Public Assistance Appeals and Arbitrations, 45660-45685 [2021-17213]

Download as PDF lotter on DSK11XQN23PROD with RULES1 45660 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations recipient if there is sufficient evidence in the medical record of an occurrence of TRALI and the pulmonary edema is not caused by cardiac dysfunction or other causes and occurs within 72 of receiving a blood product containing plasma, in this case VIGIV. (12) Acute renal failure (ARF). ARF is the sudden loss of the kidneys’ ability to perform their main function of eliminating excess fluids and electrolytes (salts), as well as waste material from the blood. ARF, which is also called acute kidney injury, develops rapidly over a few hours or a few days. ARF can be fatal and requires intensive treatment; however, ARF may be reversible. ARF may cause permanent loss of kidney function, or end-stage renal disease necessitating dialysis or transplant. A Table 2 injury for ARF has occurred if there is sufficient evidence in the medical record of an occurrence of ARF within the identified timeframe and the individual received the associated countermeasure (VIGIV). (13) Drug-induced aseptic meningitis (DIAM). (i) DIAM is an inflammation of the meninges (linings of the brain) that is not caused by a bacteria or virus, but is caused by a drug or medication. The symptoms of meningitis include severe headache, nuchal (neck) rigidity, drowsiness, fever, photophobia (light sensitivity), painful eye movements, nausea, and vomiting. Discontinuation of the medication leads to a resolution of the symptoms. DIAM is thought to occur because of an immunological hypersensitivity reaction to a specific medication. In the case of immunoglobulins, DIAM may be precipitated by the immunologically active components within the plasma or because of the stabilizers used within the product. The symptoms of DIAM may reoccur with another exposure to the offending agent. (ii) A Table 2 injury for DIAM has occurred in a recipient if there is sufficient evidence in the medical record of an occurrence of DIAM within the identified timeframe and the individual received the associated countermeasure (VIGIV). DIAM occurring in the absence of the use of VIGIV, or DIAM occurring with the use of VIGIV outside the established timeframe of onset, which is any time after the first dose and up to 48 hours after the last dose of this medication, is not a Table 2 injury. (14) Hemolysis. Hemolysis is the physical breakdown of red blood cells (RBCs) either through natural attrition or as caused by external factors. The RBC’s function is to transport oxygen throughout the body in the hemoglobin VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 contained within the RBC. Additionally, the RBCs contain the majority of the body’s potassium stores. With hemolysis, the body is unable to transport oxygen effectively, and the person develops hypoxia. Additionally, the rapid breakdown of the cell releases large amounts of potassium into the blood stream, which can cause abnormal heart rhythms and cardiac arrest. In severe cases of hemolysis, a blood transfusion may be required to correct the resulting anemia. A Table 2 injury for hemolysis has occurred if there is sufficient evidence in the medical record of an occurrence of hemolysis, and the patient received the associated countermeasure (VIGIV). Hemolysis occurring in the absence of the use of VIGIV and outside of the timeframe of 12 hours to 14 days after receiving VIGIV is not a Table 2 injury. Hemolysis occurring from a more likely alternative diagnosis, such as infections, toxins, poisons, hemodialysis, or medications, is not a Table 2 injury. This list of conditions that can cause hemolysis, not associated with VIGIV, is not exhaustive, and all additional diagnoses within the medical documentation will be evaluated. [FR Doc. 2021–17216 Filed 8–13–21; 8:45 am] BILLING CODE 4165–15–P 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: Final rule. AGENCY: This final rule implements the new right of arbitration authorized by the Disaster Recovery Reform Act of 2018 (DRRA) and revises the Federal Emergency Management Agency’s regulations regarding first and second Public Assistance appeals. DATES: This rule is effective on January 1, 2022. Proposed information collection comments must be submitted on or before September 15, 2021. ADDRESSES: The docket for this rulemaking is available for inspection using the Federal eRulemaking Portal: http://www.regulations.gov and can be SUMMARY: PO 00000 Frm 00040 Fmt 4700 Sfmt 4700 viewed by following that website’s instructions. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to www.reginfo.gov/public/do/ PRAMain. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. 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. Proposed Rule On August 31, 2020, the Federal Emergency Management Agency (FEMA) published a Notice of Proposed Rulemaking (NPRM) (85 FR 53725) proposing to revise its current Public Assistance (PA) appeals regulation at 44 CFR 206.206 to add in the new right to arbitration under the Disaster Recovery Reform Act of 2018 (DRRA),1 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 included adding definitions; adding subparagraphs to clarify what actions FEMA may take and will not take while an appeal is pending and stating 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. Under § 206.209, applicants may request arbitration to resolve disputed PA applications under major disaster declarations for Hurricanes Katrina and Rita, pursuant to the 1 Disaster Recovery Reform Act of 2018, Public Law 115–254, 132 Stat. 3186 (Oct. 5, 2018), 42 U.S.C. 5189a. E:\FR\FM\16AUR1.SGM 16AUR1 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations lotter on DSK11XQN23PROD with RULES1 authority of the American Recovery and Reinvestment Act of 2009 (ARRA).2 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 public assistance arbitrations. Therefore, FEMA recommends that applicants review the CBCA 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, as both cover FEMA public assistance arbitrations. II. Discussion of Public Comments and FEMA’s Responses The public comment period of the NPRM closed on October 30, 2020. FEMA received germane comments from six separate commenters. The first anonymous commenter [FEMA–2019– 0012–0002] was unconditionally supportive of the NPRM, as they found the DRRA population thresholds fair. The second commenter, a member of the public [FEMA–2019–0012–0003], addressed five separate issues regarding the NPRM in their comment including: Suggesting the use of ‘‘applicant’’ to refer to all entities; suggesting the use of ‘‘appellant’’ instead of ‘‘applicant’’ and ‘‘subrecipient’’; stating that using the date of issuance of the FEMA determination instead of the date the ‘‘appellant’’ views the FEMA determination does not provide clarity; suggesting that the ‘‘appellant’’ now has 150 days to make a complete appeal with the new 30-day deadline to provide additional information; and questioning whether the NPRM removed the first 60-day requirement to make the entire deadline 120-days regardless of when each entity appeals so long as it is within 120 days. The third commenter, also a member of the public [FEMA–2019–0012–0004], suggested FEMA adjust the amount in dispute thresholds for hyper-inflation. This commenter also submitted a duplicative comment which was withdrawn [FEMA–2019–0012–0005]. The second anonymous commenter submitted an unrelated comment [FEMA–2019–0012–DRAFT–0006], which was not posted to the Docket. The fourth commenter, from a State Emergency Management Agency [FEMA–2019–0012–0006], also asked whether the NPRM’s combination of the applicant and recipient’s 60-day 2 American Recovery and Reinvestment Act of 2009, Public Law 111–5, 123 Stat. 115 (Feb. 17, 2009), 26 U.S.C. 1 note. VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 submission requirements could equate to additional submission time for appeals. The fifth commenter, from the same State Emergency Management Agency [FEMA–2019–0012–0007], asked numerous questions regarding applicant and recipient proposed appeal submission timeframes. The sixth commenter, a State Division of Emergency Management (DEM) [FEMA– 2019–0012–0008], generally supports the effort to amend the regulations. However, the State DEM believes many of the changes proposed in the NPRM conflict with the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) 3 and expressed concern with FEMA removing its own deadlines while strictly applying them to applicants and recipients. The State DEM included attachments of cases—or parts of cases—and a detailed table of their comments. A. Adjustment Amount in Dispute Thresholds Under Section 1219 of the DRRA, in order to request arbitration a PA applicant must dispute 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). One member of the public [FEMA– 2019–0012–0004] commented that, for the most part, the proposed changes are well thought out and stand to reason. However, the commenter suggested that the amount in dispute threshold allow for future adjustment based upon hyperinflation. Including provisions for hyper-inflation, this commenter posited, will allow FEMA to carry out its crucial work without returning to the rulemaking process if the dollar fluctuates in the future. A lower threshold could subsequently overwhelm the arbitration or appeal process. Since the amount in dispute thresholds are statutorily set in Section 1219 of DRRA, it is not within FEMA’s discretion to change them in this rulemaking. While FEMA appreciates the commenter’s support, FEMA did not make any changes to the regulatory text at 206.206 as a result of the comment. B. Population Thresholds The DRRA defines a rural area to mean an area with a population of less than 200,000 outside an urbanized area. The NPRM proposed to define the term ‘‘urbanized area’’ to mean the area as 3 Disaster Relief Act of 1974, Public Law 93–288, 88 Stat. 143 (May 22, 1974), as amended, 42 U.S.C. 5121 et seq. PO 00000 Frm 00041 Fmt 4700 Sfmt 4700 45661 identified by the United States Census Bureau (USCB). The USCB defines an ‘‘urbanized area’’ as an area that consists of densely settled territory that contains 50,000 or more people.4 For clarity and to comply with publication requirements found in 1 CFR chapter I, FEMA has revised the final rule’s definition of ‘‘urbanized area’’ as an area that consists of densely settled territory that contains 50,000 or more people. An anonymous commenter [FEMA– 2019–0012–0002] supports the different population thresholds of the NPRM. The anonymous commenter suggested that the population requirements give all areas a fair chance of receiving Federal assistance. FEMA appreciates the anonymous commenter’s support but, did not make any changes to the regulatory text at 206.206 as a result of the comment. C. ‘‘Applicant/Subrecipient’’ Different Entities Versus ‘‘Applicant’’ for All Entities A member of the public [FEMA– 2019–0012–0003] commented that FEMA views the applicant/subrecipient as two different entities: An ‘‘applicant’’ is one that has applied for but not yet received funding, while a ‘‘subrecipient’’ has applied for and been awarded funding. This member of the public [FEMA–2019–0012–0003] also commented that the definition of ’’applicant’’ does not include ‘‘subrecipient’’ (although one could argue that all ‘‘subrecipients’’ are ‘‘applicants,’’ but not all ‘‘applicants’’ are ‘‘subrecipients,’’ so the use of ‘‘applicant’’ for all entities could still be correct). The ‘‘applicant,’’ as defined at 44 CFR 206.201(a), is a State agency, local government, or eligible private nonprofit organization (PNP) submitting an application to the recipient for assistance under the recipient’s grant. 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. The ‘‘recipient’’ is typically the State to which a grant is awarded. In the NPRM, FEMA proposed changing the phrase ‘‘applicant, subrecipient, or recipient’’ to ‘‘applicant or recipient’’ since the definition of ‘‘applicant’’ at 44 CFR 206.201(a) already includes the term ‘‘subrecipient.’’ Since an ‘‘applicant’’ submits an application to the ‘‘recipient’’ for assistance under the recipient’s grant, the ‘‘recipient’’ and the ‘‘applicant’’ are not interchangeable 4 See ‘‘Qualifying Urban Areas for the 2010 Census,’’ 77 FR 18651, Mar. 27, 2012. E:\FR\FM\16AUR1.SGM 16AUR1 45662 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations phrases. It follows that the definition of ‘‘applicant’’ at 206.201(a) cannot include a ‘‘recipient,’’ so FEMA disagrees with the public commenter’s [FEMA–2019–0012–0003] statement that the use of ‘‘applicant’’ for all entities could still be correct. Therefore, FEMA did not make any changes to the regulatory text at 206.206 as a result of the comment. lotter on DSK11XQN23PROD with RULES1 D. ‘‘Appellant’’ Versus ‘‘Applicant’’ and ‘‘Subrecipient’’ A member of the public [FEMA– 2019–0012–0003] also commented that there is a difference in ‘‘applicant’’ and ‘‘subrecipient’’ per 44 CFR 206.201(a). FEMA disagrees with the statement that there is a difference in ‘‘applicant’’ and ‘‘subrecipient’’ per 206.201(a). As indicated above, the definition of ‘‘applicant’’ at 206.201(a) includes ‘‘subrecipient,’’ but not ‘‘recipient.’’ Therefore, FEMA did not make any changes to the regulatory text at 206.206 as a result of the comment. The commenter further stated that the use of ‘‘appellant’’ allows for both ‘‘applicants’’ and ‘‘subrecipients’’ to be represented in the terminology. In the past, FEMA used the term ‘‘appellant’’ instead of ‘‘applicant or recipient’’ for the requirement of specifying the provisions in Federal law, regulator, or policy in dispute. In the NPRM, FEMA’s reason for changing from ‘‘appellant’’ to ‘‘applicant or recipient’’ was for consistency in terminology and no substantive change was intended. Since FEMA’s goal is consistency in terminology, FEMA will not add ‘‘appellant’’ as a defined term to paragraph (a) of 44 CFR 206.206, as it could lead to confusion for the reader as to whether it refers to an ‘‘applicant’’ or a ‘‘recipient.’’ Therefore, FEMA did not make any changes to the regulatory text at 206.206 as a result of the comment. E. Other Definitions The State DEM [FEMA–2019–0012– 0008] commented that in 44 CFR 206.206(a), FEMA should define ‘‘Regional Administrator’’ because applicants submit first appeals to the appropriate FEMA Regional office and then submit second appeals to the Assistant Administrator for the Recovery Directorate. The State DEM proposed to define ‘‘Regional Administrators’’ as ‘‘the Administrator of the Federal Emergency Management Agency Regional Office in which the Applicant resides.’’ FEMA decided against the commenter’s suggested definition of ‘‘Regional Administrator’’ since 44 CFR 206.2(a)(21) already provides a definition for ‘‘Regional Administrator’’ VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 with general applicability throughout part 206. Regional Administrator: An administrator of a regional office of FEMA, or his/her designated representative. As used in these regulations, Regional Administrator also means the Disaster Recovery Manager who has been appointed to exercise the authority of the Regional Administrator for a particular emergency or major disaster. This second sentence in the definition of Regional Administrator at 206.2(a)(21) is contrary to the structure proposed in the NPRM at 206.206, as it says that the Regional Administrator also means the Disaster Recovery Manager. In the NPRM, the Regional Administrator/Disaster Recovery Manager is not making the FEMA determination. Otherwise, the submission of the first appeal to the Regional Administrator for review would mean that the Regional Administrator could review their own determination. Therefore, FEMA decided to add only the first sentence of the ‘‘Regional Administrator’’ definition at 206.2(a)(21) to this final rule for consistency and clarity. So, FEMA added the following definition of ‘‘Regional Administrator’’ to the regulatory text: Regional Administrator means an administrator of a regional office of FEMA, or his/her designated representative. Both, ‘‘Administrator’’ and ‘‘Regional Administrator’’ were added to Title V of the Homeland Security Act of 2002 by the Post-Katrina Emergency Management Reform Act of 2006.5 Therefore, it makes sense that they are defined terms under 44 CFR 206.206, as they are statutorily mandated FEMA positions. The State DEM also recommended that FEMA define the term ‘‘Assistant Administrator for the Recovery Directorate.’’ FEMA chose not to provide a definition of ‘‘Assistant Administrator for the Recovery Directorate’’ since future FEMA reorganizations may change that position title. Additionally, the ‘‘Assistant Administrator for the Recovery Directorate’’ is not a FEMA statutorily mandated position. Finally, the State DEM [FEMA–2019– 0012–0008] suggested that FEMA define ‘‘final agency determination’’ to mean the decision of FEMA as provided through electronic transmission of a formal determination if the applicant or recipient does not submit a first appeal within the time limits. FEMA does not 5 Post-Katrina Emergency Management Reform Act of 2006, 109–295, 120 Stat. 1394 (Oct. 4, 2006), 6 U.S.C. 701 note. PO 00000 Frm 00042 Fmt 4700 Sfmt 4700 adopt the commenter’s definition because the definition in the NPRM the is a more fulsome definition which covers all eventualities. In the NPRM, ‘‘final agency determination’’ means 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 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. For this reason, FEMA declines to adopt the commenter’s definition. Therefore, FEMA only added the definition of ‘‘Regional Administrator’’ to the regulatory text at 206.206(a) as a result of the comment. F. First and Second Appeals’ Deadlines Proposed paragraph 206.206(b)(1)(ii) of the NPRM addressed 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. Moreover, 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. There is no recourse for the applicant if the recipient misses the deadline to forward the appeal and recommendation to the Regional Administrator. There is also no recourse for the applicant in a second appeal where the recipient does not make the deadline. Several commenters—including a member of the public [FEMA–2019– 0012–0003], a State agency [FEMA– 2019–0012–0007], and State DEM [FEMA–2019–0012–0008]—sought clarification on when, exactly, the applicant’s initial 60-day deadline is triggered. For instance, is the deadline triggered on the day the applicant views the determination [FEMA–2019–0012– 0003]? Does the deadline begin once the applicant has physically received the determination paperwork [FEMA–2019– 0012–0008]? As FEMA was aware of this issue, the NPRM provided clarity by adding an electronic submission requirement for both first and second appeals. This requirement will enable FEMA to accurately track the transmittal and receipt of appeals since they will be E:\FR\FM\16AUR1.SGM 16AUR1 lotter on DSK11XQN23PROD with RULES1 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations the same date, while providing the applicant with a clear timeline for compliance. Specifically the deadline is triggered by FEMA’s transmittal of the determination, not the date the applicant views the determination. Nonetheless, a member of the public [FEMA–2019–0012–0003] questioned whether the NPRM’s proposal to change the language ‘‘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’’ will actually assist FEMA with tracking. In her opinion, using the date of the issuance of the determination, rather than the date the ‘‘appellant’’ views the determination, does not provide clarity. Since the proposed language of the NPRM relies on the electronic submission for appeals, it would not matter when the FEMA determination that is subject of the appeal is viewed. With the switch to electronic submission, the date of the FEMA determination and the date of receipt are the same. Therefore, FEMA did not make any changes to the regulatory text as a result of the comments. A State DEM [FEMA–2019–0012– 0008] commented that it agrees with electronic submission to ease in tracking and ensuring timely receipt of appeals. However, the commenter stated, applicants and recipients do not always receive FEMA’s determination on the same day as the date of the transmission letter. This could potentially reduce the amount of time for an applicant to appeal. In support of this comment, the State DEM submitted an emergency (as opposed to major disaster) declaration determination with what appeared to be a discrepancy between the date of receipt and the date of determination, as attachments. Upon further review, FEMA finds the discrepancy between the date of receipt and date of determination was an administrative error or an anomaly. FEMA is taking programmatic and technological steps to tie the date of determination to date of the determination’s transmittal, but should a similar error or discrepancy recur in the future FEMA would use the date of transmittal as the deadline trigger. Nonetheless, the State DEM suggested remedy language for both first and second appeals which would start the clock on the 60-day deadline on the confirmed receipt of FEMA’s determination. Further, the commenter proposed language to create a rebuttable presumption in favor of the date of receipt claimed by the applicant or recipient. Because the NPRM proposed requiring electronic submission for both VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 applicant and recipient and the NPRM proposed FEMA simultaneously electronically notify both applicant and recipient, these concerns are unfounded. Therefore, FEMA did not make any changes to the regulatory text at 206.206(b)(1)(ii) and (b)(2)(ii) as a result of the comments. G. First and Second Appeals’ Deadlines—60/60-Day Versus 120-Day A member of the public [FEMA– 2019–0012–0003] queried: Is the NPRM to remove the first 60-day requirement for the appellant to appeal, and make the entire deadline 120 days regardless of when each entity appeals so long as it is within 120 days? This simplifies the timeliness requirement for all parties she stated, but the proposed language is confusing as to whether the 60-day deadline remains for the applicant. By the NPRM, she continues, the applicant could appeal on day 120 and the recipient could forward on same that day. In this scenario, the commenter believed the submission would remain timely. The commenter stated that this removes some of the intent behind the timeliness requirements for each party to responsibly review the appeal. The applicant’s 60-day deadline remains, as the Stafford Act requires it for appeals. See 423(a) of the Stafford Act. In order to resolve the confusion identified by the public commenter [FEMA–2019–0012–0003], FEMA has added regulatory text to both the first and second appeals paragraphs of the final rule for clarity and consistency. Specifically, FEMA replaced the second to the last sentence of the appeals paragraphs of the final rule at 206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) with the following: ‘‘[i]f the applicant or the recipient do not meet their respective 60-calendar day and 120calendar day deadlines, FEMA will deny the appeal.’’ This is consistent with current FEMA policy. See page 40 of the Public Assistance Program and Policy Guide,6 which says that ‘‘[i]f either the Applicant or Recipient does not meet the respective 60-day deadlines, FEMA will deny the appeal as untimely.’’ Also in reference to the 120-day deadline, a State agency [FEMA–2019– 0012–0006] inquired: Does this mean that if the applicant appeals to the recipient 45 days from the FEMA determination, that the recipient still has 120 calendar days from the date of the FEMA determination to transmit the appeal to FEMA? In the above scenario, 6 Public Assistance Program and Policy Guide Version 4 (fema.gov). PO 00000 Frm 00043 Fmt 4700 Sfmt 4700 45663 an applicant that appeals 45 days after its FEMA determination would then leave the recipient with 75 days to forward the appeal to FEMA. The NPRM is in no way extending the 120-day deadline. A separate comment from the same State agency [FEMA–2019–0012–0007] correctly stated that the applicant still has a firm 60-day deadline to submit its appeal to the applicant. The commenter then inquired whether FEMA will deny any appeal as untimely if the applicant submits its appeal to the recipient after the 60-day deadline, but FEMA receives the appeal within 120 days. In this scenario, the commenter is correct that FEMA would deny this appeal as untimely. Even if the recipient ultimately submitted the appeal to FEMA within 120 days from the date of determination, if an applicant submits its appeal to the recipient outside of the 60 days, it has exceeded the deadline imposed by Section 423 of the Stafford Act. As stated above, FEMA added new regulatory text in the final rule to both the first and second appeals paragraphs for clarity and consistency. The new language states that if the applicant or the recipient do not meet their respective 60-calendar day and 120calendar day deadlines, FEMA will deny the appeal. Finally, the State DEM [FEMA–2019– 0012–0008] suggested that the regulatory language was misleading because it implies that FEMA will deny all first appeals it does not receive by the recipient’s 120-day deadline and is not clear that applicant’s untimeliness will jeopardize the appeal. As the scenarios above make clear, both an applicant and recipient’s untimeliness will continue to jeopardize either a first or second appeal based upon their respective 60-calendar day and 120calendar day deadlines. For these reasons, FEMA made changes to the regulatory text regarding first appeals at 206.206(b)(1)(ii)(A) and regarding second appeals at (b)(2)(ii)(A) as a result of the comments. H. Denial Based Upon Timeliness The State DEM [FEMA–2019–0012– 0008] objected to FEMA denying either a first or second appeal based upon timeliness. The State DEM argued that FEMA lacked the authority to unilaterally deny an appeal based upon timeliness because this is not specifically permitted by the Stafford Act. The State DEM stated that it was ‘‘administratively unfair’’ for FEMA to deny second appeals solely based on timeliness without considering the merits thereof. E:\FR\FM\16AUR1.SGM 16AUR1 lotter on DSK11XQN23PROD with RULES1 45664 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations The State DEM specifically proposed language prohibiting FEMA from denying a second appeal based on untimeliness if a determination on the merits would be in the applicant or recipient’s favor. It offered language barring FEMA from denying an otherwise timely second appeal solely on the grounds that the relevant first appeal was untimely. To bolster its argument, the State DEM attached an exhibit wherein FEMA rejected a second appeal based on the first appeal being untimely even though, the State DEM argued, FEMA incorrectly de-obligated funds initially. Had FEMA examined the issue on the merits the argument continues, the applicant would have prevailed. Section 423 of the Stafford Act requires an applicant to submit an appeal within 60 days. FEMA does not have the unilateral authority to alter or ignore this requirement. The State DEM’s suggestions would have the effect of removing timeliness as a meaningful consideration for appeals. Further, FEMA has no ability to extend the deadlines listed in Section 423, just as it lacks express authority to waive timelines. FEMA is solely implementing requirements prescribed by law. In addition, the start of the mandatory 60day period, the date of FEMA’s determination, and the date of the applicant and recipient’s receipt thereof should be identical with the implementation of electronic transmission. Since electronic transmission addresses the State DEM’s concerns regarding the start of the appeals period and FEMA cannot waive, alter, or modify the 60-day appeal deadline in the Stafford Act, FEMA did not make any changes to the regulatory text at 206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) as a result of these comments. However, as stated above FEMA added new regulatory text in the final rule to both the first and second appeals paragraphs for clarity and consistency. The new language states that if the applicant or the recipient do not meet their respective 60-calendar day and 120-calendar day deadlines, FEMA will deny the appeal. The State DEM [FEMA–2019–0012– 0008] also suggested that the regulatory language in 206.206(b)(3)(iii)(B)(2) of the NPRM be modified to permit requests for arbitration from untimely appeals. This comment and proposed language would render timeliness moot, as applicants could make an untimely appeal and then attempt to arbitrate the rejection on timeliness. Section 423 of the Stafford Act only permits an applicant to submit an appeal within 60 days; FEMA does not have the authority VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 to alter or ignore this deadline. Consequently, FEMA did not make any changes to the regulatory text at 206.206(b)(3)(iii)(B)(2) as a result of these comments. However, FEMA provided clarifying edits to 206.206(b)(3)(iii)(B)(2) in the final rule, so that an applicant understands that if they choose arbitration pursuant to Section 423(d) of the Stafford Act, as FEMA has not responded to an applicant’s first appeal within 180 days, then they must withdraw the pending appeal before they file the request for arbitration. Basically, the applicant cannot arbitrate and appeal at the same time. Additionally, FEMA provided clarifying edits to 206.206(b)(3)(iii)(B)(2) to remove the phrase ‘‘and the CBCA.’’ FEMA deleted this phrase, as a pending first appeal would not be pending before the CBCA, so the applicant would have no reason to notify the CBCA of the first appeal withdrawal. So in the final rule, FEMA has split the first sentence of 206.206(b)(3)(iii)(B)(2) into two sentences that say 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 arbitrate the decision of FEMA. To request arbitration, the applicant must first electronically submit a withdrawal of the pending appeal simultaneously to the recipient and the FEMA Regional Administrator. Plus, FEMA added clarifying language to the last sentence of 206.206(b)(3)(iii)(B)(2) by replacing ‘‘may’’ with ‘‘must’’ and by adding the phrase ‘‘to the recipient, the CBCA, and FEMA’’ after arbitration. So, 206.206(b)(3)(iii)(B)(2) in the final rule says that the applicant must then submit a request for arbitration to the recipient, the CBCA, and FEMA within 30 calendar days from the date of the withdrawal of the pending appeal. FEMA wants to clarify that if an applicant withdraws a first appeal, then the applicant must submit a request for arbitration within 30 calendar days. If the applicant does not follow the requirements of 206.206(b)(3)(iii)(B)(2), then the applicant’s request for arbitration will be denied for timeliness. I. Simultaneously Provide Decisions to Applicants & Recipients The State DEM [FEMA–2019–0012– 0008] commented that it agrees with electronic submission to ease in tracking and ensuring timely receipt of appeals, and suggested FEMA also provide its decisions electronically to both the applicant and recipient simultaneously. This is the course of action that FEMA PO 00000 Frm 00044 Fmt 4700 Sfmt 4700 proposed in the NPRM’s 206.206(b)(1)(iii); therefore, FEMA did not make any changes to the regulatory text as a result of this comment. J. FEMA Exceeds 90-Day Deadline A State DEM [FEMA–2019–0012– 0008] commented that in both paragraphs 206.206(b)(1)(ii)(C) and (b)(2)(ii)(C) of the NPRM, FEMA allows itself 90 days from receipt of the appeal, rather than the date of the appeal itself, to respond per Section 423(b) of the Stafford Act. The State DEM further suggests regulatory text changes imposing penalties for any response beyond the 90-day deadline. First and foremost, the date an applicant makes an appeal is not the same date FEMA receives the appeal because it must first pass through the recipient. In addition, though FEMA endeavors to render all appeals decisions within 90 days, it is an agile agency with emergent responsibilities. Nevertheless, FEMA remains stewards of Federal monies and must perform a thorough review to ensure grants follow the law. This constant conflict demands an ongoing shift of resources and priorities. With the final rule’s implementation of electronic transmission, FEMA determinations should be received electronically when issued. The Regional Administrator will provide electronic notice of the disposition of the appeal to the applicant and the recipient thereby avoiding delays inherent in methods such as carrier delivery. FEMA will know the date received as it will be the same as the electronic transmission date. Lastly, FEMA notes that, pursuant to Section 423(d) of the Stafford Act, if the agency fails to respond to an applicant’s first appeal within 180 days, said applicant may choose to arbitrate the dispute provided they meet all the other arbitration threshold requirements. Consequently, FEMA did not make any changes to the regulatory text at 206.206(b)(1)(ii)(C) and (b)(2)(ii)(C) as a result of the comments. K. 90-Day Deadline for Technical Information Proposed paragraphs 206.206(b)(1)(iii) and (b)(2)(iii) provide that, for highly technical matters, the Regional Administrator may submit the appeal to an independent scientific or technical person/group having expertise in the subject matter of the appeal for advice or recommendation. The period of this review may be in addition to other allotted time periods. In lieu of the above, a State DEM [FEMA–2019–0012–0008] commented that FEMA does not have the authority E:\FR\FM\16AUR1.SGM 16AUR1 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations lotter on DSK11XQN23PROD with RULES1 to expand the time it has to render a determination on a first or second appeal. Moreover, the State DEM argued, the time taken to seek technical advice should be deducted from FEMA’s allotted 90 days, as FEMA should have already conducted a proper full technical review prior to making a final agency determination. FEMA, as the steward of Federal monies, must always pursue the public’s best interest by ensuring that all grants follow the law. For highly technical matters, the Agency has a responsibility to seek outside guidance if it lacks the requisite expertise inhouse. This will allow the Agency to make the correct decision and serve the greater good of distributing equitable disaster assistance. Moreover, pursuant to Section 423(d) of the Stafford Act, if FEMA fails to respond to an applicant’s first appeal within 180 days, said applicant may choose to arbitrate the dispute provided they meet all the other arbitration threshold requirements. For these reasons, FEMA did not alter the regulatory text at 206.206(b)(1)(iii) and (b)(2)(iii) as a result of the comments. L. 30 Days To Provide Additional Information In the NPRM, under paragraphs 206.206(b)(1)(ii)(B) and (b)(2)(ii)(B), FEMA proposed allowing the recipient only 30-calendar days to provide any additional information to the Regional Administrator; instead of having the Regional Administrator include the date by which the information must be provided. Quantifying the period for additional information better allows FEMA to issue timely determinations on first and second appeals. A member of the public [FEMA– 2019–0012–0003] commented that the proposed change allows an appellant to provide additional information even 30 days after the appeal submittal. This change would not serve the public’s interest of FEMA issuing timely determinations on first appeal she argued. In this instance, FEMA would be required to delay its adjudication by 30 days while it waits for the window of opportunity to submit additional information on a first appeal to pass. Thus, if this change was implemented, an appellant would have 150 days to make a complete appeal. While the member of the public [FEMA–2019– 0012–0003] is correct that the new 30day deadline may add to the appeals timeline, it could also shorten the timeline of future appeals by quantifying the deadline. FEMA intends to provide a fair deadline for additional information. Therefore, FEMA did not make any changes to the regulatory text VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 at 206.206(b)(1)(ii)(B) and (b)(2)(ii)(B) as a result of the comment. M. Untimeliness and Imposition of Penalties Upon FEMA The State DEM [FEMA–2019–0012– 0008] proposed the imposition of penalties on FEMA when it exceeds the 90-day deadline for requesting additional information for both first and second appeals. This commenter also suggested that if FEMA misses its deadline, recipients and applicants should not be held to their deadlines, and FEMA should be barred from requesting information to substantiate timeliness. The State DEM also proposed a requirement for FEMA to provide monthly status updates concerning each appeal to the applicant and recipient. As noted above, the Stafford Act does not include any remedies or corrective actions in the event that FEMA fails to meet the 90day deadline to decide appeals. However, FEMA has a public assistance second appeals tracker available to the public at https://www.fema.gov/about/ openfema/data-sets/fema-publicassistance-second-appeals-tracker. With regards to the State DEM’s [FEMA–2019–0012–0008] suggestion that untimeliness on FEMA’s part should relieve applicants and recipients from complying with their own deadlines. Section 423 of the Stafford Act requires an applicant to submit an appeal within 60 days; FEMA does not have the authority to alter or ignore this requirement. FEMA does have a duty to be a responsible steward of public monies and must therefore conduct a thorough review of all grants to ensure compliance with the law, even if that review happens to exceed the 90-day deadline provided for disposition of appeals. Finally, FEMA will not impose additional responsibilities upon itself, such as status updates, outside of what is prescribed by law. Consequently, FEMA did not make any changes to the regulatory text as a result of the comment. N. Implementation A State DEM [FEMA–2019–0012– 0008] commented that 206.206(b)(1)(v) and (b)(2)(v) do not have deadlines or timelines for implementing a successful appeal. The State DEM suggested that FEMA adopt an actual deadline to avoid delaying project development without explanation to the applicant or recipient. The State DEM suggested language stating that if the Regional Administrator grants an appeal, FEMA must begin implementing the action within 30 days of the determination date, or at a minimum, provide the PO 00000 Frm 00045 Fmt 4700 Sfmt 4700 45665 applicants and recipient with a status update indicating when the action would be implemented. In a separate comment, the agency also suggested requiring the Assistant Administrator for the Recovery Directorate to perform this action regarding second appeals. FEMA finds the proposed language to be unnecessary because it effectively requires FEMA to impose requirements on itself not otherwise imposed by Congress. FEMA trusts the discretion of its Regional Administrators 7 to make appropriate decisions on addressing successful appeals. Also, providing status updates would unintendedly affect FEMA’s ability to meet timelines for other actions. Therefore, FEMA did not make any changes to the regulatory text at 206.206(b)(1)(v) and (b)(2)(v) as a result of the comment. O. Content of Arbitration Request A State DEM [FEMA–2019–0012– 0008] commented on 206.206(b)(3)(iii)(C), which states that a 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. Additional supplemental documentation is permitted as ordered by the CBCA. The State DEM believed the language was confusing because ‘‘all documentation’’ implied applicants could not submit supplemental information within a request for arbitration. The State DEM suggested removing the word ‘‘all’’ and adding language to allow supplemental documentation as requested by the CBCA. FEMA notes that the CBCA already has rules on supplemental materials located at 48 CFR 6106.608, Evidence; timing [Rule 608]. Accordingly, FEMA did not make any changes to the regulatory text at 206.206(b)(3)(iii)(C) as a result of the comment. P. Emergency Versus Major Disaster Declaration Determinations As mentioned before, the State DEM [FEMA–2019–0012–0008] submitted an emergency declaration determination as their second and third attachment to their comment related to timeliness of appeals. In the third attachment, FEMA cites to 44 CFR 206.206 for the authority to appeal this emergency declaration determination. During the course of adjudicating this comment, FEMA 7 The Assistant Administrator for the Recovery Directorate will direct the Regional Administrator to take appropriate implementing action(s) regarding successful second appeals. E:\FR\FM\16AUR1.SGM 16AUR1 45666 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations reviewed how the NPRM discussed emergency versus major disaster determinations. In the NPRM, FEMA limited arbitrations to major disaster declaration determinations at proposed 206.206(b)(3)(i)(A) since the right of arbitration is housed in paragraph (d) of Section 423 of the Stafford Act. Section 423 is under Title IV of the Stafford Act, which is entitled ‘‘Major Disaster Assistance Programs.’’ Also, subparagraph (d)(5)(A) of 423 of the Stafford Act states that the applicant shall submit to the arbitration process established under the authority granted under Section 601 of Public Law 111– 5. FEMA’s corresponding regulations under 206.209 are entitled ‘‘Arbitration for Public Assistance determinations related to Hurricanes Katrina and Rita (Major disaster declarations DR–1603, DR–1604, DR–1605, DR–1606, and DR– 1607).’’ Therefore, FEMA limited arbitration in the NPRM to major disaster declarations. Yet, there was no corresponding limitation in the appeals section of the NPRM because applicants may appeal emergency declaration decisions. As a result of the deliberation surrounding a response to this comment, FEMA did discover that the NPRM imprecisely stated in the Executive Orders 12866 and 13563 section that ‘‘[t]his proposed rule does not apply to emergency disaster declarations.’’ Rather, it should have stated that ‘‘[t]he Regulatory Evaluation does not include a discussion of emergency disaster declarations; since, arbitration is only available to dispute the determinations of major disaster declarations.’’ There was no need to analyze the cost for applicants to appeal determinations of emergency disaster declarations in the NPRM, since FEMA currently allows for such and the NPRM did not limit appeals to major disaster declaration determinations. FEMA did not make any changes to the regulatory text at 206.206 as a result of this comment but it did update the Regulatory Evaluation as noted above. lotter on DSK11XQN23PROD with RULES1 III. Summary of Other Changes The NPRM at 44 CFR 206.206(a) proposed to define the term ‘‘urbanized area’’ to mean the area as identified by the United States Census Bureau (USCB). The USCB defines an ‘‘urbanized area’’ as an area that consists of densely settled territory that contains 50,000 or more people. For clarity and to comply with publication requirements found in 1 CFR chapter I, FEMA has revised the final rule’s definition of ‘‘urbanized area’’ as an area VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 that consists of densely settled territory that contains 50,000 or more people. FEMA realized that the NPRM at 206.206 was silent regarding the recipient-related first and second appeal time limits. Section 423(a) of the Stafford Act allows appeals within 60 days. Therefore, in the first appeal time limits portion of the final rule FEMA aligned with this requirement by adding the following sentence at the end of 206.206(b)(1)(ii)(A): A recipient may make a recipient-related first appeal within 60 calendar days from the date of the FEMA determination that is the subject of the appeal and must electronically submit their first appeal to the Regional Administrator. FEMA also had to make a corresponding addition to the second appeal time limits portion of the final rule by adding the following sentence to the end of 206.206(b)(2)(ii)(A): If the Regional Administrator denies a recipient-related first appeal in whole or in part, the recipient may make a recipient-related second appeal within 60 calendar days from the date of the Regional Administrator’s first appeal decision and the recipient must electronically submit their second appeal to the Assistant Administrator for the Recovery Directorate. FEMA realized that the NPRM at 206.206(b)(3)(i)(A) does not follow the language of Section 423(d)(1) of the Stafford Act, which says that an applicant for assistance may request arbitration to dispute the eligibility for assistance or repayment of assistance. Rather, the NPRM at 206.206(b)(3)(i)(A) states that an applicant may request arbitration if there is a disputed agency determination. Therefore, in the final rule FEMA is removing the phrase ‘‘disputed agency determination’’ from paragraph 206.206(b)(3)(i)(A) and adding ‘‘dispute of the eligibility for assistance or of the repayment of assistance’’ in its place. FEMA also realized that the NPRM at 206.206(b) does not follow the language of Section 423 of the Stafford Act, which says that an applicant for assistance may request arbitration to dispute the eligibility for assistance or repayment of assistance. Rather, the NPRM at 206.206(b) says 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 PA according to the procedures of this section. Because the regulatory text does not follow the statutory language, FEMA is removing the phrase ‘‘or an eligible applicant may arbitrate’’ from 206.206(b) and FEMA is adding a second sentence to 206.206(b) that says: PO 00000 Frm 00046 Fmt 4700 Sfmt 4700 ‘‘An eligible applicant may request arbitration to dispute the eligibility for assistance or repayment of assistance.’’ FEMA is making these technical changes because FEMA does not have the discretion to deviate from statutorily imposed restrictions. Section 423(a) of the Stafford Act allows an applicant to appeal any decision regarding eligibility for, from, or amount of assistance. Whereas, Section 423(d)(1) of the Stafford Act allows an applicant to arbitrate the eligibility for assistance or repayment of assistance. Since Congress did not use the same language, there is a difference between what an applicant can arbitrate and what an applicant can appeal, which FEMA must delineate in its regulations at 44 CFR 206.206. Since these requirements are statutorily imposed and FEMA has no discretion FEMA may make these edits as technical changes in the final rule. Additional technical changes to the final rule are at 44 CFR 206.206(b)(1)(iv)(B)(1) and (b)(2)(iv)(B)(1) as the Office of Management and Budget (OMB) revised the cross references from 2 CFR 200.338 to 2 CFR 200.339; as, OMB revised sections of their Guidance for Grants and Agreements. (See 85 FR 49506, Aug. 13, 2020.) The final rule also includes corrections of typographical errors and other non-substantive stylistic changes from the NPRM. FEMA made a typographical error under the Executive Orders 12866 and 13563 section Impartiality heading. In the NPRM, the Executive Orders 12866 and 13563 section stated that CBCA found in favor of the applicant fully or partially in less than 20 percent of the time. The ‘‘20 percent’’ was a typographical error. It should have read ‘‘55 percent’’ to align with the correct data, which was listed on Table 13 of the NPRM. In this final rule, the data for the Executive Orders 12866 and 13563 section has been updated with the most recent 10-years of available data at the time of the analysis. Therefore, FEMA has replaced ‘‘less than 20’’ with ‘‘about 13’’ in the final rule to make sure that the narrative of the percentage that the CBCA found in favor of the applicant fully or partially aligns with Table 13. The final rule also includes other nonsubstantive changes from the NPRM. For instance, FEMA added a footnote to the Executive Orders 12866 and 13563 section under the Cost to Government/ FEMA heading that ‘‘FEMA estimates that we could need up to four expert witnesses. FEMA’s expert witnesses may or may not speak at the hearing. Additionally, FEMA may hire an expert witness so that FEMA can consult with E:\FR\FM\16AUR1.SGM 16AUR1 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations them about the subject matter.’’ The footnote adds clarity to the statement that FEMA assumes that it would use four expert witnesses per case. This change is for clarification purposes only. In this final rule, FEMA added onto footnote 11 in the Executive Orders 12866 and 13563 section under the first bullet point under the Assumptions heading that ‘‘[i]n the final rule, the data for the Executive Orders 12866 and 13563 section has been updated with the most recently available data at the time of the analysis.’’ The edits to footnote 11 clarifies that the Executive Orders 12866 and 13563 section contains the most recent data at the time of the analysis and that the figures will be in the most recent dollars. For the NPRM, 2018 dollars were used based off the Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) data. In the final rule, 2019 dollars were used based off the BLS CPI data as it became available. This addition is for clarification purposes only. Another non-substantive stylistic change from the NPRM was made to the definition of ‘‘applicant’’ and ‘‘recipient’’ in 206.206(a). Instead of saying that the ‘‘applicant’’ or the ‘‘recipient’’ ‘‘refers to,’’ the final rule regulatory text says that the ‘‘applicant’’ or the ‘‘recipient’’ ‘‘has the same meaning as.’’ So, the definitions in the final rule regulatory text are: Applicant has the same meaning as the definition at § 206.201(a) and Recipient has the same meaning as the definition at § 206.201(m). The final non-substantive stylistic and grammar changes from the NPRM were made to 206.206(c) in the final rule. First, FEMA split the paragraph into two subparagraphs based on whether the subparagraph dealt with the finality of a FEMA decision or a CBCA decision. Then, FEMA corrected a grammar error in the first sentence of 206.206(c)(1) by revising ‘‘constitute’’ to ‘‘constitutes.’’ Since, FEMA split paragraph 206.206(c) from the NPRM into two subparagraphs in the final rule, FEMA had to include that final decisions are not subject to further administrative review in both subparagraphs, as it applies to the finality of both FEMA and CBCA decisions. lotter on DSK11XQN23PROD with RULES1 IV. Regulatory and Statutory Analyses A. Executive Order 12866, as Amended, Regulatory Planning and Review and Executive Order 13563, Improving Regulation and Regulatory Review Executive Orders 12866 (‘‘Regulatory Planning and Review’’) and 13563 (‘‘Improving Regulation and Regulatory VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 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 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. 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. Need for Regulatory Action 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 (RA), who will make a determination on the appeal. If the applicant or recipient does not submit a second appeal of the RA’s determination, 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. This rule implements 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 final rule will directly affect applicants or recipients disputing FEMA PA eligibility determinations or PO 00000 Frm 00047 Fmt 4700 Sfmt 4700 45667 disputing the amount awarded for PA projects. Applicants are required to submit appeals through their State, or in the case of a Tribal declaration,8 their Tribal government (recipients). The recipient will 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 in the case of an applicant not receiving the first appeal decision within 180 days or to defend FEMA’s first appeal decision. The final rule will codify regulations for the 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.9 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.10 This final rule establishes a 60calendar day deadline for submitting 8 Tribes may choose to apply for PA independently as a recipient (tribal declaration) or may submit through their State as a subrecipient. 9 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). After CBCA finalized their rule on June 21, 2019, see 84 FR 29085, FEMA again updated the Fact Sheet. The current Fact Sheet can be found at: https:// www.fema.gov/sites/default/files/2020-07/fema_ DRRA-1219-public-assistance-arbitration-right_factsheet.pdf. (2–20). Accessed June 8, 2021. 10 48 CFR part 6101, Rules of Procedure of the Civilian Board of Contract Appeals, also covers PA arbitrations. E:\FR\FM\16AUR1.SGM 16AUR1 45668 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations requests for arbitration (§ 206.206(b)(3)(iii)(B)) so that submission time limits for second appeals and arbitrations are the same. 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 final rule will affect disputes from 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. lotter on DSK11XQN23PROD with RULES1 Summary of Regulatory Changes FEMA is revising its 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 appeals process. DRRA added 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 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. In the final rule, a non-substantive stylistic change from the NPRM was made to the definition of ‘‘applicant’’ and ‘‘recipient’’ in § 206.206(a). Instead of saying that the ‘‘applicant’’ or the ‘‘recipient’’ ‘‘refers to,’’ the final rule regulatory text says that the ‘‘applicant’’ or the ‘‘recipient’’ ‘‘has the same meaning as.’’ So, the definitions in the final rule regulatory text are: Applicant has the same meaning as the definition at § 206.201(a) and Recipient has the VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 same meaning as the definition at § 206.201(m). In this final rule, FEMA is adding a definition of Regional Administrator and making changes to the regulatory text regarding first appeals and second appeals at § 206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) as a result of the 60-day appeals deadline comments. Additionally, in this final rule, FEMA is making technical revisions at §§ 206.206(b) and 206.206(b)(3)(i)(A) to align the regulatory text with the dispute of the eligibility for assistance or repayment of assistance language of Section 423(d)(1) of the Stafford Act. FEMA realized that the NPRM at § 206.206 was silent regarding the recipient-related first and second appeal time limits. Section 423(a) of the Stafford Act allows appeals within 60 days. Therefore, in the first appeal time limits portion of the final rule FEMA aligned with this requirement by adding the following sentence at the end of § 206.206(b)(1)(ii)(A): A recipient may make a recipient-related first appeal within 60 calendar days from the date of the FEMA determination that is the subject of the appeal and must electronically submit their first appeal to the Regional Administrator. FEMA also had to make a corresponding addition to the second appeal time limits portion of the final rule by adding the following sentence to the end of § 206.206(b)(2)(ii)(A): If the Regional Administrator denies a recipient-related first appeal in whole or in part, the recipient may make a recipient-related second appeal within 60 calendar days from the date of the Regional Administrator’s first appeal decision and the recipient must electronically submit their second appeal to the Assistant Administrator for the Recovery Directorate. This regulatory change is not expected to have a significant economic impact. FEMA provided clarifying edits to § 206.206(b)(3)(iii)(B)(2) in the final rule, so that an applicant understands that if they choose arbitration pursuant to Section 423(d) of the Stafford Act, as FEMA has not responded to an applicant’s first appeal within 180 days, then they must withdraw the pending appeal before they file the request for arbitration. Basically, the applicant cannot arbitrate and appeal at the same time. Plus, FEMA provided clarifying edits to § 206.206(b)(3)(iii)(B)(2) to remove the phrase ‘‘and the CBCA.’’ FEMA deleted this phrase, as a pending first appeal would not be pending before the CBCA, so the applicant would have no reason to notify the CBCA of the first appeal withdrawal. PO 00000 Frm 00048 Fmt 4700 Sfmt 4700 For clarity and to comply with publication requirements found in 1 CFR chapter I, FEMA has revised the final rule’s definition of ‘‘urbanized area’’ as an area that consists of densely settled territory that contains 50,000 or more people. Additional technical changes to the final rule are at 44 CFR 206.206(b)(1)(iv)(B)(1) and (b)(2)(iv)(B)(1) as the Office of Management and Budget (OMB) revised the cross references from 2 CFR 200.338 to 2 CFR 200.339; as, OMB revised sections of their Guidance for Grants and Agreements. (See 85 FR 49506, Aug. 13, 2020.) So in the final rule, FEMA has split the first sentence of § 206.206(b)(3)(iii)(B)(2) into two sentences that say 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 arbitrate the decision of FEMA. To request arbitration, the applicant must first electronically submit a withdrawal of the pending appeal simultaneously to the recipient and the FEMA Regional Administrator. This regulatory change will not have an economic impact. FEMA also added clarifying language to the last sentence of § 206.206(b)(3)(iii)(B)(2) by replacing ‘‘may’’ with ‘‘must’’ and by adding the phrase ‘‘to the recipient, the CBCA, and FEMA’’ after arbitration. So, § 206.206(b)(3)(iii)(B)(2) in the final rule says that the applicant must then submit a request for arbitration to the recipient, the CBCA, and FEMA within 30 calendar days from the date of the withdrawal of the pending appeal. FEMA wants to clarify that if an applicant withdraws a first appeal, then the applicant must submit a request for arbitration within 30 calendar days. If the applicant does not follow the requirements of § 206.206(b)(3)(iii)(B)(2), then the applicant’s request for arbitration will be denied for timeliness. This regulatory change will not have an economic impact. The final non-substantive stylistic and grammar changes from the NPRM were made to § 206.206(c) in the final rule. First, FEMA split the paragraph into two subparagraphs based on whether it dealt with the finality of a FEMA decision or a CBCA decision. Then, FEMA corrected a grammar error in the first sentence of § 206.206(c)(1) by revising ‘‘constitute’’ to ‘‘constitutes.’’ Since, FEMA split paragraph 206.206(c) from the NPRM into two subparagraphs in the final rule, FEMA had to include that final decisions are not subject to further E:\FR\FM\16AUR1.SGM 16AUR1 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations administrative review in both subparagraphs, as it applies to the finality of both FEMA and CBCA decisions. Assumptions This analysis used the following assumptions: • All monetary values are presented in 2019 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 December 2019.11 • This analysis does not include a discussion of emergency disaster declarations; since, arbitration is only available to dispute the determinations of major disaster declarations.12 • FEMA assumed the length of time for an arbitration case is based on the hearing location. • FEMA used 2019 wage rates for all parties involved in arbitration cases. Baseline lotter on DSK11XQN23PROD with RULES1 Following guidance in OMB Circular A–4, FEMA assessed the impacts of this final 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 under a no-action baseline. The costs, benefits, and transfers of this rule are measured against the pre-statutory baseline. The benefit of this rule is making information publicly available in the CFR for transparency and to prevent any confusion on the most upto-date arbitration process. Currently, FEMA has no permanent regulations for arbitrations outside of Hurricanes Katrina and Rita. Since the 11 Historical Consumer Price Index for All Urban Consumers (CPI–U): U.S. city average, all items, by month. Bureau of Labor Statistics: Consumer Price Index 2019. Accessed October 23, 2020. https:// www.bls.gov/cpi/tables/supplemental-files/archive2019.zip. In the final rule, the data for the Executive Orders 12866 and 13563 section has been updated with the most recently available data at the time of the analysis. 12 The NPRM incorrectly stated in the Executive Orders 12866 and 13563 section that ‘‘[t]his proposed rule does not apply to emergency disaster declarations.’’ The NPRM should have stated that here was no need to the cost for applicants to appeal determinations of emergency disaster declarations because FEMA currently allows for such and the NPRM did not limit appeals to major disaster declaration determinations. VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 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 November 9, 2020, FEMA received 20 requests for arbitration.13 Three of these cases are still in progress, so FEMA does not have available data on the outcome of these cases. Of the 17 closed cases, FEMA prevailed in 10 cases, the applicant prevailed in 4 cases, and the applicant withdrew from the arbitration process prior to a decision in 3 cases. These figures will 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 19 months of historical data, and therefore, FEMA relied on older arbitration regulations as a proxy for the expected number of arbitration cases arising out of this final 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 final rule. While the Katrina/Rita arbitration regulations have some key differences from this final regulation, 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 final rule. FEMA recognized that the regulations at 44 CFR 206.209 have a 30-day time limit for submitting arbitration requests; whereas, this final rule has a 60 calendar-day time limit for arbitrations. 