Technical Advice. In appeals involving highly technical issues, the Assistant Administrator for the Recovery Directorate may, at his or her discretion, submit the appeal to an independent scientific or technical person or group having expertise in the subject matter of the appeal for advice or recommendation. The period for this technical review may be in addition to PO 00000 Frm 00058 Fmt 4702 Sfmt 4702 53747 other allotted time periods. Within 90 calendar days of receipt of the report, the Assistant Administrator for the Recovery Directorate will provide electronic notice of the disposition of the appeal to the recipient and applicant. (iv) Effect of an Appeal. (A) FEMA will take no action to implement any determination pending an appeal decision from the Assistant Administrator for the Recovery Directorate, subject to the exceptions in paragraph (b)(2)(iv)(B) of this section. (B) Notwithstanding paragraph (b)(2)(iv)(A) of this section, FEMA may (1) Suspend funding (see 2 CFR 200.338); (2) Defer or disallow other claims questioned for reasons also disputed in the pending appeal; or (3) Take other action to recover, withhold, or offset funds if specifically authorized by statute or regulation. (v) Implementation. If the Assistant Administrator for the Recovery Directorate grants an appeal, the Assistant Administrator for the Recovery Directorate will direct the Regional Administrator to take appropriate implementing action(s). (vi) Guidance. FEMA may issue separate guidance as necessary to supplement paragraph (b)(2) of this section. (3) Arbitration. (i) Applicability. An applicant may request arbitration from the Civilian Board of Contract Appeals (CBCA) if: (A) There is a disputed agency determination arising from a major disaster declared on or after January 1, 2016; and (B) The amount in dispute is greater than $500,000, or greater than $100,000 for an applicant for assistance in a rural area; and (C) The Regional Administrator has denied a first appeal decision or received a first appeal but not rendered a decision within 180 calendar days of receipt. (ii) Limitations. A request for arbitration is in lieu of a second appeal. (iii) Request for Arbitration. (A) An applicant may initiate arbitration by submitting an electronic request simultaneously to the recipient, the CBCA, and FEMA. See 48 CFR part 6106. (B) Time Limits. (1) An applicant must submit a request for arbitration within 60 calendar days from the date of the Regional Administrator’s first appeal decision; or (2) If the first appeal was timely submitted, and the Regional Administrator has not rendered a decision within 180 calendar days of E:\FR\FM\31AUP1.SGM 31AUP1 53748 Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Proposed Rules receiving the appeal, an applicant may electronically submit a withdrawal of the pending appeal simultaneously to the recipient, the FEMA Regional Administrator, and the CBCA. The applicant may then submit a request for arbitration within 30 calendar days from the date of the withdrawal of the pending appeal. (C) Content of request. The request for arbitration must contain a written statement that specifies the amount in dispute, all documentation supporting the position of the applicant, the disaster number, and the name and address of the applicant’s authorized representative or counsel. (iv) Expenses. Expenses for each party will be paid by the party who incurred the expense. (v) Guidance. FEMA may issue separate guidance as necessary to supplement paragraph (b)(3) of this section. (c) Finality of decision. A FEMA final agency determination or a decision of the Assistant Administrator for the Recovery Directorate on a second appeal constitute a final decision of FEMA. In the alternative, a decision of the majority of the CBCA panel constitutes a final decision, binding on all parties. See 48 CFR 6106.613. Final decisions are not subject to further administrative review. Pete Gaynor, Administrator, Federal Emergency Management Agency. [FR Doc. 2020–16040 Filed 8–28–20; 8:45 am] BILLING CODE 9111–19–P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 204, 209, 212, 213, and 252 [Docket 2020–0027] RIN 0750–AK44 khammond on DSKJM1Z7X2PROD with PROPOSALS Defense Federal Acquisition Regulation Supplement: Use of Supplier Performance Risk System (SPRS) Assessments (DFARS Case 2019–D009) Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Proposed rule. AGENCY: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to update the policy and procedures for SUMMARY: VerDate Sep<11>2014 16:36 Aug 28, 2020 Jkt 250001 use of the Supplier Performance Risk System. DATES: Comments on the proposed rule should be submitted in writing to the address shown below on or before October 30, 2020, to be considered in the formation of a final rule. ADDRESSES: Submit comments identified by DFARS Case 2019–D009, using any of the following methods: Æ Regulations.gov: https:// www.regulations.gov. Search for ‘‘DFARS Case 2019–D009.’’ Select ‘‘Comment Now’’ and follow the instructions provided to submit a comment. Please include ‘‘DFARS Case 2019–D009’’ on any attached document. Æ Email: osd.dfars@mail.mil. Include DFARS Case 2019–D009 in the subject line of the message. Æ Fax: 571–372–6094. Æ Mail: Defense Acquisition Regulations System, Attn: Heather Kitchens, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301–3060. Comments received generally will be posted without change to https:// www.regulations.gov, including any personal information provided. To confirm receipt of your comment(s), please check www.regulations.gov, approximately two to three days after submission to verify posting (except allow 30 days for posting of comments submitted by mail). FOR FURTHER INFORMATION CONTACT: Ms. Heather Kitchens, telephone 571–372– 6095. SUPPLEMENTARY INFORMATION: I. Background The Supplier Performance Risk System (SPRS) is a DoD enterprise application that retrieves quality and delivery data from Government systems to calculate ‘‘on time’’ delivery scores and quality classifications. Contracting officers will use the overall risk assessment generated by the SPRS module to evaluate quotes and offers received under all solicitations for supplies and services, including solicitations using part 12 procedures for the acquisition of commercial items. The system generates three risk assessments using the SPRS Evaluation Criteria and calculations at https:// www.sprs.csd.disa.mil/pdf/SPRS_ DataEvaluationCriteria.pdf. These risk assessments are described as follows: • Item Risk. SPRS collects data to generate the probability that a product or service, based on intended use, will introduce counterfeit or nonconforming material entering the DoD supply chain, which can result in significant personnel safety issues, mission PO 00000 Frm 00059 Fmt 4702 Sfmt 4702 degradation, or monetary loss. SPRS ‘‘flags’’ items identified by Government sources as ‘‘high risk’’ and provides suggested mitigations, or as ‘‘not high risk’’. • Price Risk. SPRS collects historical pricing data from Government sources and applies a common statistical method to calculate the average price paid for a product or services, generating a price range that contracting officers can use in the evaluation of fair and reasonable pricing. Price Risk determines whether ‘‘a proposed price is consistent with historical prices paid for that item and is depicted by high, low, or within range’’. • Supplier Risk. SPRS calculates a supplier risk score, for contracting officers to compare competing suppliers. This score includes three years of relevant supplier performance information from existing Government data sources. II. Discussion and Analysis The proposed rule amends the DFARS to: (1) Move coverage of the Supplier Performance Risk System (SPRS) from part 213, Simplified Acquisition Procedures, to a new subpart 204.7X, Supplier Performance Risk System; and (2) replace DFARS clause 252.213–7000, Notice to Prospective Suppliers on Use of Supplier Performance Risk System in Past Performance Evaluations, with DFARS provision 252.204–70XX, Notice to Prospective Suppliers on Use of Supplier Performance Risk System in Performance Evaluations, to enhance the use of SPRS in the evaluation of a supplier’s performance through the introduction of SPRS system-generated item, price, and supplier risk assessments. In the new subpart, at 204.7X01, definitions are added for item, price, and supplier risk. Section 204.7X02, Applicability, provides that the use of SPRS is required to be used to evaluate quotes and offers in response to all solicitations for supplies and services, including solicitations using FAR part 12 procedures for the acquisition of commercial items. Language is added at 204.7X03, Procedures, to provide guidance to the contracting officer on how SPRS risk assessments shall be considered during award decisions, how to respond to risk assessment ratings, and what mitigating strategies shall be considered for risk assessments prior to award. A prescription for use of the new solicitation provision at 252.204–70XX is added at 204.7X04. The proposed rule amends the DFARS by requiring contracting officers to use the supplier risk assessments available in SPRS as a factor in determining E:\FR\FM\31AUP1.SGM 31AUP1

Agencies

[Federal Register Volume 85, Number 169 (Monday, August 31, 2020)]
[Proposed Rules]
[Pages 53725-53748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16040]


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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

44 CFR Part 206

[Docket ID: FEMA-2019-0012]
RIN 1660-AB00


Public Assistance Appeals and Arbitrations

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Emergency Management Agency (FEMA) is proposing 
regulations to implement the new right of arbitration authorized by the 
Disaster Recovery Reform Act of 2018 (DRRA), and to revise its 
regulations regarding first and second Public Assistance appeals.

DATES: Comments must be received no later than October 30, 2020.

ADDRESSES: You may submit comments, identified by Docket ID: FEMA-2019-
0012, via the Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.

FOR FURTHER INFORMATION CONTACT: Shabnaum Amjad, Deputy Associate Chief 
Counsel, Regulatory Affairs, Office of Chief Counsel, Federal Emergency 
Management Agency, 500 C Street SW, Washington, DC 20472. Phone: 202-
212-2398 or email: [email protected].

SUPPLEMENTARY INFORMATION:

I. Public Participation

    We encourage you to participate in this rulemaking by submitting 
comments and related materials. We will consider all comments and 
materials received during the comment period.
    If you submit a comment, identify the agency name and the Docket ID 
for this rulemaking, indicate the specific section of this document to 
which each comment applies, and give the reason for each comment. All 
submissions will be posted, without change, to the Federal e-Rulemaking 
Portal at www.regulations.gov, and will include any personal 
information you provide. Therefore, submitting this information makes 
it public. For more about privacy and the docket, visit https://www.regulations.gov/document?D=DHS-2018-0029-0001.
    Viewing comments and documents: For access to the docket to read 
background documents or comments received, go to the Federal e-
Rulemaking Portal at https://www.regulations.gov.

II. Background

A. The Public Assistance Program

    Under the Public Assistance (PA) Program, authorized by the Robert 
T. Stafford Disaster Relief and Emergency Assistance Act \1\ (Stafford 
Act), FEMA awards grants to eligible applicants to assist them in 
responding to and recovering from Presidentially-declared emergencies 
and major disasters. The recipient, as defined at 44 CFR 206.201(m), is 
the government to which a grant is awarded, and which is accountable 
for the use of the funds provided. Generally, the State for which the 
emergency or major disaster is declared is the recipient. The recipient 
can also be an Indian Tribal government. The applicant, as defined at 
44 CFR 206.201(a), is a State agency, local government, or eligible 
private nonprofit organization submitting an application to the 
recipient for assistance under the recipient's grant.
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    \1\ Disaster Relief Act of 1974, Public Law 93-288, 88 Stat. 143 
(May 22, 1974), as amended, 42 U.S.C. 5121 et seq.
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    The PA Program provides Federal funds for debris removal, emergency 
protective measures, and permanent restoration of infrastructure. When 
the President issues an emergency or major disaster declaration 
authorizing PA FEMA may accept applications from eligible applicants 
under the PA Program. To apply for a grant under the PA Program, the 
eligible applicant must submit a Request for PA to FEMA through the 
recipient. Upon award, the recipient notifies the applicant of the 
award, and the applicant becomes a subrecipient.
    FEMA uses Project Worksheets (PWs) to administer the PA Program. A 
FEMA Project Specialist develops PWs for large projects, working with a 
recipient representative and the applicant. A PW is the primary form 
used to document the location, damage description and dimensions, scope 
of work, and cost estimate for a project. Although large projects are 
funded on documented actual costs, work typically is not complete at 
the time of project formulation, PW development, and approval. 
Therefore, FEMA obligates large project grants based on estimated costs 
and relies on financial reconciliation at project closeout for final 
costs.
    The obligation process is the process by which FEMA makes funds 
available to the recipient. The funds reside in a

[[Page 53726]]

Federal account until drawn down by the recipient and disbursed to the 
applicant, unless partially or otherwise deobligated for reasons 
including, but not limited to, discrepancies between estimated and 
actual costs, updated estimates, a determination that a prior 
eligibility determination was incorrect, additional funds received from 
other sources that could represent a prohibited duplication of 
benefits, or expiration of the period of performance.
    Occasionally, an applicant or recipient may disagree with FEMA 
regarding a determination related to their request for Public 
Assistance. Such disagreements may include, for instance, whether an 
applicant or recipient, facility, item of work, or project is eligible 
for Public Assistance; whether approved costs are sufficient to 
complete the work; whether a requested time extension was properly 
denied; whether a portion of the cost claimed for the work is eligible; 
or whether the approved scope of work is correct. In such 
circumstances, the applicant or recipient may appeal FEMA's 
determination. 44 CFR 206.206.

B. 44 CFR 206.206, Public Assistance Appeals

    Under the appeals procedures in 44 CFR 206.206, an eligible 
applicant, subrecipient, or recipient may appeal any determination made 
by FEMA related to an application for or the provision of Public 
Assistance. There are two levels of appeal. The first appeal is to the 
FEMA Regional Administrator. The second appeal is to the FEMA Assistant 
Administrator for Recovery at FEMA Headquarters.
    The applicant must file an appeal with the recipient within 60 
calendar days of the applicant's receipt of a notice from FEMA of the 
Federal determination that is being appealed. 44 CFR 206.206(c)(1). The 
applicant must provide documentation to support the position of the 
appeal. In this documentation, the applicant will specify the monetary 
amount in dispute and the provisions in Federal law, regulation, or 
policy with which the applicant believes FEMA's initial action was 
inconsistent. 44 CFR 206.206(a). The recipient reviews and evaluates 
the appeal documentation. The recipient then prepares a written 
recommendation on the merits of the appeal and forwards that 
recommendation to the FEMA Regional Administrator within 60 calendar 
days of the recipient's receipt of the appeal from the applicant. 44 
CFR 206.206(c)(2). Recipients may make recipient-related appeals to the 
FEMA Administrator.
    The FEMA Regional Administrator reviews the appeal and takes one of 
two actions: (1) Renders a decision on the appeal and informs the 
recipient of the decision; or (2) requests additional information. If 
the appeal is granted, the FEMA Regional Administrator takes 
appropriate action, such as approving additional funding or sending a 
Project Specialist to meet with the appellant to determine additional 
eligible funding. 44 CFR 206.206(c)(3).
    If the FEMA Regional Administrator denies the appeal, the applicant 
or recipient may submit a second appeal.\2\ The applicant must submit 
the second appeal to the recipient within 60 calendar days of receiving 
the notice of the FEMA Regional Administrator's decision on the first 
appeal. The recipient must forward the second appeal with a written 
recommendation to the FEMA Regional Administrator within 60 calendar 
days of receiving the second appeal. 44 CFR 206.206(c)(2). The FEMA 
Regional Administrator will forward the second appeal for action to the 
FEMA Assistant Administrator for Recovery as soon as practicable. 
Recipients may make recipient-related second appeals to the FEMA 
Assistant Administrator for Recovery.
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    \2\ Introductory text of paragraph(a) of 44 CFR 206.206.
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    The FEMA Assistant Administrator for Recovery at FEMA Headquarters 
reviews the second appeal and renders a decision or requests additional 
information from the applicant. In a case involving highly technical 
issues, FEMA may request an independent scientific or technical 
analysis by a group or person having expertise in the subject matter of 
the appeal. 44 CFR 206.206(d). Upon receipt of requested information 
and reports from the applicant, FEMA must render a decision on the 
second appeal within 90 calendar days. 44 CFR 206.206(c)(3). This 
decision constitutes the final administrative decision of FEMA. 44 CFR 
206.206(e)(3).

C. 44 CFR 206.209, Arbitration for Public Assistance Determinations 
Related to Hurricanes Katrina and Rita

    Under 44 CFR 206.209, applicants may request arbitration to resolve 
disputed PA applications under major disaster declarations for 
Hurricanes Katrina and Rita, pursuant to the authority of the American 
Recovery and Reinvestment Act of 2009 (ARRA).\3\ Pursuant to section 
601 of the ARRA, FEMA promulgated 44 CFR 206.209 to establish 
arbitration procedures to resolve outstanding disputes regarding PA 
projects over $500,000. The ARRA arbitration regulations are only 
available to the States of Louisiana, Mississippi, Alabama, and Texas 
under the following declarations: DR-1603, DR-1604, DR-1605, DR-1606, 
and DR-1607.
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    \3\ American Recovery and Reinvestment Act of 2009, Public Law 
111-5, 123 Stat. 115 (Feb. 17, 2009), 26 U.S.C. 1 note.
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D. Former 44 CFR 206.210, Dispute Resolution Pilot Program

    The Sandy Recovery Improvement Act of 2013 \4\ (SRIA) authorized 
FEMA to conduct a Dispute Resolution Pilot Program (DRPP), which was in 
effect from August 16, 2013 to December 31, 2015. 78 FR 49950, Aug 16, 
2013. FEMA promulgated regulations at 44 CFR 206.210 (since removed) to 
effectuate the pilot program. It included arbitration by an independent 
review panel to resolve disputes relating to PA projects, to facilitate 
an efficient recovery from major disasters. Applicants could choose to 
use for their second appeal either the DRPP or the review already 
offered under 44 CFR 206.206. Arbitration by an independent review 
panel was available only for disputes in an amount equal to or greater 
than $1,000,000 for projects with non-Federal cost share requirement 
(where, the subrecipient had a cost share requirement), and for 
applicants that had completed a first appeal pursuant to 44 CFR 
206.206.
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    \4\ Sandy Recovery Improvement Act of 2013, Public Law 113-2, 
127 Stat. 43 (Jan. 29, 2013), 42 U.S.C. 5189a note.
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    The arbitration decisions under this section were to be binding 
upon the parties to the dispute, as required by section 1105(b)(2) of 
SRIA. Under section 1105 of SRIA, the authority to accept a request for 
arbitration pursuant to the DRPP sunset on December 31, 2015, and FEMA 
has since removed these regulations.\5\ FEMA did not receive any 
requests for arbitration pursuant to the DRPP.
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    \5\ See Removal of Dispute Resolution Pilot Program for Public 
Assistance Appeals, 83 FR 44238, Aug. 30, 2018.
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E. Arbitration Under the Disaster Recovery Reform Act of 2018 (DRRA)

    On October 5, 2018, the President signed into law the Disaster 
Recovery Reform Act of 2018 (DRRA).\6\ Section 1219 of DRRA, which 
amended Section 423(d) of the Stafford Act (42 U.S.C. 5189a), provides 
a right of arbitration to certain applicants of the PA Program that 
have a dispute concerning the eligibility for assistance or repayment 
of assistance.
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    \6\ Disaster Recovery Reform Act of 2018, Public Law 115-254, 
132 Stat. 3186 (Oct. 5, 2018), 42 U.S.C. 5189a.

