Hermit's Peak/Calf Canyon Fire Assistance, 68085-68104 [2022-24728]

Agencies

• Federal Emergency Management Agency
• DEPARTMENT OF HOMELAND SECURITY

[Federal Register Volume 87, Number 218 (Monday, November 14, 2022)]
[Rules and Regulations]
[Pages 68085-68104]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24728]


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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

44 CFR 296

[Docket ID FEMA-2022-0037]
RIN 1660-AB14


Hermit's Peak/Calf Canyon Fire Assistance

AGENCY: Federal Emergency Management Agency, Department of Homeland 
Security.

ACTION: Interim final rule; request for comments.

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SUMMARY: This interim final rule sets out the procedures for Claimants 
to seek compensation for injury or loss of property resulting from the 
Hermit's Peak/Calf Canyon Fire.

DATES: 
    Effective Date: This rule is effective November 14, 2022.
    Comment Date: Comments must be received on or before January 13, 
2023.

ADDRESSES: You may submit comments, identified by Docket ID FEMA-2022-
0037, via the Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.

[[Page 68086]]


FOR FURTHER INFORMATION CONTACT: Angela Gladwell, Office of Response 
and Recovery, 202-646-3642, [email protected]. Persons 
with hearing or speech challenges may access this number through TTY by 
calling the toll-free Federal Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Public Participation

    Interested persons are invited to participate in this rulemaking by 
submitting comments and related materials. We will consider all 
comments and material received during the comment period.
    If you submit a comment, include the Docket ID FEMA-2022-0037, 
indicate the specific section of this document to which each comment 
applies, and give the reason for each comment. All submissions may be 
posted, without change, to the Federal e-Rulemaking Portal at https://www.regulations.gov, and will include any personal information you 
provide. Therefore, submitting this information makes it public.
    Viewing comments and documents: For access to the docket, to read 
background documents or comments received, go to the Federal e-
Rulemaking Portal at https://www.regulations.gov.
    FEMA will hold four in-person public meetings to solicit public 
feedback about this Interim Final Rule. FEMA is announcing these public 
meetings to give the public as much notice as possible regarding their 
dates. FEMA will hold meetings on the below dates. If the locations and 
times of these meetings change, FEMA will announce the specific times 
and locations in a separate Federal Register document.
    November 17, 2022 from 5:00 p.m. to 7:00 p.m. MT at Old Memorial 
Middle School, 947 Legion Drive, Las Vegas, NM 87701;
    December 1, 2022 from 5:00 p.m. to 7:00 p.m. MT at the Mora High 
School, 10 Ranger Road, Mora, NM 87732;
    December 15, 2022 from 5:00 p.m. to 7:00 p.m. MT at Old Memorial 
Middle School, 947 Legion Drive, Las Vegas, NM 87701; and
    January 5, 2023 from 5:00 p.m. to 7:00 p.m. MT at the Mora High 
School, 10 Ranger Road, Mora, NM 87732.
    Depending on the number of speakers, the meetings may end before 
their announced end time, following the last call for comments. 
Reasonable accommodations are available for people with disabilities. 
To request a reasonable accommodation, contact the person listed in the 
FOR FURTHER INFORMATION CONTACT section as soon as possible. Last 
minute requests will be accepted but may not be possible to fulfill. 
All comments on this IFR made during the meetings will be posted to 
https://www.regulations.gov, Docket ID FEMA-2022-0037. Please review 
https://www.fema.gov/hermits-peak for more information and any updates 
on these public meetings.