13 The number of arbitration requests was provided by FEMA’s Office of Chief Counsel Disaster Disputes Branch as of November 9, 2020. PO 00000 Frm 00049 Fmt 4700 Sfmt 4700 45669 FEMA was not able to estimate the impact 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 20 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 2010 through 2019 to derive an estimate of 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 final rule. This analysis was conducted using data from 2010 through 2019.14 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 73 arbitrations and a total 225 first appeals.16 From this available data, applicants chose arbitration in lieu of a first appeal 32 percent of the time ((73 ÷ 225) × 100 = approximately 32 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 14 The proposed rule stated that ‘‘The authority to arbitrate in lieu of a 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.’’ Review under the Executive Orders 12866 and 13563 section in the proposed rule was conducted with data available at the time. FEMA typically uses 10 years of historical data for their analysis. However, 10 years of historical data was not available at the time of the analysis of the proposed rule. For this final rule, FEMA was able to use 10 years of historical data, 2010 through 2019. Hurricane Katrina and Rita occurred in 2005. FEMA notes that as time passes, fewer applicants are submitting requests for public assistance each year, as over 15 years has passed since the Katrina/ Rita declarations. 15 Please note that arbitration cases for Hurricanes Katrina and Rita are not bound by a threshold for rural areas as is this rule. FEMA does not know if this limitation will result in more or less cases submitted. 16 Data on appeals and arbitrations is provided by FEMA’s Office of Chief Counsel Disaster Disputes Branch. Not all 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. E:\FR\FM\16AUR1.SGM 16AUR1 45670 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations estimates, FEMA looked at all PA appeals from 2010 through 2019, 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 874 second appeals submitted.17 Of that total, FEMA had data on the amount in dispute for 751 appeals. FEMA applied the urban/rural and minimum project amount requirements to these appeals and found that 353 or 47 percent would have been eligible for arbitration under this final rule ((353 ÷ 751) × 100 = approximately 47 percent).18 FEMA used the number of second appeals by year, then applied the percent eligible for arbitration under the final rule of 47 percent, then applied the percent choosing arbitration in lieu of a first appeal of 32 percent to calculate the expected number of arbitration cases from 2010 to 2019 as shown in Table 1. TABLE 1—TOTAL AND ANNUAL AVERAGE ESTIMATED ARBITRATION CASES PER YEAR Number of second appeals CY lotter on DSK11XQN23PROD with RULES1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Percent eligible under final rule (%) Percent choosing arbitration (%) Expected number of arbitration cases ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... ......................................................................................... 93 107 92 102 82 43 83 76 110 86 47 47 47 47 47 47 47 47 47 47 32 32 32 32 32 32 32 32 32 32 14 16 14 15 12 6 12 11 17 13 Total .................................................................................. 874 .............................. .............................. 130 Average ..................................................................... 87 .............................. .............................. 13 Based on historical data from 2010 through 2019 and case data from 44 CFR 206.209, FEMA estimates that there would be an average of 13 arbitration cases in lieu of a second appeal per year under the final rule. Arbitration has been available under 42 U.S.C. 5189a(d)(5) since January 1, 2016. So far, 20 cases were submitted, with three submitted for a first appeal lasting more than 180 days. Based on this limited data, FEMA estimates that 15 percent of arbitration cases would result from a withdrawal of a first appeal.19 Applying the 15 percent arbitration rate to the annual average number of expected arbitration cases would result in two additional arbitration case per year (15 percent × 13 cases = 1.95, rounded to two cases). Therefore, FEMA estimates an average of 15 arbitration cases per year (13 + 2 = 15 arbitrations per year). In this final rule, FEMA is removing the phrase ‘‘or an eligible applicant may arbitrate’’ from ‘‘206.206(b) and FEMA added a second sentence to 206.206(b) that says: ‘‘[a]n eligible applicant may request arbitration to dispute the eligibility for assistance or repayment of assistance’’ so that it follows the Stafford Act. This change in this final rule will not impact the number of arbitration cases per year since applicants can still request to arbitrate the case. However, the results of the arbitration may be impacted by the change in language. FEMA further discusses this point in our transfers and uncertainty analysis sections. 17 During the period of 2010–2019, 874 second level appeals were submitted. FEMA has amount in dispute data for 751 cases. FEMA does not have the amount in dispute data on the 123 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. 18 Out of 751 cases, 258 had an amount in dispute greater than $500,000 and would be eligible regardless of the urban/rural classification. 288 cases were for amounts between $100,000 and $500,000, of which 95 were classified as rural. 353 VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 Costs Based on experience from the arbitrations conducted for Hurricanes Katrina and Rita, costs from this final 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 final rule. Other provisions of the final rule, such as timeframe requirements, electronic filing requirements, technical advice and clarifications would not have associated costs. FEMA does not expect PO 00000 Frm 00050 Fmt 4700 Sfmt 4700 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 final 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 final 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 20 arbitration cases already filed. Generally, the applicant will use one or two attorneys and at least one expert witness. However, the arbitration (= 258 + 95) cases out of 751, or 47 percent would have met the eligibility requirements for arbitration in lieu of a second appeal. 19 Calculation: (3 cases where a first appeal lasted more than 180 days ÷ 20 arbitration cases) × 100 = 15 percent. E:\FR\FM\16AUR1.SGM 16AUR1 lotter on DSK11XQN23PROD with RULES1 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations 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 final 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. This analysis estimates a range of potential costs based on the applicant’s or recipient’s use of attorneys for representation. The final 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 (rounded to 47 hours) to prepare for the hearing, attend the hearing, and for post hearing work.20 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. Regulations at 44 CFR 206.209 have a 30-day time limit for submitting arbitration requests; whereas, this final rule has a 60 calendar-day time limit for arbitrations. Since the 60 calendar-day appeals deadline is current FEMA policy there will be no additional costs for the regulatory text changes at § 206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) since it has already been accounted for. 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. VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 Opportunity Cost of Time and Wages 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 wage rates for 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: $69.86 for Lawyers (SOC 23–1011), $31.25 for Court Reporters and Simultaneous Captioners (SOC 23–2093), $48.45 for Engineers (SOC 17–2000), and $59.15 for General and Operations Managers (SOC 11–1021).22 To account for the benefits paid by employers, FEMA used a wage multiplier of 1.46,23 resulting in fully-loaded hourly wages of $102.00 for Lawyers, $45.63 for Court Reporters and Simultaneous Captioners, $70.74 for Engineers, and $86.36 for General and Operations Managers. FEMA used the 2019 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 $53.85, and the hourly GS–15 step 5 salary was $74.86. In order to account 22 U.S. Bureau of Labor Statistics. National Occupational Employment and Wage Estimates United States. May 2019. Accessed August 18, 2020. https://www.bls.gov/oes/2019/may/oes_ nat.htm. 23 Bureau of Labor Statistics, Employer Costs for Employee Compensation, Table 1. ‘‘Employer costs per hour worked for employee compensation and costs as a percent of total compensation: Civilian workers, by major occupational and industry group, March 2019.’’ Available at http://www.bls.gov/ news.release/archives/ecec_06182020.pdf. Accessed August 18, 2020. The wage multiplier is calculated by dividing total compensation for all workers of $37.73 by wages and salaries for all workers of $25.91 per hour yielding a benefits multiplier of approximately 1.46. 24 U.S. Office of Personnel Management. 2019 General Schedule (GS) Locality Pay Tables. August 19, 2020. https://www.opm.gov/policy-dataoversight/pay-leave/salaries-wages/salary-tables/ pdf/2019/DCB_h.pdf. PO 00000 Frm 00051 Fmt 4700 Sfmt 4700 45671 for the benefits paid by employers, FEMA used a 1.46 multiplier to calculate loaded wage rates of $78.62 for a GS–13 Federal employee and $109.30 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 employees is not available, FEMA used the Federal lodging and per diem rates for applicants traveling to Washington, DC to attend hearings. According to GSA, in 2019, the average price of a hotel room in Washington, DC was $216 per night 26 and outside of the Washington, DC metro area was $94 per night.27 The per diem rate for meals and incidentals on the first and last travel days 28 is $57 and $76 for other travel 25 U.S. General Services Administration. ‘‘FY 2019 Per Diem Rates for District of Columbia.’’ Accessed on August 19, 2020. Standard CONUS rate used for lodging and MI&E. https:// www.gsa.gov/travel/plan-book/per-diem-rates/perdiem-rates-lookup/?action=perdiems_ report&state=DC&fiscal_year=2019&zip=&city=. Per diem rates are calendar year instead of fiscal year. 26 FEMA took the average of the 12 month per diem lodging rates provided by GSA for Washington, DC from October 2018 to September 2019, available at https://www.gsa.gov/travel/planbook/per-diem-rates/per-diem-rates-lookup/ ?action=perdiems_report&state=DC&fiscal_ year=2019&zip=&city=. 27 U.S. General Service Administration. ‘‘FY 2019 Per Diem Rates—Effective October 1, 2018.’’ Accessed on May 24, 2021. Standard CONUS rate used for lodging and MI&E. https://www.gsa.gov/ cdnstatic/FY2019_PerDiemRatesMasterFile_0.xls. Per diem rates are calendar year instead of fiscal year. 28 U.S. General Services Administration. ‘‘M&IE Breakdown.’’ Accessed on May 24, 2021. https:// E:\FR\FM\16AUR1.SGM Continued 16AUR1 45672 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations day(s) in Washington, DC. Similarly, the per diem rates for meals and incidentals on the first and last day is $41 and $55 for the other days outside of Washington, DC.29 The U.S. Department of Transportation (DOT) provides information on the price of domestic airfare.30 According to the Bureau of Transportation Statistics, the annual unadjusted cost of an average domestic flight within the United States, the average airfare was $355 roundtrip in 2019.31 The total travel costs for applicants attending hearings in Washington, DC that typically last 3 nights and 4 days would be $1,269 per person ($355 average airfare + ($216 hotel in Washington, DC × 3 nights) + ($76 meals and incidentals × 2 days of stay) + ($57 meals and incidentals × 2 travel days)) = $1,269). 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. Therefore, the opportunity costs of time for one expert witness to attend a hearing would be $3,325 ($70.74 engineers wages × 47 hours). Thus, the total cost for one expert witness’ travel and opportunity cost of time is $4,594 ($1,269 + $3,325). Table 2 shows the detailed costs per expert witness to attend a hearing in Washington, DC. To provide a range of estimates since cases vary, a hearing at the applicant’s location for an expert witness would cost $2,547 ($70.74 engineers wages × 36 hours 32). This total assumes the expert witness is local and therefore incurs no travel costs. TABLE 2—ESTIMATED COST PER EXPERT WITNESS, WASHINGTON, DC HEARING [2019$] 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) $355 $648 $266 $1,269 $3,325 $4,594 Cost for the Applicant The typical 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 $2,538 ($1,269 × 2 personnel = $2,538), 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 $10,925 (($102.00 per hour wages for a lawyer × 58 hours) + ($86.36 per hour wages for a general and operations manager × 58 hours) = $10,925). If the applicant does not use an attorney as their representative, the opportunity costs of time would be $10,018 (2 general and operations managers at $86.36 each × 58 hours = $10,018). Table 3 shows the range of total costs to the applicant which include the opportunity costs of time and the travel costs. TABLE 3—RANGE OF APPLICANT COSTS—WASHINGTON, DC HEARING [2019$] Opportunity cost of time lotter on DSK11XQN23PROD with RULES1 1 Attorney and 1 Non-Attorney .................................................................................. 2 Non-Attorneys ......................................................................................................... Travel $10,925 10,018 $2,538 2,538 Total $13,463 12,556 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 $21,744 ((2 expert witnesses at a cost of $4,594 each) + $12,556 applicant cost) if the representatives are 2 non-attorneys to $22,651 ((2 expert witnesses at $4,594 each) + $13,463 applicant and attorney cost) if the representatives are 1 attorney and 1 non-attorney. www.gsa.gov/travel/plan-book/per-diem-rates/miebreakdown. Per GSA, first and last travel days meals and incidentals expenses (M&IE) for the first and last calendar day of travel is calculated at 75 percent of the total M&IE. 29 U.S. General Service Administration. ‘‘FY 2019 Per Diem Rates—Effective October 1, 2018.’’ Accessed on May 24, 2021. Standard CONUS rate used for lodging and MI&E. https://www.gsa.gov/ cdnstatic/FY2019_PerDiemRatesMasterFile_0.xls. Per diem rates are calendar year instead of fiscal year. 30 Bureau of Transportation Statistics. ‘‘Annual Fares 1995–2019 4Q 2019’’ (.xlsx) March 23, 2020. U.S. Department of Transportation. https:// www.bts.gov/sites/bts.dot.gov/files/Annual%20 Fares%201995-2020%201Q2020.xlsx. 31 Unadjusted 2019 dollars. Excludes airline tickets under $50. 32 FEMA deducts the 11 hours of travel time from the total of 47 hours used for a hearing in Washington, DC to come up with the total time for a hearing at the applicant’s location assuming the expert witness is also local. Therefore, 36 hours is derived from the 20 hours estimated for preparing for the hearing and 16 hours for the duration of the hearing. VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 PO 00000 Frm 00052 Fmt 4700 Sfmt 4700 E:\FR\FM\16AUR1.SGM 16AUR1 45673 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations 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 hours) + ($102.00 for an attorney × 47 hours) + (2 expert witnesses at $70.74 each × 36 hours) = $13,946) 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. (assuming the expert witnesses are local) and would range from $13,211 ((2 general and operations managers at $86.36 each × 47 hours) + (2 expert witnesses at $70.74 each × 36 hours) = $13,211) to $13,946 (($86.36 for a general and operations manager × 47 TABLE 4—APPLICANT COSTS—LOCAL HEARING [2019$] Expert witnesses 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. Opportunity cost of time $5,093 5,093 The cost per arbitration case for the recipient is the opportunity costs of time for the representatives totaling $10,018 (2 general and operations managers at $86.36 each × 58 hours = $10,018) and travel expenses $2,538 (2 Total $8,853 8,118 $13,946 13,211 representatives × $1,269) of those attending the hearing in Washington, DC. As shown in table 5, the total cost to the recipient would be $12,556 if the hearing was held in Washington, DC. TABLE 5—ESTIMATED RECIPIENT COSTS, WASHINGTON, DC HEARING [2019$] General and Operations Managers ........................................................................... For a local hearing, two representatives would spend 47 hours on the case and the cost to the recipient would be $8,118 (2 general and operations managers at $86.36 each × 47 hours = $8,118). 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.33 The opportunity costs of time of the attorneys, including preparation and review of a case, is $8,832 (($78.62 GS–13 Step 5 attorney × 47 hours) + ($109.30 GS 15 Step 5 Supervisory Attorney × 47) hours = $8,832). Opportunity cost of time Travel Total $10,018 $2,538 $12,556 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 $5,032 (4 GS–13 Step 5 program analysts at $78.62 each × 16 hours = $5,032). Thus, the total opportunity costs of time for all six FEMA personnel would be $13,864. 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 34 for a total of $10,188 ($2,547 cost per expert witness × 4 expert witnesses = $10,188). 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 will continue to pay for a court reporter for the duration of a hearing under the final rule, but will not provide a transcript to the CBCA. The opportunity costs of time for the court reporter services for a transcript would be $730 per arbitration case ($45.63 per hour wages for Court Reporters and Simultaneous Captioners × 16 hours of arbitration time = $730). The estimated total cost to FEMA, including staff time, expert witnesses, and transcript services, would be $24,782 per case. Table 6 presents the cost of each component by opportunity cost of time and other costs. TABLE 6—ESTIMATED FEMA COSTS—WASHINGTON, DC HEARING lotter on DSK11XQN23PROD with RULES1 [2019$] 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 $10,188 $730 $13,864 $24,782 33 Based on information provided by FEMA Office of Chief Counsel Disaster Disputes Branch. VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 34 FEMA estimates that we could need up to four expert witnesses. FEMA’s expert witnesses may or may not speak at the hearing. Additionally, FEMA PO 00000 Frm 00053 Fmt 4700 Sfmt 4700 may hire an expert witness so that FEMA can consult with them about the subject matter. E:\FR\FM\16AUR1.SGM 16AUR1 45674 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations 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 for FEMA due to paying for travel time as well as actual travel costs. Travel costs are estimated using the attorneys at $109.30 each × 58 hours) $12,679 plus $5,032 for non-travelling program analysts resulting in a total cost of $17,711. The total estimated costs to FEMA for a local hearing are presented in Table 7. figures previously mentioned and would be $1,269 per person for a total of $2,538, if 2 attorneys travel to the applicant’s location. Additionally, FEMA estimates that the time would increase to 58 hours due to 11 hours of travel time for the attorneys totaling (2 TABLE 7—ESTIMATED FEMA COSTS—LOCAL [2019$] 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 $10,188 $730 $ 17,711 $2,538 $31,167 In addition to these costs, FEMA’s PA Program hired an Arbitration Coordinator at the GS–13 Step 5 level with an annual salary of $116,353. With the 1.46 multiplier for a fully loaded wage rate, the additional cost to FEMA is $169,875 per year. Therefore, the annual total costs to FEMA range from $194,657 ($169,875 + $24,782) if the hearing is held in Washington, DC to $201,042 ($169,875 + $31,167) if the hearing is held at the applicant’s location. 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 $52,496 and $59,989. Table 8 presents the range of estimated costs per arbitration case. Total Costs The total cost per case vary based on who the applicant uses as a representative, and whether the hearing is held in Washington, DC or local to the TABLE 8—TOTAL COST PER CASE [2019$] FEMA Low .......................................................................................... High .......................................................................................... As established earlier in this analysis, FEMA estimates an average of 15 arbitration cases per year. Therefore, FEMA estimates the total annual costs to range between $957,315 ((15 cases × $31,167 per case) + $169,875 to hire a new FEMA employee + (15 cases × Applicant $31,167 24,782 Recipient $13,211 22,651 $8,118 12,556 Total $52,496 59,989 $1,069,710) (high). Table 9 shows the estimated total costs per year of this final 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. $13,211 per case for applicant) + (15 cases × $8,118 per case for the recipient) = $957,315) (low) and $1,069,710 ((15 cases × $24,782 per case) + $169,875 for a new FEMA employee + (15 cases × $22,651 per case for the applicant) + (15 cases × $12,556 for the recipient) = TABLE 9—TOTAL COST PER YEAR FOR 15 CASES [2019$] FEMA Low .......................................................................................... High .......................................................................................... Applicant $637,380 $541,605 Recipient $198,165 $339,765 $121,770 $188,340 Total $957,315 $1,069,710 Tables 10 and 11 show the total 10year costs and 10-year costs annualized at 3 percent and 7 percent. TABLE 10—10-YEAR COST TOTALS USING 3 PERCENT AND 7 PERCENT DISCOUNT RATES lotter on DSK11XQN23PROD with RULES1 [Low estimate, 2019$] Year 1 2 3 4 5 ....................................... ....................................... ....................................... ....................................... ....................................... VerDate Sep<11>2014 16:35 Aug 13, 2021 FEMA costs Applicant costs $637,380 637,380 637,380 637,380 637,380 Jkt 253001 PO 00000 Recipient costs $198,165 198,165 198,165 198,165 198,165 Frm 00054 Fmt 4700 $121,770 121,770 121,770 121,770 121,770 Sfmt 4700 Total costs Annual costs discounted at 3% 1 $957,315 957,315 957,315 957,315 957,315 E:\FR\FM\16AUR1.SGM $929,432 902,361 876,079 850,562 825,788 16AUR1 Annual costs discounted at 7% 1 $894,687 836,156 781,454 730,331 682,552 45675 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations TABLE 10—10-YEAR COST TOTALS USING 3 PERCENT AND 7 PERCENT DISCOUNT RATES—Continued [Low estimate, 2019$] Year FEMA costs Applicant costs Recipient costs Total costs Annual costs discounted at 3% 1 Annual costs discounted at 7% 1 6 ....................................... 7 ....................................... 8 ....................................... 9 ....................................... 10 ..................................... 637,380 637,380 637,380 637,380 637,380 198,165 198,165 198,165 198,165 198,165 121,770 121,770 121,770 121,770 121,770 957,315 957,315 957,315 957,315 957,315 801,736 778,385 755,713 733,702 712,332 637,899 596,168 557,166 520,716 486,650 Total .......................... 6,373,800 1,981,650 1,217,700 9,573,150 8,166,090 6,723,779 Annualized ....................... ............................ ............................ ............................ ............................ 957,315 957,315 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, 2019$] Year FEMA costs Applicant 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 ..................................... $541,605 541,605 541,605 541,605 541,605 541,605 541,605 541,605 541,605 541,605 $339,765 339,765 339,765 339,765 339,765 339,765 339,765 339,765 339,765 339,765 $188,340 188,340 188,340 188,340 188,340 188,340 188,340 188,340 188,340 188,340 $1,069,710 1,069,710 1,069,710 1,069,710 1,069,710 1,069,710 1,069,710 1,069,710 1,069,710 1,069,710 $1,038,553 1,008,304 978,936 950,423 922,741 895,865 869,772 844,439 819,844 795,965 $999,729 934,326 873,202 816,077 762,688 712,793 666,162 622,581 581,851 543,786 Total .......................... 5,416,050 3,397,650 1,883,400 10,697,100 9,124,842 7,513,195 Annualized ....................... ............................ ............................ ............................ ............................ 1,069,710 1,069,710 1 The lotter on DSK11XQN23PROD with RULES1 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 continues to believe that there will not be any implementation or familiarization costs. FEMA currently has an arbitration process that is very similar to the final rule for cases arising from Hurricanes Katrina and Rita. Additionally, FEMA has already notified eligible applicants, dating back to January 1, 2016 of their eligibility for arbitration under DRRA Section 1219. Further, applicants will not have familiarization costs because the process for requesting arbitration will consist of an email request and will use materials previously submitted in the application for PA funding. to submit a second appeal. The final rule offers an alternative that the applicant might 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 have the opportunity to present their case in person and call expert witnesses to support their claims. These two options allow applicants to choose a course of action that is most appropriate to their circumstances. Benefits Applicants may select arbitration, if they consider this process more customizable. The arbitration process provides 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 The benefits of this final rule are qualitative in nature and apply mostly to the applicant. FEMA believes that this final rule will 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 VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 Customization PO 00000 Frm 00055 Fmt 4700 Sfmt 4700 their technical specialty to assist the arbitration panel in understanding the underlying work for which FEMA ultimately decides eligibility. Additionally, applicants 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 final rule also allows applicants to present the same technical documentation in both the appeals and arbitration procedures. An applicant who submits a first appeal but elects withdrawal in favor of arbitration may opt to reuse the information in the request for arbitration that was previously submitted in the first appeal. E:\FR\FM\16AUR1.SGM 16AUR1 45676 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations 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 about 23 percent of the second appeals submitted by applicants.35 CBCA has found in favor or partially in favor for the applicant about 13 percent of Katrina/Rita arbitrations.36 The applicant may nevertheless perceive they have a better opportunity to gain additional Federal funding through arbitration. Applicants may select arbitration to have cases reviewed by a third party, rather than an appeal process that is conducted entirely by FEMA. Applicants may perceive this to be a more impartial system, if the forum encourages both parties to solicit discussion rather than ‘‘paper’’ based appeals. Applicants may expect that impartiality would best achieve the objective of an equitable 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 [2010–2019] Second appeal outcome Number of cases Percent Granted ........................................................................................................................................................ Denied .......................................................................................................................................................... Partially Granted .......................................................................................................................................... Active ........................................................................................................................................................... Other 1 .......................................................................................................................................................... 138 594 78 37 27 15.8 68.0 8.9 4.2 3.1 Total ...................................................................................................................................................... 874 100.0 1 The category of Other includes appeal decision not available, remand, rescind, arbitration, and withdrawn. TABLE 13—ARBITRATION OUTCOMES UNDER 44 CFR 206.209 [2010–2019] Arbitration outcome Number of cases Percent Matters Resolved Without CBCA Decision ................................................................................................. In Favor of FEMA ........................................................................................................................................ In Favor of Applicant ................................................................................................................................... Partial in Favor of Applicant ........................................................................................................................ Withdrawn .................................................................................................................................................... Other 2 .......................................................................................................................................................... 24 22 6 3 12 5 33.3 30.6 8.3 4.2 16.7 6.9 Total ...................................................................................................................................................... 