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[[Page 53727]]

    To request arbitration pursuant to the newly amended 42 U.S.C. 
5189a, a PA applicant (1) must have a dispute arising from a disaster 
declared after January 1, 2016, (2) must be disputing an amount that 
exceeds $500,000 (or $100,000 for an applicant in a ``rural area'' with 
a population of less than 200,000 and outside of an urbanized area), 
and (3) must have submitted a first appeal pursuant to the requirements 
established under 44 CFR 206.206. Such applicants that receive a 
negative first appeal decision then have the option of submitting 
either a request for a second appeal or a request for arbitration. In 
addition, an applicant that has had a first appeal pending with FEMA 
for more than 180 calendar days may withdraw such appeal and submit a 
request for arbitration.
    Applicants that had a second appeal pending with FEMA as of October 
5, 2018, from a disaster declared after January 1, 2016 may, if they 
meet the amount in dispute requirement of $500,000 (or $100,000 for 
rural areas), withdraw their second appeal and request arbitration. 
Following the DRRA's enactment, FEMA individually notified applicants 
with pending second appeals that were eligible to withdraw those 
appeals and request arbitration.
    Applicants that are not eligible to request arbitration are (1) 
applicants that have received a second appeal determination from FEMA 
prior to October 5, 2018, and (2) applicants that were eligible to 
submit a second appeal prior to October 5, 2018, but did not do so 
within the 60 calendar days required by 44 CFR 206.206.\7\
---------------------------------------------------------------------------

    \7\ On December 18, 2018, FEMA implemented section 1219 of DRRA 
by posting a Fact Sheet on its website. After CBCA published their 
March 5, 2019 proposed rule, see 84 FR 7861, FEMA updated the: 
Section 1219 Public Assistance Appeals and Arbitration Fact Sheet on 
March 27, 2019. A link to the current Fact Sheet: https://www.fema.gov/media-library/assets/documents/175821. Accessed May 15, 
2020.
---------------------------------------------------------------------------

    As amended by Section 1219 of the DRRA, 42 U.S.C. 5189a(d) names 
the Civilian Board of Contract Appeals (CBCA) as the entity responsible 
for conducting these arbitrations. The CBCA has promulgated regulations 
at 48 CFR part 6106 establishing its arbitration procedures for such 
purpose. The CBCA also currently conducts arbitrations arising from 
Hurricanes Katrina and Rita under the ARRA regulations pursuant to an 
Inter-Agency Agreement between the CBCA and FEMA.

III. Proposed Rule

    FEMA proposes to revise its current PA appeals regulation at 44 CFR 
206.206 to add in the new right to arbitration under DRRA, in 
conjunction with some revisions to the current appeals process. The 
DRRA adds arbitration as a permanent alternative to a second appeal 
under the PA Program. Additionally, applicants that have had a first 
appeal pending with FEMA for more than 180 calendar days may withdraw 
such appeal and submit a request for arbitration. In both cases, the 
amount in dispute must be greater than $500,000, or greater than 
$100,000 for an applicant for assistance in a rural area. The other 
major proposed revisions to 44 CFR 206.206 include adding definitions; 
adding subparagraphs to clarify what actions FEMA may take and will not 
take while an appeal is pending and state that FEMA may issue separate 
guidance as necessary, similar to current 44 CFR 206.209(m); adding a 
finality of decision paragraph; requiring electronic submission for 
appeals and arbitrations documents; and clarifying overall time limits 
for first and second appeals.
    These proposed rules for arbitration are separate and distinct from 
the arbitration provisions located in 44 CFR 206.209.
    Applicants should also review the Civilian Board of Contract 
Appeals regulations at 48 CFR part 6101, Rules of Procedure of the 
Civilian Board of Contract Appeals, and 48 CFR part 6106, Rules of 
Procedure for Arbitration of Public Assistance Eligibility or 
Repayment, for additional CBCA rules of procedure.
    FEMA proposes to change the 44 CFR 206.206 section heading from 
``Appeals'' to ``Appeals and arbitrations,'' since FEMA proposes new 
regulatory text to implement DRRA's right of arbitration at Sec.  
206.206. Throughout this section, FEMA proposes to change references to 
the ``Disaster Assistance Directorate'' to the ``Recovery 
Directorate.'' The proposed changes are technical edits, as they 
represent past FEMA organizational changes. Also, throughout this 
section FEMA proposes to change all ``dates'' to ``calendar dates'' for 
clarity. Finally, since FEMA is proposing new arbitration regulations, 
FEMA is proposing that the first appeal, second appeal, and arbitration 
requirements are in separate paragraphs for clarity. Currently in Sec.  
206.206, FEMA's first and second appeal requirements are comingled.

A. Definitions (Proposed 44 CFR 206.206(a))

    Currently, Sec.  206.206 does not include any definitions. FEMA 
proposes to add the terms ``Administrator,'' ``Amount in dispute,'' 
``Applicant,'' ``Final agency determination,'' ``Recipient,'' ``Rural 
area,'' and ``Urbanized area,'' as follows.
    Administrator. FEMA proposes to define the term ``Administrator'' 
to mean the Administrator of the Federal Emergency Management Agency 
for clarity.
    Amount in dispute. FEMA proposes to define the term ``Amount in 
dispute'' to mean the difference between the amount of financial 
assistance sought for a Public Assistance project and the amount of 
financial assistance for which FEMA has determined such Public 
Assistance project is eligible. The DRRA amendments to 42 U.S.C. 
5189a(d)(1) introduced the term ``dispute,'' and also added dollar 
thresholds that applicants must meet (which differ depending on the 
area of the country in which the applicant applies for assistance) in 
order to request arbitration. ``Amount in dispute'' is not used in the 
current appeals section, 44 CFR 206.206, because there is no required 
dollar threshold to appeal a decision. Accordingly, FEMA proposes to 
define the term ``amount in dispute'' because applicants seeking 
arbitration must state an amount in dispute as a prerequisite for the 
arbitration portion of proposed 44 CFR 206.206.
    A Project is a logical grouping of work required as a result of the 
declared major disaster or emergency. The scope of work and cost 
estimate for a project are documented on a PW. 44 CFR 206.201(k). 
Applicants and recipients cannot combine PWs together in order to 
obtain eligibility. FEMA makes PA determinations at the PW level.
    Facility means any publicly or privately owned building, works, 
system, or equipment, built or manufactured, or an improved and 
maintained natural feature. Land used for agricultural purposes is not 
a facility. 44 CFR 206.201(c). FEMA must consider the amount in dispute 
at the PW level, rather than by facility (as one PW could encompass 
multiple facilities) or by appeal (which could consolidate multiple 
PWs, thereby increasing the amount in dispute).
    Applicant. FEMA proposes to define the term ``Applicant'' to refer 
to the definition at 206.201(a) for the sake of consistency within the 
program.
    Final agency determination. FEMA proposes to define the term 
``Final agency determination'' to mean the decision of FEMA, if the 
applicant or recipient does not submit a first appeal within the time 
limits provided for in paragraph (b)(1)(ii)(A) of proposed Sec.  
206.206; or the decision of FEMA, if the applicant or recipient 
withdraws the pending appeal and does not file a

[[Page 53728]]

request for arbitration within 30 calendar days of the withdrawal of 
the pending appeal; or the decision of the FEMA Regional Administrator, 
if the applicant or recipient does not submit a second appeal within 
the time limits provided for in paragraph (b)(2)(ii)(A) of proposed 
Sec.  206.206. This term was introduced by the DRRA amendments to 42 
U.S.C. 5189a(d)(5)(B) and requires a definition.
    The purpose of the proposed definition is to clearly state when a 
FEMA determination is final and thus no longer ripe for any additional 
review through FEMA's administrative appeal process or arbitration 
under the DRRA. Using ``final agency determination'' to replace the 
current term ``final administrative decision,'' used in Sec.  
206.206(e)(3), will align FEMA's regulation with the language 
introduced by the DRRA amendments at 42 U.S.C. 5189a(d)(5)(B).
    Recipient. FEMA proposes to define the term ``Recipient'' to refer 
to the definition at Sec.  206.201(m) for the sake of consistency 
within the program.
    Rural area. FEMA proposes to define the term ``Rural area'' to mean 
an area with a population of less than 200,000 outside an urbanized 
area. As amended by the DRRA, 42 U.S.C. 5189a(d)(4) defines this term.
    FEMA makes PA determinations at the PW level. Therefore, 
considerations of the amount in dispute and rural/urban status must be 
done at the PW level, rather than by facility (as one PW could 
encompass multiple facilities) or by appeal (which could consolidate 
multiple PWs. If a PW encompasses multiple facilities, and those 
facilities happen to be in both rural and urbanized areas, then FEMA 
will consider the entire PW as ``rural.''
    Urbanized area. FEMA proposes to define the term ``Urbanized area'' 
to mean the area as identified by the United States Census Bureau. The 
Census Bureau defines an ``urbanized area'' as an area that consists of 
densely settled territory that contains 50,000 or more people.\8\ The 
DRRA amendments to 42 U.S.C. 5189a(d)(4) introduced this term and it 
requires a definition. FEMA proposes to defer to the Census Bureau 
definition, which meets FEMA's needs for determining eligibility for an 
arbitration.
---------------------------------------------------------------------------

    \8\ See ``Qualifying Urban Areas for the 2010 Census, 77 FR 
18651, Mar. 27, 2012.
---------------------------------------------------------------------------

B. Appeals and Arbitrations (Proposed 44 CFR 206.206(b) Introductory 
Paragraph)

    For the introductory paragraph of Sec.  206.206(b), FEMA proposes 
to state that an eligible applicant or recipient may appeal or an 
eligible applicant may arbitrate any determination previously made 
related to an application for or the provision of Public Assistance 
according to the procedures of proposed Sec.  206.206. This language is 
similar to the current regulation at Sec.  206.206 introductory 
paragraph. FEMA proposes changing '' applicant, subrecipient, or 
recipient'' to ``applicant or recipient'' since the definition of 
applicant at Sec.  206.201(a) includes subrecipient. FEMA proposes 
changing ``Federal assistance'' to ``Public Assistance'' to clarify 
that appeal and arbitration procedures only apply to Public Assistance. 
Additionally, FEMA proposes to add ``or an eligible applicant may 
arbitrate'' to the proposed Sec.  206.206(b) introductory paragraph, 
since the current Sec.  206.206 only discusses an appeal and 42 U.S.C. 
5189a requires applicants to have the choice to either request an 
arbitration or a second appeal. FEMA also proposes to replace 
``procedures below'' with ``procedures of this section'' for clarity.

C. First Appeal (Proposed 44 CFR 206.206(b)(1))

    In the introductory paragraph of proposed paragraph (b)(1), FEMA 
states that the applicant must make a first appeal in writing and 
submit it electronically through the recipient to the Regional 
Administrator. The current regulation (at 44 CFR 206.206(a)) does not 
require submission electronically, but states submissions must be in 
writing. FEMA proposes this revision to the current regulation to 
accurately track the transmittal/receipt of appeals for the purposes of 
establishing deadlines for second appeal and arbitration.
    The revision removes the mandatory language that the recipient 
``shall review and evaluate'' all subrecipient appeals before 
submission to the Regional Administrator. Instead, FEMA proposes that 
the recipient must include a written recommendation on the applicant's 
appeal with the electronic submission of the applicant's first appeal 
to the Regional Administrator. To include a recommendation on the 
applicant's appeal, the recipient must review and evaluate the appeal. 
Accordingly, FEMA proposes striking the review and the evaluation 
portion of the sentence as superfluous. FEMA's proposed language 
regarding the mandatory recommendation includes electronic submission 
to the Regional Administrator. Again, the change to electronic 
submissions is to accurately track the transmittal/receipt of 
recommendations for the purposes of establishing deadlines for second 
appeals and arbitrations.
    FEMA is proposing a requirement that the recipient provide a 
recommendation on the applicant's appeal due to the recipient's grant 
management responsibilities and fiscal accountability for all PA grants 
under a major disaster declaration, including its commitment to comply 
with the applicable cost share requirement.\9\ The recipient has a 
responsibility to ensure all applicants abide by grant and cost share 
requirements, so in this capacity FEMA believes that the recipient 
should make a recommendation on the substance of the applicant's first 
appeal.
---------------------------------------------------------------------------

    \9\ All grants FEMA administers must comply with the government-
wide rules governing all Federal assistance. These rules, set out at 
2 CFR part 200, apply to FEMA awards to recipients as well as to 
subawards under the FEMA award, which a recipient, as pass-through 
entity, awards to subrecipients. These rules govern administrative 
and grants management requirements, cost principles, and audit 
requirements. FEMA Manual 205-0-1, ``Grants Management,'' as a whole 
serves to explain key requirements of 2 CFR part 200 as they pertain 
to FEMA assistance. The following regulations cover FEMA's cost 
share requirement: 44 CFR 206.36(c)(5), 206.44, and 206.203(b).
---------------------------------------------------------------------------

    The final sentence of proposed paragraph (b)(1) is currently the 
third sentence in paragraph 206.206(a), which states that the recipient 
may make recipient-related appeals to the Regional Administrator.
    In proposed paragraph (b)(1)(i), FEMA states the requirements of a 
first appeal, which must include all documented justification 
supporting the applicant or recipient's position; the specific amount 
in dispute, as applicable; and the specific provisions in Federal law, 
regulation, or policy with which the applicant or recipient believes 
the FEMA determination was inconsistent. This is consistent with the 
current regulation in Sec.  206.206(a), except that FEMA proposes to 
change ``initial action'' to ``FEMA determination.'' This change 
clarifies what the ``initial action'' actually is and aligns the 
regulation with the terminology the program now uses. As such, no 
substantive change is intended. Similarly, FEMA proposes to change 
``monetary figure in dispute'' to ``amount in dispute, as applicable'' 
so that we could use one term for both appeals and arbitrations, plus 
for clarity. Currently, FEMA allows an applicant, subrecipient, or 
recipient to appeal a provision of assistance without providing a 
monetary figure. (E.g. time extension requests, scope of work change 
requests, etc.) Therefore, FEMA has proposed ``amount in dispute, as 
applicable'' to replace the current regulations of ``monetary figure in

[[Page 53729]]

dispute.'' Also, the current regulation uses the term ``appellant'' 
instead of ``applicant or recipient'' for the requirement of specifying 
the provisions in Federal law, regulation, or policy in dispute. FEMA's 
reason for changing from ``appellant'' to ``applicant or ``recipient'' 
is for consistency in terminology and no substantive change is 
intended. Finally, in keeping with principles of transparency and plain 
language, FEMA proposes to replace ``shall'' with ``must'' in the last 
sentence of current Sec.  206.206(a) and reorganizing the last sentence 
by separating it into subparagraphs (b)(1)(i)(A) through (C).
    Proposed paragraph (b)(1)(ii) addresses time limits for first 
appeals. Under proposed paragraph (b)(1)(ii)(A), the applicant may make 
a first appeal through the recipient within 60 calendar days from the 
date of the FEMA determination that is the subject of the appeal, and 
the recipient must electronically forward to the Regional Administrator 
the applicant's first appeal with a recommendation within 120 calendar 
days from the date of the FEMA determination that is the subject of the 
appeal. FEMA proposes to change the term ``appellant'' to ``applicant'' 
for consistency in terminology; no substantive change is intended. FEMA 
also proposes to change ``after receipt of a notice of the action that 
is being appealed'' to ``from the date of the FEMA determination that 
is the subject of the appeal'' to enable FEMA to accurately track the 
transmittal/receipt of appeals.
    The proposed revision removes the mandatory language that the 
recipient ``will review'' the first appeal. In order for the recipient 
to provide a written recommendation, the recipient must review the 
appeal, so the deleted language is superfluous. FEMA proposes adding a 
requirement that the recipient forward the applicant's appeal and the 
recipient's recommendation electronically to the Regional 
Administrator. The proposed change to electronic submissions is to 
accurately track the transmittal/receipt of appeals for the purposes of 
establishing deadlines for second appeal and arbitration.
    Finally, under proposed paragraph (b)(1)(ii)(A), FEMA proposes to 
state that FEMA will deny all first appeals it receives from the 
recipient more than 120 calendar days from the date of the FEMA 
determination that is the subject of the appeal. This addition is added 
for clarity to explain what occurs if an applicant misses the deadline. 
This addition is not a new deadline. Currently, 44 CFR 206.206(c)(1) 
allows an applicant 60 days to file an appeal and paragraph 
206.206(c)(2) allows a recipient to review and forward an applicant's 
appeals along with a written recommendation within 60 days. FEMA has 
combined the two 60-day deadlines into a 120-calendar days deadline.
    Under proposed paragraph (b)(1)(ii)(B), within 90 calendar days 
following receipt of a first appeal, if there is a need for additional 
information, the Regional Administrator will provide electronic notice 
to the recipient and applicant. This is consistent with the current 
regulations, with the added requirement for electronic notification and 
simultaneous notification of the applicant. FEMA also proposes for 
clarity to state that if there is no need for additional information, 
then FEMA will not provide notification. Finally, FEMA also proposes to 
state that the Regional Administrator will generally allow the 
recipient 30 calendar days to provide any additional information. This 
is consistent with the current regulation, except that the current 
regulation does not include the 30-calendar day timeframe, but rather 
states that the Regional Administrator will include a date by which the 
information must be provided. This change is to better allow FEMA to 
issue timely determinations on first appeal. The proposed regulations, 
at (b)(1)(ii)(B) and (C), have split the current regulations into two 
paragraphs.
    Under proposed paragraph (b)(1)(ii)(C), FEMA will require the 
Regional Administrator to provide electronic notice of the disposition 
of the appeal to the applicant and recipient within 90 calendar days of 
receipt of the appeal or within 90 calendar days following the receipt 
of additional information or following expiration of the period for 
providing the information. The proposed regulations reorganize the word 
order of the current regulation and adds the following phrase ``within 
90 calendar days of receipt of the appeal'' for clarification. 
Additionally, proposed paragraph (b)(1)(ii)(C) adds the requirement to 
provide electronic notice of the disposition of the appeal, removes the 
requirement that it be ``in writing,'' and includes simultaneous 
notification of the applicant. The change to electronic submissions is 
to accurately track the transmittal/receipt of appeals for the purposes 
of establishing deadlines for second appeal and arbitration. Currently, 
FEMA may receive submissions several ways, including electronically, 
through courier delivery, and through the United States (U.S.) mail.
    Proposed paragraph (b)(1)(iii) addresses technical advice and 
states that in appeals involving highly technical issues, the Regional 
Administrator may, at his or her discretion, submit the appeal to an 
independent scientific or technical person or group having expertise in 
the subject matter of the appeal for advice or recommendation. The 
period for technical review may be in addition to other allotted time 
periods. Within 90 calendar days of the report, the Regional 
Administrator will provide electronic notice of the disposition of the 
appeal to the recipient and applicant. This is consistent with the 
current regulation at 44 CFR 206.206(d), except for the requirement to 
electronically notify the recipient and provide simultaneous notice to 
the applicant.
    FEMA proposes to add a new paragraph regarding the effect of an 
appeal in proposed paragraph (b)(1)(iv). Proposed paragraph 
(b)(1)(iv)(A) states that FEMA will take no action to implement any 
determination pending an appeal decision from the Regional 
Administrator, subject to the exceptions in paragraph (b)(1)(iv)(B) of 
proposed Sec.  206.206. This section is added to provide clarity to an 
appellant as to what actions FEMA will not take and what actions FEMA 
may take while an appeal is pending. It does not alter any current FEMA 
practices or procedures, nor does the rule limit any rights an 
appellant has regarding their appeal.
    In proposed paragraph (b)(1)(iv)(B), FEMA states that, 
notwithstanding (b)(1)(iv)(A), FEMA may suspend funding (referring to 2 
CFR 200.338); defer or disallow other claims questioned for reasons 
also disputed in the pending appeal; or take other action to recover, 
withhold, or offset funds if specifically authorized by statute or 
regulation. As stated above, this section is added to provide clarity 
to an appellant as to what actions FEMA will not take and what actions 
FEMA may take while an appeal is pending and does not alter any of 
FEMA's current practices or procedures or limit any rights an appellant 
has regarding their appeal.
    As stated in the current regulation in the final sentence of Sec.  
206.206(c)(3), if the Regional Administrator grants an appeal, the 
Regional Administrator will take appropriate implementing action(s). 
This language is now in proposed paragraph (b)(1)(v).
    In proposed paragraph (b)(1)(vi), FEMA states that FEMA may issue 
separate guidance as necessary to supplement paragraph (b)(1). This 
language arises from 44 CFR 206.209(m) and is carried over to this 
proposed regulation for consistency. Since FEMA has separated first 
appeal, second