II. Background

    On September 30, 2022, President Biden signed into law the Hermit's 
Peak/Calf Canyon Fire Assistance Act (``Act'') as part of the 
Continuing Appropriations and Ukraine Supplemental Appropriations Act, 
2023, Public Law 117-180, 136 Stat. 2114 (2022). The Congress passed 
the Act to compensate those parties who suffered injury and loss of 
property from the Hermit's Peak/Calf Canyon Fire (``Fire'').
    On April 6, 2022, the U.S. Forest Service initiated the Las 
Dispensas-Gallinas prescribed burn on Federal land in the Santa Fe 
National Forest in San Miguel County, New Mexico. That same day the 
prescribed burn, which became known as the ``Hermit's Peak Fire,'' 
exceeded the containment capabilities of the U.S. Forest Service and 
was declared a wildfire, spreading to other Federal and non-Federal 
lands.\1\ On April 19, 2022, the Calf Canyon Fire, also in San Miguel 
County, New Mexico, began burning on Federal land and was later 
identified as the result of a pile burn in January 2022 that remained 
dormant under the surface before reemerging.\2\ The Hermit's Peak and 
Calf Canyon Fires merged on April 27, 2022, and both fires were 
reported as the Hermit's Peak Fire or the Hermit's Peak/Calf Canyon 
Fire. By May 2, 2022, the fire had grown, causing evacuations in 
multiple villages and communities in San Miguel County and Mora County, 
including the San Miguel County jail, the State's psychiatric hospital, 
the United World College, and New Mexico Highlands University.\3\ At 
the request of New Mexico Governor Lujan Grisham, President Biden 
issued a major disaster declaration on May 4, 2022.\4\ The Hermit's 
Peak/Calf Canyon Fire was not 100 percent contained until August 21, 
2022.\5\
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    \1\ Section 102(a)(1) and (2), Hermit's Peak/Calf Canyon Fire 
Assistance Act, Public Law 117-180, 136 Stat. 2114 (2002). See also 
``Las Dispensas Prescribed Burn Declared Wildfire,'' Apr. 6, 2022 
found at https://inciweb.nwcg.gov/incident/article/8049/68044/ (last 
accessed Sept. 15, 2022) and Theresa Davis, ``How `good fires' can 
turn into wildfires,'' Albuquerque Journal, Apr. 30, 2022 found at 
https://www.alqjournal.com/2494692/how-good-fires-can-turn-into-wildfires.html (last accessed Sept. 15, 2022).
    \2\ See Bill Gabbert, ``Investigators determine Calf Canyon Fire 
caused by holdover from prescribed fire,'' Wildfire Today, May 27, 
2022 found at https://wildfiretoday.com/?s=calf+canyon+holdover&apbct__email_id__search_form_34270= (last 
accessed Oct. 6, 2022).
    \3\ See Bill Gabbert, ``Calf Canyon/Hermits Peak Fire grows to 
more than 120,000 acres,'' Wildfire Today, May 2, 2022 found at 
https://wildfiretoday.com/2002/05/02/calf-canyon-hermits-peak-fire-grows-to-more-than-120000-acres/ (last accessed Sept. 15, 2022). See 
also Bryan Pietsch and Jason Samenow, ``New Mexico blaze is now 
largest wildfire in state history,'' The Washington Post, May 17, 
2022 found at https://www.washingtonpost.com/nation/2022/05/17/calf-canyon-hermits-peak-fire-new-mexico/ (last accessed Sept. 15, 2022).
    \4\ 87 FR 33808 (June 3, 2022).
    \5\ ``Hermits Peak/Calf Canyon Fire 100 percent contained, fire 
officials say,'' The New Mexican, Aug. 21, 2022 found at https://www.santafenewmexican.com/news/local_news/hermits-peak-calf-canyon-fire-100-percent-contained-fire-officials-say/articles_5ac054fc-21a1-11ed-9401-134e852ee0a8.html (last accessed Sept. 15, 2022).
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    The Act provides compensation to injured persons impacted by the 
Fire. It requires FEMA to design and administer a claims program to 
compensate victims of the Fire, for injuries resulting from the fire 
and to provide for the expeditious consideration and settlement for 
those claims and injuries. The Act further directs FEMA to establish an 
arbitration process for disputes regarding claims.
    This interim final rule establishes the procedures for the 
processing and payment of claims to those injured by the Fire 
sustaining property, business, and/or financial losses. FEMA's 
procedures in this interim final rule are generally consistent with 
prior processes established for claims associated with the Cerro Grande 
Fire Assistance Act.\6\ Specific discussion and request for comment is 
provided where FEMA seeks to revise and/or modernize that process. As 
referenced above, FEMA plans to hold in-person public meetings during 
the 60-day comment period.
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    \6\ The Cerro Grande Fire Assistance Act (Pub. L. 106-246 
(2001)) required FEMA to design and administer a program for fully 
compensating those who suffered injuries resulting from the Cerro 
Grande Fire. The Cerro Grande fire resulted from a prescribed fire 
ignited on May 4, 2000, by National Park Service fire personnel at 
the Bandelier National Monument, New Mexico under an approved 
prescribed fire plan. That fire burned approximately 47,750 acres 
and destroyed over 200 residential structures. The Cerro Grande Fire 
Assistance Act process is detailed in an Interim Final Rule (65 FR 
52259 (Aug. 27, 2000) and a Final Rule (66 FR 15847 (Mar. 21, 2001) 
that is now codified at 44 CFR part 295.
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    The first step in the claims process under this part is for the 
Claimant to file a Notice of Loss with the Office of Hermit's Peak/Calf 
Canyon Fire Claims (``Claims Office''). After receipt and 
acknowledgement by the Claims Office, a Claims Reviewer will contact 
the