72 100 2 The category of Other includes other decision, dismissed, and ongoing cases. Transfers FEMA is unable to quantify transfers because of the unpredictability of the results of this final 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 that would result from this final rule. Impacts Table 14 summarizes the costs, benefits, and transfer impacts of this final rule. TABLE 14—OMB CIRCULAR A–4 ACCOUNTING TABLE Estimates Units Category Low estimate lotter on DSK11XQN23PROD with RULES1 Benefits: Annualized Monetized .................................................. Annualized Quantified .................................................. 35 Based on information provided by FEMA Office of Chief Counsel Disaster Disputes Branch. VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 High estimate Dollar year Frm 00056 Fmt 4700 Period covered $0 $0 2019 7 10 Years. 0 0 2019 3 10 Years. 0 0 36 Based on information provided by FEMA Office of Chief Counsel Disaster Disputes Branch. PO 00000 Discount rate (%) Sfmt 4700 E:\FR\FM\16AUR1.SGM 16AUR1 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations 45677 TABLE 14—OMB CIRCULAR A–4 ACCOUNTING TABLE—Continued Estimates Units Category Low estimate High estimate 0 Qualitative ..................................................................... Effects: Small Entities ................................................................ 1,069,710 2019 7 10 Years. 957,315 1,069,710 2019 3 10 Years. 0 0 0 0 lotter on DSK11XQN23PROD with RULES1 Possible changes to PA grant disbursements. FEMA expects 11 arbitration cases per year from small entities with an estimated cost of between $13,211 and $22,651 per small entity. None. Growth .......................................................................... None. The estimates of the costs of the final 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 final 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 this final 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.37 Because Katrina/Rita applicants were 37 ‘‘The Federal share of assistance is not less than 75 percent of the eligible cost. The recipient determines how the non-Federal share (up to 25 percent) is split with the subrecipients (i.e., eligible applicants).’’ Program Overview: Public Assistance. FEMA. https://www.fema.gov/assistance/public/ program-overview. Last accessed on: May 25, 2021. VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 0 • Longer time frame to resolve disputes under arbitration option. Wages .......................................................................... Uncertainty Analysis 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 implementing a 60-day submission deadline for arbitration submissions under DRRA requirements to align with the 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 identified several alternative regulatory approaches to the requirements in this final rule. The alternatives included: (1) Not issuing a mandatory regulation; (2) an alternate definition of rural; and (3) not requiring electronic submission. FEMA did not consider the first alternative option of not issuing a mandatory regulation. The DRRA mandates FEMA to promulgate a rule allowing the option of arbitration in lieu of a second appeal and specifies the PO 00000 Period covered 957,315 Annualized Quantified .................................................. Transfers .............................................................................. Discount rate (%) • 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 .................................................. Qualitative ..................................................................... Dollar year Frm 00057 Fmt 4700 Sfmt 4700 CBCA as the arbitration administrator. As such, FEMA must pursue a regulatory action. FEMA considered using an alternate definition of rural, such as OMB’s nonmetropolitan area definition. OMB’s nonmetropolitan area is defined as areas outside the boundaries of metropolitan areas.38 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 38 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas; Notice. Office of Management and Budget. See 75 FR 37246, June 28, 2010. https://www.govinfo.gov/content/pkg/FR2010-06-28/pdf/2010-15605.pdf. Last accessed: May 25, 2021. E:\FR\FM\16AUR1.SGM 16AUR1 45678 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations 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 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 to require electronic submissions 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, requiring electronic submission will not pose an undue burden on most applicants. lotter on DSK11XQN23PROD with RULES1 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 a Final Regulatory Flexibility Analysis (FRFA) unless it determines and certifies that a rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. This final rule will not have a significant economic impact on a substantial number of small entities. In accordance with the Regulatory Flexibility Act, a FRFA 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 final rule. VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 1. Statement of a need for, and objectives of the rule. 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 PNP 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. Applicants currently have a right to arbitration to dispute FEMA eligibility determinations associated with Hurricanes Katrina and Rita; see 44 CFR 206.209. The DRRA amended the Stafford Act and FEMA promulgated a regulation providing all applicants the right to request arbitration for disputes under all disaster declarations after January 1, 2016 that are above certain dollar amount thresholds. This final rule implements the Section 1219 requirements of DRRA and will grant applicants an additional method of recourse. PO 00000 Frm 00058 Fmt 4700 Sfmt 4700 2. Statement of the significant issues raised by the public comments in response to the Initial Regulatory Flexibility Analysis (IRFA), a statement of the assessment of the agency of such issues, and a statement of any changes made to the proposed rule as a result of such comments. FEMA did not receive any comments on the IRFA for this rule, and therefore did not make any changes to this FRFA from the proposed rule due to public comments. 3. The response of the agency to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration (SBA) in response to the proposed rule, and a detailed statement of any change made to the final rule as a result of the comments. FEMA did not receive any comments on the proposed rule from the Chief Counsel for Advocacy of the SBA. 4. A description of and an estimate of the number of small entities to which the rule will apply or an explanation of why no such estimate is available. ‘‘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.’’ Section 601(3) defines a ‘‘small business’’ as having the same meaning as ‘‘small business concern’’ under Section 3 of the 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 to determine if an entity is considered small. This final rule does not place any additional 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 E:\FR\FM\16AUR1.SGM 16AUR1 lotter on DSK11XQN23PROD with RULES1 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations 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 final requirements to be eligible for arbitration. FEMA identified 3,478 applicants for FEMA’s PA Program 39 that would be eligible for arbitration under the final requirements for the time frame from 2010 through 2019. FEMA used Slovin’s formula 40 and a 90 percent confidence interval to determine the sample size. FEMA sampled 97 of these applicants and found that 74 (76 percent) met the definition of a small entity based on the population size of local governments (less than 50,000 population),41 or PNPs based on size standards set by the SBA.42 The remaining 23 entities were not found to be considered small entities. Eligible small entities included 67 small government agencies and seven PNP organizations. Based on information presented in the Executive Orders 12866 and 13563 section, FEMA estimates 15 arbitration cases per year. If 76 percent of these are small entities, FEMA estimates 11 arbitration requests per year from small entities with an average cost of between $13,211 and $22,651 per case. Eleven small entities do not represent a substantial number of small entities impacted by this final rule and the costs imposed to these small entities are not significant. 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 will 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 $86.36 for a general and operations manager. FEMA estimates the opportunity cost of time for completing the request will be $172.72 per applicant. With an estimated 11 cases per year, FEMA estimates the total burden for completing the request is $1,900 per year. The person completing the request would need to be familiar with PA regulations and policies. 5. Description of the projected reporting, recordkeeping, and other compliance requirements of the rule, including an estimate of the classes of small entities which will be subject to the requirement and the types 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 6. Description of the steps the agency has taken to minimize the significant economic impact on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each of the other significant alternatives to the rule considered by the agency which affect the impact on small entities was rejected. 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. 39 FEMA reported 3,778 applicants in the NPRM to this rule. The number of applicants has since been adjusted to account for more recent data and new timeframe for analysis. The NPRM contained data from 2009–2017 due to the limited data available at that time. This final rule contains data from 2010–2019. 40 Slovin’s formula is n = N/(1 + N*e¥2). 3,478/ (1 + 3,478 × 0.1¥2) = 97 (rounded). 41 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. 42 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 16:35 Aug 13, 2021 Jkt 253001 PO 00000 Frm 00059 Fmt 4700 Sfmt 4700 45679 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 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, electronic submission will not pose an additional undue burden on applicants that are considered small entities. Conclusion This rule codifies legislative requirements included in the DRRA, which 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. On December 18, 2018, FEMA implemented section 1219 of DRRA by posting a Fact Sheet on its website. On June 21, 2019, CBCA published a final rule (see 84 FR 29085) and FEMA has published a corresponding fact sheet. PA arbitration has been available for disasters declared after January 1, 2016. FEMA certifies that this regulation will not have a significant economic impact on a substantial number of small entities. 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 final rulemaking which implements any E:\FR\FM\16AUR1.SGM 16AUR1 45680 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations lotter on DSK11XQN23PROD with RULES1 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 final 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. This proposed information collection previously published in the Federal Register on August 31, 2020 at 85 FR 53725 as part of the NPRM. Since the proposed information collection published on August 31, 2020, FEMA completed an emergency revision of information collection 1660–0017. In the emergency information collection for 1660–0017 FEMA added the FEMA Template 104–FY–21–100 Equitable COVID–19 Response and Recovery: Vaccine Administration Information which resulted in 51,016 new Total No. of Responses with an .5 Average Burden per response of (in hours) which resulted in 25,508 Total Annual Burden (in hours) totaling $1,445,028 in additional Total Annual Respondent VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 Cost. Also, FEMA is correcting the wage rate used to calculate the Estimated Total Annual Respondent Cost in the NPRM, which resulted in a decrease of the Estimated Total Annual Respondent Cost from $29,601,921 to $27,845,344. FEMA incorrectly used the wage rate for the whole industry, instead of the State government industry wage rate. 43 Additionally, the NPRM incorrectly listed the proposed decrease to the Estimated Total Annual Cost to the Federal Government as $29,976, an error of $2,498. Rather, the NPRM should have listed a proposed decrease of $27,478 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). Additionally, the Staff Salaries changed as the wage rate multiplier changed from 1.6 to 1.45. Finally, the NPRM incorrectly listed the Estimated Total Annual Costs to the Federal Government, as $1,890,650, when the NPRM should have listed it as $1,930,187, due to the previously mentioned changes. No comments were received regarding the proposed information collection. The purpose of this section is to notify the public that FEMA will submit the information collection abstracted below to OMB for review and clearance. This final rule serves as the 30-day comment period pursuant to 5 CFR 1320.12. FEMA invites the public to comment on this 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; 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 43 Bureau of Labor Statistics, Occupational Employment and Wage Statistics. https:// www.bls.gov/oes/. Last accessed: June 10, 2021. PO 00000 Frm 00060 Fmt 4700 Sfmt 4700 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, FEMA Template 104–FY–21– 100 Equitable COVID–19 Response and Recovery: Vaccine Administration Information. 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: 1,068. Estimated Number of Responses: 449,084. Estimated Total Annual Burden Hours: 491,533. The final 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 final rule, as applicants can only choose one option. The final rule’s implementation would not impact the total number of responses or burden hours. FEMA estimated it will take approximately 2 hours to prepare an electronic appeal or arbitration. This estimate is based on the assumption that 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 final 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 an electronic 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 final E:\FR\FM\16AUR1.SGM 16AUR1 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations rule would not impact the estimate of the burden hours. Table 15 provides estimates of annualized cost to respondents for the 45681 hour burdens for the collection of information. TABLE 15—ESTIMATED ANNUALIZED BURDEN HOURS AND COSTS Number of respondents Number of responses per respondent Total number of responses Avg. burden per response (in hours) Total annual burden (in hours) Avg. hourly wage rate Total annual respondent cost Type of respondent Form name/form No. State, Local or Tribal Government. State, Local or Tribal Government. FEMA Form 009–0–49, Request for PA 56 129 7,224 0.25 1,806 $56.65 $102,310 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. FEMA Template 104–FY–21–100 Equitable COVID–19 Response and Recovery. 56 840 47,040 1.5 70,560 56.65 3,997,224 56 784 43,904 1.5 65,856 56.65 3,730,742 56 784 43,904 1.3333 58,537 56.65 3,316,121 56 728 40,768 1.5 61,152 56.65 3,464,261 56 728 40,768 1.5 61,152 56.65 3,464,261 56 840 47,040 0.5 23,520 56.65 1,332,408 56 784 43,904 0.5 21,952 56.65 1,243,581 56 94 5,264 0.5 2,632 56.65 149,103 56 94 5,264 0.5 2,632 56.65 149,103 56 94 5,264 0.25 1,316 56.65 74,551 56 94 5,264 0.5 2,632 56.65 149,103 56 94 5,264 0.5 2,632 56.65 149,103 56 94 5,264 0.25 1,316 56.65 74,551 56 1 56 8 448 56.65 25,379 56 4 224 100 22,400 56.65 1,268,960 56 9 504 3 1,512 56.65 85,655 4 5 20 3 60 56.65 3,399 56 913 51,128 1.25 63,910 56.65 3,620,502 56 911 51,016 0.5 25,508 56.65 1,445,028 1,068 .................... 449,084 .................... 491,533 .................... 27,845,344 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. State, Local or Tribal Government. State, Local or Tribal Government. State, Local or Tribal Government. Total ............... ............................................................... Note: The ‘‘Avg. Hourly Wage Rate’’ for each respondent includes a 1.62 multiplier to reflect a fully-loaded wage rate. Estimated Total Annual Respondent Cost: $27,845,344. 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: $1,930,187. lotter on DSK11XQN23PROD with RULES1 E. Privacy Act Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must determine whether implementation of a final 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 VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 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 PO 00000 Frm 00061 Fmt 4700 Sfmt 4700 in a system of records except by following specific procedures. In accordance with DHS policy, FEMA has completed a Privacy Threshold Analysis (PTA) for this final rule. DHS has determined that this final rule 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, E:\FR\FM\16AUR1.SGM 16AUR1 45682 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations lotter on DSK11XQN23PROD with RULES1 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 Federal agencies to consider the impacts of their proposed actions on 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. If an action does not qualify for a catex and has the potential to significantly affect the environment, agencies develop environmental assessments (EAs) to evaluate those actions. The Council on Environmental Quality’s 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. At the end of the EA process, the agency will determine whether to make a Finding of No Significant Impact 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 finalize the proposed regulations to implement the new right of arbitration authorized by the DRRA, and to revise FEMA’s regulations regarding first and second PA appeals. Additionally, in response to a public comment, FEMA is adding a definition of Regional Administrator. Plus, FEMA made changes to the regulatory text regarding first appeals and second appeals at 206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) as a result of the 60-day appeals deadline comments. Finally, FEMA is making two technical revisions at 206.206(b) and 206.206(b)(3)(i)(A) to align the regulatory text with the dispute of the eligibility for assistance or repayment of assistance language of Section 423(d)(1) VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 of the Stafford Act. These changes are to implement statutory requirements and to amend existing regulation without changing its environmental effect, consistent with Catex A3(b) and (d), 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). 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 finalize the proposed regulations to implement the new right of arbitration authorized by the DRRA, and to revise FEMA’s regulations regarding first and second PA appeals. Additionally, in response to a public comment, FEMA is adding a definition of Regional Administrator. Plus, FEMA made changes to the regulatory text regarding first appeals and second appeals at 206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) as a result of the 60-day appeals deadline comments. Finally, FEMA is making two technical revisions at 206.206(b) and 206.206(b)(3)(i)(A) to align the regulatory text with the dispute of the eligibility for assistance or repayment of assistance language of Section 423(d)(1) of the Stafford Act. Under the final rule, Indian Tribal Governments 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 Tribal Governments, will participate in the PO 00000 Frm 00062 Fmt 4700 Sfmt 4700 new permanent right of arbitration. FEMA also anticipates a very small number of Indian Tribal Governments will be affected by the other major revisions to 44 CFR 206.206. As a result, FEMA does not expect this final rule to have a substantial direct effect on one or more Indian Tribal Governments or impose direct compliance costs on Indian Tribal Governments. Additionally, since FEMA anticipates a very small number, if any Indian Tribal Governments will participate in the arbitration portion of the final rule nor will be affected by the rest of the finalized 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 Tribal Governments or on the distribution of power and responsibilities between the Federal Government and Indian Tribal Governments. 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 final 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), as amended by Executive Order 12948 (60 FR 6381, Feb. 1, 1995) 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 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 E:\FR\FM\16AUR1.SGM 16AUR1 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations 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 finalize the proposed regulations to implement the new right of arbitration authorized by the DRRA, and to revise FEMA’s regulations regarding first and second PA appeals. Additionally, in response to a public comment, FEMA is adding a definition of Regional Administrator. Plus, FEMA made changes to the regulatory text regarding first appeals and second appeals at 206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) as a result of the 60-day appeals deadline comments. Finally, FEMA is making two technical revisions at 206.206(b) and 206.206(b)(3)(i)(A) to align the regulatory text with the dispute of the eligibility for assistance or repayment of assistance language of Section 423(d)(1) of the Stafford Act. There are no adverse effects and no disproportionate effects on minority or low-income populations. K. Executive Order 12988, Civil Justice Reform This final 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 final 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). lotter on DSK11XQN23PROD with RULES1 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 has submitted this final rule to the Congress and to GAO pursuant to the CRA. OMB has determined that this VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 rule is not a ‘‘major rule’’ within the meaning of the CRA. 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 amends 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 has the same meaning as the definition at § 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 has the same meaning as the definition at § 206.201(m). Regional Administrator means an administrator of a regional office of PO 00000 Frm 00063 Fmt 4700 Sfmt 4700 45683 FEMA, or his/her designated representative. Rural area means an area with a population of less than 200,000 outside an urbanized area. Urbanized area means an area that consists of densely settled territory that contains 50,000 or more people. (b) Appeals and Arbitrations. An eligible applicant or recipient may appeal any determination previously made related to an application for or the provision of Public Assistance according to the procedures of this section. An eligible applicant may request arbitration to dispute the eligibility for assistance or repayment of assistance. (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. If the applicant or the recipient do not meet their respective 60-calendar day and 120-calendar day deadlines, FEMA will deny the appeal. A recipient may make a recipient-related first appeal within 60 calendar days from the date of the FEMA determination that is the subject of the appeal and must electronically submit their first appeal to the Regional Administrator. (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 E:\FR\FM\16AUR1.SGM 16AUR1 lotter on DSK11XQN23PROD with RULES1 45684 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations 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 200.339); (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: VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 (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. If the applicant or the recipient do not meet their respective 60-calendar day and 120-calendar day deadlines, FEMA will deny the appeal. If the Regional Administrator denies a recipient-related first appeal in whole or in part, the recipient may make a recipient-related second appeal within 60 calendar days from the date of the Regional Administrator’s first appeal decision and the recipient must electronically submit their second appeal to the Assistant Administrator for the Recovery Directorate. (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 00064 Fmt 4700 Sfmt 4700 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 200.339); (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 dispute of the eligibility for assistance or of the repayment of assistance 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\16AUR1.SGM 16AUR1 Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations receiving the appeal, an applicant may arbitrate the decision of FEMA. To request arbitration, the applicant must first electronically submit a withdrawal of the pending appeal simultaneously to the recipient and the FEMA Regional Administrator. The applicant must then submit a request for arbitration to the recipient, the CBCA, and FEMA 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. (1) 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. Final decisions are not subject to further administrative review. (2) 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. Deanne B. Criswell, Administrator, Federal Emergency Management Agency. [FR Doc. 2021–17213 Filed 8–13–21; 8:45 am] BILLING CODE 9111–19–P DEPARTMENT OF THE INTERIOR Fish and Wildlife Service 50 CFR Part 17 [Docket No. FWS–R4–ES–2019–0080; FXES11130900000–212–FF09E22000] RIN 1018–BD82 lotter on DSK11XQN23PROD with RULES1 Endangered and Threatened Wildlife and Plants; Removing Arenaria cumberlandensis (Cumberland Sandwort) From the Federal List of Endangered and Threatened Plants Fish and Wildlife Service, Interior. ACTION: Final rule. AGENCY: We, the U.S. Fish and Wildlife Service (Service), are removing Cumberland sandwort (Arenaria SUMMARY: VerDate Sep<11>2014 16:35 Aug 13, 2021 Jkt 253001 cumberlandensis) from the Federal List of Endangered and Threatened Plants (List). This determination is based on a thorough review of the best available scientific and commercial data, which indicate that Cumberland sandwort has recovered and no longer meets the definition of an endangered or a threatened species under the Endangered Species Act of 1973, as amended (Act). Our review shows that threats to the species identified at the time of listing (i.e., timber harvesting, trampling from recreational uses, and digging for archaeological artifacts) have been reduced to the point that they no longer pose a threat to the species, and the known range and abundance of Cumberland sandwort have increased. Our review also indicates that potential effects of projected climate change are not expected to cause the species to become endangered in the foreseeable future. Accordingly, the prohibitions and conservation measures provided by the Act will no longer apply to this species. DATES: This rule is effective September 15, 2021. ADDRESSES: The proposed rule and this final rule, supporting documents, the post-delisting monitoring plan, and the comments received on the proposed rule are available at http:// www.regulations.gov under Docket No. FWS–R4–ES–2019–0080. FOR FURTHER INFORMATION CONTACT: Daniel Elbert, Field Supervisor, U.S. Fish and Wildlife Service, Tennessee Ecological Services Field Office, 446 Neal Street, Cookeville, TN 38501; telephone (931) 528–6481. Individuals who use a telecommunications device for the deaf (TDD), may call the Federal Relay Service at (800) 877–8339. SUPPLEMENTARY INFORMATION: Executive Summary Why we need to publish a rule. Under the Act, a species may be removed from the Federal List of Endangered and Threatened Plants (List) (‘‘delisted’’) if it is determined that the species has recovered and no longer meets the definition of an endangered or threatened species. Removing a species from the List can only be completed by issuing a rule. What this document does. This rule delists Cumberland sandwort from the Federal List of Endangered and Threatened Plants based on the species’ recovery. The basis for our action. Under the Act, we may determine that a species is an endangered or threatened species because of one or more of the five factors described in section 4(a)(1) of the PO 00000 Frm 00065 Fmt 4700 Sfmt 4700 45685 Act: (A) The present or threatened destruction, modification, or curtailment of its habitat or range; (B) overutilization for commercial, recreational, scientific, or educational purposes; (C) disease or predation; (D) the inadequacy of existing regulatory mechanisms; or (E) other natural or manmade factors affecting its continued existence. We must consider these same factors in delisting a species. We have determined that Cumberland sandwort is not in danger of extinction now nor likely to become so in the foreseeable future based on a comprehensive review of its status and listing factors. Specifically, our recent review indicated: (1) An increase in the known number of occurrences of the species within its geographically restricted range, and increased abundance in some occurrences; (2) resiliency to existing and potential threats; (3) the protection of 66 extant occurrences located on Federal and State conservation lands by regulations or management plans to prevent habitat destruction or removal of plants; and (4) the implementation of beneficial management practices. Accordingly, Cumberland sandwort no longer meets the definition of an endangered or threatened species under the Act. Peer review and public comment. In accordance with our joint policy on peer review published in the Federal Register on July 1, 1994 (59 FR 34270), and our August 22, 2016, memorandum updating and clarifying the role of peer review of listing actions under the Act, we sought peer review of our April 27, 2020, proposed rule to delist the species (85 FR 23302). The Service sent the proposed rule to five independent peer reviewers and received three responses. The purpose of peer review is to ensure that our determination is based on scientifically sound data, assumptions, and analyses. The peer reviewers have expertise in the biology, habitat, and threats to the species. Previous Federal Actions On April 27, 2020, we published in the Federal Register (85 FR 23302) a proposed rule to remove Cumberland sandwort from the Federal List of Endangered and Threatened Plants (i.e., to delist the species). Please refer to that proposed rule for a detailed description of previous Federal actions concerning this species. The proposed rule and supplemental documents are provided at http://www.regulations.gov under Docket No. FWS–R4–ES–2019–0080. E:\FR\FM\16AUR1.SGM 16AUR1