[[Page 53730]]

appeal, and arbitration requirements into separate paragraphs for 
clarity, FEMA proposes adding a guidance subparagraph to the first and 
second appeal paragraphs for consistency. FEMA already provides 
guidance for first appeals in the Public Assistance Program and Policy 
Guide, FP-104-009-2 (April 2018). FEMA likewise provides guidance for 
staff implementing appeals procedures in Recovery Directorate Manual 
Public Assistance Program Appeal Procedures (Version 4) Approval Date: 
March 29, 2016. As such, proposed paragraph (b)(1)(vi) will not alter 
current practice.

D. Second Appeal (Proposed 44 CFR 206.206(b)(2))

    The introductory paragraph to proposed Sec.  206.206(b)(2) states 
that if the Regional Administrator denies a first appeal in whole or in 
part, the applicant may make a second appeal in writing and submit it 
electronically through the recipient to the Assistant Administrator for 
the Recovery Directorate. This is consistent with the current 
regulation, except for the addition of the requirement to submit 
electronically. This requirement ensures the accurate and clear 
tracking of transmittal dates of appeals for the purposes of 
establishing deadlines for arbitrations. In addition, the current 
regulation refers to the ``Assistant Administrator for the Disaster 
Assistance Directorate.'' The title of this position is now the 
``Assistant Administrator for the Recovery Directorate;'' the proposed 
regulation reflects this new title.
    The second to last sentence under the introductory paragraph to 
proposed Sec.  206.206(b)(2) states that the recipient must include a 
written recommendation on the applicant's appeal with the electronic 
submission of the applicant's second appeal to the Assistant 
Administrator for the Recovery Directorate. This is consistent with 
FEMA's current implementation of Sec.  206.206(c)(2). FEMA's proposed 
language regarding the mandatory recommendation includes electronic 
submission to the Assistant Administrator for the Recovery Directorate. 
Again, the change to electronic submissions is to accurately track the 
transmittal/receipt of recommendations for the purposes of establishing 
deadlines.
    The last sentence under the introductory paragraph to proposed 
Sec.  206.206(b)(2) states that the recipient may make recipient-
related second appeals to the Assistant Administrator for the Recovery 
Directorate. This is consistent with the current third sentence in 
paragraph 206.206(a) that the recipient may make recipient-related 
appeals to the Regional Administrator.
    In proposed paragraph (b)(2)(i), FEMA states the requirements of a 
second appeal, which must include all documented justification 
supporting the applicant or recipient's position; the specific amount 
in dispute, as applicable; and the specific provisions in Federal law, 
regulation, or policy with which the applicant or recipient believes 
the FEMA determination was inconsistent. This is consistent with the 
current regulation, with the substitution of ``FEMA determination'' for 
``initial action'' and ``appellant'' for ``applicant or recipient'' for 
clarity as described above.
    Also consistent with the proposed paragraph (b)(1)(i) described 
above, FEMA proposes replacing ``monetary figure in dispute'' with 
``amount in dispute, as applicable,'' since FEMA allows an applicant or 
recipient to appeal a FEMA determination that does not concern a 
monetary figure. Additionally, FEMA proposes again to change 
``appellant'' to ``applicant or recipient'' in this paragraph for 
consistency of terminology, and replacing ``shall'' with ``must'' for 
purposes of plain language. FEMA finally proposes reorganizing the last 
sentence by separating it into subparagraphs (b)(2)(i)(A)-(b)(2)(i)(C).
    Proposed paragraph (b)(2)(ii) addresses time limits for second 
appeals. Under proposed paragraph (b)(2)(ii)(A), if the Regional 
Administrator denies a first appeal in whole or in part, the applicant 
may make a second appeal through the recipient within 60 calendar days 
from the date of the Regional Administrator's first appeal decision and 
the recipient must electronically forward to the Assistant 
Administrator for the Recovery Directorate the applicant's second 
appeal with a recommendation within 120 calendar days from the date of 
the Regional Administrator's first appeal decision. FEMA will deny all 
second appeals it receives from the recipient more than 120 calendar 
days from the date of the Regional Administrator's first appeal 
decision. This proposed language allows the recipient the same level of 
review and involvement in the second appeal process as they have with 
the first appeals process, which is consistent with how FEMA currently 
implements Sec.  206.206, and emphasizes that FEMA will deny all second 
appeals it receives from the recipient more than 120 calendar days from 
the date of the Regional Administrator's first appeal decision. This 
addition is not a new deadline. Currently, 44 CFR 206.206(c)(1) allows 
an applicant 60 days to file an appeal and paragraph 206.206(c)(2) 
allows a recipient to review and forward an applicant's appeals along 
with a written recommendation within 60 days. FEMA has combined the two 
60-day deadlines into a 120-calendar day deadline.
    Proposed paragraph (b)(2)(ii)(B) states that within 90 calendar 
days following receipt of a second appeal, if there is a need for 
additional information, the Assistant Administrator for the Recovery 
Directorate will provide electronic notice to the recipient and 
applicant. If there is no need for additional information, then FEMA 
will not provide notification. The Assistant Administrator for the 
Recovery Directorate will generally allow the recipient 30 calendar 
days to provide any additional information. This is consistent with the 
current regulation, except that the current regulation does not include 
the 30-calendar day time limit or simultaneous notification of the 
applicant.
    Proposed paragraph (b)(2)(ii)(C) states that the Assistant 
Administrator for the Recovery Directorate will provide electronic 
notice of the disposition of the appeal to the recipient and applicant 
within 90 calendar days of receipt of the appeal or within 90 calendar 
days following the receipt of additional information or following 
expiration of the period for providing the information. This is 
consistent with the current regulations except for the requirement that 
the notice be provided electronically, and the simultaneous 
notification of the applicant. Again, the change to electronic 
submission is to accurately track the transmittal/receipt.
    Proposed paragraph (b)(2)(iii) states that in appeals involving 
highly technical issues, the Assistant Administrator for the Recovery 
Directorate may, at his or her discretion, submit the appeal to an 
independent scientific or technical person or group having expertise in 
the subject matter of the appeal for advice or recommendation. The 
paragraph further states that the period for this technical review may 
be in addition to other allotted time periods and within 90 calendar 
days of receipt of the report, the Assistant Administrator for the 
Recovery Directorate will provide electronic notice of the disposition 
of the appeal to the recipient and applicant. Proposed paragraph 
(b)(2)(iii) has been added to this section to be consistent with 
proposed paragraph (b)(1)(iii), which mirrors this section for first 
appeals.
    Proposed paragraph (b)(2)(iv) addresses the effect of an appeal and 
has

[[Page 53731]]

been added to this section to be consistent with the proposed paragraph 
in (b)(1)(iv), which mirrors this section for first appeals.
    Proposed paragraph (b)(2)(v) states that if the Assistant 
Administrator for the Recovery Directorate grants an appeal, the 
Assistant Administrator for the Recovery Directorate will direct the 
Regional Administrator to take appropriate implementing action(s). 
Proposed paragraph (b)(2)(v) has been added to this section for 
consistency with the proposed paragraph in (b)(1)(v), which mirrors 
this section for first appeals.
    Proposed paragraph (b)(2)(vi) addresses guidance and has been added 
to this section for consistency with the proposed paragraph (b)(1)(vi), 
which mirrors this section for first appeals.

E. Arbitration (Proposed 44 CFR 206.206(b)(3))

    Proposed paragraph 206.206(b)(3)(i) states that an applicant may 
request arbitration from the CBCA if there is a disputed agency 
determination arising from a major disaster declared on or after 
January 1, 2016. This is consistent with the requirements set forth in 
42 U.S.C. 5189a(d), as amended by Section 1219 of the DRRA. The 
proposed paragraph sets forth additional requirements for eligibility 
to request arbitration, stating in (b)(3)(i)(B) that the amount in 
dispute is greater than $500,000, or greater than $100,000 for an 
applicant for assistance in a rural area; and in (b)(3)(i)(C) that the 
Regional Administrator has either denied a first appeal decision or 
received a first appeal but not rendered a decision within 180 calendar 
days of receipt. These eligibility requirements are consistent with the 
requirements set forth in 42 U.S.C. 5189a(d). FEMA added proposed 
paragraph (b)(3)(ii) to clarify that arbitration is in lieu of a second 
appeal. The proposed regulatory text clarifies that an applicant cannot 
submit a second appeal after requesting arbitration.
    Proposed paragraph 206.206(b)(3)(iii) details how applicants may 
request arbitration. Proposed paragraph 206.206(b)(3)(iii)(A) states 
that an applicant may initiate arbitration by submitting an electronic 
request simultaneously to the recipient, CBCA, and FEMA. See 48 CFR 
part 6106 (CBCA's ``Rules of Procedure for Arbitration of PA 
Eligibility or Repayment''). Proposed paragraph 
206.206(b)(3)(iii)(B)(1) states that an applicant must submit a request 
for arbitration within 60 calendar days from the date of the Regional 
Administrator's first appeal decision. This proposed rule is consistent 
with 42 U.S.C. 5189a(d)(5)(A).
    FEMA is proposing in paragraph 206.206(b)(3)(iii)(B)(1) a 60 
calendar day deadline for submission of requests for arbitration. FEMA 
is proposing 60 calendar days to be consistent with the submission time 
limits for second appeals.
    Proposed paragraph 206.206(b)(3)(iii)(B)(2) provides that if the 
first appeal was timely submitted, and the Regional Administrator has 
not rendered a decision within 180 calendar days of receiving the 
appeal, an applicant may electronically submit a withdrawal of the 
pending appeal simultaneously to the recipient, the FEMA Regional 
Administrator, and the CBCA. The applicant may then submit a request 
for arbitration within 30 calendar days from the date of the withdrawal 
of the pending appeal. This proposed language describes the right to 
arbitration consistent with 42 U.S.C. 5189a(d)(5)(A) and adds a 30-day 
deadline to ensure that applicants make requests for arbitration 
promptly. Since the applicant will have already received 60 calendar 
days when they initially filed their appeal, FEMA believes that 
allowing 30 calendar days to request arbitration following withdrawal 
of their appeal is a sufficient submission period. If the applicant 
does not request arbitration within 30 calendar days after withdrawing 
their pending appeal, then the decision of FEMA becomes the final 
agency determination.
    Proposed paragraph 206.206(b)(3)(iii)(C) states that the request 
for arbitration must contain a written statement that specifies the 
amount in dispute, all documentation supporting the position of the 
applicant, the disaster number, and the name and address of the 
applicant's authorized representative or counsel. This rule is 
consistent with 42 U.S.C. 5189a(d)(5)(A), which refers to the 
arbitration process established under the authority of section 601 of 
ARRA codified at 44 CFR 206.209.\10\
---------------------------------------------------------------------------

    \10\ American Recovery and Reinvestment Act of 2009, Public Law 
111-5, 123 Stat. 115 (Feb. 17, 2009), 26 U.S.C. 1 note.
---------------------------------------------------------------------------

    Proposed paragraph 206.206(b)(3)(iv) states that expenses for each 
party will be paid by the party who incurred the expense. This is 
consistent with 42 U.S.C. 5189a(d)(5)(A). Since 42 U.S.C. 5189a(d)(1) 
requires the Civilian Board of Contract Appeals to conduct 
arbitrations, CBCA's regulations state that the CBCA arbitrates at no 
cost to the parties. (See 48 CFR 6106.606.)
    Proposed paragraph 206.206(b)(3)(v) states that FEMA may issue 
separate guidance as necessary to supplement paragraph (b)(3). This 
proposed rule is consistent with 42 U.S.C. 5189a(d)(5)(A) and directly 
corresponds to language contained in 44 CFR 206.209(m).

F. Finality of Decision (Proposed 44 CFR 206.206(c))

    Proposed paragraph 206.206(c) states that a FEMA final agency 
determination or a decision of the Assistant Administrator for the 
Recovery Directorate on a second appeal constitutes a final decision of 
FEMA. In the alternative, a decision of the majority of the CBCA panel 
constitutes a final decision, binding on all parties. See 48 CFR 
6106.613. (CBCA's Decision; finality regulation.) Final decisions are 
not subject to further administrative review. This is consistent with 
the provision in 42 U.S.C. 5189a(d)(1) that CBCA decisions are binding. 
The purpose of this paragraph is to clarify that an applicant cannot 
appeal, arbitrate, or pursue any administrative remedy for any matter 
for which FEMA has issued a final agency determination or a second 
appeal decision; or regarding which the CBCA has issued an arbitration 
decision.

G. Removal of Current 44 CFR 206.206(e), Transition

    FEMA proposes removing current paragraphs 206.206(e)(1) and (2) as 
they are no longer necessary for this section. FEMA proposes removing 
current paragraph 206.206(e)(3) because FEMA proposes defining ``final 
agency determination'' in Sec.  206.206(a). Using the proposed term 
``final agency determination'' to replace the current term ``final 
administrative decision,'' used in Sec.  206.206(e)(3), will align 
FEMA's regulation with the language introduced by Congress in 42 U.S.C. 
5189a(d)(5)(B), offering consistency with the statute.

IV. Regulatory and Statutory Analyses

A. Executive Order 12866, as Amended, Regulatory Planning and Review, 
Executive Order 13563, Improving Regulation and Regulatory Review; and 
Executive Order 13771, Reducing Regulation and Controlling Regulatory 
Costs

    Executive Orders 12866 (``Regulatory Planning and Review'') and 
13563 (``Improving Regulation and Regulatory Review'') direct agencies 
to assess the costs and benefits of available regulatory alternatives 
and, if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety

[[Page 53732]]

effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
Executive Order 13771 (``Reducing Regulation and Controlling Regulatory 
Costs'') directs agencies to reduce regulation and control regulatory 
costs and provides that ``for every one new regulation issued, at least 
two prior regulations be identified for elimination, and that the cost 
of planned regulations be prudently managed and controlled through a 
budgeting process.''
    The Office of Management and Budget (OMB) has designated this rule 
as a non-significant regulatory action, under section 3(f) of Executive 
Order 12866. Accordingly, OMB has not reviewed it. Due to this non-
significant determination, this rule is also exempt from the 
requirements of Executive Order 13771. See the OMB Memorandum titled 
``Guidance Implementing Executive Order 13771, titled `Reducing 
Regulation and Controlling Regulatory Costs' '' (April 5, 2017.)
    FEMA is proposing this rule to implement a new right of arbitration 
authorized by DRRA, and to revise its regulations regarding first and 
second PA appeals.
    FEMA's PA Program provides Federal grant assistance to government 
organizations and eligible private nonprofit (PNP) organizations 
following a Presidential disaster declaration. The PA Program is 
administered through a coordinated effort between FEMA, States, or 
federally recognized Tribes and local governments or eligible PNPs 
(subrecipients).
Need for Regulatory Action
    Under current regulations, when FEMA determines that an applicant 
or recipient is ineligible for PA funding, or if the applicant or 
recipient disputes the amount awarded, FEMA has implemented a process 
to appeal the decision. First, the applicant or recipient can appeal to 
the FEMA Regional Administrator. If the applicant or recipient does not 
submit a second appeal within 60 days, the result of the first appeal 
is the final agency determination. If the applicant or recipient is not 
satisfied with the result of the first appeal, they can submit a second 
appeal to the FEMA Assistant Administrator for the Recovery 
Directorate. The result of the second appeal is a final decision of 
FEMA.
    FEMA is proposing in this rule to implement provisions for 
arbitration in lieu of a second appeal, or in cases where an applicant 
has had a first appeal pending with FEMA for more than 180 calendar 
days. Applicants choosing arbitration would have their case heard by a 
panel of judges with the CBCA. A decision by the majority of the CBCA 
panel constitutes a final decision that would be binding on all 
parties. Final decisions would not be subject to further administrative 
review.
    Pursuant to 42 U.S.C. 5189a, as amended by section 1219 of the 
DRRA, to request arbitration, an applicant (1) must have a dispute 
arising from a disaster declared after January 1, 2016; (2) must be 
disputing an amount that exceeds $500,000 (or $100,000 for an applicant 
in a ``rural area'' with a population of less than 200,000 and outside 
of an urbanized area); and, (3) must have submitted a first appeal and 
has either received a denial of the first appeal or has not received a 
decision after 180 calendar days.
    This proposed rule would directly affect applicants or recipients 
disputing FEMA PA eligibility determinations or disputing the amount 
awarded for PA projects. Applicants would be required to submit appeals 
through their State, or in the case of a Tribal declaration,\11\ their 
Tribal government (recipients). The recipient would then forward the 
request to the FEMA Regional Administrator, along with a recommendation 
for a first appeal.
---------------------------------------------------------------------------