[[Page 68087]]

claimant to review the claim and help the claimant formulate a strategy 
for obtaining any necessary supporting documentation to complete the 
Proof of Loss. After discussion of the claim with the Claims Reviewer, 
the claimant will review and sign a Proof of Loss and submit it to the 
Claims Office. The Claims Reviewer will submit a report to the 
Authorized Official for review to determine whether compensation is due 
to the claimant. The Authorized Official's written decision will be 
provided to the claimant. If satisfied with the decision, the claimant 
will receive payment after returning a completed Release and 
Certification Form. If the claimant is not satisfied with the decision, 
an Administrative Appeal may be filed with the Director of the Claims 
Office. If the claimant is not satisfied after appeal, the dispute may 
be resolved through binding arbitration or heard in the United States 
District Court for the District of New Mexico. The specific proposals 
in this rule are more fully described below.

III. Discussion of the Interim Final Rule

    This interim final rule adds 44 CFR part 296 to establish the 
procedures for processing and payment of claims to those injured by the 
Fire sustaining property, business, and/or financial losses.

A. Subpart A--General

    Subpart A provides a general introduction and overview of the 
process.
1. Section 296.1 Purpose
    This section provides for the purpose of the regulation, which is 
to establish the Office of Hermit's Peak/Calf Canyon Fire Claims to 
evaluate, process, and pay actual compensatory damages for injuries 
suffered from the Fire.
2. Section 296.2 Policy
    This section explains FEMA's policy to provide expeditious 
resolution of damage claims for those injured by the Fire. The policy 
requires sensitivity to claimants' situations in administering the 
process.
3. Section 296.3 Information and assistance
    This section provides information on the Claims Office and general 
information about assistance available as a result of the Fire.
4. Section 296.4 Definitions
    This section provides definitions for the relevant regulatory 
terms, consistent with the Act and terms defined in the Cerro Grande 
Fire Assistance process found at 44 CFR part 295. FEMA is adding 
definitions for ``Administrator,'' ``Claims Office,'' and ``Hermit's 
Peak/Calf Canyon Fire'' consistent with the Act's definition of these 
terms. FEMA is including a definition of ``Director'' to mean the 
Independent Claims Manager appointed by the Administrator who will lead 
the Claims Office. FEMA is adding a definition of ``Good Cause'' to 
further explain when FEMA will allow claimants to extend the deadline 
for filing, supplementing claims, or reopening a claim for good cause. 
FEMA is incorporating a definition for ``Injury'' similar to the 
definition of ``Loss'' found in the Cerro Grande Fire Assistance 
process to reflect the terminology of the Act, and an updated 
definition of ``Indian Tribe,'' ``Notice of Loss,'' and ``Proof of 
Loss'' to reflect the definitions and updated requirements found in the 
Act. FEMA is also including a definition for ``Individual Assistance'' 
consistent with the definition found at 44 CFR 206.2. Finally, FEMA is 
including a definition for ``Subrogee'' to mean an insurer or other 
third party that has paid compensation to a claimant for injury and 
subrogated to any right the claimant has to receive payment under the 
Act.
5. Section 296.5 Overview of the Claims Process
    The claims process is generally described in this section and is 
generally consistent with the process established in the Cerro Grande 
Fire Assistance process at 44 CFR part 295. The claimant must first 
file a Notice of Loss with the Claims Office. A Claims Reviewer will 
then contact the claimant to review the claim and help the claimant 
formulate a strategy for obtaining any necessary supporting 
documentation. After discussion of the claim with the Claims Reviewer, 
the claimant will review and sign a Proof of Loss. The Proof of Loss 
will document all injuries and loss of property, business losses, and 
financial losses pursuant to the Act. The Claims Reviewer will fully 
evaluate the claim and submit a report to the Authorized Official for 
review to determine whether compensation is due to the claimant. The 
Authorized Official's written decision will be provided to the 
claimant. If the claimant is satisfied with the decision, payment will 
be received upon return of a completed Release and Certification Form. 
If the claimant is not satisfied with the decision, an Administrative 
Appeal may be filed with the Director of the Claims Office. If the 
claimant is not satisfied after appeal, the dispute may be resolved 
through binding arbitration or heard in the United States District 
Court for the District of New Mexico.