Agencies

[Federal Register Volume 86, Number 155 (Monday, August 16, 2021)]
[Rules and Regulations]
[Pages 45660-45685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-17213]


=======================================================================
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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: Final rule.

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SUMMARY: This final rule implements the new right of arbitration 
authorized by the Disaster Recovery Reform Act of 2018 (DRRA) and 
revises the Federal Emergency Management Agency's regulations regarding 
first and second Public Assistance appeals.

DATES: This rule is effective on January 1, 2022. Proposed information 
collection comments must be submitted on or before September 15, 2021.

ADDRESSES: The docket for this rulemaking is available for inspection 
using the Federal eRulemaking Portal: http://www.regulations.gov and 
can be viewed by following that website's instructions.
    Written comments and recommendations for the proposed information 
collection should be sent within 30 days of publication of this notice 
to www.reginfo.gov/public/do/PRAMain. Find this particular information 
collection by selecting ``Currently under 30-day Review--Open for 
Public Comments'' or by using the search function.

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. Proposed Rule

    On August 31, 2020, the Federal Emergency Management Agency (FEMA) 
published a Notice of Proposed Rulemaking (NPRM) (85 FR 53725) 
proposing to revise its current Public Assistance (PA) appeals 
regulation at 44 CFR 206.206 to add in the new right to arbitration 
under the Disaster Recovery Reform Act of 2018 (DRRA),\1\ 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 included adding definitions; 
adding subparagraphs to clarify what actions FEMA may take and will not 
take while an appeal is pending and stating 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.
---------------------------------------------------------------------------

    \1\ Disaster Recovery Reform Act of 2018, Public Law 115-254, 
132 Stat. 3186 (Oct. 5, 2018), 42 U.S.C. 5189a.
---------------------------------------------------------------------------

    These proposed rules for arbitration are separate and distinct from 
the arbitration provisions located in 44 CFR 206.209. Under Sec.  
206.209, applicants may request arbitration to resolve disputed PA 
applications under major disaster declarations for Hurricanes Katrina 
and Rita, pursuant to the

[[Page 45661]]

authority of the American Recovery and Reinvestment Act of 2009 
(ARRA).\2\
---------------------------------------------------------------------------

    \2\ American Recovery and Reinvestment Act of 2009, Public Law 
111-5, 123 Stat. 115 (Feb. 17, 2009), 26 U.S.C. 1 note.
---------------------------------------------------------------------------

    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 public assistance arbitrations. Therefore, FEMA 
recommends that applicants review the CBCA 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, as both cover FEMA public assistance arbitrations.

II. Discussion of Public Comments and FEMA's Responses

    The public comment period of the NPRM closed on October 30, 2020. 
FEMA received germane comments from six separate commenters. The first 
anonymous commenter [FEMA-2019-0012-0002] was unconditionally 
supportive of the NPRM, as they found the DRRA population thresholds 
fair. The second commenter, a member of the public [FEMA-2019-0012-
0003], addressed five separate issues regarding the NPRM in their 
comment including: Suggesting the use of ``applicant'' to refer to all 
entities; suggesting the use of ``appellant'' instead of ``applicant'' 
and ``subrecipient''; stating that using the date of issuance of the 
FEMA determination instead of the date the ``appellant'' views the FEMA 
determination does not provide clarity; suggesting that the 
``appellant'' now has 150 days to make a complete appeal with the new 
30-day deadline to provide additional information; and questioning 
whether the NPRM removed the first 60-day requirement to make the 
entire deadline 120-days regardless of when each entity appeals so long 
as it is within 120 days. The third commenter, also a member of the 
public [FEMA-2019-0012-0004], suggested FEMA adjust the amount in 
dispute thresholds for hyper-inflation. This commenter also submitted a 
duplicative comment which was withdrawn [FEMA-2019-0012-0005]. The 
second anonymous commenter submitted an unrelated comment [FEMA-2019-
0012-DRAFT-0006], which was not posted to the Docket. The fourth 
commenter, from a State Emergency Management Agency [FEMA-2019-0012-
0006], also asked whether the NPRM's combination of the applicant and 
recipient's 60-day submission requirements could equate to additional 
submission time for appeals. The fifth commenter, from the same State 
Emergency Management Agency [FEMA-2019-0012-0007], asked numerous 
questions regarding applicant and recipient proposed appeal submission 
timeframes. The sixth commenter, a State Division of Emergency 
Management (DEM) [FEMA-2019-0012-0008], generally supports the effort 
to amend the regulations. However, the State DEM believes many of the 
changes proposed in the NPRM conflict with the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act (Stafford Act) \3\ and 
expressed concern with FEMA removing its own deadlines while strictly 
applying them to applicants and recipients. The State DEM included 
attachments of cases--or parts of cases--and a detailed table of their 
comments.
---------------------------------------------------------------------------

    \3\ Disaster Relief Act of 1974, Public Law 93-288, 88 Stat. 143 
(May 22, 1974), as amended, 42 U.S.C. 5121 et seq.
---------------------------------------------------------------------------

A. Adjustment Amount in Dispute Thresholds

    Under Section 1219 of the DRRA, in order to request arbitration a 
PA applicant must dispute 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).
    One member of the public [FEMA-2019-0012-0004] commented that, for 
the most part, the proposed changes are well thought out and stand to 
reason. However, the commenter suggested that the amount in dispute 
threshold allow for future adjustment based upon hyper-inflation. 
Including provisions for hyper-inflation, this commenter posited, will 
allow FEMA to carry out its crucial work without returning to the 
rulemaking process if the dollar fluctuates in the future. A lower 
threshold could subsequently overwhelm the arbitration or appeal 
process.
    Since the amount in dispute thresholds are statutorily set in 
Section 1219 of DRRA, it is not within FEMA's discretion to change them 
in this rulemaking. While FEMA appreciates the commenter's support, 
FEMA did not make any changes to the regulatory text at 206.206 as a 
result of the comment.

B. Population Thresholds

    The DRRA defines a rural area to mean an area with a population of 
less than 200,000 outside an urbanized area. The NPRM proposed to 
define the term ``urbanized area'' to mean the area as identified by 
the United States Census Bureau (USCB). The USCB defines an ``urbanized 
area'' as an area that consists of densely settled territory that 
contains 50,000 or more people.\4\ For clarity and to comply with 
publication requirements found in 1 CFR chapter I, FEMA has revised the 
final rule's definition of ``urbanized area'' as an area that consists 
of densely settled territory that contains 50,000 or more people.
---------------------------------------------------------------------------

    \4\ See ``Qualifying Urban Areas for the 2010 Census,'' 77 FR 
18651, Mar. 27, 2012.
---------------------------------------------------------------------------

    An anonymous commenter [FEMA-2019-0012-0002] supports the different 
population thresholds of the NPRM. The anonymous commenter suggested 
that the population requirements give all areas a fair chance of 
receiving Federal assistance. FEMA appreciates the anonymous 
commenter's support but, did not make any changes to the regulatory 
text at 206.206 as a result of the comment.

C. ``Applicant/Subrecipient'' Different Entities Versus ``Applicant'' 
for All Entities

    A member of the public [FEMA-2019-0012-0003] commented that FEMA 
views the applicant/subrecipient as two different entities: An 
``applicant'' is one that has applied for but not yet received funding, 
while a ``subrecipient'' has applied for and been awarded funding. This 
member of the public [FEMA-2019-0012-0003] also commented that the 
definition of ''applicant'' does not include ``subrecipient'' (although 
one could argue that all ``subrecipients'' are ``applicants,'' but not 
all ``applicants'' are ``subrecipients,'' so the use of ``applicant'' 
for all entities could still be correct).
    The ``applicant,'' as defined at 44 CFR 206.201(a), is a State 
agency, local government, or eligible private nonprofit organization 
(PNP) submitting an application to the recipient for assistance under 
the recipient's grant. 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. The ``recipient'' is 
typically the State to which a grant is awarded.
    In the NPRM, FEMA proposed changing the phrase ``applicant, 
subrecipient, or recipient'' to ``applicant or recipient'' since the 
definition of ``applicant'' at 44 CFR 206.201(a) already includes the 
term ``subrecipient.'' Since an ``applicant'' submits an application to 
the ``recipient'' for assistance under the recipient's grant, the 
``recipient'' and the ``applicant'' are not interchangeable

[[Page 45662]]

phrases. It follows that the definition of ``applicant'' at 206.201(a) 
cannot include a ``recipient,'' so FEMA disagrees with the public 
commenter's [FEMA-2019-0012-0003] statement that the use of 
``applicant'' for all entities could still be correct.
    Therefore, FEMA did not make any changes to the regulatory text at 
206.206 as a result of the comment.

D. ``Appellant'' Versus ``Applicant'' and ``Subrecipient''

    A member of the public [FEMA-2019-0012-0003] also commented that 
there is a difference in ``applicant'' and ``subrecipient'' per 44 CFR 
206.201(a). FEMA disagrees with the statement that there is a 
difference in ``applicant'' and ``subrecipient'' per 206.201(a). As 
indicated above, the definition of ``applicant'' at 206.201(a) includes 
``subrecipient,'' but not ``recipient.'' Therefore, FEMA did not make 
any changes to the regulatory text at 206.206 as a result of the 
comment.
    The commenter further stated that the use of ``appellant'' allows 
for both ``applicants'' and ``subrecipients'' to be represented in the 
terminology. In the past, FEMA used the term ``appellant'' instead of 
``applicant or recipient'' for the requirement of specifying the 
provisions in Federal law, regulator, or policy in dispute. In the 
NPRM, FEMA's reason for changing from ``appellant'' to ``applicant or 
recipient'' was for consistency in terminology and no substantive 
change was intended. Since FEMA's goal is consistency in terminology, 
FEMA will not add ``appellant'' as a defined term to paragraph (a) of 
44 CFR 206.206, as it could lead to confusion for the reader as to 
whether it refers to an ``applicant'' or a ``recipient.'' Therefore, 
FEMA did not make any changes to the regulatory text at 206.206 as a 
result of the comment.

E. Other Definitions

    The State DEM [FEMA-2019-0012-0008] commented that in 44 CFR 
206.206(a), FEMA should define ``Regional Administrator'' because 
applicants submit first appeals to the appropriate FEMA Regional office 
and then submit second appeals to the Assistant Administrator for the 
Recovery Directorate. The State DEM proposed to define ``Regional 
Administrators'' as ``the Administrator of the Federal Emergency 
Management Agency Regional Office in which the Applicant resides.''
    FEMA decided against the commenter's suggested definition of 
``Regional Administrator'' since 44 CFR 206.2(a)(21) already provides a 
definition for ``Regional Administrator'' with general applicability 
throughout part 206. Regional Administrator: An administrator of a 
regional office of FEMA, or his/her designated representative. As used 
in these regulations, Regional Administrator also means the Disaster 
Recovery Manager who has been appointed to exercise the authority of 
the Regional Administrator for a particular emergency or major 
disaster.
    This second sentence in the definition of Regional Administrator at 
206.2(a)(21) is contrary to the structure proposed in the NPRM at 
206.206, as it says that the Regional Administrator also means the 
Disaster Recovery Manager. In the NPRM, the Regional Administrator/
Disaster Recovery Manager is not making the FEMA determination. 
Otherwise, the submission of the first appeal to the Regional 
Administrator for review would mean that the Regional Administrator 
could review their own determination. Therefore, FEMA decided to add 
only the first sentence of the ``Regional Administrator'' definition at 
206.2(a)(21) to this final rule for consistency and clarity. So, FEMA 
added the following definition of ``Regional Administrator'' to the 
regulatory text: Regional Administrator means an administrator of a 
regional office of FEMA, or his/her designated representative.
    Both, ``Administrator'' and ``Regional Administrator'' were added 
to Title V of the Homeland Security Act of 2002 by the Post-Katrina 
Emergency Management Reform Act of 2006.\5\ Therefore, it makes sense 
that they are defined terms under 44 CFR 206.206, as they are 
statutorily mandated FEMA positions.
---------------------------------------------------------------------------

    \5\ Post-Katrina Emergency Management Reform Act of 2006, 109-
295, 120 Stat. 1394 (Oct. 4, 2006), 6 U.S.C. 701 note.
---------------------------------------------------------------------------

    The State DEM also recommended that FEMA define the term 
``Assistant Administrator for the Recovery Directorate.'' FEMA chose 
not to provide a definition of ``Assistant Administrator for the 
Recovery Directorate'' since future FEMA reorganizations may change 
that position title. Additionally, the ``Assistant Administrator for 
the Recovery Directorate'' is not a FEMA statutorily mandated position.
    Finally, the State DEM [FEMA-2019-0012-0008] suggested that FEMA 
define ``final agency determination'' to mean the decision of FEMA as 
provided through electronic transmission of a formal determination if 
the applicant or recipient does not submit a first appeal within the 
time limits. FEMA does not adopt the commenter's definition because the 
definition in the NPRM the is a more fulsome definition which covers 
all eventualities. In the NPRM, ``final agency determination'' means 
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 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. For this reason, FEMA declines to adopt the 
commenter's definition. Therefore, FEMA only added the definition of 
``Regional Administrator'' to the regulatory text at 206.206(a) as a 
result of the comment.

F. First and Second Appeals' Deadlines

    Proposed paragraph 206.206(b)(1)(ii) of the NPRM addressed 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. Moreover, 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. There is no recourse 
for the applicant if the recipient misses the deadline to forward the 
appeal and recommendation to the Regional Administrator. There is also 
no recourse for the applicant in a second appeal where the recipient 
does not make the deadline.
    Several commenters--including a member of the public [FEMA-2019-
0012-0003], a State agency [FEMA-2019-0012-0007], and State DEM [FEMA-
2019-0012-0008]--sought clarification on when, exactly, the applicant's 
initial 60-day deadline is triggered. For instance, is the deadline 
triggered on the day the applicant views the determination [FEMA-2019-
0012-0003]? Does the deadline begin once the applicant has physically 
received the determination paperwork [FEMA-2019-0012-0008]? As FEMA was 
aware of this issue, the NPRM provided clarity by adding an electronic 
submission requirement for both first and second appeals. This 
requirement will enable FEMA to accurately track the transmittal and 
receipt of appeals since they will be

[[Page 45663]]

the same date, while providing the applicant with a clear timeline for 
compliance. Specifically the deadline is triggered by FEMA's 
transmittal of the determination, not the date the applicant views the 
determination.
    Nonetheless, a member of the public [FEMA-2019-0012-0003] 
questioned whether the NPRM's proposal to change the language ``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'' 
will actually assist FEMA with tracking. In her opinion, using the date 
of the issuance of the determination, rather than the date the 
``appellant'' views the determination, does not provide clarity. Since 
the proposed language of the NPRM relies on the electronic submission 
for appeals, it would not matter when the FEMA determination that is 
subject of the appeal is viewed. With the switch to electronic 
submission, the date of the FEMA determination and the date of receipt 
are the same. Therefore, FEMA did not make any changes to the 
regulatory text as a result of the comments.
    A State DEM [FEMA-2019-0012-0008] commented that it agrees with 
electronic submission to ease in tracking and ensuring timely receipt 
of appeals. However, the commenter stated, applicants and recipients do 
not always receive FEMA's determination on the same day as the date of 
the transmission letter. This could potentially reduce the amount of 
time for an applicant to appeal. In support of this comment, the State 
DEM submitted an emergency (as opposed to major disaster) declaration 
determination with what appeared to be a discrepancy between the date 
of receipt and the date of determination, as attachments. Upon further 
review, FEMA finds the discrepancy between the date of receipt and date 
of determination was an administrative error or an anomaly. FEMA is 
taking programmatic and technological steps to tie the date of 
determination to date of the determination's transmittal, but should a 
similar error or discrepancy recur in the future FEMA would use the 
date of transmittal as the deadline trigger.
    Nonetheless, the State DEM suggested remedy language for both first 
and second appeals which would start the clock on the 60-day deadline 
on the confirmed receipt of FEMA's determination. Further, the 
commenter proposed language to create a rebuttable presumption in favor 
of the date of receipt claimed by the applicant or recipient. Because 
the NPRM proposed requiring electronic submission for both applicant 
and recipient and the NPRM proposed FEMA simultaneously electronically 
notify both applicant and recipient, these concerns are unfounded. 
Therefore, FEMA did not make any changes to the regulatory text at 
206.206(b)(1)(ii) and (b)(2)(ii) as a result of the comments.

G. First and Second Appeals' Deadlines--60/60-Day Versus 120-Day

    A member of the public [FEMA-2019-0012-0003] queried: Is the NPRM 
to remove the first 60-day requirement for the appellant to appeal, and 
make the entire deadline 120 days regardless of when each entity 
appeals so long as it is within 120 days? This simplifies the 
timeliness requirement for all parties she stated, but the proposed 
language is confusing as to whether the 60-day deadline remains for the 
applicant. By the NPRM, she continues, the applicant could appeal on 
day 120 and the recipient could forward on same that day. In this 
scenario, the commenter believed the submission would remain timely. 
The commenter stated that this removes some of the intent behind the 
timeliness requirements for each party to responsibly review the 
appeal.
    The applicant's 60-day deadline remains, as the Stafford Act 
requires it for appeals. See 423(a) of the Stafford Act. In order to 
resolve the confusion identified by the public commenter [FEMA-2019-
0012-0003], FEMA has added regulatory text to both the first and second 
appeals paragraphs of the final rule for clarity and consistency. 
Specifically, FEMA replaced the second to the last sentence of the 
appeals paragraphs of the final rule at 206.206(b)(1)(ii)(A) and 
(b)(2)(ii)(A) with the following: ``[i]f the applicant or the recipient 
do not meet their respective 60-calendar day and 120-calendar day 
deadlines, FEMA will deny the appeal.'' This is consistent with current 
FEMA policy. See page 40 of the Public Assistance Program and Policy 
Guide,\6\ which says that ``[i]f either the Applicant or Recipient does 
not meet the respective 60-day deadlines, FEMA will deny the appeal as 
untimely.''
---------------------------------------------------------------------------

    \6\ Public Assistance Program and Policy Guide Version 4 
(fema.gov).
---------------------------------------------------------------------------

    Also in reference to the 120-day deadline, a State agency [FEMA-
2019-0012-0006] inquired: Does this mean that if the applicant appeals 
to the recipient 45 days from the FEMA determination, that the 
recipient still has 120 calendar days from the date of the FEMA 
determination to transmit the appeal to FEMA? In the above scenario, an 
applicant that appeals 45 days after its FEMA determination would then 
leave the recipient with 75 days to forward the appeal to FEMA. The 
NPRM is in no way extending the 120-day deadline.
    A separate comment from the same State agency [FEMA-2019-0012-0007] 
correctly stated that the applicant still has a firm 60-day deadline to 
submit its appeal to the applicant. The commenter then inquired whether 
FEMA will deny any appeal as untimely if the applicant submits its 
appeal to the recipient after the 60-day deadline, but FEMA receives 
the appeal within 120 days. In this scenario, the commenter is correct 
that FEMA would deny this appeal as untimely. Even if the recipient 
ultimately submitted the appeal to FEMA within 120 days from the date 
of determination, if an applicant submits its appeal to the recipient 
outside of the 60 days, it has exceeded the deadline imposed by Section 
423 of the Stafford Act. As stated above, FEMA added new regulatory 
text in the final rule to both the first and second appeals paragraphs 
for clarity and consistency. The new language states that if the 
applicant or the recipient do not meet their respective 60-calendar day 
and 120-calendar day deadlines, FEMA will deny the appeal.
    Finally, the State DEM [FEMA-2019-0012-0008] suggested that the 
regulatory language was misleading because it implies that FEMA will 
deny all first appeals it does not receive by the recipient's 120-day 
deadline and is not clear that applicant's untimeliness will jeopardize 
the appeal. As the scenarios above make clear, both an applicant and 
recipient's untimeliness will continue to jeopardize either a first or 
second appeal based upon their respective 60-calendar day and 120-
calendar day deadlines. For these reasons, FEMA made changes to the 
regulatory text regarding first appeals at 206.206(b)(1)(ii)(A) and 
regarding second appeals at (b)(2)(ii)(A) as a result of the comments.

H. Denial Based Upon Timeliness

    The State DEM [FEMA-2019-0012-0008] objected to FEMA denying either 
a first or second appeal based upon timeliness. The State DEM argued 
that FEMA lacked the authority to unilaterally deny an appeal based 
upon timeliness because this is not specifically permitted by the 
Stafford Act. The State DEM stated that it was ``administratively 
unfair'' for FEMA to deny second appeals solely based on timeliness 
without considering the merits thereof.

[[Page 45664]]

    The State DEM specifically proposed language prohibiting FEMA from 
denying a second appeal based on untimeliness if a determination on the 
merits would be in the applicant or recipient's favor. It offered 
language barring FEMA from denying an otherwise timely second appeal 
solely on the grounds that the relevant first appeal was untimely. To 
bolster its argument, the State DEM attached an exhibit wherein FEMA 
rejected a second appeal based on the first appeal being untimely even 
though, the State DEM argued, FEMA incorrectly de-obligated funds 
initially. Had FEMA examined the issue on the merits the argument 
continues, the applicant would have prevailed.
    Section 423 of the Stafford Act requires an applicant to submit an 
appeal within 60 days. FEMA does not have the unilateral authority to 
alter or ignore this requirement. The State DEM's suggestions would 
have the effect of removing timeliness as a meaningful consideration 
for appeals. Further, FEMA has no ability to extend the deadlines 
listed in Section 423, just as it lacks express authority to waive 
timelines. FEMA is solely implementing requirements prescribed by law. 
In addition, the start of the mandatory 60-day period, the date of 
FEMA's determination, and the date of the applicant and recipient's 
receipt thereof should be identical with the implementation of 
electronic transmission. Since electronic transmission addresses the 
State DEM's concerns regarding the start of the appeals period and FEMA 
cannot waive, alter, or modify the 60-day appeal deadline in the 
Stafford Act, FEMA did not make any changes to the regulatory text at 
206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) as a result of these comments. 
However, as stated above FEMA added new regulatory text in the final 
rule to both the first and second appeals paragraphs for clarity and 
consistency. The new language states that if the applicant or the 
recipient do not meet their respective 60-calendar day and 120-calendar 
day deadlines, FEMA will deny the appeal.
    The State DEM [FEMA-2019-0012-0008] also suggested that the 
regulatory language in 206.206(b)(3)(iii)(B)(2) of the NPRM be modified 
to permit requests for arbitration from untimely appeals. This comment 
and proposed language would render timeliness moot, as applicants could 
make an untimely appeal and then attempt to arbitrate the rejection on 
timeliness. Section 423 of the Stafford Act only permits an applicant 
to submit an appeal within 60 days; FEMA does not have the authority to 
alter or ignore this deadline. Consequently, FEMA did not make any 
changes to the regulatory text at 206.206(b)(3)(iii)(B)(2) as a result 
of these comments.
    However, FEMA provided clarifying edits to 206.206(b)(3)(iii)(B)(2) 
in the final rule, so that an applicant understands that if they choose 
arbitration pursuant to Section 423(d) of the Stafford Act, as FEMA has 
not responded to an applicant's first appeal within 180 days, then they 
must withdraw the pending appeal before they file the request for 
arbitration. Basically, the applicant cannot arbitrate and appeal at 
the same time. Additionally, FEMA provided clarifying edits to 
206.206(b)(3)(iii)(B)(2) to remove the phrase ``and the CBCA.'' FEMA 
deleted this phrase, as a pending first appeal would not be pending 
before the CBCA, so the applicant would have no reason to notify the 
CBCA of the first appeal withdrawal.
    So in the final rule, FEMA has split the first sentence of 
206.206(b)(3)(iii)(B)(2) into two sentences that say 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 arbitrate the decision of FEMA. To request 
arbitration, the applicant must first electronically submit a 
withdrawal of the pending appeal simultaneously to the recipient and 
the FEMA Regional Administrator. Plus, FEMA added clarifying language 
to the last sentence of 206.206(b)(3)(iii)(B)(2) by replacing ``may'' 
with ``must'' and by adding the phrase ``to the recipient, the CBCA, 
and FEMA'' after arbitration. So, 206.206(b)(3)(iii)(B)(2) in the final 
rule says that the applicant must then submit a request for arbitration 
to the recipient, the CBCA, and FEMA within 30 calendar days from the 
date of the withdrawal of the pending appeal. FEMA wants to clarify 
that if an applicant withdraws a first appeal, then the applicant must 
submit a request for arbitration within 30 calendar days. If the 
applicant does not follow the requirements of 206.206(b)(3)(iii)(B)(2), 
then the applicant's request for arbitration will be denied for 
timeliness.