    \11\ Tribes may choose to apply for PA independently as a 
recipient (tribal declaration) or may submit through their State as 
a subrecipient.
---------------------------------------------------------------------------

    If an applicant has not received a decision on their first appeal 
after 180 days and meets the other two previously-outlined criteria, 
they may withdraw the first appeal and request arbitration. 
Alternatively, if the applicant does not agree with the Regional 
Administrator's decision on the first appeal, they may either submit a 
second appeal to the FEMA Assistant Administrator for the Recovery 
Directorate or request arbitration. A panel of judges with the CBCA 
would hear any arbitration cases. The applicant would send a 
representative and possibly expert witnesses to the arbitration 
hearing. The recipient would also send a representative to support the 
applicant. FEMA representatives and expert witnesses would also attend 
the hearing to defend FEMA's determination.
    The proposed rule would codify regulations for the appeals and 
arbitration process as directed by 42 U.S.C. 5189a(d)(5). Applicants 
are eligible for arbitration for disputes arising from major disasters 
declared on or after January 1, 2016. This process is already 
available, and eligible applicants have been notified of this 
option.\12\
---------------------------------------------------------------------------

    \12\ On December 18, 2018, FEMA implemented section 1219 of DRRA 
by posting a Fact Sheet on its website. After CBCA published their 
March 5, 2019 proposed rule, see 84 FR 7861, FEMA updated the: 
Section 1219 Public Assistance Appeals and Arbitration Fact Sheet 
(3-27-19). A link to the current Fact Sheet: https://www.fema.gov/media-library/assets/documents/175821. Accessed May 15, 2020.
---------------------------------------------------------------------------

    As amended by Section 1219 of the DRRA, 42 U.S.C. 5189a(d) names 
the CBCA as the entity responsible for conducting these arbitrations. 
The CBCA has promulgated regulations at 48 CFR part 6106 establishing 
its arbitration procedures for such purpose.
    FEMA is proposing in paragraph 206.206(b)(3)(iii)(B) a 60 calendar 
day deadline for submitting requests for arbitration. FEMA is proposing 
this as FEMA does not want different submission time limits for second 
appeals and arbitrations. Rather, FEMA believes that there should be 
consistency between the time to request arbitration and the time to 
submit second appeals for administrative ease and to reduce potential 
confusion amongst applicants.
Affected Population
    The proposed rule would affect PA applicants arising from major 
disaster declarations. Specifically, applicants that (1) submitted a 
first appeal and received a negative decision, or, (2) have a first 
appeal pending for more than 180 days and wish to withdraw the appeal 
in favor of arbitration. Applicants may only request arbitration for 
disputes in excess of $500,000, or $100,000 in rural areas, and for 
disputes that arise from major disasters declared on or after January 
1, 2016.
Summary of Regulatory Changes
    FEMA proposes to revise its current PA appeals regulation at 44 CFR 
206.206 to add in the new right to arbitration under DRRA, in 
conjunction with some revisions to the current appeals process. DRRA 
adds arbitration as a permanent alternative to a second appeal under 
the PA Program, or for applicants that have had a first appeal pending 
with FEMA for more than 180 calendar days that may withdraw such appeal 
and submit a request for arbitration, provided the dispute is in excess 
of $500,000, or $100,000 in rural areas, and for disputes that arise 
from major disasters declared on or after January 1, 2016. The other 
major proposed revisions to 44 CFR 206.206 include adding definitions; 
adding subparagraphs to clarify what actions FEMA may take and will not 
take while

[[Page 53733]]

an appeal is pending and state that FEMA may issue separate guidance as 
necessary, similar to current 44 CFR 206.209(m); adding a finality of 
decision paragraph; requiring electronic submission for appeals and 
arbitrations documents; and clarifying overall time limits for first 
and second appeals.
Assumptions
    This analysis uses the following assumptions:
     All monetary values are presented in 2018 dollars. FEMA 
used the Bureau of Labor Statistics (BLS) Consumer Price Index for All 
Urban Consumers (CPI-U): U.S. city average, all items, by month, Annual 
Average as published May 2019.\13\
---------------------------------------------------------------------------

    \13\ Accessed and downloaded June 17, 2019. https://www.bls.gov/cpi/tables/supplemental-files/historical-cpi-u-201905.pdf.
---------------------------------------------------------------------------

     This proposed rule does not apply to emergency disaster 
declarations. Thus, FEMA only included major disaster declarations in 
this analysis.
     FEMA assumes the length of time for an arbitration case is 
based on the hearing location.
     FEMA used 2018 wage rates for all parties involved in 
arbitration cases.
Baseline
    Following guidance in OMB Circular A-4, FEMA assesses the impacts 
of this proposed rule against a pre-statutory baseline. The pre-
statutory baseline is an assessment of what the world would look like 
if the relevant statute(s) had not been adopted. In this instance, FEMA 
has been accepting arbitration cases since the implementation of DRRA, 
and retroactive to January 1, 2016. Since the statute has already been 
implemented and because this rule is not making additional substantive 
changes, the rule has no cost or benefits related to the new right of 
arbitration. The benefit of this rule is making information publicly 
available in the CFR for transparency and to prevent any confusion on 
the most up-to-date arbitration process.
    Currently, FEMA has no permanent regulations for arbitrations 
outside of Hurricanes Katrina and Rita. Since the passage of the DRRA, 
certain PA applicants under declarations since January 1, 2016 may 
request arbitration pursuant to 42 U.S.C. 5189a(d). On June 21, 2019, 
CBCA published a final rule (see 84 FR 29085) and FEMA has published a 
corresponding fact sheet. Between January 1, 2016 and May 7, 2020, FEMA 
received 15 \14\ requests for arbitration. Five of these cases are 
still in progress, so FEMA does not have available data on the outcome 
of these cases. Of the 10 closed cases, FEMA prevailed in 6 cases, the 
applicant prevailed in 3 cases, and the applicant withdrew from the 
arbitration process prior to a decision in 1 case. Of the four cases 
involving PNPs, FEMA prevailed in three cases and the applicant 
prevailed in one case. These figures will continue to change as FEMA 
continues to receive arbitration requests.
---------------------------------------------------------------------------

    \14\ The number of arbitration requests was provided by FEMA's 
Office of Chief Counsel Disaster Disputes Branch as of May 7, 2020.
---------------------------------------------------------------------------

    While arbitration is available for disaster declarations 
retroactive to January 1, 2016, the process did not become available to 
applicants until FEMA published guidance in December 2018, and FEMA did 
not begin receiving arbitration requests until March 7, 2019. This 
means that FEMA only has 14 months of historical data, and therefore, 
FEMA also relies on older arbitration regulations as a proxy for the 
expected number of arbitration cases arising out of this proposed rule.
    FEMA previously had regulations permitting arbitrations arising 
from disaster declarations for Superstorm Sandy. No applicants 
requested arbitration pursuant to these regulations. The authority for 
these arbitrations has sunset and FEMA has since removed the 
regulations. FEMA has regulations, at 44 CFR 206.209, permitting 
arbitrations arising from disaster declarations for Hurricanes Katrina 
and Rita. This regulation is only available for PA applicants under 
Hurricane Katrina and Rita disaster declarations. The number of 
arbitrations submitted under this authority and the process relied on 
to conduct these arbitrations provide insight to project the number of 
arbitration cases in this proposed rule. While the Katrina/Rita 
arbitration regulations have some key differences from the proposed 
regulations, such as time frames and allowing applicants to request 
arbitration in lieu of first appeals, it is the best historical data 
that FEMA has available to estimate the number of expected arbitration 
cases for this proposed rule.
    FEMA recognizes that the regulations at 44 CFR 206.209 have a 30 
day time limit for submitting arbitration requests; whereas, FEMA is 
proposing a 60 calendar-day time limit for arbitrations under this 
proposed rule. FEMA does not know the impact that these additional 30 
days may have on the number of arbitrations submitted.
Number of Potential Arbitration Cases
    In addition to reviewing the limited historical data available on 
the 15 arbitration cases, FEMA also examined the number of arbitrations 
submitted from the Hurricane Katrina and Rita disasters pursuant to 44 
CFR 206.209, in lieu of filing a first appeal, from 2009 through 2017 
to derive an estimate on the number of arbitration cases that 
applicants might submit per year pursuant to 42 U.S.C. 5189a(d). 
Pursuant to 42 U.S.C. 5189(d)(5)(A), arbitrations authorized by the 
DRRA must follow the process established in 44 CFR 206.209 for Katrina 
and Rita arbitrations, so FEMA relied on the annual average percentage 
of cases submitted under this regulation as a basis for estimating the 
number of cases that would arise for this proposed rule. The authority 
to arbitrate in lieu of filing a first appeal for Hurricanes Katrina 
and Rita became available in February 2009 and 2017 is the latest 
calendar year where complete data was available at the time of this 
analysis. Applicants could arbitrate in lieu of a first appeal only if 
the amount of the project was greater than $500,000.\15\ During this 
period, applicants submitted a total of 75 arbitrations and a total 290 
first appeals.\16\ From this available data, applicants chose 
arbitration in lieu of a first appeal 26 percent of the time ((75 / 
290) x 100 = approximately 26 percent).
---------------------------------------------------------------------------

    \15\ Please note that arbitration cases for Hurricanes Katrina 
and Rita are not bound by a threshold for rural areas as is proposed 
by this rule. FEMA does not know if this limitation would result in 
more or less cases filed.
    \16\ Data on appeals and arbitrations is provided by FEMA's 
Office of Chief Counsel Disaster Disputes Branch. Not all of these 
first appeals would have been eligible for arbitration. To be 
eligible for arbitration, the amount in dispute would have had to 
have been greater than $500,000. FEMA does not have amount in 
dispute data available for these cases, so the arbitration 
percentage may be overstated.
---------------------------------------------------------------------------

    Pursuant to 42 U.S.C. 5189(d)(5)(B), arbitration is authorized by 
the DRRA in lieu of a second appeal where the dispute is more $500,000, 
or $100,000 for rural areas. For second appeals estimates, FEMA looked 
at all PA appeals from 2009 through 2017, rather than just the appeals 
resulting from Hurricanes Katrina and Rita since a second appeal was 
available to all applicants. FEMA found that there were 801 \17\ second 
appeals submitted. Of that total, FEMA had data on the amount in 
dispute for 559 appeals. FEMA applied the proposed urban/rural and 
minimum

[[Page 53734]]

project amount requirements to these appeals and found that 261 or 47 
percent would have been eligible for arbitration under this proposed 
rule \18\ ((261/ 559) x 100 = approximately 47 percent).
---------------------------------------------------------------------------

    \17\ During the period of 2009-2017, 801 second level appeals 
were submitted. FEMA has amount in dispute data for 559 cases. The 
amount in dispute for 242 cases was not available. FEMA does not 
have the amount in dispute data on the 242 cases because FEMA did 
not maintain electronic records for appeals prior to 2015. Prior to 
2015, this data was manually entered into a database with many 
fields left blank. Therefore, the percentages used for estimates for 
this proposed rule are based on a total of 559 cases.
    \18\ Out of 559 cases, 166 had an amount in dispute greater than 
$500,000 and would be eligible regardless of the urban/rural 
classification. 193 cases were for amounts between $100,000 and 
$500,000, of which 95 were classified as rural. 261 (166 + 95 = 261) 
cases out of 559, or 47 percent would have met the eligibility 
requirements for arbitration in lieu of a second appeal.
---------------------------------------------------------------------------

    FEMA then applied the arbitration rate of 47 percent from the 
Katrina and Rita arbitrations to the number of second appeals that 
would have been eligible under this proposed rule, by year, from 2009 
to 2017 as shown in Table 1.

                     Table 1--Total and Annual Average Estimated Arbitration Cases per Year
----------------------------------------------------------------------------------------------------------------
                                                                                                     Expected
                                                    Number of        Percent          Percent        number of
                       CY                        second appeals   eligible under     choosing       arbitration
                                                                  proposed rule     arbitration        cases
----------------------------------------------------------------------------------------------------------------
2009...........................................             122               47              26              15
2010...........................................              92               47              26              11
2011...........................................             107               47              26              13
2012...........................................              93               47              26              11
2013...........................................             102               47              26              12
2014...........................................              82               47              26              10
2015...........................................              43               47              26               5
2016...........................................              83               47              26              10
2017...........................................              77               47              26               9
                                                ----------------------------------------------------------------
    Total......................................             801  ...............  ..............              96
                                                ----------------------------------------------------------------
    Average....................................              89  ...............  ..............              11
----------------------------------------------------------------------------------------------------------------

    Based on historical data from 2009 through 2017 and case data from 
44 CFR 206.209, FEMA estimates that there would be an average of 11 
arbitration cases in lieu of a second appeal per year under the 
proposed rule.
    The option to withdraw a first appeal and request arbitration was 
not available under 44 CFR 206.209, so FEMA could not use this 
historical data \19\ to estimate the number of arbitration cases after 
a first appeal withdrawal. However, arbitration has been available 
under 42 U.S.C. 5189a(d)(5) since January 1, 2016. So far, 15 cases 
were submitted, with two submitted for a first appeal lasting more than 
180 days. Based on this limited data, FEMA estimates that 13.3 percent 
of arbitration cases would result from a withdrawal of a first appeal. 
((2 / 15) x 100 = 13.3 percent). Applying the 13.3 percent rate to the 
annual average number of expected arbitration cases would result in one 
additional arbitration case per year (13.3 percent x 11 cases = 1.46, 
rounded to one case). Therefore, FEMA estimates an average of 12 
arbitration cases per year (11 + 1 = 12 arbitrations per year).
---------------------------------------------------------------------------

    \19\ Out of 3,778 first appeals between 2009 and 2017, 1,834 or 
49 percent lasted longer than 180 days. ((1,834 / 3,778) x 100 = 49 
percent).
---------------------------------------------------------------------------

Costs
    Based on experience from the arbitrations conducted for Hurricanes 
Katrina and Rita, costs from this proposed rule would arise mainly from 
travel expenses; opportunity costs of time for the applicant and 
applicant's representatives, recipient's representatives, and FEMA's 
representatives; and contract costs for applicants and FEMA to retain 
legal counsel and experts. Cost estimates are based on the expected 
number of arbitration cases per year. Since FEMA does not reimburse for 
applicant arbitration expenses, FEMA does not have data on the expenses 
incurred by applicants who have arbitrated from Hurricanes Katrina and 
Rita to serve as a proxy for this proposed rule. Other provisions of 
the proposed rule, such as timeframe requirements, electronic filing 
requirements, technical advice and clarifications would not have 
associated costs. FEMA does not expect the electronic filing 
requirement to have associated costs since nearly all applicants have 
access to internet and email, and most submit arbitration requests 
through their attorneys. The proposed timeframe requirements would 
align the submission deadlines for arbitration and appeals and would 
not place additional burdens on the applicants. FEMA currently provides 
technical advice as needed, so this would not be a new practice under 
this proposed rule.
    The arbitration process is highly customizable for the applicant. 
The applicant may choose to use an attorney, or several attorneys to 
represent them during the arbitration process. The applicant may also 
choose not to hire legal representation at all. Additionally, the 
applicant may use any number of expert witnesses or none. Because of 
the variability in the way arbitrations are conducted, FEMA is 
presenting what it considers a typical case upon which to base its cost 
estimates. This ``typical case'' is based on recent experience with the 
15 arbitration already cases filed. Generally, the applicant will use 
one or two attorneys and at least one expert witness. However, the 
arbitration process is extremely flexible, and an applicant can use 
whatever resources it thinks would be most appropriate for its case. 
For example, in one case, the applicant hired several non-local 
attorneys for representation. In another case, the arbitration was 
conducted via written reports only, and no hearing was conducted.
    Costs to the CBCA are not discussed in this analysis. CBCA 
promulgated their own regulations regarding their procedures for FEMA 
arbitration cases. Under DRRA, CBCA will be responsible for covering 
the costs of conducting arbitration hearings. All other parties 
including the applicant, the recipient, and FEMA would be responsible 
for covering their own expenses. The proposed rule does not mandate any 
costs for the applicant or recipient. The arbitration process would be 
entirely voluntary on the part of the applicant. Applicants would 
choose to request arbitration, if they determine that the cost of 
arbitration is justified by the potential benefits.