B. Subpart B--Bringing a Claim Under the Hermit's Peak/Calf Canyon Fire 
Assistance Act

    Consistent with the Cerro Grande Fire Assistance claims process, 
subpart B explains the procedure for filing a claim under the Act.
1. Section 296.10 Filing a Claim Under the Hermit's Peak/Calf Canyon 
Fire Assistance Act
    Any Injured Person can file a Notice of Loss to bring a claim under 
the Act which must include a brief description of each injury. FEMA 
will only accept a Notice of Loss form to bring a claim to ensure 
efficient and consistent processing of all claims associated with the 
Fire. FEMA reminds claimants in paragraph (a) that the Notice of Loss 
must contain a brief description of each injury, as defined in section 
296.4. For the convenience of claimants, FEMA is offering the option 
for a single Notice of Loss submission for a household so long as all 
those injured are identified. Paragraph (c) explains the signature 
process for the Notice of Loss. If the claimant is an entity or 
individual who lacks the legal capacity to sign the Notice of Loss, 
then and only then can a duly authorized legal representative of the 
claimant sign the Notice of Loss. The same principle applies to 
affidavits submitted in support of claims, the Proof of Loss, and the 
Release and Certification Form. Public adjusters and attorneys may not 
sign documents filed under the Act on behalf of individual claimants 
who have the legal capacity to execute these documents.
    Paragraph (e) modernizes the process by providing options to file 
the Notice of Loss by mail, electronically, or in person. Details 
regarding the filing process can be found at https://www.fema.gov/hermits-peak. FEMA seeks comment on whether this update will improve 
the overall claims process. Paragraph (f) clarifies that the Notice of 
Loss is deemed to be filed on the date received and acknowledged by the 
Claims Office if completed and properly signed.
2. Section 296.11 Deadline for Notifying FEMA of Injuries
    Pursuant to the Act, the deadline to file a Notice of Loss is two 
years after the date the interim final rule is promulgated or November 
14, 2022. There is no ability to extend this deadline under the Act and 
section 296.11 provides clear instructions regarding the deadline to 
ensure claimants are informed of the timeline

[[Page 68088]]

by which to submit their Notice of Loss. FEMA cannot provide 
compensatory damages for an injury unless the claimant has reported it 
to FEMA by November 14, 2024. Sections 296.34 and 296.35 below 
establish a process for notifying FEMA of injuries that are not 
referenced in the initial Notice of Loss. Whether a claimant tells FEMA 
about an injury in the initial Notice of Loss or an amendment under 
section 296.34, FEMA must know about the injury by November 14, 2024.
3. Section 296.12 Election of Remedies
    The Act permits an Injured Person to seek compensation through one 
of three mechanisms: (1) the Act; or (2) the Federal Tort Claims Act; 
or (3) a civil lawsuit against the United States (if authorized by 
another law). The Act further provides that a claimant's choice of one 
of these three mechanisms becomes ``final and conclusive on the 
Claimant . . . upon acceptance of an award.'' Therefore, in paragraph 
(a), FEMA clarifies that Injured Persons who accept an award under the 
Act waive the right to pursue any claims arising out of or relating to 
the same subject matter, whether through the Federal Tort Claims Act or 
a civil lawsuit. Under paragraph (b), any person or entity who accepts 
an award on a claim under the Federal Tort Claims Act or a civil action 
against the United States, or any employee, officer, or agency of the 
United States for fire-related claims waives the right to pursue any 
claims for injuries arising out of or relating to the same subject 
matter. FEMA seeks comment on the best means of implementing the Act's 
election of remedies provision.
4. Section 296.13 Subrogation
    Section 296.13 describes the procedures to be used by insurers (or 
other third parties with the rights of a Subrogee) for submitting 
subrogation claims. This section is generally consistent with the Cerro 
Grande Fire Assistance process. The procedures described in paragraphs 
(c) through (f) of section 295.10 apply with equal vigor to subrogation 
claims, including the requirement that the Notice of Loss be received 
by November 14, 2024. No subrogation claim will be considered unless 
the Subrogee elects the Act as its exclusive mechanism for seeking 
compensation from the United States for all Hermit's Peak/Calf Canyon 
Fire-related subrogation claims and any other Hermit's Peak/Calf Canyon 
Fire-related injuries. FEMA will reject a subrogation claim to recover 
payments until the Subrogee has paid the insured everything that the 
Subrogee believes that the Injured Person is entitled to receive under 
the policy. A Notice of Loss may be filed if there is a dispute between 
the Injured Person and the Subrogee, which is pending before a third 
party (e.g., appraiser, arbitrator, or court), provided that the 
insurer has made the final payment that it believes that the insured is 
entitled to receive under the policy.
5. Section 296.14 Assignments
    Consistent with the Cerro Grande Fire Assistance process, this 
section prohibits assignment of claims. It also prohibits assignment of 
the right to receive payment for claims. FEMA intends to make the Act's 
compensation payments only to the injured claimant.