I. Simultaneously Provide Decisions to Applicants & Recipients

    The State DEM [FEMA-2019-0012-0008] commented that it agrees with 
electronic submission to ease in tracking and ensuring timely receipt 
of appeals, and suggested FEMA also provide its decisions 
electronically to both the applicant and recipient simultaneously. This 
is the course of action that FEMA proposed in the NPRM's 
206.206(b)(1)(iii); therefore, FEMA did not make any changes to the 
regulatory text as a result of this comment.

J. FEMA Exceeds 90-Day Deadline

    A State DEM [FEMA-2019-0012-0008] commented that in both paragraphs 
206.206(b)(1)(ii)(C) and (b)(2)(ii)(C) of the NPRM, FEMA allows itself 
90 days from receipt of the appeal, rather than the date of the appeal 
itself, to respond per Section 423(b) of the Stafford Act. The State 
DEM further suggests regulatory text changes imposing penalties for any 
response beyond the 90-day deadline.
    First and foremost, the date an applicant makes an appeal is not 
the same date FEMA receives the appeal because it must first pass 
through the recipient. In addition, though FEMA endeavors to render all 
appeals decisions within 90 days, it is an agile agency with emergent 
responsibilities. Nevertheless, FEMA remains stewards of Federal monies 
and must perform a thorough review to ensure grants follow the law. 
This constant conflict demands an ongoing shift of resources and 
priorities. With the final rule's implementation of electronic 
transmission, FEMA determinations should be received electronically 
when issued. The Regional Administrator will provide electronic notice 
of the disposition of the appeal to the applicant and the recipient 
thereby avoiding delays inherent in methods such as carrier delivery. 
FEMA will know the date received as it will be the same as the 
electronic transmission date. Lastly, FEMA notes that, pursuant to 
Section 423(d) of the Stafford Act, if the agency fails to respond to 
an applicant's first appeal within 180 days, said applicant may choose 
to arbitrate the dispute provided they meet all the other arbitration 
threshold requirements. Consequently, FEMA did not make any changes to 
the regulatory text at 206.206(b)(1)(ii)(C) and (b)(2)(ii)(C) as a 
result of the comments.

K. 90-Day Deadline for Technical Information

    Proposed paragraphs 206.206(b)(1)(iii) and (b)(2)(iii) provide 
that, for highly technical matters, the Regional Administrator may 
submit the appeal to an independent scientific or technical person/
group having expertise in the subject matter of the appeal for advice 
or recommendation. The period of this review may be in addition to 
other allotted time periods.
    In lieu of the above, a State DEM [FEMA-2019-0012-0008] commented 
that FEMA does not have the authority

[[Page 45665]]

to expand the time it has to render a determination on a first or 
second appeal. Moreover, the State DEM argued, the time taken to seek 
technical advice should be deducted from FEMA's allotted 90 days, as 
FEMA should have already conducted a proper full technical review prior 
to making a final agency determination.
    FEMA, as the steward of Federal monies, must always pursue the 
public's best interest by ensuring that all grants follow the law. For 
highly technical matters, the Agency has a responsibility to seek 
outside guidance if it lacks the requisite expertise inhouse. This will 
allow the Agency to make the correct decision and serve the greater 
good of distributing equitable disaster assistance. Moreover, pursuant 
to Section 423(d) of the Stafford Act, if FEMA fails to respond to an 
applicant's first appeal within 180 days, said applicant may choose to 
arbitrate the dispute provided they meet all the other arbitration 
threshold requirements. For these reasons, FEMA did not alter the 
regulatory text at 206.206(b)(1)(iii) and (b)(2)(iii) as a result of 
the comments.

L. 30 Days To Provide Additional Information

    In the NPRM, under paragraphs 206.206(b)(1)(ii)(B) and 
(b)(2)(ii)(B), FEMA proposed allowing the recipient only 30-calendar 
days to provide any additional information to the Regional 
Administrator; instead of having the Regional Administrator include the 
date by which the information must be provided. Quantifying the period 
for additional information better allows FEMA to issue timely 
determinations on first and second appeals.
    A member of the public [FEMA-2019-0012-0003] commented that the 
proposed change allows an appellant to provide additional information 
even 30 days after the appeal submittal. This change would not serve 
the public's interest of FEMA issuing timely determinations on first 
appeal she argued. In this instance, FEMA would be required to delay 
its adjudication by 30 days while it waits for the window of 
opportunity to submit additional information on a first appeal to pass. 
Thus, if this change was implemented, an appellant would have 150 days 
to make a complete appeal. While the member of the public [FEMA-2019-
0012-0003] is correct that the new 30-day deadline may add to the 
appeals timeline, it could also shorten the timeline of future appeals 
by quantifying the deadline. FEMA intends to provide a fair deadline 
for additional information. Therefore, FEMA did not make any changes to 
the regulatory text at 206.206(b)(1)(ii)(B) and (b)(2)(ii)(B) as a 
result of the comment.

M. Untimeliness and Imposition of Penalties Upon FEMA

    The State DEM [FEMA-2019-0012-0008] proposed the imposition of 
penalties on FEMA when it exceeds the 90-day deadline for requesting 
additional information for both first and second appeals. This 
commenter also suggested that if FEMA misses its deadline, recipients 
and applicants should not be held to their deadlines, and FEMA should 
be barred from requesting information to substantiate timeliness. The 
State DEM also proposed a requirement for FEMA to provide monthly 
status updates concerning each appeal to the applicant and recipient. 
As noted above, the Stafford Act does not include any remedies or 
corrective actions in the event that FEMA fails to meet the 90-day 
deadline to decide appeals. However, FEMA has a public assistance 
second appeals tracker available to the public at https://www.fema.gov/about/openfema/data-sets/fema-public-assistance-second-appeals-tracker.
    With regards to the State DEM's [FEMA-2019-0012-0008] suggestion 
that untimeliness on FEMA's part should relieve applicants and 
recipients from complying with their own deadlines. Section 423 of the 
Stafford Act requires an applicant to submit an appeal within 60 days; 
FEMA does not have the authority to alter or ignore this requirement. 
FEMA does have a duty to be a responsible steward of public monies and 
must therefore conduct a thorough review of all grants to ensure 
compliance with the law, even if that review happens to exceed the 90-
day deadline provided for disposition of appeals. Finally, FEMA will 
not impose additional responsibilities upon itself, such as status 
updates, outside of what is prescribed by law. Consequently, FEMA did 
not make any changes to the regulatory text as a result of the comment.

N. Implementation

    A State DEM [FEMA-2019-0012-0008] commented that 206.206(b)(1)(v) 
and (b)(2)(v) do not have deadlines or timelines for implementing a 
successful appeal. The State DEM suggested that FEMA adopt an actual 
deadline to avoid delaying project development without explanation to 
the applicant or recipient. The State DEM suggested language stating 
that if the Regional Administrator grants an appeal, FEMA must begin 
implementing the action within 30 days of the determination date, or at 
a minimum, provide the applicants and recipient with a status update 
indicating when the action would be implemented. In a separate comment, 
the agency also suggested requiring the Assistant Administrator for the 
Recovery Directorate to perform this action regarding second appeals.
    FEMA finds the proposed language to be unnecessary because it 
effectively requires FEMA to impose requirements on itself not 
otherwise imposed by Congress. FEMA trusts the discretion of its 
Regional Administrators \7\ to make appropriate decisions on addressing 
successful appeals. Also, providing status updates would unintendedly 
affect FEMA's ability to meet timelines for other actions. Therefore, 
FEMA did not make any changes to the regulatory text at 
206.206(b)(1)(v) and (b)(2)(v) as a result of the comment.
---------------------------------------------------------------------------

    \7\ The Assistant Administrator for the Recovery Directorate 
will direct the Regional Administrator to take appropriate 
implementing action(s) regarding successful second appeals.
---------------------------------------------------------------------------

O. Content of Arbitration Request

    A State DEM [FEMA-2019-0012-0008] commented on 
206.206(b)(3)(iii)(C), which states that a 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. Additional supplemental documentation is 
permitted as ordered by the CBCA.
    The State DEM believed the language was confusing because ``all 
documentation'' implied applicants could not submit supplemental 
information within a request for arbitration. The State DEM suggested 
removing the word ``all'' and adding language to allow supplemental 
documentation as requested by the CBCA. FEMA notes that the CBCA 
already has rules on supplemental materials located at 48 CFR 6106.608, 
Evidence; timing [Rule 608]. Accordingly, FEMA did not make any changes 
to the regulatory text at 206.206(b)(3)(iii)(C) as a result of the 
comment.

P. Emergency Versus Major Disaster Declaration Determinations

    As mentioned before, the State DEM [FEMA-2019-0012-0008] submitted 
an emergency declaration determination as their second and third 
attachment to their comment related to timeliness of appeals. In the 
third attachment, FEMA cites to 44 CFR 206.206 for the authority to 
appeal this emergency declaration determination. During the course of 
adjudicating this comment, FEMA

[[Page 45666]]

reviewed how the NPRM discussed emergency versus major disaster 
determinations.
    In the NPRM, FEMA limited arbitrations to major disaster 
declaration determinations at proposed 206.206(b)(3)(i)(A) since the 
right of arbitration is housed in paragraph (d) of Section 423 of the 
Stafford Act. Section 423 is under Title IV of the Stafford Act, which 
is entitled ``Major Disaster Assistance Programs.'' Also, subparagraph 
(d)(5)(A) of 423 of the Stafford Act states that the applicant shall 
submit to the arbitration process established under the authority 
granted under Section 601 of Public Law 111-5. FEMA's corresponding 
regulations under 206.209 are entitled ``Arbitration for Public 
Assistance determinations related to Hurricanes Katrina and Rita (Major 
disaster declarations DR-1603, DR-1604, DR-1605, DR-1606, and DR-
1607).'' Therefore, FEMA limited arbitration in the NPRM to major 
disaster declarations.
    Yet, there was no corresponding limitation in the appeals section 
of the NPRM because applicants may appeal emergency declaration 
decisions. As a result of the deliberation surrounding a response to 
this comment, FEMA did discover that the NPRM imprecisely stated in the 
Executive Orders 12866 and 13563 section that ``[t]his proposed rule 
does not apply to emergency disaster declarations.'' Rather, it should 
have stated that ``[t]he Regulatory Evaluation does not include a 
discussion of emergency disaster declarations; since, arbitration is 
only available to dispute the determinations of major disaster 
declarations.'' There was no need to analyze the cost for applicants to 
appeal determinations of emergency disaster declarations in the NPRM, 
since FEMA currently allows for such and the NPRM did not limit appeals 
to major disaster declaration determinations. FEMA did not make any 
changes to the regulatory text at 206.206 as a result of this comment 
but it did update the Regulatory Evaluation as noted above.

III. Summary of Other Changes

    The NPRM at 44 CFR 206.206(a) proposed to define the term 
``urbanized area'' to mean the area as identified by the United States 
Census Bureau (USCB). The USCB defines an ``urbanized area'' as an area 
that consists of densely settled territory that contains 50,000 or more 
people. For clarity and to comply with publication requirements found 
in 1 CFR chapter I, FEMA has revised the final rule's definition of 
``urbanized area'' as an area that consists of densely settled 
territory that contains 50,000 or more people.
    FEMA realized that the NPRM at 206.206 was silent regarding the 
recipient-related first and second appeal time limits. Section 423(a) 
of the Stafford Act allows appeals within 60 days. Therefore, in the 
first appeal time limits portion of the final rule FEMA aligned with 
this requirement by adding the following sentence at the end of 
206.206(b)(1)(ii)(A): A recipient may make a recipient-related first 
appeal within 60 calendar days from the date of the FEMA determination 
that is the subject of the appeal and must electronically submit their 
first appeal to the Regional Administrator. FEMA also had to make a 
corresponding addition to the second appeal time limits portion of the 
final rule by adding the following sentence to the end of 
206.206(b)(2)(ii)(A): If the Regional Administrator denies a recipient-
related first appeal in whole or in part, the recipient may make a 
recipient-related second appeal within 60 calendar days from the date 
of the Regional Administrator's first appeal decision and the recipient 
must electronically submit their second appeal to the Assistant 
Administrator for the Recovery Directorate.
    FEMA realized that the NPRM at 206.206(b)(3)(i)(A) does not follow 
the language of Section 423(d)(1) of the Stafford Act, which says that 
an applicant for assistance may request arbitration to dispute the 
eligibility for assistance or repayment of assistance. Rather, the NPRM 
at 206.206(b)(3)(i)(A) states that an applicant may request arbitration 
if there is a disputed agency determination. Therefore, in the final 
rule FEMA is removing the phrase ``disputed agency determination'' from 
paragraph 206.206(b)(3)(i)(A) and adding ``dispute of the eligibility 
for assistance or of the repayment of assistance'' in its place.
    FEMA also realized that the NPRM at 206.206(b) does not follow the 
language of Section 423 of the Stafford Act, which says that an 
applicant for assistance may request arbitration to dispute the 
eligibility for assistance or repayment of assistance. Rather, the NPRM 
at 206.206(b) says 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 PA according to 
the procedures of this section. Because the regulatory text does not 
follow the statutory language, FEMA is removing the phrase ``or an 
eligible applicant may arbitrate'' from 206.206(b) and FEMA is adding a 
second sentence to 206.206(b) that says: ``An eligible applicant may 
request arbitration to dispute the eligibility for assistance or 
repayment of assistance.''
    FEMA is making these technical changes because FEMA does not have 
the discretion to deviate from statutorily imposed restrictions. 
Section 423(a) of the Stafford Act allows an applicant to appeal any 
decision regarding eligibility for, from, or amount of assistance. 
Whereas, Section 423(d)(1) of the Stafford Act allows an applicant to 
arbitrate the eligibility for assistance or repayment of assistance. 
Since Congress did not use the same language, there is a difference 
between what an applicant can arbitrate and what an applicant can 
appeal, which FEMA must delineate in its regulations at 44 CFR 206.206. 
Since these requirements are statutorily imposed and FEMA has no 
discretion FEMA may make these edits as technical changes in the final 
rule.
    Additional technical changes to the final rule are at 44 CFR 
206.206(b)(1)(iv)(B)(1) and (b)(2)(iv)(B)(1) as the Office of 
Management and Budget (OMB) revised the cross references from 2 CFR 
200.338 to 2 CFR 200.339; as, OMB revised sections of their Guidance 
for Grants and Agreements. (See 85 FR 49506, Aug. 13, 2020.)
    The final rule also includes corrections of typographical errors 
and other non-substantive stylistic changes from the NPRM. FEMA made a 
typographical error under the Executive Orders 12866 and 13563 section 
Impartiality heading. In the NPRM, the Executive Orders 12866 and 13563 
section stated that CBCA found in favor of the applicant fully or 
partially in less than 20 percent of the time. The ``20 percent'' was a 
typographical error. It should have read ``55 percent'' to align with 
the correct data, which was listed on Table 13 of the NPRM. In this 
final rule, the data for the Executive Orders 12866 and 13563 section 
has been updated with the most recent 10-years of available data at the 
time of the analysis. Therefore, FEMA has replaced ``less than 20'' 
with ``about 13'' in the final rule to make sure that the narrative of 
the percentage that the CBCA found in favor of the applicant fully or 
partially aligns with Table 13.
    The final rule also includes other non-substantive changes from the 
NPRM. For instance, FEMA added a footnote to the Executive Orders 12866 
and 13563 section under the Cost to Government/FEMA heading that ``FEMA 
estimates that we could need up to four expert witnesses. FEMA's expert 
witnesses may or may not speak at the hearing. Additionally, FEMA may 
hire an expert witness so that FEMA can consult with

[[Page 45667]]

them about the subject matter.'' The footnote adds clarity to the 
statement that FEMA assumes that it would use four expert witnesses per 
case. This change is for clarification purposes only.
    In this final rule, FEMA added onto footnote 11 in the Executive 
Orders 12866 and 13563 section under the first bullet point under the 
Assumptions heading that ``[i]n the final rule, the data for the 
Executive Orders 12866 and 13563 section has been updated with the most 
recently available data at the time of the analysis.'' The edits to 
footnote 11 clarifies that the Executive Orders 12866 and 13563 section 
contains the most recent data at the time of the analysis and that the 
figures will be in the most recent dollars. For the NPRM, 2018 dollars 
were used based off the Bureau of Labor Statistics (BLS) Consumer Price 
Index (CPI) data. In the final rule, 2019 dollars were used based off 
the BLS CPI data as it became available. This addition is for 
clarification purposes only.
    Another non-substantive stylistic change from the NPRM was made to 
the definition of ``applicant'' and ``recipient'' in 206.206(a). 
Instead of saying that the ``applicant'' or the ``recipient'' ``refers 
to,'' the final rule regulatory text says that the ``applicant'' or the 
``recipient'' ``has the same meaning as.'' So, the definitions in the 
final rule regulatory text are: Applicant has the same meaning as the 
definition at Sec.  206.201(a) and Recipient has the same meaning as 
the definition at Sec.  206.201(m).
    The final non-substantive stylistic and grammar changes from the 
NPRM were made to 206.206(c) in the final rule. First, FEMA split the 
paragraph into two subparagraphs based on whether the subparagraph 
dealt with the finality of a FEMA decision or a CBCA decision. Then, 
FEMA corrected a grammar error in the first sentence of 206.206(c)(1) 
by revising ``constitute'' to ``constitutes.'' Since, FEMA split 
paragraph 206.206(c) from the NPRM into two subparagraphs in the final 
rule, FEMA had to include that final decisions are not subject to 
further administrative review in both subparagraphs, as it applies to 
the finality of both FEMA and CBCA decisions.

IV. Regulatory and Statutory Analyses

A. Executive Order 12866, as Amended, Regulatory Planning and Review 
and Executive Order 13563, Improving Regulation and Regulatory Review

    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 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.
    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.
Need for Regulatory Action
    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 (RA), who will make a determination on the appeal. If the 
applicant or recipient does not submit a second appeal of the RA's 
determination, 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.
    This rule implements 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 final rule will directly affect applicants or recipients 
disputing FEMA PA eligibility determinations or disputing the amount 
awarded for PA projects. Applicants are required to submit appeals 
through their State, or in the case of a Tribal declaration,\8\ their 
Tribal government (recipients). The recipient will then forward the 
request to the FEMA Regional Administrator, along with a recommendation 
for a first appeal.
---------------------------------------------------------------------------

    \8\ 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 in the case of an applicant 
not receiving the first appeal decision within 180 days or to defend 
FEMA's first appeal decision.
    The final rule will codify regulations for the 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.\9\
---------------------------------------------------------------------------

    \9\ 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). After CBCA finalized their rule on June 21, 2019, see 84 
FR 29085, FEMA again updated the Fact Sheet. The current Fact Sheet 
can be found at: https://www.fema.gov/sites/default/files/2020-07/fema_DRRA-1219-public-assistance-arbitration-right_fact-sheet.pdf. 
(2-20). Accessed June 8, 2021.
---------------------------------------------------------------------------

    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.\10\
---------------------------------------------------------------------------

    \10\ 48 CFR part 6101, Rules of Procedure of the Civilian Board 
of Contract Appeals, also covers PA arbitrations.
---------------------------------------------------------------------------

    This final rule establishes a 60-calendar day deadline for 
submitting

[[Page 45668]]

requests for arbitration (Sec.  206.206(b)(3)(iii)(B)) so that 
submission time limits for second appeals and arbitrations are the 
same. 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 final rule will affect disputes from 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 is revising its 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 appeals process. DRRA added 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 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.
    In the final rule, a non-substantive stylistic change from the NPRM 
was made to the definition of ``applicant'' and ``recipient'' in Sec.  
206.206(a). Instead of saying that the ``applicant'' or the 
``recipient'' ``refers to,'' the final rule regulatory text says that 
the ``applicant'' or the ``recipient'' ``has the same meaning as.'' So, 
the definitions in the final rule regulatory text are: Applicant has 
the same meaning as the definition at Sec.  206.201(a) and Recipient 
has the same meaning as the definition at Sec.  206.201(m).
    In this final rule, FEMA is adding a definition of Regional 
Administrator and making changes to the regulatory text regarding first 
appeals and second appeals at Sec.  206.206(b)(1)(ii)(A) and 
(b)(2)(ii)(A) as a result of the 60-day appeals deadline comments.
    Additionally, in this final rule, FEMA is making technical 
revisions at Sec. Sec.  206.206(b) and 206.206(b)(3)(i)(A) to align the 
regulatory text with the dispute of the eligibility for assistance or 
repayment of assistance language of Section 423(d)(1) of the Stafford 
Act.
    FEMA realized that the NPRM at Sec.  206.206 was silent regarding 
the recipient-related first and second appeal time limits. Section 
423(a) of the Stafford Act allows appeals within 60 days. Therefore, in 
the first appeal time limits portion of the final rule FEMA aligned 
with this requirement by adding the following sentence at the end of 
Sec.  206.206(b)(1)(ii)(A): A recipient may make a recipient-related 
first appeal within 60 calendar days from the date of the FEMA 
determination that is the subject of the appeal and must electronically 
submit their first appeal to the Regional Administrator. FEMA also had 
to make a corresponding addition to the second appeal time limits 
portion of the final rule by adding the following sentence to the end 
of Sec.  206.206(b)(2)(ii)(A): If the Regional Administrator denies a 
recipient-related first appeal in whole or in part, the recipient may 
make a recipient-related second appeal within 60 calendar days from the 
date of the Regional Administrator's first appeal decision and the 
recipient must electronically submit their second appeal to the 
Assistant Administrator for the Recovery Directorate. This regulatory 
change is not expected to have a significant economic impact.
    FEMA provided clarifying edits to Sec.  206.206(b)(3)(iii)(B)(2) in 
the final rule, so that an applicant understands that if they choose 
arbitration pursuant to Section 423(d) of the Stafford Act, as FEMA has 
not responded to an applicant's first appeal within 180 days, then they 
must withdraw the pending appeal before they file the request for 
arbitration. Basically, the applicant cannot arbitrate and appeal at 
the same time. Plus, FEMA provided clarifying edits to Sec.  
206.206(b)(3)(iii)(B)(2) to remove the phrase ``and the CBCA.'' FEMA 
deleted this phrase, as a pending first appeal would not be pending 
before the CBCA, so the applicant would have no reason to notify the 
CBCA of the first appeal withdrawal.
    For clarity and to comply with publication requirements found in 1 
CFR chapter I, FEMA has revised the final rule's definition of 
``urbanized area'' as an area that consists of densely settled 
territory that contains 50,000 or more people.
    Additional technical changes to the final rule are at 44 CFR 
206.206(b)(1)(iv)(B)(1) and (b)(2)(iv)(B)(1) as the Office of 
Management and Budget (OMB) revised the cross references from 2 CFR 
200.338 to 2 CFR 200.339; as, OMB revised sections of their Guidance 
for Grants and Agreements. (See 85 FR 49506, Aug. 13, 2020.)
    So in the final rule, FEMA has split the first sentence of Sec.  
206.206(b)(3)(iii)(B)(2) into two sentences that say 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 arbitrate the decision of FEMA. To request 
arbitration, the applicant must first electronically submit a 
withdrawal of the pending appeal simultaneously to the recipient and 
the FEMA Regional Administrator. This regulatory change will not have 
an economic impact.
    FEMA also added clarifying language to the last sentence of Sec.  
206.206(b)(3)(iii)(B)(2) by replacing ``may'' with ``must'' and by 
adding the phrase ``to the recipient, the CBCA, and FEMA'' after 
arbitration. So, Sec.  206.206(b)(3)(iii)(B)(2) in the final rule says 
that the applicant must then submit a request for arbitration to the 
recipient, the CBCA, and FEMA within 30 calendar days from the date of 
the withdrawal of the pending appeal. FEMA wants to clarify that if an 
applicant withdraws a first appeal, then the applicant must submit a 
request for arbitration within 30 calendar days. If the applicant does 
not follow the requirements of Sec.  206.206(b)(3)(iii)(B)(2), then the 
applicant's request for arbitration will be denied for timeliness. This 
regulatory change will not have an economic impact.
    The final non-substantive stylistic and grammar changes from the 
NPRM were made to Sec.  206.206(c) in the final rule. First, FEMA split 
the paragraph into two subparagraphs based on whether it dealt with the 
finality of a FEMA decision or a CBCA decision. Then, FEMA corrected a 
grammar error in the first sentence of Sec.  206.206(c)(1) by revising 
``constitute'' to ``constitutes.'' Since, FEMA split paragraph 
206.206(c) from the NPRM into two subparagraphs in the final rule, FEMA 
had to include that final decisions are not subject to further