[[Page 53735]]

    This analysis estimates a range of potential costs based on the 
applicant's or recipient's use of attorneys for representation. The 
proposed rule would not require attorneys to represent any party for 
arbitration. However, FEMA would be represented by attorneys at any 
arbitration hearing.
    The costs to the applicant, recipient, and FEMA would be due to 
travel and opportunity cost of time and contract costs for legal 
counsel and experts. To estimate the opportunity cost of time, FEMA 
assumed that each case would take each party 46.5 hours \20\ (rounded 
to 47 hours) to prepare for the hearing, attend the hearing, and for 
post hearing work. Hearings have historically lasted two working days, 
or 16 hours.\21\ Additional time would be required for travel as is 
discussed later in this analysis. FEMA also assumes that each party 
would make use of expert witnesses in support of their case. 
Additionally, FEMA generally pays for a court reporter.
---------------------------------------------------------------------------

    \20\ Based on information provided by FEMA Office of Chief 
Counsel Disaster Disputes Branch.
    \21\ Based on information provided by FEMA Office of Chief 
Counsel Disaster Disputes Branch.
---------------------------------------------------------------------------

Opportunity Cost of Time
    A typical arbitration request requires the work of several people, 
including lawyers to represent the applicants, a court reporter to take 
a transcript of the hearing, and State, local, Tribal, or PNP managers 
who are responsible for compiling and submitting the original PA 
request. Applicants will also typically supply expert witnesses when 
making their case to the CBCA panel. FEMA used General and Operations 
Managers to represent State, Tribal, local, and PNP managers. Many PA 
projects involve repair or replacement of buildings and infrastructure, 
so FEMA assumes that Engineers would be the most likely occupation used 
as expert witnesses.
    FEMA used hourly wage rates from the Bureau of Labor Statistics 
Occupational Employment Statistics for the following occupations: 
Lawyers (SOC 23-1011), $69.34; Court Reporters (SOC 23-2091), $30.00; 
Engineers (SOC 17-2000), $47.71; and General and Operations Managers 
(SOC 11-1021) $59.56.\22\ To account for employee benefits, FEMA used a 
wage multiplier of 1.46,\23\ resulting in fully-loaded hourly wages of 
$101.24 for Lawyers, $43.80 for Court Reporters, $69.66 for Engineers, 
and $86.96 for General and Operations Managers.
---------------------------------------------------------------------------

    \22\ U.S. Bureau of Labor Statistics. National Occupational 
Employment and Wage Estimates United States. May 2018. Accessed May 
20, 2020. https://www.bls.gov/oes/2018/may/oes_nat.htm.
    \23\ BLS Employer Costs for Employee Compensation, Table 1, 
December 2018 located at https://www.bls.gov/news.release/archives/ecec_03192019.pdf. The loaded wage factor is equal to the total 
compensation of $36.32 divided by the wages and salary of $24.91. 
Values for the total compensation and wages and salary are for 
civilian workers in the all workers occupational group. Accessed 
April 29, 2019.
---------------------------------------------------------------------------

    FEMA used the 2018 hourly wage tables for the Washington-Baltimore-
Arlington, DC-MD-VA-WV-PA \24\ locality rate for FEMA employees 
participating in arbitration cases. Based on current FEMA practice, 
FEMA assumes that GS-13 employees would perform both legal and other 
services for an arbitration case and the work would be reviewed by a 
manager at the GS-15 level. The hourly GS-13 Step 5 salary was $52.66, 
and the hourly GS-15 step 5 salary was $73.20. In order to account for 
the benefits paid by employers, FEMA used a 1.46 multiplier to 
calculate loaded wage rates of $76.88 for a GS-13 Federal employee and 
$106.87 for a GS-15 Federal employee.
---------------------------------------------------------------------------

    \24\ U.S. Office of Personnel Management. 2018 General Schedule 
(GS) Locality Pay Tables. Accessed May 22, 2020. https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/18Tables/html/DCB_h.aspx.
---------------------------------------------------------------------------

Travel
    Arbitration cases are heard by a panel of judges of the CBCA, which 
is based in Washington, DC. The arbitration process is very 
customizable, so applicants can choose to have the hearings locally, 
where a CBCA judge would travel to their location, and FEMA would also 
send its representatives. Alternatively, cases could be heard at the 
CBCA, and the applicant would travel to Washington, DC, along with any 
lawyers and expert witnesses. Finally, the applicant could choose to 
have the CBCA review documents, and nobody would be required to travel. 
Because PA applicants are located throughout the U.S. and can be 
travelling from any location within the U.S., FEMA used average 
nationwide travel costs to estimate the travel costs for this rule.
    The U.S. General Service Administration (GSA) provides guidance on 
travel policy, hotel rates, and meals and incidentals for Federal 
employees. FEMA used GSA data on hotel prices and per diem rates to 
estimate travel expense costs of attending a hearing in person.\25\ 
Because data on travel expenses for non-Federal employees is not 
available, FEMA used the Federal lodging and per diem rates for 
applicants travelling to Washington DC to attend hearings. According to 
GSA, in 2018, the average price of a hotel room in the U.S. in the 
Washington, DC was $219 per night and outside of Washington, DC was $93 
per night. The per diem rate for meals and incidentals on the first and 
last travel days is $52 and $69 for other travel day(s) in Washington, 
DC. Similarly, the per diem rates for meals and incidentals on the 
first and last day is $39 and $51 for the other days outside of 
Washington, DC.
---------------------------------------------------------------------------

    \25\ U.S. General Services Administration. ``FY 2018 Per Diem 
Rates for District of Columbia .'' Accessed on May 18, 2020. 
Standard CONUS rate used for lodging and MI&E. https://www.gsa.gov/travel/plan-book/per-diem-rates/per-diem-rates-lookup/?action=perdiems_report&state=DC&fiscal_year=2018&zip=&city=. Per 
diem rates are calendar year instead of fiscal year.
---------------------------------------------------------------------------

    The U.S. Department of Transportation (DOT) provides information on 
the price of domestic airfare.\26\ According to the Bureau of 
Transportation Statistics, the annual cost of an average domestic 
flight within the United States, the average airfare was $350 
roundtrip.\27\ The total travel costs for applicants attending hearings 
in Washington, DC would be $1,249 per person ($350 average airfare + 
($219 hotel in DC x 3 nights) + ($69 meals and incidentals x 2 days of 
stay) + ($52 meals and incidentals x 2 travel days)) = $1,249).
---------------------------------------------------------------------------

    \26\ Bureau of Transportation Statistics. ``Annual Fares 1995-
2019 3Q 2019'' (.xlsx) March 23, 2020. U.S. Department of 
Transportation. https://www.bts.gov/sites/bts.dot.gov/files/Annual%20Fares%201995-2019%203Q%202019.xlsx.
    \27\ The airfare was adjusted to 2018 dollars and excludes 
airline tickets under $50.
---------------------------------------------------------------------------

Expert Witnesses
    FEMA assumes that each party would make use of expert witnesses to 
support their case. The expert witnesses would be required to travel to 
the hearing at the expense of the party that hired them. Based on 
historical experience, preparing for the hearing is estimated to take 
20 hours, the duration of the hearing is estimated to be 16 hours and 
the travel time is estimated at 11 hours for a total of 47 hours for a 
hearing in Washington, DC, the opportunity costs of time for one expert 
witness to attend a hearing would be $3,274 ($69.66 x 47 hours). Thus, 
the total cost for one expert witness' travel and opportunity cost of 
time is $4,523 ($1,249 + $3,274). Table 2 shows the detailed the costs 
of an expert witness. To provide a range of estimates since cases vary, 
a hearing at the applicant's location for an expert witness would cost 
$2,508 ($69.66 x 36 hours).

[[Page 53736]]



                                           Table 2--Estimated Cost per Expert Witness, Washington, DC Hearing
                                                                         [2018$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                          Opportunity
                                                                     Three nights of                                     costs of time
                         Round trip flight                           lodging at $219     Meals and       Total travel    for a hearing     Total expert
                                                                        per night       incidentals        expenses      in Washington,    witness cost
                                                                                                                               DC
(A)                                                                             (B)                (C) (D) = (A + B +              (E)          (D + E)
                                                                                                                     C)
--------------------------------------------------------------------------------------------------------------------------------------------------------
$350...............................................................            $657             $242           $1,249           $3,274           $4,523
--------------------------------------------------------------------------------------------------------------------------------------------------------

Cost for the Applicant
    The total cost for the applicant includes travel expenses (round 
trip flight, three nights of lodging, and meals and incidentals) and 
opportunity costs of time for the applicant, the applicant's 
representatives, and the expert witnesses. The total travel expenses 
for the applicant and the representative would be $2,498 ($1,249 x 2 
personnel = $2,498), if the hearing is held in Washington DC. As 
previously discussed in this analysis, costs include 47 hours for 
hearing preparation, attending the hearing, and post hearing work, plus 
11 hours of travel time for applicants and the applicant's 
representative. FEMA notes that an applicant can choose not to bring a 
representative or an applicant's representative could be one attorney 
or in some cases more than one attorney. To provide a range of costs, 
FEMA analyzes the typical case where one attorney or no attorneys are 
present. If the applicant's representative is an attorney, the 
opportunity costs of time would be $10,916 ($101.24 per hour wages for 
a lawyer x 58 hours) + ($86.96 per hour wages for a general and 
operations manager x 58 hours) = $10,916). If the applicant does not 
use an attorney as their representative, the opportunity costs of time 
would be $10,087 (2 general and operations managers at $86.96 each x 58 
hours = $10,087). Table 3 shows the range of total costs to the 
applicant.

                            Table 3--Range of Applicant Costs--Washington, DC Hearing
                                                     [2018$]
----------------------------------------------------------------------------------------------------------------
                                                                    Opportunity
                                                                   cost of time       Travel           Total
----------------------------------------------------------------------------------------------------------------
1 Attorney and 1 Non-Attorney...................................         $10,916          $2,498         $13,414
2 Non-Attorneys.................................................          10,087           2,498          12,585
----------------------------------------------------------------------------------------------------------------

    The total cost to the applicant if they were to travel to 
Washington, DC for a hearing with a representative and two expert 
witnesses, ranges from $21,631 ((2 expert witnesses at a cost of $4,523 
each) + $12,585 recipient cost) to $22,460 ((2 expert witnesses at 
$4,523 each) + $13,414 recipient and attorney cost).
    For a local hearing, the costs to the applicant would include 47 
hours of opportunity costs of time for the applicant and representative 
(assuming the representative is local), and 36 hours of opportunity 
costs of time to attend the hearing for two expert witnesses (assuming 
the expert witnesses are local) and would range from $13,190 ((2 
general and operations managers at $86.96 each x 47 hours) + (2 expert 
witnesses at $69.66 each x 36 hours) = $13,190) to $13,861 (($86.96 for 
a general and operations manager x 47 hours) + ($101.24 for an attorney 
x 47 hours) + (2 expert witnesses at $69.66 each x 36 hours) = $13,861) 
depending on who the recipient uses as a representative. Table 4 shows 
the range of total costs for an applicant for hearings held at the 
applicant's location.

                                     Table 4--Applicant Costs--Local Hearing
                                                     [2018$]
----------------------------------------------------------------------------------------------------------------
                                                                      Expert        Opportunity
                                                                     witnesses     cost of time        Total
----------------------------------------------------------------------------------------------------------------
1 Attorney and 1 Non-Attorney...................................          $5,016          $8,845         $13,861
2 Non-Attorneys.................................................           5,016           8,174          13,190
----------------------------------------------------------------------------------------------------------------

Cost for the Recipient
    The recipient would not present information in the arbitration 
case, but would send one or more representatives in a supporting role 
for the applicant. The cost per arbitration case for the recipient, is 
the opportunity costs of time for the representative totaling $10,087 
(2 general and operations managers at $86.96 each x 58 hours = $10,087) 
and travel expenses $2,498 (2 representatives x $1,249) of those 
attending the hearing in Washington, DC. As shown in table 5, the total 
cost to the recipient would be $12,585 if the hearing was held in 
Washington, DC.

[[Page 53737]]



                           Table 5--Estimated Recipient Costs, Washington, DC Hearing
                                                     [2018$]
----------------------------------------------------------------------------------------------------------------
                                                                 Opportunity
                                                                 cost of time        Travel           Total
----------------------------------------------------------------------------------------------------------------
General and Operations Managers..............................         $10,087           $2,498          $12,585
----------------------------------------------------------------------------------------------------------------

    For a local hearing, two representatives would spend 47 hours on 
the case and the cost to the recipient would be $8,174 (2 general and 
operations managers at $86.96 each x 47 hours = $8,174).
Cost to Government/FEMA
    FEMA would require two attorneys for a typical arbitration case, a 
GS-13 step 5 attorney and a GS-15 step 5 supervisory attorney, to 
review and to prepare a response to the request for arbitration. Based 
on historical experience, the two attorneys' total time from 
preparation to post hearing is 47 hours.\28\ The opportunity costs of 
time of the attorneys, including preparation and review of a case, is 
$8,636 (($76.88 GS 13 Step 5 attorney x 47 hours) + ($106.87 GS 15 Step 
5 Supervisory Attorney x 47) hours = $8,636).
---------------------------------------------------------------------------

    \28\ Based on information provided by FEMA Office of Chief 
Counsel Disaster Disputes Branch.
---------------------------------------------------------------------------

    Based on historical experience, FEMA would also require four non-
attorneys (e.g., GS-13 Step 5 program analysts) to support the 
arbitration case only for the duration of the hearing. The opportunity 
costs of time associated with the program analysts would be $4,920 (4 
GS 13 Step 5 program analysts at $76.88 each x 16 hours = $4,920). 
Thus, the total opportunity costs of time for all six FEMA personnel 
would be $13,556.
    FEMA would also call their own expert witnesses to attend the 
hearing. Based on historical experience, FEMA assumes that it would use 
four expert witnesses per case for a total of $10,032 ($2,508 cost per 
expert witness x 4 expert witnesses = $10,032). The expert witnesses 
provide testimony on a range of subjects, for example soil degradation 
or building construction.
    Arbitration hearings do not require transcription services. 
However, FEMA has historically hired a court reporter for hearings and 
provided the transcript to the CBCA for their records. FEMA would 
continue to pay for a court reporter for the duration of a hearing 
under the proposed rule. The opportunity costs of time for the court 
reporter services for a transcript would be $701 per arbitration case 
($43.80 per hour wages for Court Reporters x 16 hours of arbitration 
time = $701).
    The estimated total cost to FEMA, including staff time, expert 
witnesses and transcript services, would be $24,289 per case. Table 6 
presents the cost of each component by opportunity cost of time and 
other costs.

                              Table 6--Estimated FEMA Costs--Washington, DC Hearing
                                                     [2018$]
----------------------------------------------------------------------------------------------------------------
                                                                                 Cost for FEMA
                                                                                  employees (2
                Cost for four expert witnesses                  Cost of court   attorneys and 4   Total per-case
                                                                   reporter         program        cost to FEMA
                                                                                   analysts)
----------------------------------------------------------------------------------------------------------------
$10,032......................................................            $701          $13,556          $24,289
----------------------------------------------------------------------------------------------------------------

    For a hearing at the applicant's location, FEMA representatives 
would need to travel to the location of the hearing. Costs for a local 
hearing would be higher due to paying for travel time as well as actual 
travel costs. Travel costs are estimated using the figures previously 
mentioned and would be $1,249 per person for a total of $2,498, if 2 
attorneys travel to the applicant's location. Additionally, FEMA 
estimates that the time would increase to 58 hours due to 11 hours of 
travel time for the attorneys totaling (2 attorneys at $106.87 each x 
58 hours) $12,397 plus $4,920 for non-travelling program analysts 
resulting in a total cost of $17,317. The estimated costs to FEMA for a 
local hearing are presented in Table 7.

                                      Table 7--Estimated FEMA Costs--Local
                                                     [2018$]
----------------------------------------------------------------------------------------------------------------
                                                                 Opportunity
                                               Cost of court    costs of time     Travel costs    Total per-case
       Cost for four expert witnesses             reporter         for FEMA      (2 attorneys)     cost to FEMA
                                                                  employees
----------------------------------------------------------------------------------------------------------------
$10,032.....................................            $701         $ 17,317           $2,498          $30,548
----------------------------------------------------------------------------------------------------------------

    In addition to these costs, FEMA's PA Program would also hire an 
Arbitration Coordinator at the GS-13 Step 5 level with an annual salary 
of $109,900.With the 1.46 multiplier for a fully loaded wage rate, the 
additional cost to FEMA would be $160,454 per year. Therefore, the 
annual total costs to FEMA range from $184,743 ($160,454 + $24,289) if 
the hearing is held in Washington, DC to $191,002 ($160,454 + $30,548) 
if the hearing is held at the applicant's location.

[[Page 53738]]

Total Costs
    The total cost per case vary based on who the applicant uses as a 
representative, and whether the hearing is held in Washington, DC or 
local to the applicant. Government and FEMA costs would be higher for a 
hearing held local to the applicant, and likewise, applicant and 
recipient costs would be higher if the hearing was held in Washington, 
DC. FEMA estimates that the total costs per case to range between 
$51,912 and $59,343. Table 8 presents the range of estimated costs per 
arbitration case.

                                          Table 8--Total Cost Per Case
                                                     [2018$]
----------------------------------------------------------------------------------------------------------------
                                                       FEMA          Applicant       Recipient         Total
----------------------------------------------------------------------------------------------------------------
Low.............................................         $30,548         $13,190          $8,174         $51,912
High............................................          24,289          22,460          12,585          59,334
----------------------------------------------------------------------------------------------------------------

    As established earlier in this analysis, FEMA estimate an average 
of 12 arbitration cases per year. Therefore, FEMA estimates the total 
annual costs to range between $783,398 ((12 cases x $30,548 per case) + 
$160,454 for a new FEMA employee + (12 x $13,190 per case for 
applicant) + (12 x $8,174 per case for the recipient)= $783,398) (low) 
and $872,462((12 cases x $24,289 per case) + $160,454 for a new FEMA 
employee + (12 x $22,460 per case for the applicant) + (12 x $12,585 
for the recipient)= $872,462) (high). Table 9 shows the estimated total 
costs per year of this proposed rule. The low cost estimate assumes 
that all hearings would be held at the applicant's location, while the 
high estimate assumes hearings would be held in Washington, DC.

                                    Table 9--Total Cost Per Year for 12 Cases
                                                     [2018$]
----------------------------------------------------------------------------------------------------------------
                                                       FEMA          Applicant       Recipient         Total
----------------------------------------------------------------------------------------------------------------
Low.............................................        $527,030        $158,280         $98,088        $783,398
High............................................         451,922         269,520         151,020         872,462
----------------------------------------------------------------------------------------------------------------

    Tables 10 and 11 show the total 10-year costs and 10-year costs 
annualized at 3 percent and 7 percent.

                                       Table 10--10-Year Cost Totals Using 3 Percent and 7 Percent Discount Rates
                                                                  [Low Estimate, 2018$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Annual costs    Annual costs
                          Year                              FEMA costs       Applicant       Recipient      Total costs    discounted at   discounted at
                                                                               costs           costs                          3% \1\          7% \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................        $527,030        $158,280         $98,088        $783,398        $759,896        $728,560
2.......................................................         527,030         158,280          98,088         783,398         737,099         677,561
3.......................................................         527,030         158,280          98,088         783,398         714,986         630,132
4.......................................................         527,030         158,280          98,088         783,398         693,536         586,023
5.......................................................         527,030         158,280          98,088         783,398         672,730         545,001
6.......................................................         527,030         158,280          98,088         783,398         652,548         506,851
7.......................................................         527,030         158,280          98,088         783,398         632,972         471,371
8.......................................................         527,030         158,280          98,088         783,398         613,983         438,375
9.......................................................         527,030         158,280          98,088         783,398         595,564         407,689
10......................................................         527,030         158,280          98,088         783,398         577,697         379,151
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................       5,270,300       1,582,800         980,880       7,833,980       6,651,012       5,370,714
                                                         -----------------------------------------------------------------------------------------------
    Annualized..........................................  ..............  ..............  ..............  ..............         783,398         783,398
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The annualized amounts for 7 percent and 3 percent are equal in this table because the amounts for each year are identical and the first year is
  discounted.