C. Subpart C--Compensation Available Under the Hermit's Peak/Calf 
Canyon Fire Assistance Act

    Subpart C describes the compensation available under the Act. 
Section 104(c)(3) of the Act limits payments under the Act to ``actual 
compensatory damages measured by injuries suffered'' and shall not 
include ``interest before settlement or payment of a claim; or punitive 
damages.'' Consistent with the Cerro Grande Fire Assistance process, 
FEMA views the terms ``compensation,'' ``damages,'' and ``compensatory 
damages'' under the Act as synonyms and uses them interchangeably in 
this interim final rule. FEMA may only compensate claimants for damages 
that resulted from the Fire. Each claim will be reviewed on its unique 
facts and merits. Claimants should not assume that an injury resulting 
from the Fire is not compensable simply because the regulation fails to 
address it specifically. Claimants should include all injuries 
resulting from the Fire on the Notice of Loss. Generally speaking, FEMA 
will determine compensatory damages in accordance with the laws of the 
State of New Mexico, except where the Act is more generous. If FEMA 
denies a claim, an explanation of the reasons for doing so will be 
provided.
1. Section 296.20 Prerequisite to Compensation
    Consistent with the Cerro Grande Fire Assistance process, a 
claimant must be an Injured Person who suffered an injury as a result 
of the Fire and sustained damages to receive compensation under the 
Act.
2. Section 296.21 Allowable Damages
    As required by the Act, FEMA will provide for payment of actual 
compensatory damages under paragraph (a). Consistent with the Act \7\ 
and Cerro Grande Fire Assistance process, FEMA will apply the laws of 
the State of New Mexico to the calculation of damages. Damages must be 
reasonable in amount. To reduce complexity in the process, FEMA has 
eliminated language referencing reasonable steps to reduce damages.
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    \7\ Section 104(c)(2), Hermit's Peak/Calf Canyon Fire Assistance 
Act, Public Law 117-180, 136 Stat. 2114, 2168 (2022).
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    Consistent with the Act and the Cerro Grande Fire Assistance 
process, paragraph (b) provides that FEMA will not reimburse claimants 
for attorneys' fees or agents' fees. Our treatment of attorney and 
agent fees is consistent with the Act. Section 104(j) of the Act limits 
the fees that an attorney or agent may charge a client. It does not 
provide that FEMA will reimburse claimants for attorneys' or agents' 
fees and this exclusion applies to attorney and agent fees incurred in 
the prosecution of a claim under the Act. FEMA also notes that the Act 
does not regard attorneys' fees as compensatory damages. Attorneys' 
fees are not considered compensatory damages in tort actions under New 
Mexico law.\8\ Further, the statutory damages under New Mexico law \9\ 
may not be recovered as Congress did not authorize FEMA to pay 
statutory damages in the Act.
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    \8\ See New Mexico Right to Choose/NARAL v. Johnson, 127 N.M. 
654 (1999).
    \9\ See NM Stat. Ann. Sec.  30-21-4.
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    Paragraphs (c) through (e) explain how FEMA plans to approach the 
types of claims the agency expects to encounter most frequently. FEMA 
addressed all three categories of damages allowed under the Act--
property, business, and/or financial losses--but made a deliberate 
choice not to address all the examples of such categories enumerated 
under the Act. There is no intention to limit the right of claimants in 
this section. Claimants may recover all damages allowable under section 
104(d)(4) of the Act.
    Consistent with the approach taken in the Act, paragraph (c) sets 
out FEMA's approach to compensating for property losses. Paragraph 
(c)(1) explains FEMA's approach to loss of real property and contents. 
FEMA will provide compensatory damages for the damage or destruction of 
a property and its contents, including the reasonable cost of 
reconstruction of a structure comparable in design, construction 
materials, size, and improvements. FEMA will calculate these costs 
using post-fire construction costs in the locality that a damaged or 
destroyed structure existed before the Fire. FEMA will compensate 
property owners to