[[Page 45669]]

administrative review in both subparagraphs, as it applies to the 
finality of both FEMA and CBCA decisions.
Assumptions
    This analysis used the following assumptions:
     All monetary values are presented in 2019 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 December 2019.\11\
---------------------------------------------------------------------------

    \11\ Historical Consumer Price Index for All Urban Consumers 
(CPI-U): U.S. city average, all items, by month. Bureau of Labor 
Statistics: Consumer Price Index 2019. Accessed October 23, 2020. 
https://www.bls.gov/cpi/tables/supplemental-files/archive-2019.zip. 
In the final rule, the data for the Executive Orders 12866 and 13563 
section has been updated with the most recently available data at 
the time of the analysis.
---------------------------------------------------------------------------

     This analysis does not include a discussion of emergency 
disaster declarations; since, arbitration is only available to dispute 
the determinations of major disaster declarations.\12\
---------------------------------------------------------------------------

    \12\ The NPRM incorrectly stated in the Executive Orders 12866 
and 13563 section that ``[t]his proposed rule does not apply to 
emergency disaster declarations.'' The NPRM should have stated that 
here was no need to the cost for applicants to appeal determinations 
of emergency disaster declarations because FEMA currently allows for 
such and the NPRM did not limit appeals to major disaster 
declaration determinations.
---------------------------------------------------------------------------

     FEMA assumed the length of time for an arbitration case is 
based on the hearing location.
     FEMA used 2019 wage rates for all parties involved in 
arbitration cases.
Baseline
    Following guidance in OMB Circular A-4, FEMA assessed the impacts 
of this final 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 under a no-action baseline. The costs, benefits, and 
transfers of this rule are measured against the pre-statutory baseline. 
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 November 9, 2020, 
FEMA received 20 requests for arbitration.\13\ Three of these cases are 
still in progress, so FEMA does not have available data on the outcome 
of these cases. Of the 17 closed cases, FEMA prevailed in 10 cases, the 
applicant prevailed in 4 cases, and the applicant withdrew from the 
arbitration process prior to a decision in 3 cases. These figures will 
change as FEMA continues to receive arbitration requests.
---------------------------------------------------------------------------

    \13\ The number of arbitration requests was provided by FEMA's 
Office of Chief Counsel Disaster Disputes Branch as of November 9, 
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 19 months of historical data, and therefore, 
FEMA relied on older arbitration regulations as a proxy for the 
expected number of arbitration cases arising out of this final 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 final rule. While the Katrina/Rita 
arbitration regulations have some key differences from this final 
regulation, 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 final rule.
    FEMA recognized that the regulations at 44 CFR 206.209 have a 30-
day time limit for submitting arbitration requests; whereas, this final 
rule has a 60 calendar-day time limit for arbitrations. FEMA was not 
able to estimate the impact 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 20 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 2010 through 2019 
to derive an estimate of 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 final rule. This analysis was 
conducted using data from 2010 through 2019.\14\ 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 73 arbitrations and a total 225 first appeals.\16\ From this 
available data, applicants chose arbitration in lieu of a first appeal 
32 percent of the time ((73 / 225) x 100 = approximately 32 percent).
---------------------------------------------------------------------------

    \14\ The proposed rule stated that ``The authority to arbitrate 
in lieu of a 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.'' Review under the Executive Orders 12866 and 13563 
section in the proposed rule was conducted with data available at 
the time. FEMA typically uses 10 years of historical data for their 
analysis. However, 10 years of historical data was not available at 
the time of the analysis of the proposed rule. For this final rule, 
FEMA was able to use 10 years of historical data, 2010 through 2019. 
Hurricane Katrina and Rita occurred in 2005. FEMA notes that as time 
passes, fewer applicants are submitting requests for public 
assistance each year, as over 15 years has passed since the Katrina/
Rita declarations.
    \15\ Please note that arbitration cases for Hurricanes Katrina 
and Rita are not bound by a threshold for rural areas as is this 
rule. FEMA does not know if this limitation will result in more or 
less cases submitted.
    \16\ Data on appeals and arbitrations is provided by FEMA's 
Office of Chief Counsel Disaster Disputes Branch. Not all 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

[[Page 45670]]

estimates, FEMA looked at all PA appeals from 2010 through 2019, 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 874 second appeals submitted.\17\ Of that total, FEMA had data on 
the amount in dispute for 751 appeals. FEMA applied the urban/rural and 
minimum project amount requirements to these appeals and found that 353 
or 47 percent would have been eligible for arbitration under this final 
rule ((353 / 751) x 100 = approximately 47 percent).\18\
---------------------------------------------------------------------------

    \17\ During the period of 2010-2019, 874 second level appeals 
were submitted. FEMA has amount in dispute data for 751 cases. FEMA 
does not have the amount in dispute data on the 123 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.
    \18\ Out of 751 cases, 258 had an amount in dispute greater than 
$500,000 and would be eligible regardless of the urban/rural 
classification. 288 cases were for amounts between $100,000 and 
$500,000, of which 95 were classified as rural. 353 (= 258 + 95) 
cases out of 751, or 47 percent would have met the eligibility 
requirements for arbitration in lieu of a second appeal.
---------------------------------------------------------------------------

    FEMA used the number of second appeals by year, then applied the 
percent eligible for arbitration under the final rule of 47 percent, 
then applied the percent choosing arbitration in lieu of a first appeal 
of 32 percent to calculate the expected number of arbitration cases 
from 2010 to 2019 as shown in Table 1.

                     Table 1--Total and Annual Average Estimated Arbitration Cases per Year
----------------------------------------------------------------------------------------------------------------
                                                          Percent eligible                      Expected number
                 CY                    Number of second   under final rule   Percent choosing    of arbitration
                                           appeals              (%)          arbitration (%)         cases
----------------------------------------------------------------------------------------------------------------
2010................................                 93                 47                 32                 14
2011................................                107                 47                 32                 16
2012................................                 92                 47                 32                 14
2013................................                102                 47                 32                 15
2014................................                 82                 47                 32                 12
2015................................                 43                 47                 32                  6
2016................................                 83                 47                 32                 12
2017................................                 76                 47                 32                 11
2018................................                110                 47                 32                 17
2019................................                 86                 47                 32                 13
                                     ---------------------------------------------------------------------------
    Total...........................                874  .................  .................                130
                                     ---------------------------------------------------------------------------
        Average.....................                 87  .................  .................                 13
----------------------------------------------------------------------------------------------------------------

    Based on historical data from 2010 through 2019 and case data from 
44 CFR 206.209, FEMA estimates that there would be an average of 13 
arbitration cases in lieu of a second appeal per year under the final 
rule.
    Arbitration has been available under 42 U.S.C. 5189a(d)(5) since 
January 1, 2016. So far, 20 cases were submitted, with three submitted 
for a first appeal lasting more than 180 days. Based on this limited 
data, FEMA estimates that 15 percent of arbitration cases would result 
from a withdrawal of a first appeal.\19\ Applying the 15 percent 
arbitration rate to the annual average number of expected arbitration 
cases would result in two additional arbitration case per year (15 
percent x 13 cases = 1.95, rounded to two cases). Therefore, FEMA 
estimates an average of 15 arbitration cases per year (13 + 2 = 15 
arbitrations per year).
---------------------------------------------------------------------------

    \19\ Calculation: (3 cases where a first appeal lasted more than 
180 days / 20 arbitration cases) x 100 = 15 percent.
---------------------------------------------------------------------------

    In this final rule, FEMA is removing the phrase ``or an eligible 
applicant may arbitrate'' from ``206.206(b) and FEMA added a second 
sentence to 206.206(b) that says: ``[a]n eligible applicant may request 
arbitration to dispute the eligibility for assistance or repayment of 
assistance'' so that it follows the Stafford Act. This change in this 
final rule will not impact the number of arbitration cases per year 
since applicants can still request to arbitrate the case. However, the 
results of the arbitration may be impacted by the change in language. 
FEMA further discusses this point in our transfers and uncertainty 
analysis sections.
Costs
    Based on experience from the arbitrations conducted for Hurricanes 
Katrina and Rita, costs from this final 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 final rule. Other provisions of the 
final 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 final 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 final 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 
20 arbitration cases already filed. Generally, the applicant will use 
one or two attorneys and at least one expert witness. However, the 
arbitration

[[Page 45671]]

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 final 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.
    This analysis estimates a range of potential costs based on the 
applicant's or recipient's use of attorneys for representation. The 
final 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 (rounded to 47 
hours) to prepare for the hearing, attend the hearing, and for post 
hearing work.\20\ 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.
---------------------------------------------------------------------------

    Regulations at 44 CFR 206.209 have a 30-day time limit for 
submitting arbitration requests; whereas, this final rule has a 60 
calendar-day time limit for arbitrations. Since the 60 calendar-day 
appeals deadline is current FEMA policy there will be no additional 
costs for the regulatory text changes at Sec.  206.206(b)(1)(ii)(A) and 
(b)(2)(ii)(A) since it has already been accounted for.
Opportunity Cost of Time and Wages
    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 wage rates for 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: 
$69.86 for Lawyers (SOC 23-1011), $31.25 for Court Reporters and 
Simultaneous Captioners (SOC 23-2093), $48.45 for Engineers (SOC 17-
2000), and $59.15 for General and Operations Managers (SOC 11-
1021).\22\ To account for the benefits paid by employers, FEMA used a 
wage multiplier of 1.46,\23\ resulting in fully-loaded hourly wages of 
$102.00 for Lawyers, $45.63 for Court Reporters and Simultaneous 
Captioners, $70.74 for Engineers, and $86.36 for General and Operations 
Managers.
---------------------------------------------------------------------------

    \22\ U.S. Bureau of Labor Statistics. National Occupational 
Employment and Wage Estimates United States. May 2019. Accessed 
August 18, 2020. https://www.bls.gov/oes/2019/may/oes_nat.htm.
    \23\ Bureau of Labor Statistics, Employer Costs for Employee 
Compensation, Table 1. ``Employer costs per hour worked for employee 
compensation and costs as a percent of total compensation: Civilian 
workers, by major occupational and industry group, March 2019.'' 
Available at http://www.bls.gov/news.release/archives/ecec_06182020.pdf. Accessed August 18, 2020. The wage multiplier is 
calculated by dividing total compensation for all workers of $37.73 
by wages and salaries for all workers of $25.91 per hour yielding a 
benefits multiplier of approximately 1.46.
---------------------------------------------------------------------------

    FEMA used the 2019 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 $53.85, 
and the hourly GS-15 step 5 salary was $74.86. In order to account for 
the benefits paid by employers, FEMA used a 1.46 multiplier to 
calculate loaded wage rates of $78.62 for a GS-13 Federal employee and 
$109.30 for a GS-15 Federal employee.
---------------------------------------------------------------------------

    \24\ U.S. Office of Personnel Management. 2019 General Schedule 
(GS) Locality Pay Tables. August 19, 2020. https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2019/DCB_h.pdf.
---------------------------------------------------------------------------

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 traveling to Washington, DC to attend hearings. According to 
GSA, in 2019, the average price of a hotel room in Washington, DC was 
$216 per night \26\ and outside of the Washington, DC metro area was 
$94 per night.\27\ The per diem rate for meals and incidentals on the 
first and last travel days \28\ is $57 and $76 for other travel

[[Page 45672]]

day(s) in Washington, DC. Similarly, the per diem rates for meals and 
incidentals on the first and last day is $41 and $55 for the other days 
outside of Washington, DC.\29\
---------------------------------------------------------------------------

    \25\ U.S. General Services Administration. ``FY 2019 Per Diem 
Rates for District of Columbia.'' Accessed on August 19, 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=2019&zip=&city=. Per 
diem rates are calendar year instead of fiscal year.
    \26\ FEMA took the average of the 12 month per diem lodging 
rates provided by GSA for Washington, DC from October 2018 to 
September 2019, available at https://www.gsa.gov/travel/plan-book/per-diem-rates/per-diem-rates-lookup/?action=perdiems_report&state=DC&fiscal_year=2019&zip=&city=.
    \27\ U.S. General Service Administration. ``FY 2019 Per Diem 
Rates--Effective October 1, 2018.'' Accessed on May 24, 2021. 
Standard CONUS rate used for lodging and MI&E. https://www.gsa.gov/cdnstatic/FY2019_PerDiemRatesMasterFile_0.xls. Per diem rates are 
calendar year instead of fiscal year.
    \28\ U.S. General Services Administration. ``M&IE Breakdown.'' 
Accessed on May 24, 2021. https://www.gsa.gov/travel/plan-book/per-diem-rates/mie-breakdown. Per GSA, first and last travel days meals 
and incidentals expenses (M&IE) for the first and last calendar day 
of travel is calculated at 75 percent of the total M&IE.
    \29\ U.S. General Service Administration. ``FY 2019 Per Diem 
Rates--Effective October 1, 2018.'' Accessed on May 24, 2021. 
Standard CONUS rate used for lodging and MI&E. https://www.gsa.gov/cdnstatic/FY2019_PerDiemRatesMasterFile_0.xls. 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.\30\ According to the Bureau of 
Transportation Statistics, the annual unadjusted cost of an average 
domestic flight within the United States, the average airfare was $355 
roundtrip in 2019.\31\ The total travel costs for applicants attending 
hearings in Washington, DC that typically last 3 nights and 4 days 
would be $1,269 per person ($355 average airfare + ($216 hotel in 
Washington, DC x 3 nights) + ($76 meals and incidentals x 2 days of 
stay) + ($57 meals and incidentals x 2 travel days)) = $1,269).
---------------------------------------------------------------------------

    \30\ Bureau of Transportation Statistics. ``Annual Fares 1995-
2019 4Q 2019'' (.xlsx) March 23, 2020. U.S. Department of 
Transportation. https://www.bts.gov/sites/bts.dot.gov/files/Annual%20Fares%201995-2020%201Q2020.xlsx.
    \31\ Unadjusted 2019 dollars. 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. Therefore, the opportunity costs of time for 
one expert witness to attend a hearing would be $3,325 ($70.74 
engineers wages x 47 hours). Thus, the total cost for one expert 
witness' travel and opportunity cost of time is $4,594 ($1,269 + 
$3,325). Table 2 shows the detailed costs per expert witness to attend 
a hearing in Washington, DC. To provide a range of estimates since 
cases vary, a hearing at the applicant's location for an expert witness 
would cost $2,547 ($70.74 engineers wages x 36 hours \32\). This total 
assumes the expert witness is local and therefore incurs no travel 
costs.
---------------------------------------------------------------------------

    \32\ FEMA deducts the 11 hours of travel time from the total of 
47 hours used for a hearing in Washington, DC to come up with the 
total time for a hearing at the applicant's location assuming the 
expert witness is also local. Therefore, 36 hours is derived from 
the 20 hours estimated for preparing for the hearing and 16 hours 
for the duration of the hearing.

                                           Table 2--Estimated Cost per Expert Witness, Washington, DC Hearing
                                                                         [2019$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Opportunity costs of
    Round trip flight      Three nights of lodging    Meals and incidentals    Total travel  expenses    time for a  hearing in   Total expert  witness
                              at $219 per night                                                              Washington, DC                cost
(A)                                        (B)                         (C)         (D) = (A + B + C)                     (E)                  (D + E)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                $355                      $648                      $266                    $1,269                    $3,325                   $4,594
--------------------------------------------------------------------------------------------------------------------------------------------------------

Cost for the Applicant
    The typical 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 $2,538 ($1,269 x 2 
personnel = $2,538), 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 $10,925 (($102.00 per hour wages for 
a lawyer x 58 hours) + ($86.36 per hour wages for a general and 
operations manager x 58 hours) = $10,925). If the applicant does not 
use an attorney as their representative, the opportunity costs of time 
would be $10,018 (2 general and operations managers at $86.36 each x 58 
hours = $10,018). Table 3 shows the range of total costs to the 
applicant which include the opportunity costs of time and the travel 
costs.

                            Table 3--Range of Applicant Costs--Washington, DC Hearing
                                                     [2019$]
----------------------------------------------------------------------------------------------------------------
                                                          Opportunity cost
                                                              of time             Travel             Total
----------------------------------------------------------------------------------------------------------------
1 Attorney and 1 Non-Attorney..........................            $10,925             $2,538            $13,463
2 Non-Attorneys........................................             10,018              2,538             12,556
----------------------------------------------------------------------------------------------------------------

    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 $21,744 ((2 expert witnesses at a cost of $4,594 
each) + $12,556 applicant cost) if the representatives are 2 non-
attorneys to $22,651 ((2 expert witnesses at $4,594 each) + $13,463 
applicant and attorney cost) if the representatives are 1 attorney and 
1 non-attorney.

[[Page 45673]]

    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 $13,211 ((2 
general and operations managers at $86.36 each x 47 hours) + (2 expert 
witnesses at $70.74 each x 36 hours) = $13,211) to $13,946 (($86.36 for 
a general and operations manager x 47 hours) + ($102.00 for an attorney 
x 47 hours) + (2 expert witnesses at $70.74 each x 36 hours) = $13,946) 
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
                                                     [2019$]
----------------------------------------------------------------------------------------------------------------
                                                                             Opportunity cost
                                                          Expert witnesses       of time             Total
----------------------------------------------------------------------------------------------------------------
1 Attorney and 1 Non-Attorney..........................             $5,093             $8,853            $13,946
2 Non-Attorneys........................................              5,093              8,118             13,211
----------------------------------------------------------------------------------------------------------------

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 representatives totaling $10,018 (2 
general and operations managers at $86.36 each x 58 hours = $10,018) 
and travel expenses $2,538 (2 representatives x $1,269) of those 
attending the hearing in Washington, DC. As shown in table 5, the total 
cost to the recipient would be $12,556 if the hearing was held in 
Washington, DC.

                           Table 5--Estimated Recipient Costs, Washington, DC Hearing
                                                     [2019$]
----------------------------------------------------------------------------------------------------------------
                                                       Opportunity cost
                                                            of time             Travel               Total
----------------------------------------------------------------------------------------------------------------
General and Operations Managers.....................            $10,018              $2,538             $12,556
----------------------------------------------------------------------------------------------------------------

    For a local hearing, two representatives would spend 47 hours on 
the case and the cost to the recipient would be $8,118 (2 general and 
operations managers at $86.36 each x 47 hours = $8,118).
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.\33\ The opportunity costs of 
time of the attorneys, including preparation and review of a case, is 
$8,832 (($78.62 GS-13 Step 5 attorney x 47 hours) + ($109.30 GS 15 Step 
5 Supervisory Attorney x 47) hours = $8,832).
---------------------------------------------------------------------------

    \33\ 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 $5,032 (4 
GS-13 Step 5 program analysts at $78.62 each x 16 hours = $5,032). 
Thus, the total opportunity costs of time for all six FEMA personnel 
would be $13,864. 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 \34\ for a total of $10,188 
($2,547 cost per expert witness x 4 expert witnesses = $10,188). The 
expert witnesses provide testimony on a range of subjects, for example 
soil degradation or building construction.
---------------------------------------------------------------------------

    \34\ FEMA estimates that we could need up to four expert 
witnesses. FEMA's expert witnesses may or may not speak at the 
hearing. Additionally, FEMA may hire an expert witness so that FEMA 
can consult with them about the subject matter.
---------------------------------------------------------------------------

    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 will 
continue to pay for a court reporter for the duration of a hearing 
under the final rule, but will not provide a transcript to the CBCA. 
The opportunity costs of time for the court reporter services for a 
transcript would be $730 per arbitration case ($45.63 per hour wages 
for Court Reporters and Simultaneous Captioners x 16 hours of 
arbitration time = $730).
    The estimated total cost to FEMA, including staff time, expert 
witnesses, and transcript services, would be $24,782 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
                                                     [2019$]
----------------------------------------------------------------------------------------------------------------
                                                          Cost for FEMA employees (2
    Cost for four expert        Cost of court reporter      attorneys and 4 program     Total per-case cost to
         witnesses                                                 analysts)                     FEMA
----------------------------------------------------------------------------------------------------------------
               $10,188                         $730                     $13,864                     $24,782
----------------------------------------------------------------------------------------------------------------


[[Page 45674]]

    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 for FEMA due to paying for travel time as well 
as actual travel costs. Travel costs are estimated using the figures 
previously mentioned and would be $1,269 per person for a total of 
$2,538, 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 $109.30 each x 58 hours) $12,679 plus $5,032 for non-travelling 
program analysts resulting in a total cost of $17,711. The total 
estimated costs to FEMA for a local hearing are presented in Table 7.

                                      Table 7--Estimated FEMA Costs--Local
                                                     [2019$]
----------------------------------------------------------------------------------------------------------------
                                               Opportunity costs of
 Cost for four expert      Cost of court          time for FEMA         Travel costs (2      Total per-case cost
      witnesses               reporter              employees              attorneys)              to FEMA
----------------------------------------------------------------------------------------------------------------
            $10,188                   $730               $ 17,711                 $2,538               $31,167
----------------------------------------------------------------------------------------------------------------

    In addition to these costs, FEMA's PA Program hired an Arbitration 
Coordinator at the GS-13 Step 5 level with an annual salary of 
$116,353. With the 1.46 multiplier for a fully loaded wage rate, the 
additional cost to FEMA is $169,875 per year. Therefore, the annual 
total costs to FEMA range from $194,657 ($169,875 + $24,782) if the 
hearing is held in Washington, DC to $201,042 ($169,875 + $31,167) if 
the hearing is held at the applicant's location.
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 
$52,496 and $59,989. Table 8 presents the range of estimated costs per 
arbitration case.