                                       Table 11--10-Year Cost Totals Using 3 Percent and 7 Percent Discount Rates
                                                                 [High Estimate, 2018$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Annual costs    Annual costs
                          Year                              FEMA costs       Applicant       Recipient      Total costs    discounted at   discounted at
                                                                               costs           costs                          3% \1\          7% \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................        $451,922        $269,520        $151,020        $872,462        $846,288        $811,390
2.......................................................         451,922         269,520         151,020         872,462         820,899         754,593
3.......................................................         451,922         269,520         151,020         872,462         796,273         701,771
4.......................................................         451,922         269,520         151,020         872,462         772,384         652,647

[[Page 53739]]

 
5.......................................................         451,922         269,520         151,020         872,462         749,212         606,962
6.......................................................         451,922         269,520         151,020         872,462         726,736         564,475
7.......................................................         451,922         269,520         151,020         872,462         704,934         524,962
8.......................................................         451,922         269,520         151,020         872,462         683,786         488,215
9.......................................................         451,922         269,520         151,020         872,462         663,272         454,040
10......................................................         451,922         269,520         151,020         872,462         643,374         422,257
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................       4,519,220       2,595,200       1,510,200       8,724,620       7,407,158       5,981,312
                                                         -----------------------------------------------------------------------------------------------
        Annualized......................................  ..............  ..............  ..............  ..............         872,462         872,462
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The annualized amounts for 7 percent and 3 percent are equal in this table because the amounts for each year are identical and the first year is
  discounted.

    FEMA believes that it would not have any implementation or 
familiarization costs. FEMA currently has an arbitration process that 
is very similar to the proposed rule for cases arising from Hurricanes 
Katrina and Rita. FEMA has already notified eligible applicants, dating 
back to January 1, 2016 of their eligibility for arbitration under DRRA 
section 1219.
    Further, applicants would not have familiarization costs because 
the process for requesting arbitration would consist of an email 
request and would use materials previously submitted in the application 
for PA funding.
Benefits
    The benefits of this proposed rule would be qualitative in nature, 
and would apply mostly to the applicant. FEMA believes that this 
proposed rule would further its mission of supporting State, Tribal, 
and local governments, as well as eligible PNPs by offering them an 
alternative procedure for disputing PA eligibility and funding 
decisions. Applicants retain the option to submit a second appeal. The 
proposed rule would offer an alternative that the applicant may see as 
more impartial because the arbitration cases would be heard by CBCA 
judges, as opposed to second appeals that would continue to be 
conducted entirely within FEMA. Additionally, applicants would have the 
opportunity to present their case in person and call expert witnesses 
to support their claims. These two options would allow applicants to 
choose the course that would be most appropriate to their 
circumstances.
Customization
    Applicants may select arbitration, if they consider this process 
more customizable. The arbitration process would provide applicants 
with the opportunity to appear in person before an impartial panel and 
present evidence as to why they are disputing a FEMA determination. 
Applicants can also retain expert witnesses to provide support to their 
position. Expert witnesses provide testimony within their technical 
specialty to assist the arbitration panel in understanding the 
underlying work for which FEMA ultimately decides eligibility.
    Additionally, applicants would have the opportunity to respond in 
real time to evidence presented by FEMA, allowing them more control 
over the dispute than they might have under a second appeal. Applicants 
may opt to hire an expert witness in arbitration to help present the 
disputed information in a manner more favorable to the applicant. The 
ability to hire expert witnesses may provide applicants with additional 
utility and may be an incentive to select arbitration.
    The proposed rule would also allow applicants to present the same 
technical documentation in both the appeals and arbitration procedures. 
An applicant who submits a first appeal, but elects to withdrawal in 
favor of arbitration may opt to reuse the information in the request 
for arbitration that was previously submitted in the first appeal. 
Applicants may gain utility from the convenience of reusing documents.
Impartiality
    It is not possible to quantify an applicant's increased utility due 
to perceived impartiality. The purpose of arbitration is to create a 
process to resolve the issues in a manner satisfactory to all parties. 
Based on past cases, FEMA has granted or partially granted 23 percent 
of the second appeals submitted by applicants.\29\ CBCA has found in 
favor or partially in favor for the applicant in less than 20 percent 
of Katrina/Rita arbitrations.\30\
---------------------------------------------------------------------------

    \29\ Based on information provided by FEMA Office of Chief 
Counsel Disaster Disputes Branch.
    \30\ Based on information provided by FEMA Office of Chief 
Counsel Disaster Disputes Branch.
---------------------------------------------------------------------------

    The applicant may nevertheless perceive they have a better 
opportunity to gain additional Federal funding through arbitration. 
Applicants would select arbitration as their case would be heard by a 
third party, rather than an appeal process that is conducted entirely 
by FEMA. Applicants would perceive a more impartial system, if the 
forum encourages both parties to solicit discussion rather than 
``paper'' based appeals. Applicants would expect that impartiality 
would best achieve their objective of a fair resolution.
    Tables 12 and 13 analyze the historical outcomes from second 
appeals and arbitration from 44 CFR 206.209. Because of the 
unpredictable nature and unique circumstances of every disaster, these 
figures may not be representative of future outcomes, as the outcomes 
are based on the arbitration policies for Hurricanes Rita and Katrina 
and the unique circumstances of each case.

                    Table 12--Second Appeals Outcomes
                               [2009-2017]
------------------------------------------------------------------------
                                                 Number of
             Second appeal outcome                 cases       Percent
------------------------------------------------------------------------
Granted.......................................          118         14.7
Denied........................................          445         55.6
Partially Granted.............................           67          8.4
Active........................................            1          0.1
Other \1\.....................................          170         21.2
                                               -------------------------
    Total.....................................          801          100
------------------------------------------------------------------------
\1\ The category of Other includes appeal decision not available,
  remand, rescind, arbitration, and withdrawn.


[[Page 53740]]


           Table 13--Arbitration Outcomes under 44 CFR 206.209
                               [2009-2017]
------------------------------------------------------------------------
                                                 Number of
              Arbitration outcome                  cases       Percent
------------------------------------------------------------------------
Binding Decision without CBCA.................            3          4.0
In Favor of FEMA..............................           17         22.7
In Favor of Applicant.........................           10         13.3
Partial in Favor of Applicant.................           31         41.3
Withdrawn.....................................            3          4.0
Other \2\.....................................           11         14.7
                                               -------------------------
    Total.....................................           75          100
------------------------------------------------------------------------
\2\ The category of Other includes other decision, dismissed, and
  ongoing cases.

Transfers
    FEMA is unable to quantify transfers due to this proposed rule. 
Transfers would arise from the possibility that FEMA may award a 
different amount of grant funding under the arbitration process than it 
would under current regulations that only allow for a second appeal. 
However, it would be speculative for FEMA to make an estimate as to the 
potential changes in grant disbursement due to the proposed rule.
Impacts
    Table 14 summarizes the costs, benefits, and transfer impacts from 
the proposed rule.

                                   Table 14--OMB Circular A-4 Accounting Table
----------------------------------------------------------------------------------------------------------------
                                           Estimates                                  Units
           Category            ---------------------------------------------------------------------------------
                                 Low estimate    High estimate    Year dollar    Discount rate   Period covered
----------------------------------------------------------------------------------------------------------------
Benefits:
    Annualized Monetized......              $0              $0            2018              7%  10 Years.
                                            $0              $0            2018              3%  10 Years.
    Annualized Quantified.....               0               0
                               ---------------------------------------------------------------------------------
                                             0               0
    Qualitative...............   Additional option for review of PA projects and decisions.
                                 Greater perception of impartiality in the arbitration process.
                                 Ability to customize arbitration process.
----------------------------------------------------------------------------------------------------------------
Costs:
    Annualized Monetized......        $783,398       $ 872,462            2018              7%  10 Years.
                                      $783,398       $4872,462            2018              3%  10 Years.
    Annualized Quantified.....               0               0
                                             0               0
                               ---------------------------------------------------------------------------------
Qualitative...................   Longer time frame to resolve disputes under arbitration option.
----------------------------------------------------------------------------------------------------------------
Transfers                       Possible changes to PA grant disbursements.
----------------------------------------------------------------------------------------------------------------
Effects:
    Small Entities............  FEMA expects 9 arbitration cases per year from small entities with an estimated
                                cost of between $13,190 and $22,460 per small entity.
    Wages.....................  None.
    Growth....................  None.
----------------------------------------------------------------------------------------------------------------

Uncertainty Analysis
    The estimates of the costs of the proposed rule are subject to 
uncertainty due to the uniqueness of each arbitration case. The cost 
estimates can vary widely depending on complexity and other factors. As 
a result, the cost estimate could be overstated or understated.
    There are several sources of uncertainty in this analysis: The 
number of eligible applicants, the proposed deadlines for filing, and 
the potential number of arbitration cases. Major disasters do not occur 
on a regular time interval. The severity of the disaster would affect 
the number of applicants that decide to apply for funding in the PA 
Program. The number of eligible applicants can vary year-to-year.
    Historical data used in this analysis was based on the arbitration 
process for Hurricanes Katrina and Rita, which is different in a couple 
of key respects from the proposed arbitration process. While the cost 
shares for Katrina and Rita were 100 percent, cost shares for future 
disaster declarations may be as high as 25 percent for applicants. 
Because Katrina/Rita applicants were not required to pay for any 
portion of their project cost, they had an incentive to apply for more 
costly projects and pursue arbitration when denied. Future disasters 
with a cost share may lead applicants to be more conservative in 
applying for PA projects, which may result in fewer arbitration 
requests than was indicated in the primary estimate.
    Additionally, the timeframe for submitting arbitration requests 
under 44 CFR 206.209 was 30 days. However, FEMA is proposing a 60 day 
submission deadline for arbitration submissions under DRRA requirements 
to align with the current 60 day submission timeframe for second 
appeals. This additional time may affect the number of arbitration 
cases submitted in the future, but FEMA cannot reliably predict these 
impacts at this time.
Alternatives
    FEMA considered several alternative regulatory approaches to the 
requirements in the proposed rule. The alternatives included: (1) Not 
issuing a mandatory regulation; (2) proposing an alternate definition 
of rural; and (3) not requiring electronic submission. FEMA did not 
consider a no-action alternative. The DRRA mandates FEMA to promulgate 
a rule allowing the option of arbitration in lieu of a second appeal 
and specifies the CBCA as the arbitration administrator. As such, FEMA 
must pursue a regulatory action.

[[Page 53741]]

    FEMA considered using OMB's nonmetropolitan area definition as an 
alternate definition of the term ``rural.'' OMB's nonmetropolitan area 
is defined as areas outside the boundaries of metropolitan areas.
    Nonmetropolitan areas are outside the boundaries of metropolitan 
areas and are further subdivided into two types:

    1. Micropolitan (micro) areas, which are nonmetro labor-market 
areas centered on urban clusters of 10,000-49,999 persons and 
defined with the same criteria used to define metro areas.
    2. All remaining counties, often labeled ``noncore'' counties 
because they are not part of ``core-based'' metro or micro areas.

    OMB defines metropolitan areas to include:

    1. Central counties with one or more urbanized areas; urbanized 
areas are densely-settled urban entities with 50,000 or more people.
    2. Outlying counties that are economically tied to the core 
counties as measured by labor-force commuting. Outlying counties are 
included if 25 percent of workers living in the county commute to 
the central counties, or if 25 percent of the employment in the 
county consists of workers coming out from the central counties--the 
so-called ``reverse'' commuting pattern.

    FEMA did not recommend using the OMB's definition because it 
combines rural area populations into Metropolitan counties. The OMB 
definition would also result in some rural areas such as the Grand 
Canyon being considered a metropolitan county. This alternative would 
not result in reducing the impact on small entities, while 
accomplishing the stated objective of the rule.
    FEMA considered not requiring applicants to submit a request for 
arbitration electronically. Current practices allow FEMA to accept hard 
copy submissions (through U.S. Mail or other means) for first and 
second appeals. In addition, FEMA currently accepts electronic 
submissions for requests for arbitration under 44 CFR 206.209. FEMA 
chose this alternative, as it would provide FEMA with enhanced ability 
to track and establish deadlines in the arbitration process. CBCA's 
rule requires applicants to use an electronic method to submit their 
documentation and request for arbitration to CBCA. Thus, FEMA believes 
requiring electronic submission would not pose an undue burden on most 
applicants.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) and 
Executive Order 13272 (67 FR 53461, Aug. 16, 2002) require agency 
review of proposed and final rules to assess their impact on small 
entities. An agency must prepare an initial regulatory flexibility 
analysis (IRFA) unless it determines and certifies that a rule, if 
promulgated, would not have a significant economic impact on a 
substantial number of small entities. FEMA does not believe this 
proposed rule will have a significant economic impact on a substantial 
number of small entities. However, FEMA is publishing this IRFA to aid 
the public in commenting on the potential small business impacts of the 
proposed requirements in this NPRM. FEMA invites all interested parties 
to submit data and information regarding the potential economic impact 
on small entities that would result from the adoption of this NPRM. 
FEMA will consider all comments received during the public comment 
period when making a final determination. In accordance with the 
Regulatory Flexibility Act, an IFRA must contain the following 
statements, including descriptions of the reason(s) for the rulemaking, 
its objective(s), the affected small entities, any additional burden 
for book or record keeping and other compliance requirements; any 
Federal rules that duplicate, overlap, or conflict with the rulemaking, 
and significant alternatives considered. The following sections address 
these subjects individually in the context of this proposed rule.
1. A Description of the Reasons why Action by the Agency Is Being 
Considered
    PA helps State and local governments respond to and recover from 
the challenges faced during major disasters and emergencies. To support 
State and local governments facing those challenges, Congress passed 
DRRA.
    Under the PA Program, as authorized by the Stafford Act, FEMA 
awards grants to eligible applicants to assist them in responding to 
and recovering from Presidentially-declared emergencies and major 
disasters. The recipient, as defined at 44 CFR 206.201(m), is the 
government to which a grant is awarded, and which is accountable for 
the use of the funds provided. Generally, the State for which the 
emergency or major disaster is declared is the recipient. The recipient 
can also be an Indian Tribal government. The applicant, as defined at 
44 CFR 206.201(a), is a State agency, local government, or eligible 
private nonprofit organization submitting an application to the 
recipient for assistance under the State's grant.
    The PA Program provides Federal funds for debris removal, emergency 
protective measures, repair and replacement of roads and bridges, 
utilities, water treatment facilities, public buildings, and other 
infrastructure. When the President declares an emergency or major 
disaster declaration authorizing disbursement of funds through the PA 
Program, that presidential declaration automatically authorizes FEMA to 
accept applications from eligible applicants under the PA Program. To 
apply for a grant under the PA Program, the eligible applicant must 
submit a Request for PA to FEMA through the recipient. Upon award, the 
recipient notifies the applicant of the award, and the applicant 
becomes a subrecipient.
    The DRRA requires FEMA to promulgate a regulation providing 
applicants with a right of arbitration under FEMA's PA Program. 
Applicants currently have a right to arbitration to dispute FEMA 
eligibility determinations associated with Hurricanes Katrina and Rita; 
see 44 CFR 206.209. The proposed rule would expand the scope by 
allowing applicants to request arbitration for disputes under all 
disaster declarations after January 1, 2016 that are above certain 
dollar amount thresholds. The proposed rule would grant applicants an 
additional method of recourse.
2. A Succinct Statement of the Objectives of, and Legal Basis for, the 
Proposed Rule
    The proposed rule would implement section 1219 of the DRRA by 
providing applicants with a right to arbitration for the PA Program 
under major disaster declarations. Pursuant to section 1219, to request 
arbitration a PA applicant (1) must have a dispute arising from a 
disaster declared after January 1, 2016, (2) must be disputing an 
amount that exceeds $500,000 (or $100,000 for an applicant in a ``rural 
area'' with a population of less than 200,000 outside an urbanized 
area), and (3) must have submitted a first appeal pursuant to the time 
requirements established in 44 CFR 206.206.
    Accordingly, FEMA is initiating a rulemaking to amend appeals 
regulation at 44 CFR 206.206 to add in the new right to arbitration 
under DRRA. The proposed rule would revise appeals procedures and 
establish arbitration procedures.
3. A Description of and, Where Feasible, an Estimate of the Number of 
Small Entities to Which the Proposed Rule Will Apply
    ``Small entity'' is defined in 5 U.S.C. 601. The term ``small 
entity'' can have the same meaning as the terms ``small business,'' 
``small organization,'' and ``small governmental jurisdiction.''