[[Page 68089]]

rebuild their structures in accordance with the building codes and 
standards applicable at the time that their claim is processed, 
regardless of whether the destroyed structure complied with codes and 
standards before the Fire. To process claims within a timely manner, 
FEMA may be required to estimate a property owner's costs well before 
construction is completed. Property owners who decide to rebuild and 
later find that their actual costs exceeded FEMA's estimate may 
supplement or reopen their claims under Sections 296.34 and 296.35 of 
this interim final rule.
    In paragraph (c)(2), FEMA is limiting compensation for trees and 
other landscaping to 25 percent of the pre-fire value of the structure 
and lot. This approach is generally consistent with the approach taken 
in the Cerro Grande Fire Assistance process. Under New Mexico tort law, 
damages are awarded for destroyed or damaged trees based on the value 
of the trees destroyed or the difference in value of the real estate 
with and without the trees.\10\ This 25 percent limitation does not 
apply to business losses for timber, crops, and other natural resources 
under section 296.21(d). The New Mexico tort law formula is a less 
generous formula than the replacement cost calculation FEMA implemented 
in the Cerro Grande Fire Assistance process. FEMA is implementing the 
same formula as the Cerro Grande Fire Assistance process now.
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    \10\ See Mogollon Gold & Copper Co. v. Stout, 14 NW 245 (1907).
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    Paragraph (c)(3) is intended to implement section 104(d)(4)(A)(ii) 
of the Act, which authorizes FEMA to pay ``otherwise uncompensated 
damages resulting from the Hermit's Peak/Calf Canyon Fire for . . . a 
decrease in the value of real property.'' Consistent with the Cerro 
Grande Fire Assistance process, paragraph (c)(3) allows FEMA to 
compensate for realized losses in the value of real property, i.e., 
land and structure, to the extent that such losses have not been fully 
compensated either through compensation under paragraph (c)(1) or 
otherwise. To be awarded compensatory damages, paragraph (c)(3) 
requires the claimant to either sell the real property in a good faith 
arm's length transaction that closes no later than November 14, 2024 
and the claimant realizes a loss in the pre-fire value (see paragraph 
(c)(1)); or the claimant can establish that the real property value was 
permanently diminished as a result of the Fire (see paragraph (c)(2)). 
Losses involving the value of commercial real estate will be evaluated 
on a case-by-case basis.
    Paragraph (c)(4) addresses compensation to Injured Persons for 
Subsistence Resources losses. FEMA is generally mirroring the Cerro 
Grande Fire Assistance process for subsistence in this section, but 
consistent with section 104(d)(4)(A)(iv) of the Act, FEMA is not 
limiting compensation to Indian Tribes, Tribal entities, Tribal 
Members, or Households including Tribal Members but rather allowing 
this compensation for all Injured Persons that have sustained 
Subsistence Resource losses. Reimbursement is available for the 
reasonable cost of replacing Subsistence Resources used by a claimant 
prior to the start of the Fire, but that are no longer available to the 
claimant as a result of the Fire. Claimants may receive either 
compensatory damages for the increased cost of obtaining subsistence 
resources from lands not damaged by the Fire or for the cost of 
procuring substitute Subsistence Resources in the cash economy. 
Compensatory damages will be paid for the period between April 6, 2022, 
and the date when subsistence resources can reasonably be expected to 
return to the level of availability that existed before the Fire. Long-
term damages for subsistence resources will be made in the form of lump 
sum cash payments to eligible claimants.
    In paragraph (d), FEMA addresses business losses. Consistent with 
the Act, FEMA will award compensatory damages for damage to tangible 
assets or inventory, including timber, crops, and other natural 
resources; business interruption losses; overhead costs; employee wages 
for work not performed; loss of business net income; and any other loss 
that the Administrator determines to be appropriate for inclusion as a 