                                          Table 8--Total Cost Per Case
                                                     [2019$]
----------------------------------------------------------------------------------------------------------------
                                             FEMA            Applicant          Recipient            Total
----------------------------------------------------------------------------------------------------------------
Low.................................            $31,167            $13,211             $8,118            $52,496
High................................             24,782             22,651             12,556             59,989
----------------------------------------------------------------------------------------------------------------

    As established earlier in this analysis, FEMA estimates an average 
of 15 arbitration cases per year. Therefore, FEMA estimates the total 
annual costs to range between $957,315 ((15 cases x $31,167 per case) + 
$169,875 to hire a new FEMA employee + (15 cases x $13,211 per case for 
applicant) + (15 cases x $8,118 per case for the recipient) = $957,315) 
(low) and $1,069,710 ((15 cases x $24,782 per case) + $169,875 for a 
new FEMA employee + (15 cases x $22,651 per case for the applicant) + 
(15 cases x $12,556 for the recipient) = $1,069,710) (high). Table 9 
shows the estimated total costs per year of this final 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 15 Cases
                                                     [2019$]
----------------------------------------------------------------------------------------------------------------
                                             FEMA            Applicant          Recipient            Total
----------------------------------------------------------------------------------------------------------------
Low.................................           $637,380           $198,165           $121,770           $957,315
High................................           $541,605           $339,765           $188,340         $1,069,710
----------------------------------------------------------------------------------------------------------------

    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, 2019$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        Annual costs      Annual costs
                    Year                         FEMA costs      Applicant costs   Recipient costs     Total costs     discounted  at    discounted  at
                                                                                                                           3% \1\            7% \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...........................................          $637,380          $198,165          $121,770          $957,315          $929,432          $894,687
2...........................................           637,380           198,165           121,770           957,315           902,361           836,156
3...........................................           637,380           198,165           121,770           957,315           876,079           781,454
4...........................................           637,380           198,165           121,770           957,315           850,562           730,331
5...........................................           637,380           198,165           121,770           957,315           825,788           682,552

[[Page 45675]]

 
6...........................................           637,380           198,165           121,770           957,315           801,736           637,899
7...........................................           637,380           198,165           121,770           957,315           778,385           596,168
8...........................................           637,380           198,165           121,770           957,315           755,713           557,166
9...........................................           637,380           198,165           121,770           957,315           733,702           520,716
10..........................................           637,380           198,165           121,770           957,315           712,332           486,650
                                             -----------------------------------------------------------------------------------------------------------
    Total...................................         6,373,800         1,981,650         1,217,700         9,573,150         8,166,090         6,723,779
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized..................................  ................  ................  ................  ................           957,315           957,315
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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, 2019$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        Annual costs      Annual costs
                    Year                         FEMA costs      Applicant costs   Recipient costs     Total costs     discounted  at    discounted  at
                                                                                                                           3% \1\            7% \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...........................................          $541,605          $339,765          $188,340        $1,069,710        $1,038,553          $999,729
2...........................................           541,605           339,765           188,340         1,069,710         1,008,304           934,326
3...........................................           541,605           339,765           188,340         1,069,710           978,936           873,202
4...........................................           541,605           339,765           188,340         1,069,710           950,423           816,077
5...........................................           541,605           339,765           188,340         1,069,710           922,741           762,688
6...........................................           541,605           339,765           188,340         1,069,710           895,865           712,793
7...........................................           541,605           339,765           188,340         1,069,710           869,772           666,162
8...........................................           541,605           339,765           188,340         1,069,710           844,439           622,581
9...........................................           541,605           339,765           188,340         1,069,710           819,844           581,851
10..........................................           541,605           339,765           188,340         1,069,710           795,965           543,786
                                             -----------------------------------------------------------------------------------------------------------
    Total...................................         5,416,050         3,397,650         1,883,400        10,697,100         9,124,842         7,513,195
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized..................................  ................  ................  ................  ................         1,069,710         1,069,710
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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 continues to believe that there will not be any implementation 
or familiarization costs. FEMA currently has an arbitration process 
that is very similar to the final rule for cases arising from 
Hurricanes Katrina and Rita. Additionally, FEMA has already notified 
eligible applicants, dating back to January 1, 2016 of their 
eligibility for arbitration under DRRA Section 1219.
    Further, applicants will not have familiarization costs because the 
process for requesting arbitration will consist of an email request and 
will use materials previously submitted in the application for PA 
funding.
Benefits
    The benefits of this final rule are qualitative in nature and apply 
mostly to the applicant. FEMA believes that this final rule will 
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 final rule offers an alternative 
that the applicant might 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 have the opportunity to present their case in person and 
call expert witnesses to support their claims. These two options allow 
applicants to choose a course of action that is most appropriate to 
their circumstances.
Customization
    Applicants may select arbitration, if they consider this process 
more customizable. The arbitration process provides 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 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 final rule also allows applicants to present the same technical 
documentation in both the appeals and arbitration procedures. An 
applicant who submits a first appeal but elects withdrawal in favor of 
arbitration may opt to reuse the information in the request for 
arbitration that was previously submitted in the first appeal.

[[Page 45676]]

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 about 23 
percent of the second appeals submitted by applicants.\35\ CBCA has 
found in favor or partially in favor for the applicant about 13 percent 
of Katrina/Rita arbitrations.\36\
---------------------------------------------------------------------------

    \35\ Based on information provided by FEMA Office of Chief 
Counsel Disaster Disputes Branch.
    \36\ 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 may select arbitration to have cases reviewed by a third 
party, rather than an appeal process that is conducted entirely by 
FEMA. Applicants may perceive this to be a more impartial system, if 
the forum encourages both parties to solicit discussion rather than 
``paper'' based appeals. Applicants may expect that impartiality would 
best achieve the objective of an equitable 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
                               [2010-2019]
------------------------------------------------------------------------
       Second appeal outcome         Number of cases        Percent
------------------------------------------------------------------------
Granted...........................                138               15.8
Denied............................                594               68.0
Partially Granted.................                 78                8.9
Active............................                 37                4.2
Other \1\.........................                 27                3.1
                                   -------------------------------------
    Total.........................                874             100.0
------------------------------------------------------------------------
\1\ The category of Other includes appeal decision not available,
  remand, rescind, arbitration, and withdrawn.


           Table 13--Arbitration Outcomes Under 44 CFR 206.209
                               [2010-2019]
------------------------------------------------------------------------
        Arbitration outcome          Number of cases        Percent
------------------------------------------------------------------------
Matters Resolved Without CBCA                      24               33.3
 Decision.........................
In Favor of FEMA..................                 22               30.6
In Favor of Applicant.............                  6                8.3
Partial in Favor of Applicant.....                  3                4.2
Withdrawn.........................                 12               16.7
Other \2\.........................                  5                6.9
                                   -------------------------------------
    Total.........................                 72               100
------------------------------------------------------------------------
\2\ The category of Other includes other decision, dismissed, and
  ongoing cases.

Transfers
    FEMA is unable to quantify transfers because of the 
unpredictability of the results of this final 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 that would result from this final rule.
Impacts
    Table 14 summarizes the costs, benefits, and transfer impacts of 
this final rule.

                                   Table 14--OMB Circular A-4 Accounting Table
----------------------------------------------------------------------------------------------------------------
                                         Estimates                                   Units
                             -----------------------------------------------------------------------------------
          Category                                                             Discount rate
                               Low estimate    High estimate    Dollar year         (%)         Period covered
----------------------------------------------------------------------------------------------------------------
Benefits:
    Annualized Monetized....              $0              $0            2019               7  10 Years.
                             -----------------------------------------------------------------------------------
                                           0               0            2019               3  10 Years.
                             -----------------------------------------------------------------------------------
    Annualized Quantified...               0               0
                             --------------------------------

[[Page 45677]]

 
                                           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....         957,315       1,069,710            2019               7  10 Years.
                             --------------------------------
                                     957,315       1,069,710            2019               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 11 arbitration cases per year from small entities with an estimated
                              cost of between $13,211 and $22,651 per small entity.
                             -----------------------------------------------------------------------------------
    Wages...................  None.
                             -----------------------------------------------------------------------------------
    Growth..................  None.
----------------------------------------------------------------------------------------------------------------

Uncertainty Analysis
    The estimates of the costs of the final 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 final 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 this final 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.\37\ 
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.
---------------------------------------------------------------------------

    \37\ ``The Federal share of assistance is not less than 75 
percent of the eligible cost. The recipient determines how the non-
Federal share (up to 25 percent) is split with the subrecipients 
(i.e., eligible applicants).'' Program Overview: Public Assistance. 
FEMA. https://www.fema.gov/assistance/public/program-overview. Last 
accessed on: May 25, 2021.
---------------------------------------------------------------------------

    Additionally, the timeframe for submitting arbitration requests 
under 44 CFR 206.209 was 30 days. However, FEMA is implementing a 60-
day submission deadline for arbitration submissions under DRRA 
requirements to align with the 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 identified several alternative regulatory approaches to the 
requirements in this final rule. The alternatives included: (1) Not 
issuing a mandatory regulation; (2) an alternate definition of rural; 
and (3) not requiring electronic submission.
    FEMA did not consider the first alternative option of not issuing a 
mandatory regulation. 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.
    FEMA considered using an alternate definition of rural, such as 
OMB's nonmetropolitan area definition. OMB's nonmetropolitan area is 
defined as areas outside the boundaries of metropolitan areas.\38\
---------------------------------------------------------------------------

    \38\ 2010 Standards for Delineating Metropolitan and 
Micropolitan Statistical Areas; Notice. Office of Management and 
Budget. See 75 FR 37246, June 28, 2010. https://www.govinfo.gov/content/pkg/FR-2010-06-28/pdf/2010-15605.pdf. Last accessed: May 25, 
2021.
---------------------------------------------------------------------------

    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

[[Page 45678]]

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 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 to require electronic submissions 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, 
requiring electronic submission will 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 a Final Regulatory Flexibility 
Analysis (FRFA) unless it determines and certifies that a rule, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities. This final rule will not have a 
significant economic impact on a substantial number of small entities. 
In accordance with the Regulatory Flexibility Act, a FRFA 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 final rule.

1. Statement of a need for, and objectives of the rule.

    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 PNP 
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.
    Applicants currently have a right to arbitration to dispute FEMA 
eligibility determinations associated with Hurricanes Katrina and Rita; 
see 44 CFR 206.209. The DRRA amended the Stafford Act and FEMA 
promulgated a regulation providing all applicants the right to request 
arbitration for disputes under all disaster declarations after January 
1, 2016 that are above certain dollar amount thresholds. This final 
rule implements the Section 1219 requirements of DRRA and will grant 
applicants an additional method of recourse.

2. Statement of the significant issues raised by the public comments in 
response to the Initial Regulatory Flexibility Analysis (IRFA), a 
statement of the assessment of the agency of such issues, and a 
statement of any changes made to the proposed rule as a result of such 
comments.

    FEMA did not receive any comments on the IRFA for this rule, and 
therefore did not make any changes to this FRFA from the proposed rule 
due to public comments.

3. The response of the agency to any comments filed by the Chief 
Counsel for Advocacy of the Small Business Administration (SBA) in 
response to the proposed rule, and a detailed statement of any change 
made to the final rule as a result of the comments.

    FEMA did not receive any comments on the proposed rule from the 
Chief Counsel for Advocacy of the SBA.

4. A description of and an estimate of the number of small entities to 
which the rule will apply or an explanation of why no such estimate is 
available.

    ``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.'' 
Section 601(3) defines a ``small business'' as having the same meaning 
as ``small business concern'' under Section 3 of the 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 to determine if an 
entity is considered small.
    This final rule does not place any additional 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

[[Page 45679]]

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 final requirements to be 
eligible for arbitration. FEMA identified 3,478 applicants for FEMA's 
PA Program \39\ that would be eligible for arbitration under the final 
requirements for the time frame from 2010 through 2019. FEMA used 
Slovin's formula \40\ and a 90 percent confidence interval to determine 
the sample size. FEMA sampled 97 of these applicants and found that 74 
(76 percent) met the definition of a small entity based on the 
population size of local governments (less than 50,000 population),\41\ 
or PNPs based on size standards set by the SBA.\42\ The remaining 23 
entities were not found to be considered small entities. Eligible small 
entities included 67 small government agencies and seven PNP 
organizations. Based on information presented in the Executive Orders 
12866 and 13563 section, FEMA estimates 15 arbitration cases per year. 
If 76 percent of these are small entities, FEMA estimates 11 
arbitration requests per year from small entities with an average cost 
of between $13,211 and $22,651 per case. Eleven small entities do not 
represent a substantial number of small entities impacted by this final 
rule and the costs imposed to these small entities are not significant.
---------------------------------------------------------------------------

    \39\ FEMA reported 3,778 applicants in the NPRM to this rule. 
The number of applicants has since been adjusted to account for more 
recent data and new timeframe for analysis. The NPRM contained data 
from 2009-2017 due to the limited data available at that time. This 
final rule contains data from 2010-2019.
    \40\ Slovin's formula is n = N/(1 + N*e-2). 3,478/(1 + 3,478 x 
0.1-2) = 97 (rounded).
    \41\ 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.
    \42\ 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.
---------------------------------------------------------------------------

5. Description of the projected reporting, recordkeeping, and other 
compliance requirements of the rule, including an estimate of the 
classes of small entities which will be subject to the requirement and 
the types 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 will 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 $86.36 
for a general and operations manager. FEMA estimates the opportunity 
cost of time for completing the request will be $172.72 per applicant. 
With an estimated 11 cases per year, FEMA estimates the total burden 
for completing the request is $1,900 per year. The person completing 
the request would need to be familiar with PA regulations and policies.

6. Description of the steps the agency has taken to minimize the 
significant economic impact on small entities consistent with the 
stated objectives of applicable statutes, including a statement of the 
factual, policy, and legal reasons for selecting the alternative 
adopted in the final rule and why each of the other significant 
alternatives to the rule considered by the agency which affect the 
impact on small entities was rejected.

    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 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, electronic submission will not pose an 
additional undue burden on applicants that are considered small 
entities.
Conclusion
    This rule codifies legislative requirements included in the DRRA, 
which 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. On December 18, 2018, 
FEMA implemented section 1219 of DRRA by posting a Fact Sheet on its 
website. On June 21, 2019, CBCA published a final rule (see 84 FR 
29085) and FEMA has published a corresponding fact sheet. PA 
arbitration has been available for disasters declared after January 1, 
2016. FEMA certifies that this regulation will not have a significant 
economic impact on a substantial number of small entities.

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 final rulemaking which 
implements any

[[Page 45680]]

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 final 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.
    This proposed information collection previously published in the 
Federal Register on August 31, 2020 at 85 FR 53725 as part of the NPRM. 
Since the proposed information collection published on August 31, 2020, 
FEMA completed an emergency revision of information collection 1660-
0017. In the emergency information collection for 1660-0017 FEMA added 
the FEMA Template 104-FY-21-100 Equitable COVID-19 Response and 
Recovery: Vaccine Administration Information which resulted in 51,016 
new Total No. of Responses with an .5 Average Burden per response of 
(in hours) which resulted in 25,508 Total Annual Burden (in hours) 
totaling $1,445,028 in additional Total Annual Respondent Cost. Also, 
FEMA is correcting the wage rate used to calculate the Estimated Total 
Annual Respondent Cost in the NPRM, which resulted in a decrease of the 
Estimated Total Annual Respondent Cost from $29,601,921 to $27,845,344. 
FEMA incorrectly used the wage rate for the whole industry, instead of 
the State government industry wage rate. \43\ Additionally, the NPRM 
incorrectly listed the proposed decrease to the Estimated Total Annual 
Cost to the Federal Government as $29,976, an error of $2,498. Rather, 
the NPRM should have listed a proposed decrease of $27,478 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). Additionally, the Staff Salaries changed as the wage rate 
multiplier changed from 1.6 to 1.45. Finally, the NPRM incorrectly 
listed the Estimated Total Annual Costs to the Federal Government, as 
$1,890,650, when the NPRM should have listed it as $1,930,187, due to 
the previously mentioned changes. No comments were received regarding 
the proposed information collection. The purpose of this section is to 
notify the public that FEMA will submit the information collection 
abstracted below to OMB for review and clearance. This final rule 
serves as the 30-day comment period pursuant to 5 CFR 1320.12. FEMA 
invites the public to comment on this collection of information.
---------------------------------------------------------------------------

    \43\ Bureau of Labor Statistics, Occupational Employment and 
Wage Statistics. https://www.bls.gov/oes/. Last accessed: June 10, 
2021.
---------------------------------------------------------------------------

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; 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, FEMA Template 104-FY-21-100 Equitable COVID-19 
Response and Recovery: Vaccine Administration Information.
    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: 1,068.
    Estimated Number of Responses: 449,084.
    Estimated Total Annual Burden Hours: 491,533.
    The final 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 final rule, as applicants can only 
choose one option. The final rule's implementation would not impact the 
total number of responses or burden hours.
    FEMA estimated it will take approximately 2 hours to prepare an 
electronic appeal or arbitration. This estimate is based on the 
assumption that 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 final 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 an electronic 
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 final

[[Page 45681]]

rule would not impact the estimate of the burden hours.
    Table 15 provides estimates of annualized cost to respondents for 
the hour burdens for the collection of information.

                                                  Table 15--Estimated Annualized Burden Hours and Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Number of                Avg. burden     Total                     Total
                                                                Number of    responses      Total         per         annual    Avg. hourly     annual
        Type of respondent              Form name/form No.     respondents      per       number 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       $56.65     $102,310
                                     Request for PA.
State, Local or Tribal Government.  FEMA Form 009-0-91,                 56          840       47,040          1.5       70,560        56.65    3,997,224
                                     Project Worksheet (PW)
                                     and a Request for Time
                                     Extension.
State, Local or Tribal Government.  FEMA Form 009-0-91A                 56          784       43,904          1.5       65,856        56.65    3,730,742
                                     Project Work Sheet (PW)
                                     Damage Description and
                                     Scope of Work.
State, Local or Tribal Government.  FEMA Form 009-0-91B,                56          784       43,904       1.3333       58,537        56.65    3,316,121
                                     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          1.5       61,152        56.65    3,464,261
                                     Project Worksheet (PW)
                                     Maps and Sketches Sheet.
State Local or Tribal Government..  FEMA Form 009-0-91D                 56          728       40,768          1.5       61,152        56.65    3,464,261
                                     Project Worksheet (PW)
                                     Photo Sheet.
State, Local or Tribal Government.  FEMA Form 009-0-120,                56          840       47,040          0.5       23,520        56.65    1,332,408
                                     Special Considerations
                                     Questions/.
State, Local or Tribal Government.  FEMA Form 009-0-128,                56          784       43,904          0.5       21,952        56.65    1,243,581
                                     Applicant's Benefits
                                     Calculation Worksheet/.
State, Local or Tribal Government.  FEMA Form 009-0-121, PNP            56           94        5,264          0.5        2,632        56.65      149,103
                                     Facility Questionnaire.
State, Local or Tribal Government.  FEMA Form 009-0-123,                56           94        5,264          0.5        2,632        56.65      149,103
                                     Force Account Labor
                                     Summary Record.
State, Local or Tribal Government.  FEMA Form 009-0-124,                56           94        5,264         0.25        1,316        56.65       74,551
                                     Materials Summary Record/
                                     .
State, Local or Tribal Government.  FEMA Form 009-0-125,                56           94        5,264          0.5        2,632        56.65      149,103
                                     Rented Equipment Summary
                                     Record.
State, Local or Tribal Government.  FEMA Form 009-0-126,                56           94        5,264          0.5        2,632        56.65      149,103
                                     Contract Work Summary
                                     Record/.
State, Local or Tribal Government.  FEMA Form 009-0-127,                56           94        5,264         0.25        1,316        56.65       74,551
                                     Force Account Equipment
                                     Summary Record/.
State, Local or Tribal Government.  State Administrative Plan           56            1           56            8          448        56.65       25,379
                                     and State Plan
                                     Amendments/No Form.
State, Local or Tribal Government.  FEMA Form 009-0-111,                56            4          224          100       22,400        56.65    1,268,960
                                     Quarterly Progress
                                     Report.
State, Local or Tribal Government.  Request for Appeals or              56            9          504            3        1,512        56.65       85,655
                                     Arbitrations &
                                     Recommendation/No Forms.
State, Local or Tribal Government.  Request for Arbitration &            4            5           20            3           60        56.65        3,399
                                     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        56.65    3,620,502
                                     TRAX System.
State, Local or Tribal Government.  FEMA Template 104-FY-21-            56          911       51,016          0.5       25,508        56.65    1,445,028
                                     100 Equitable COVID-19
                                     Response and Recovery.
                                                              ------------------------------------------------------------------------------------------
    Total.........................  .........................        1,068  ...........      449,084  ...........      491,533  ...........   27,845,344
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The ``Avg. Hourly Wage Rate'' for each respondent includes a 1.62 multiplier to reflect a fully-loaded wage rate.

    Estimated Total Annual Respondent Cost: $27,845,344.
    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: $1,930,187.

E. Privacy Act

    Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must 
determine whether implementation of a final 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.
    In accordance with DHS policy, FEMA has completed a Privacy 
Threshold Analysis (PTA) for this final rule. DHS has determined that 
this final rule 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,

[[Page 45682]]

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 
Federal agencies to consider the impacts of their proposed actions on 
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. If an action does not qualify 
for a catex and has the potential to significantly affect the 
environment, agencies develop environmental assessments (EAs) to 
evaluate those actions. The Council on Environmental Quality's 
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. At the end of the EA process, the agency will 
determine whether to make a Finding of No Significant Impact 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 finalize the proposed regulations to 
implement the new right of arbitration authorized by the DRRA, and to 
revise FEMA's regulations regarding first and second PA appeals. 
Additionally, in response to a public comment, FEMA is adding a 
definition of Regional Administrator. Plus, FEMA made changes to the 
regulatory text regarding first appeals and second appeals at 
206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) as a result of the 60-day 
appeals deadline comments. Finally, FEMA is making two technical 
revisions at 206.206(b) and 206.206(b)(3)(i)(A) to align the regulatory 
text with the dispute of the eligibility for assistance or repayment of 
assistance language of Section 423(d)(1) of the Stafford Act. These 
changes are to implement statutory requirements and to amend existing 
regulation without changing its environmental effect, consistent with 
Catex A3(b) and (d), 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).

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 finalize the proposed regulations to 
implement the new right of arbitration authorized by the DRRA, and to 
revise FEMA's regulations regarding first and second PA appeals. 
Additionally, in response to a public comment, FEMA is adding a 
definition of Regional Administrator. Plus, FEMA made changes to the 
regulatory text regarding first appeals and second appeals at 
206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) as a result of the 60-day 
appeals deadline comments. Finally, FEMA is making two technical 
revisions at 206.206(b) and 206.206(b)(3)(i)(A) to align the regulatory 
text with the dispute of the eligibility for assistance or repayment of 
assistance language of Section 423(d)(1) of the Stafford Act.
    Under the final rule, Indian Tribal Governments 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 Tribal Governments, will participate in the new 
permanent right of arbitration. FEMA also anticipates a very small 
number of Indian Tribal Governments will be affected by the other major 
revisions to 44 CFR 206.206. As a result, FEMA does not expect this 
final rule to have a substantial direct effect on one or more Indian 
Tribal Governments or impose direct compliance costs on Indian Tribal 
Governments. Additionally, since FEMA anticipates a very small number, 
if any Indian Tribal Governments will participate in the arbitration 
portion of the final rule nor will be affected by the rest of the 
finalized 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 Tribal Governments or on the 
distribution of power and responsibilities between the Federal 
Government and Indian Tribal Governments.

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 final 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), as amended by Executive Order 12948 (60 FR 6381, 
Feb. 1, 1995) 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 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

[[Page 45683]]

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 finalize the proposed regulations to implement the 
new right of arbitration authorized by the DRRA, and to revise FEMA's 
regulations regarding first and second PA appeals. Additionally, in 
response to a public comment, FEMA is adding a definition of Regional 
Administrator. Plus, FEMA made changes to the regulatory text regarding 
first appeals and second appeals at 206.206(b)(1)(ii)(A) and 
(b)(2)(ii)(A) as a result of the 60-day appeals deadline comments. 
Finally, FEMA is making two technical revisions at 206.206(b) and 
206.206(b)(3)(i)(A) to align the regulatory text with the dispute of 
the eligibility for assistance or repayment of assistance language of 
Section 423(d)(1) of the Stafford Act. There are no adverse effects and 
no disproportionate effects on minority or low-income populations.

K. Executive Order 12988, Civil Justice Reform

    This final 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 final 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 has submitted this final rule to the Congress and to GAO 
pursuant to the CRA. OMB has determined that this rule is not a ``major 
rule'' within the meaning of the CRA.

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 amends 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 has the same meaning as 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 has the same meaning as the definition at Sec.  
206.201(m).
    Regional Administrator means an administrator of a regional office 
of FEMA, or his/her designated representative.
    Rural area means an area with a population of less than 200,000 
outside an urbanized area.
    Urbanized area means an area that consists of densely settled 
territory that contains 50,000 or more people.
    (b) Appeals and Arbitrations. An eligible applicant or recipient 
may appeal any determination previously made related to an application 
for or the provision of Public Assistance according to the procedures 
of this section. An eligible applicant may request arbitration to 
dispute the eligibility for assistance or repayment of assistance.
    (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. If 
the applicant or the recipient do not meet their respective 60-calendar 
day and 120-calendar day deadlines, FEMA will deny the appeal. A 
recipient may make a recipient-related first appeal within 60 calendar 
days from the date of the FEMA determination that is the subject of the 
appeal and must electronically submit their first appeal to the 
Regional Administrator.
    (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

[[Page 45684]]

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 200.339);
    (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. If the applicant or the recipient do not meet their 
respective 60-calendar day and 120-calendar day deadlines, FEMA will 
deny the appeal. If the Regional Administrator denies a recipient-
related first appeal in whole or in part, the recipient may make a 
recipient-related second appeal within 60 calendar days from the date 
of the Regional Administrator's first appeal decision and the recipient 
must electronically submit their second appeal to the Assistant 
Administrator for the Recovery Directorate.
    (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 200.339);
    (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 dispute of the eligibility for assistance or of the 
repayment of assistance 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 45685]]

receiving the appeal, an applicant may arbitrate the decision of FEMA. 
To request arbitration, the applicant must first electronically submit 
a withdrawal of the pending appeal simultaneously to the recipient and 
the FEMA Regional Administrator. The applicant must then submit a 
request for arbitration to the recipient, the CBCA, and FEMA 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. (1) 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. Final 
decisions are not subject to further administrative review.
    (2) 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.

Deanne B. Criswell,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2021-17213 Filed 8-13-21; 8:45 am]
BILLING CODE 9111-19-P