[[Page 53742]]

Section 601(3) defines a ``small business'' as having the same meaning 
as ``small business concern'' under Section 3 of the Small Business Act 
(SBA). This includes any small business concern that is independently 
owned and operated and is not dominant in its field of operation. 
Section 601(4) defines a ``small organization'' as any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in their field of operation. Section 601(5) defines ``small 
governmental jurisdiction'' as governments of cities, counties, towns, 
townships, villages, school districts, or special districts, with a 
population of less than 50,000.
    The SBA also stipulates in its size standards of how large an 
entity may be and still be classified as a ``small entity.'' These 
small business size standards are matched to industries described in 
the North American Industry Classification System (NAICS) to determine 
if an entity is considered small.
    This proposed rule does not place any requirements on small 
entities. It does, however, offer them an alternative means to dispute 
FEMA's determination for PA eligibility. If the entity chooses to 
dispute a PA determination, and they select arbitration rather than a 
second appeal, they would be responsible for their share of the cost of 
the arbitration process.
    All small entities would have to meet the proposed requirements to 
be eligible for arbitration. FEMA identified 3,778 applicants for 
FEMA's PA Program that would be eligible for arbitration under the 
proposed requirements for the time frame from 2009 through 2017. FEMA 
used Slovin's formula and a 90 percent confidence interval to determine 
the sample size.\31\ FEMA sampled 97 of these applicants and found that 
73 (75 percent) met the definition of a small entity based on the 
population size of local governments (less than 50,000 population),\32\ 
or PNPs based on size standards set by the SBA.\33\ The remaining 24 
entities were not found to be considered as small entities. Eligible 
small entities included 70 small government agencies and three PNP 
organizations. Based on information presented in the Executive Orders 
12866 and 13563, FEMA estimates 12 arbitration cases per year. If 75 
percent of these are small entities, FEMA estimates 9 arbitration 
requests per year from small entities with an average cost of between 
$13,190 and $22,460 per case. Nine small entities may not represent a 
substantial number of small entities impacted by this proposed rule and 
FEMA does not believe the costs imposed to these small entities are 
significant. FEMA welcomes any comments from the public on the number 
of small entities presented in this analysis and any impacts imposed 
onto them by this proposed rule.
---------------------------------------------------------------------------

    \31\ Slovin's formula is n = N/(1 + N *e [caret]2). Therefore, 
3,778/(1 + 3,778 * 0.1[caret]2) = 97 (rounded).
    \32\ Information on population sizes was obtained using the U.S. 
Census Bureau's City and Town Population Totals 2010-2018. Available 
at https://www.census.gov/data/tables/time-series/demo/popest/2010s-total-cities-and-towns.html.
    \33\ Small Business Administration. ``Table of Size Standards'' 
(.xlxs). Available at https://www.sba.gov/document/support--table-size-standards. Revenue and employment information for individual 
PNP's was obtained from PNP websites.
---------------------------------------------------------------------------

4. A Description of the Projected Reporting, Recordkeeping and Other 
Compliance Requirements of the Proposed Rule, Including an Estimate of 
the Classes of Small Entities Which Will Be Subject to the Requirement 
and the Type of Professional Skills Necessary for Preparation of the 
Report or Record
    Arbitration--As an alternative to the appeal process, applicants 
may request arbitration of the disputed determination. To be eligible 
for Section 423 arbitration, a PA applicant's request must meet all 
three of the following conditions: (1) The amount in dispute arises 
from a disaster declared after January 1, 2016; (2) the disputed amount 
exceeds $500,000 (or $100,000 if the applicant is in a ``rural area,'' 
defined as having a population of less than 200,000 living outside an 
urbanized area); and (3) the applicant submitted a first appeal with 
FEMA pursuant to the requirements established in 44 CFR 206.206.
    The applicant must submit a Request for Arbitration to the 
recipient, CBCA, and FEMA. The Request for Arbitration must contain a 
written statement, which specifies the amount in dispute, all 
documentation supporting the position of the applicant, the disaster 
number, and the name and address of the applicant's authorized 
representative or counsel. FEMA estimates that it would take an 
applicant 2 hours to complete the Request for Arbitration (these 2 
hours are accounted for in the economic analysis through the 47 hours 
of hearing preparation time for applicants) with a wage rate of $86.96 
for a general and operations manager. FEMA estimates the opportunity 
cost of time for completing the request would be $173.92 per applicant. 
With an estimated 9 cases per year, FEMA estimates the total burden for 
completing the request at $1,565 per year. The person completing the 
request would need to be familiar with PA regulations and policies.
5. An Identification, to the Extent Practicable, of all Relevant 
Federal Rules Which May Duplicate, Overlap, or Conflict With the 
Proposed Rule
    FEMA's regulations on appeals, found at 44 CFR 206.206, are still 
in effect and provide the required process for submitting first and 
second appeals.\34\ Applicants must submit a request for a first appeal 
prior to submitting a request for arbitration. Applicants may submit a 
request for arbitration or a second appeal, but not both.
---------------------------------------------------------------------------

    \34\ A link to the current Fact Sheet: https://www.fema.gov/media-library/assets/documents/175821. Accessed May 15, 2020.
---------------------------------------------------------------------------

    Section of 1219 of DRRA requires CBCA to conduct the arbitrations. 
Accordingly, applicants that request arbitration to dispute a FEMA 
determination must also meet the CBCA electronic submission 
requirement.
    There are overlapping provisions between FEMA's proposed rule and 
CBCA's final rule.\35\ Applicants should also see CBCA regulations at 
48 CFR parts 6101 and 6106 for additional procedures for requesting 
arbitration.
---------------------------------------------------------------------------

    \35\ A copy of CBCA's final rule can be found online at: https://www.govinfo.gov/content/pkg/FR-2019-06-21/pdf/2019-13081.pdf. 
Accessed July 22, 2019.
---------------------------------------------------------------------------

6. A Description of Any Significant Alternatives to the Proposed Rule 
Which Accomplish the Stated Objectives of Applicable Statutes and Which 
Minimize Any Significant Economic Impact of the Proposed Rule on Small 
Entities
    The alternatives included: (1) Using another definition for 
``rural'' and (2) not requiring electronic submission.
    FEMA considered using OMB's nonmetropolitan area definition as an 
alternate definition of the term ``rural.'' OMB's nonmetropolitan area 
is defined as areas outside the boundaries of metropolitan areas and 
are further subdivided into two types:
    1. Micropolitan (micro) areas, which are nonmetro labor-market 
areas centered on urban clusters of 10,000-49,999 persons and defined 
with the same criteria used to define metro areas.
    2. All remaining counties, often labeled ``noncore'' counties 
because they are not part of ``core-based'' metro or micro areas.
    OMB defines metropolitan areas to include:
    1. Central counties with one or more urbanized areas; urbanized 
areas are densely-settled urban entities with 50,000 or more people.
    2. Outlying counties that are economically tied to the core 
counties

[[Page 53743]]

as measured by labor-force commuting. Outlying counties are included if 
25 percent of workers living in the county commute to the central 
counties, or if 25 percent of the employment in the county consists of 
workers coming out from the central counties--the so-called ``reverse'' 
commuting pattern.
    FEMA did not recommend using the OMB's definition as it combines 
rural area populations into Metropolitan counties. The OMB definition 
would also result in some rural areas such as the Grand Canyon being 
considered a metropolitan county. This alternative would not result in 
reducing the impact on small entities while accomplishing the stated 
objective of the rule.
    FEMA considered not requiring electronic submission. Current 
practices allow FEMA to accept physical mail for appeals. In addition, 
FEMA currently accepts electronic submissions for requests for 
arbitration under 44 CFR 206.209. As CBCA provided an electronic 
address for applicants to submit their request for arbitration and 
documentation, applicants must use electronic method if they choose the 
arbitration process. Thus, FEMA believes requiring electronic 
submission would not pose an additional undue burden on applicants that 
are considered small entities.
Conclusion
    FEMA is interested in the potential impacts from this rule on small 
businesses and requests public comment on these potential impacts. If 
you think that this rule will have a significant economic impact on 
you, your business, or organization, please submit a comment to the 
docket at the address under ADDRESSES in this proposed rule. In your 
comment, explain why, how, and to what degree you think this rule will 
have an economic impact. FEMA does not believe this proposed rule will 
have a significant economic impact on a substantial number of small 
entities. However, FEMA is publishing this IRFA to aid the public in 
commenting on the potential small business impacts of the proposed 
requirements in this NPRM. FEMA invites all interested parties to 
submit data and information regarding the potential economic impact on 
small entities that would result from the adoption of this NPRM.

C. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 658, 1501-1504, 
1531-1536, 1571 (the Act), pertains to any notice of proposed 
rulemaking which implements any rule that includes a Federal mandate 
that may result in the expenditure by State, local, and Tribal 
governments, in the aggregate, or by the private sector, of $100 
million (adjusted annually for inflation) or more in any one year. If 
the rulemaking includes a Federal mandate, the Act requires an agency 
to prepare an assessment of the anticipated costs and benefits of the 
Federal mandate. The Act also pertains to any regulatory requirements 
that might significantly or uniquely affect small governments. Before 
establishing any such requirements, an agency must develop a plan 
allowing for input from the affected governments regarding the 
requirements. Exemptions from the Act are found at 2 U.S.C. 1503, they 
include any regulation or proposed regulation that ``provides for 
emergency assistance or relief at the request of any State, local, or 
tribal government or any official of a State, local, or tribal 
government.'' Thus, FEMA finds this rule to be exempt from the Act.
    Additionally, FEMA has determined that this rule would not result 
in the expenditure by State, local, and Tribal governments, in the 
aggregate, nor by the private sector, of $100 million or more (adjusted 
annually for inflation) in any one year because of a Federal mandate, 
and it would not significantly or uniquely affect small governments. 
Therefore, no actions are deemed necessary under the provisions of the 
Unfunded Mandates Reform Act of 1995.

D. Paperwork Reduction Act of 1995

    As required by the Paperwork Reduction Act of 1995 (PRA), Public 
Law 104-13, 109 Stat. 163, (May 22, 1995) (44 U.S.C. 3501 et seq.), an 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless the collection of 
information displays a valid control number.
    In this proposed rule, FEMA is seeking a revision to the already 
existing collection of information, OMB Control Number 1660-0017. The 
annual cost to the Federal Government is decreasing from $1,920,626 to 
$1,890,650. The decrease to the cost to the Federal Government occurred 
since we deleted $29,976 in arbitration travel costs; as, we do not 
have to include them per the PRA exceptions for civil & administrative 
actions. See 44 U.S.C. 3518(c). This proposed rule serves as the 60-day 
comment period for this proposed change pursuant to 5 CFR 1320.12. FEMA 
invites the public to comment on the proposed collection of 
information.
Collection of Information
    Title: PA Program.
    Type of information collection: Revision of a currently approved 
collection.
    OMB Number: 1660-0017.
    Form Forms: FEMA Form 009-0-49 Request for Public Assistance; FEMA 
Form 009-0-91 Project Worksheet (PW); FEMA Form 009-0-91A Project 
Worksheet (PW)--Damage Description and Scope of Work Continuation 
Sheet; FEMA Form 009-0-91B Project Worksheet (PW)--Cost Estimate 
Continuation Sheet; FEMA Form 009-0-91C Project Worksheet (PW)--Maps 
and Sketches Sheet; FEMA Form 009-0-91D Project Worksheet (PW)--Photo 
Sheet; FEMA Form 009-0-120 Special Considerations Questions; FEMA Form 
009-0-121 PNP Facility Questionnaire; FEMA Form 009-0-123 Force Account 
Labor Summary Record; FEMA Form 009-0-124 Materials Summary Record; 
FEMA Form 009-0-125 Rented Equipment Summary Record; FEMA Form 009-0-
126 Contract Work Summary Record; FEMA Form 009-0-127 Force Account 
Equipment Summary Record; FEMA Form 009-0-128 Applicant's Benefits 
Calculation Worksheet; FEMA Form 009-0-111, Quarterly Progress Report; 
FEMA Form 009-0-141, FAC-TRAX System.
    Abstract: The information collected is utilized by FEMA to make 
determinations for PA grants based on the information supplied by the 
respondents.
    Affected Public: State, local, or Tribal Government.
    Estimated Number of Respondents: 1,012.
    Estimated Number of Responses: 398,068.
    Estimated Total Annual Burden Hours: 466,025.
    The proposed rule to implement section 423 arbitration would not 
impact the total number of responses or burden hours. FEMA proposes to 
add a new paragraph to 44 CFR 206.206 to add a right of arbitration for 
applicants. The proposed regulation would provide applicants an 
additional choice in FEMA's appeals and arbitration processes: 
Applicants must choose either submitting a second appeal or submitting 
a request for arbitration. Or, an applicant may select arbitration if 
the Regional Administrator has received a first appeal, but has not 
rendered a decision within 180 calendar days of receipt. There is no 
change to the number of responses due to the proposed rule, as 
applicants can only choose one option.
    FEMA estimated it will take approximately 2 hours to prepare a 
letter for appeal or arbitration. This estimate is based on the 
assumption that

[[Page 53744]]

most of the information necessary for preparing the appeal or 
arbitration request is found in the existing Project Worksheet.
    Recipients will also provide a recommendation per each applicant 
request for an appeal or arbitration. The total number of 
recommendations would not change because of the proposed rule. FEMA 
estimates it will take approximately 1 hour to prepare a 
recommendation.
    Currently, the estimated time to complete a request and submit a 
letter of recommendation for an appeal is three hours. FEMA also 
estimates the time to complete a request and submit a letter of 
recommendation for arbitration would also be three hours. The applicant 
could re-use the same information from the request for an appeal or 
arbitration and the recipient would review similar information in 
providing its recommendation. The proposed rule would not impact the 
estimate of the burden hours.
    Table A.12 provides estimates of annualized cost to respondents for 
the hour burdens for the collection of information.

                                                       Estimated Annualized Burden Hours and Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Number of                Avg. burden     Total                     Total
                                                                Number of    responses    Total No.       per         annual    Avg. hourly     annual
        Type of respondent              Form name/form No.     respondents      per           of        response   burden  (in   wage rate    respondent
                                                                             respondent   responses    (in hours)     hours)                     cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
State, Local or Tribal Government.  FEMA Form 009-0-49,                 56          129        7,224         0.25        1,806       $63.52     $114,717
                                     Request for PA/.
State, Local or Tribal Government.  FEMA Form 009-0-91,                 56          840       47,040         1.50       70,560        63.52    4,481,971
                                     Project Worksheet (PW)
                                     and a Request for Time
                                     Extension.
State, Local or Tribal Government.  FEMA Form 009-0-91A                 56          784       43,904         1.50       65,856        63.52    4,183,173
                                     Project Work Sheet (PW)
                                     Damage Description and
                                     Scope of Work.
                                    FEMA Form 009-0-91B,                56          784       43,904       1.3333       58,537        63.52    3,718,283
                                     Project Worksheet (PW)
                                     Cost Estimate
                                     Continuation Sheet and
                                     Request for additional
                                     funding for Cost
                                     Overruns.
State, Local or Tribal Government.  FEMA Form 009-0-91C                 56          728       40,768         1.50       61,152        63.52    3,884,375
                                     Project Worksheet (PW)
                                     Maps and Sketches Sheet.
State Local or Tribal Government..  FEMA Form 009-0-91D                 56          728       40,768         1.50       61,152        63.52    3,884,375
                                     Project Worksheet (PW)
                                     Photo Sheet.
State, Local or Tribal Government.  FEMA Form 009-0-120,                56          840       47,040         0.50       23,520        63.52    1,493,990
                                     Special Considerations
                                     Questions/.
State, Local or Tribal Government.  FEMA Form 009-0-128,                56          784       43,904         0.50       21,952        63.52    1,394,391
                                     Applicant's Benefits
                                     Calculation Worksheet/.
State, Local or Tribal Government.  FEMA Form 009-0-121, PNP            56           94        5,264         0.50        2,632        63.52      167,185
                                     Facility Questionnaire.
State, Local or Tribal Government.  FEMA Form 009-0-123,                56           94        5,264         0.50        2,632        63.52      167,185
                                     Force Account Labor
                                     Summary Record.
State, Local or Tribal Government.  FEMA Form 009-0-124,                56           94        5,264         0.25        1,316        63.52       83,592
                                     Materials Summary Record/
                                     .
State, Local or Tribal Government.  FEMA Form 009-0-125,                56           94        5,264         0.50        2,632        63.52      167,185
                                     Rented Equipment Summary
                                     Record.
State, Local or Tribal Government.  FEMA Form 009-0-126,                56           94        5,264         0.50        2,632        63.52      167,185
                                     Contract Work Summary
                                     Record/.
State, Local or Tribal Government.  FEMA Form 009-0-127,                56           94        5,264         0.25        1,316        63.52       83,592
                                     Force Account Equipment
                                     Summary Record/.
State, Local or Tribal Government.  State Administrative Plan           56            1           56         8.00          448        63.52       28,457
                                     and State Plan
                                     Amendments/No Form.
State, Local or Tribal Government.  FEMA Form 009-0-111,                56            4          224       100.00       22,400        63.52    1,422,848
                                     Quarterly Progress
                                     Report.
State, Local or Tribal Government.  Request for Appeals or              56            9          504         3.00        1,512        63.52       96,042
                                     Arbitrations &
                                     Recommendation/No Forms.
State, Local or Tribal Government.  Request for Arbitration &            4            5           20         3.00           60        63.52        3,811
                                     Recommendation resulting
                                     from Hurricanes Katrina
                                     or Rita/No Form.
State, Local or Tribal Government.  FEMA Form 009-0-141, FAC-           56          913       51,128         1.25       63,910        63.52    4,059,563
                                     TRAX System.
                                                              ------------------------------------------------------------------------------------------
    Total.........................  .........................        1,012  ...........      398,068  ...........      466,025  ...........   29,601,921
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The ``Avg. Hourly Wage Rate'' for each respondent includes a 1.46 multiplier to reflect a fully-loaded wage rate.

    Estimated Total Annual Respondent Cost: $29,601,921.
    Estimated Respondents' Operation and Maintenance Costs: N/A.
    Estimated Respondents' Capital and Start-Up Costs: N/A.
    Estimated Total Annual Costs to the Federal Government: $1,890,650.

E. Privacy Act

    Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must 
determine whether implementation of a proposed regulation will result 
in a system of records. A ``record'' is any item, collection, or 
grouping of information about an individual that is maintained by an 
agency, including, but not limited to, his/her education, financial 
transactions, medical history, and criminal or employment history and 
that contains his/her name, or the identifying number, symbol, or other 
identifying particular assigned to the individual, such as a finger or 
voice print or a photograph. See 5 U.S.C. 552a(a)(4). A ``system of 
records'' is a group of records under the control of an agency from 
which information is retrieved by the name of the individual or by some 
identifying number, symbol, or other identifying particular assigned to 
the individual. An agency cannot disclose any record which is contained 
in a system of records except by following specific procedures.

[[Page 53745]]

    In accordance with DHS policy, FEMA has completed a Privacy 
Threshold Analysis (PTA) for this proposed rule. DHS has determined 
that this proposed rulemaking does not affect the 1660-0017 OMB Control 
Number's current compliance with the E-Government Act of 2002 or the 
Privacy Act of 1974, as amended. As a result, DHS has concluded that 
the 1660-0017 OMB Control Number is covered by the DHS/FEMA/PIA-013 
Grants Management Programs Privacy Impact Assessment (PIA). 
Additionally, DHS has decided that the 1660-0017 OMB Control Number is 
covered by the DHS/FEMA--009 Hazard Mitigation, Disaster Public 
Assistance, and Disaster Loan Programs System of Records, 79 FR 16015, 
Mar. 24, 2014 System of Records Notice (SORN).

F. National Environmental Policy Act of 1969 (NEPA)

    Section 102 of the National Environmental Policy Act of 1969 
(NEPA), 83 Stat. 852 (Jan. 1, 1970) (42 U.S.C. 4321 et seq.) requires 
agencies to consider the impacts of their proposed actions on the 
quality of the human environment. The Council on Environmental 
Quality's (CEQ) procedures for implementing NEPA, 40 CFR parts 1500 
through 1508, require Federal agencies to prepare Environmental Impact 
Statements (EISs) for major Federal actions significantly affecting the 
quality of the human environment. Each agency can develop categorical 
exclusions (catexes) to cover actions that have been demonstrated to 
not typically trigger significant impacts to the human environment 
individually or cumulatively. Agencies develop environmental 
assessments (EAs) to evaluate those actions that are ineligible for an 
agency's catexes and which have the potential to significantly impact 
the human environment. At the end of the EA process, the agency will 
determine whether to make a Finding of No Significant Impact (FONSI) or 
whether to initiate the EIS process.
    Rulemaking is a major Federal action subject to NEPA. The list of 
catexes at DHS Instruction Manual 023-01-001-01 (Revision 01), 
``Implementation of the National Environmental Policy Act (NEPA),'' 
Appendix A, includes a catex for the promulgation of certain types of 
rules, including rules that implement, without substantive change, 
statutory or regulatory requirements and rules that interpret or amend 
an existing regulation without changing its environmental effect. 
(Catex A3(b) and (d)).
    The purpose of this rule is to propose regulations to implement the 
new right of arbitration authorized by the DRRA, and to revise FEMA's 
regulations regarding first and second PA appeals. These changes are to 
implement statutory requirements and to amend existing regulation 
without changing its environmental effect, consistent with Catex A3, as 
defined in DHS Instruction Manual 023-01-001-01 (Rev. 01), Appendix A. 
No extraordinary circumstances exist that will trigger the need to 
develop an EA or EIS. See DHS Instruction Manual 023-01-001-01 V(B)(2). 
An EA will not be prepared because a catex applies to this rulemaking 
action and no extraordinary circumstances exist.

G. Executive Order 13175, Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, ``Consultation and Coordination With Indian 
Tribal Governments,'' 65 FR 67249, Nov. 9, 2000, applies to agency 
regulations that have Tribal implications, that is, regulations that 
have substantial direct effects on one or more Indian tribes, on the 
relationship between the Federal Government and Indian Tribes, or on 
the distribution of power and responsibilities between the Federal 
Government and Indian Tribes. Under this Executive Order, to the extent 
practicable and permitted by law, no agency will promulgate any 
regulation that has Tribal implications, that imposes substantial 
direct compliance costs on Indian Tribal governments, and that is not 
required by statute, unless funds necessary to pay the direct costs 
incurred by the Indian Tribal government or the Tribe in complying with 
the regulation are provided by the Federal Government, or the agency 
consults with Tribal officials.
    The purpose of this rule is to propose regulations to implement the 
new right of arbitration authorized by 42 U.S.C. 5189a(d) and to revise 
FEMA's regulations regarding first and second PA appeals. Current 
regulations at 44 CFR 206.206 only provide regulatory guidance on a 
first and second PA appeal process, but not arbitration. The other 
major proposed revisions to 44 CFR 206.206 include adding definitions; 
adding subparagraphs to clarify what actions FEMA may take and will not 
take while an appeal is pending and state that FEMA may issue separate 
guidance as necessary, similar to current 44 CFR 206.209(m); adding a 
finality of decision paragraph; requiring electronic submission for 
appeals and arbitrations documents; and clarifying overall timeframe 
limits for first and second appeals.
    Under the proposed rule, Indian Tribes have the same opportunity to 
participate in arbitrations as other eligible applicants; however, 
given the participation criteria required under 42 U.S.C. 5189a(d) and 
its voluntary nature, FEMA anticipates a very small number, if any 
Indian Tribes, will participate in the new proposed permanent right of 
arbitration. FEMA also anticipates a very small number of Indian Tribes 
will be affected by the other major revisions to 44 CFR 206.206. As a 
result, FEMA does not expect this proposed rule to have a substantial 
direct effect on one or more Indian tribes or impose direct compliance 
costs on Indian Tribal governments. Additionally, since FEMA 
anticipates a very small number, if any Indian Tribes will participate 
in the arbitration portion of the proposed rule nor will be affected by 
the rest of the proposed revisions to 44 CFR 206.206, FEMA does not 
expect the regulations to have substantial direct effects on the 
relationship between the Federal Government and Indian Tribes or on the 
distribution of power and responsibilities between the Federal 
Government and Indian Tribes.

H. Executive Order 13132, Federalism

    A rule has implications for federalism under Executive Order 13132 
``Federalism'' (64 FR 43255, Aug. 10, 1999), if it has a substantial 
direct effect 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. FEMA has 
analyzed this proposed rule under Executive Order 13132 and determined 
that it does not have implications for federalism.

I. Executive Order 12630, Taking of Private Property

    This rule will not effect a taking of private property or otherwise 
have taking implications under Executive Order 12630, ``Governmental 
Actions and Interference With Constitutionally Protected Property 
Rights'' (53 FR 8859, Mar. 18, 1988).

J. Executive Order 12898, Environmental Justice

    Executive Order 12898 ``Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations'' (59 FR 
7629, Feb. 16, 1994), mandates that Federal agencies identify and 
address, as appropriate, disproportionately high and adverse human 
health or environmental effects of their programs, policies, and 
activities on minority and

[[Page 53746]]

low-income populations. It 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 benefit of, or subjecting 
persons to discrimination because of their race, color, or national 
origin or income level.
    The purpose of this rule is to propose regulations to implement the 
new right of arbitration authorized by the DRRA in 42 U.S.C. 5189a(d) 
and to revise FEMA's regulations regarding first and second PA appeals. 
Current regulations, at 44 CFR 206.206, only provide regulatory 
guidance on a first and second PA appeal process, but not arbitration. 
The other major proposed revisions to 44 CFR 206.206 include adding 
definitions; adding subparagraphs to clarify what actions FEMA may take 
and will not take while an appeal is pending and state that FEMA may 
issue separate guidance as necessary, similar to current 44 CFR 
206.209(m); adding a finality of decision paragraph; requiring 
electronic submission for appeals and arbitrations documents; and 
clarifying overall timeframe limits for first and second appeals. There 
are no adverse effects and no disproportionate effects on minority or 
low-income populations.

K. Executive Order 12988, Civil Justice Reform

    This proposed rule meets applicable standards in sections 3(a) and 
3(b)(2) of Executive Order 12988, ``Civil Justice Reform'' (61 FR 4729, 
Feb. 7, 1996), to minimize litigation, eliminate ambiguity, and reduce 
burden.

L. Executive Order 13045, Protection of Children From Environmental 
Health Risks and Safety Risks

    This proposed rule will not create environmental health risks or 
safety risks for children under Executive Order 13045, ``Protection of 
Children From Environmental Health Risks and Safety Risks'' (62 FR 
19885, Apr. 23, 1997).

M. Congressional Review of Agency Rulemaking

    Under the Congressional Review of Agency Rulemaking Act (CRA), 5 
U.S.C. 801-808, before a rule can take effect, the Federal agency 
promulgating the rule must submit to Congress and to the Government 
Accountability Office (GAO) a copy of the rule; a concise general 
statement relating to the rule, including whether it is a major rule; 
the proposed effective date of the rule; a copy of any cost-benefit 
analysis; descriptions of the agency's actions under the Regulatory 
Flexibility Act and the Unfunded Mandates Reform Act; and any other 
information or statements required by relevant executive orders.
    FEMA will send this rule to the Congress and to GAO pursuant to the 
CRA, if the rule is finalized. The rule is not a ``major rule'' within 
the meaning of the CRA. It will not have an annual effect on the 
economy of $100,000,000 or more; 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; and it will 
not 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 in 
domestic and export markets.

List of Subjects in 44 CFR Part 206

    Administrative practice and procedure, Coastal zone, Community 
facilities, Disaster assistance, Fire prevention, Grant programs-
housing and community development, Housing, Insurance, 
Intergovernmental relations, Loan programs-housing and community 
development, Natural resources, Penalties, Reporting and recordkeeping 
requirements.

    For the reasons stated in the preamble, the Federal Emergency 
Management Agency proposes to amend 44 CFR part 206 as follows:

PART 206--FEDERAL DISASTER ASSISTANCE

0
1. The authority citation for part 206 continues to read as follows:

    Authority:  Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, 42 U.S.C. 5121 through 5207; Homeland Security Act 
of 2002, 6 U.S.C. 101 et seq.; Department of Homeland Security 
Delegation 9001.1.

0
2. Revise Sec.  206.206 to read as follows:


Sec.  206.206   Appeals and arbitrations.

    (a) Definitions. The following definitions apply to this section:
    Administrator means the Administrator of the Federal Emergency 
Management Agency.
    Amount in dispute means the difference between the amount of 
financial assistance sought for a Public Assistance project and the 
amount of financial assistance for which FEMA has determined such 
Public Assistance project is eligible.
    Applicant refers to the definition at Sec.  206.201(a).
    Final agency determination means: (1) The decision of FEMA, if the 
applicant or recipient does not submit a first appeal within the time 
limits provided for in paragraph (b)(1)(ii)(A) of this section; or
    (2) The decision of FEMA, if the applicant or recipient withdraws 
the pending appeal and does not file a request for arbitration within 
30 calendar days of the withdrawal of the pending appeal; or
    (3) The decision of the FEMA Regional Administrator, if the 
applicant or recipient does not submit a second appeal within the time 
limits provided for in paragraph (b)(2)(ii)(A) of this section.
    Recipient refers to the definition at Sec.  206.201(m).
    Rural area means an area with a population of less than 200,000 
outside an urbanized area.
    Urbanized area means the area as identified by the United States 
Census Bureau.
    (b) Appeals and Arbitrations. An eligible applicant or recipient 
may appeal or an eligible applicant may arbitrate any determination 
previously made related to an application for or the provision of 
Public Assistance according to the procedures of this section.
    (1) First Appeal. The applicant must make a first appeal in writing 
and submit it electronically through the recipient to the Regional 
Administrator. The recipient must include a written recommendation on 
the applicant's appeal with the electronic submission of the 
applicant's first appeal to the Regional Administrator. The recipient 
may make recipient-related appeals to the Regional Administrator.
    (i) Content. A first appeal must:
    (A) Contain all documented justification supporting the applicant 
or recipient's position;
    (B) Specify the amount in dispute, as applicable; and
    (C) Specify the provisions in Federal law, regulation, or policy 
with which the applicant or recipient believes the FEMA determination 
was inconsistent.
    (ii) Time Limits. (A) The applicant may make a first appeal through 
the recipient within 60 calendar days from the date of the FEMA 
determination that is the subject of the appeal and the recipient must 
electronically forward to the Regional Administrator the applicant's 
first appeal with a recommendation within 120 calendar days from the 
date of the FEMA determination that is the subject of the appeal. FEMA 
will deny all first appeals it receives from the recipient more than 
120 calendar days from the date of the

[[Page 53747]]

FEMA determination that is the subject of the appeal.
    (B) Within 90 calendar days following receipt of a first appeal, if 
there is a need for additional information, the Regional Administrator 
will provide electronic notice to the recipient and applicant. If there 
is no need for additional information, then FEMA will not provide 
notification. The Regional Administrator will generally allow the 
recipient 30 calendar days to provide any additional information.
    (C) The Regional Administrator will provide electronic notice of 
the disposition of the appeal to the applicant and recipient within 90 
calendar days of receipt of the appeal or within 90 calendar days 
following the receipt of additional information or following expiration 
of the period for providing the information.
    (iii) Technical Advice. In appeals involving highly technical 
issues, the Regional Administrator may, at his or her discretion, 
submit the appeal to an independent scientific or technical person or 
group having expertise in the subject matter of the appeal for advice 
or recommendation. The period for this technical review may be in 
addition to other allotted time periods. Within 90 calendar days of 
receipt of the report, the Regional Administrator will provide 
electronic notice of the disposition of the appeal to the recipient and 
applicant.
    (iv) Effect of an Appeal. (A) FEMA will take no action to implement 
any determination pending an appeal decision from the Regional 
Administrator, subject to the exceptions in paragraph (b)(1)(iv)(B) of 
this section.
    (B) Notwithstanding paragraph (b)(1)(iv)(A) of this section, FEMA 
may:
    (1) Suspend funding (see 2 CFR 200.338);
    (2) Defer or disallow other claims questioned for reasons also 
disputed in the pending appeal; or
    (3) Take other action to recover, withhold, or offset funds if 
specifically authorized by statute or regulation.
    (v) Implementation. If the Regional Administrator grants an appeal, 
the Regional Administrator will take appropriate implementing 
action(s).
    (vi) Guidance. FEMA may issue separate guidance as necessary to 
supplement paragraph (b)(1) of this section.
    (2) Second Appeal. If the Regional Administrator denies a first 
appeal in whole or in part, the applicant may make a second appeal in 
writing and submit it electronically through the recipient to the 
Assistant Administrator for the Recovery Directorate. The recipient 
must include a written recommendation on the applicant's appeal with 
the electronic submission of the applicant's second appeal to the 
Assistant Administrator for the Recovery Directorate. The recipient may 
make recipient-related second appeals to the Assistant Administrator 
for the Recovery Directorate.
    (i) Content. A second appeal must:
    (A) Contain all documented justification supporting the applicant 
or recipient's position;
    (B) Specify the amount in dispute, as applicable; and
    (C) Specify the provisions in Federal law, regulation, or policy 
with which the applicant or recipient believes the FEMA determination 
was inconsistent.
    (ii) Time Limits. (A) If the Regional Administrator denies a first 
appeal in whole or in part, the applicant may make a second appeal 
through the recipient within 60 calendar days from the date of the 
Regional Administrator's first appeal decision and the recipient must 
electronically forward to the Assistant Administrator for the Recovery 
Directorate the applicant's second appeal with a recommendation within 
120 calendar days from the date of the Regional Administrator's first 
appeal decision. FEMA will deny all second appeals it receives from the 
recipient more than 120 calendar days from the date of the Regional 
Administrator's first appeal decision.
    (B) Within 90 calendar days following receipt of a second appeal, 
if there is a need for additional information, the Assistant 
Administrator for the Recovery Directorate will provide electronic 
notice to the recipient and applicant. If there is no need for 
additional information, then FEMA will not provide notification. The 
Assistant Administrator for the Recovery Directorate will generally 
allow the recipient 30 calendar days to provide any additional 
information.
    (C) The Assistant Administrator for the Recovery Directorate will 
provide electronic notice of the disposition of the appeal to the 
recipient and applicant within 90 calendar days of receipt of the 
appeal or within 90 calendar days following the receipt of additional 
information or following expiration of the period for providing the 
information.
    (iii) Technical Advice. In appeals involving highly technical 
issues, the Assistant Administrator for the Recovery Directorate may, 
at his or her discretion, submit the appeal to an independent 
scientific or technical person or group having expertise in the subject 
matter of the appeal for advice or recommendation. The period for this 
technical review may be in addition to other allotted time periods. 
Within 90 calendar days of receipt of the report, the Assistant 
Administrator for the Recovery Directorate will provide electronic 
notice of the disposition of the appeal to the recipient and applicant.
    (iv) Effect of an Appeal. (A) FEMA will take no action to implement 
any determination pending an appeal decision from the Assistant 
Administrator for the Recovery Directorate, subject to the exceptions 
in paragraph (b)(2)(iv)(B) of this section.
    (B) Notwithstanding paragraph (b)(2)(iv)(A) of this section, FEMA 
may
    (1) Suspend funding (see 2 CFR 200.338);
    (2) Defer or disallow other claims questioned for reasons also 
disputed in the pending appeal; or
    (3) Take other action to recover, withhold, or offset funds if 
specifically authorized by statute or regulation.
    (v) Implementation. If the Assistant Administrator for the Recovery 
Directorate grants an appeal, the Assistant Administrator for the 
Recovery Directorate will direct the Regional Administrator to take 
appropriate implementing action(s).
    (vi) Guidance. FEMA may issue separate guidance as necessary to 
supplement paragraph (b)(2) of this section.
    (3) Arbitration. (i) Applicability. An applicant may request 
arbitration from the Civilian Board of Contract Appeals (CBCA) if:
    (A) There is a disputed agency determination arising from a major 
disaster declared on or after January 1, 2016; and
    (B) The amount in dispute is greater than $500,000, or greater than 
$100,000 for an applicant for assistance in a rural area; and
    (C) The Regional Administrator has denied a first appeal decision 
or received a first appeal but not rendered a decision within 180 
calendar days of receipt.
    (ii) Limitations. A request for arbitration is in lieu of a second 
appeal.
    (iii) Request for Arbitration. (A) An applicant may initiate 
arbitration by submitting an electronic request simultaneously to the 
recipient, the CBCA, and FEMA. See 48 CFR part 6106.
    (B) Time Limits. (1) An applicant must submit a request for 
arbitration within 60 calendar days from the date of the Regional 
Administrator's first appeal decision; or
    (2) If the first appeal was timely submitted, and the Regional 
Administrator has not rendered a decision within 180 calendar days of

[[Page 53748]]

receiving the appeal, an applicant may electronically submit a 
withdrawal of the pending appeal simultaneously to the recipient, the 
FEMA Regional Administrator, and the CBCA. The applicant may then 
submit a request for arbitration within 30 calendar days from the date 
of the withdrawal of the pending appeal.
    (C) Content of request. The request for arbitration must contain a 
written statement that specifies the amount in dispute, all 
documentation supporting the position of the applicant, the disaster 
number, and the name and address of the applicant's authorized 
representative or counsel.
    (iv) Expenses. Expenses for each party will be paid by the party 
who incurred the expense.
    (v) Guidance. FEMA may issue separate guidance as necessary to 
supplement paragraph (b)(3) of this section.
    (c) Finality of decision. A FEMA final agency determination or a 
decision of the Assistant Administrator for the Recovery Directorate on 
a second appeal constitute a final decision of FEMA. In the 
alternative, a decision of the majority of the CBCA panel constitutes a 
final decision, binding on all parties. See 48 CFR 6106.613. Final 
decisions are not subject to further administrative review.

Pete Gaynor,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2020-16040 Filed 8-28-20; 8:45 am]
BILLING CODE 9111-19-P

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