business loss.
    Paragraph (e) discusses financial losses. Consistent with the Act, 
these losses include increased mortgage interest costs, insurance 
deductibles, temporary or relocation expenses, lost wages or personal 
income, emergency staffing expenses, debris removal and other cleanup 
costs, costs of reasonable heightened risk reduction, premiums for 
flood insurance, and any other loss that the Administrator determines 
to be appropriate for inclusion as a financial loss. Paragraph (e)(1) 
addresses recovery loans and provides for reimbursement of loans, 
including Small Business Administration (SBA) disaster loans obtained 
after April 6, 2022, for damages resulting from the Fire. Consistent 
with the Cerro Grande Fire Assistance process, FEMA will reimburse 
interest for the period beginning on the date the loan was taken out 
and ending on the date when the claimant receives a compensation award 
(other than partial payment). Claimants are required to use the 
proceeds of their compensation awards to repay the SBA disaster loans 
and FEMA will coordinate with the SBA to formulate procedures for 
assuring repayment contemporaneously with the compensation award 
receipt.
    Paragraph (e)(2) addresses the requirement from the Act that 
claimants be eligible for compensation for flood insurance premiums. 
Consistent with the Act, claimants that were not required by law to 
maintain flood insurance before the Fire and did not have such 
insurance before the Fire may receive reimbursement for the cost of 
reasonable flood insurance premiums for a two-year period for their 
owned or leased real property if required to purchase flood insurance. 
Because there has not been sufficient time to revise flood zone maps 
since the Fire, some claimants who may have legitimate reasons for 
concern may not be required to maintain flood insurance. FEMA is 
exercising the discretion in section 104(d)(4)(C)(x) to allow 
compensation for flood insurance premiums if the claimant purchased 
flood insurance after the Fire due to the fear of heightened flood 
risk. FEMA may also provide flood insurance directly through a group or 
blanket policy.
    Consistent with the Cerro Grande Fire Assistance process, paragraph 
(e)(3) states that FEMA may reimburse claimants for reasonable out of 
pocket treatment costs for mental health conditions resulting from the 
Fire. FEMA is offering reimbursement for treatment received between 
April 6, 2022 and April 6, 2024. Damages for mental health conditions 
are not recoverable under New Mexico law, except in a very limited 
class of cases. While FEMA will reimburse claimants for these expenses, 
given the limitation of New Mexico law FEMA will not entertain 
subrogation claims for mental health treatment unless those expenses 
could be recovered in a tort action under New Mexico law.
    During the fire and its immediate aftermath, many individuals, 
charitable organizations, businesses, and other entities made voluntary 
donations of cash, goods, and services to assist the fire fighting and 
fire recovery effort and to help those affected by the Fire. Consistent 
with the Cerro Grande Fire Assistance process, in paragraph (e)(4) FEMA 
will compensate claimants for the cost of merchandise, use of 
equipment, or other non-personal

[[Page 68090]]

services, directly or indirectly donated to survivors of the Fire, if 
donated no later than September 20, 2022. Given the scope of the Fire, 
FEMA believes a 30-day period after containment of the Fire constitutes 
an appropriate time frame for these donations to be reimbursable; 
however, the agency seeks comment on whether this time period is 
sufficient. Donations will be valued at cost. FEMA is removing 
compensation for discounts as provided in the Cerro Grande Fire 
Assistance process, as the agency currently lacks information about 
whether such discounts were provided in the wake of the Fire. However, 
FEMA seeks comment on whether claimants should be able to seek 
compensation for discounts on goods and services offered to fire 
survivors as well as on the method for calculating such compensation 
should FEMA amend its regulations to authorize compensation for 
discounts on goods or services offered to fire survivors.
    Section 104(d)(4)(C)(vii) of the Act grants FEMA the authority to 
compensate claimants for reasonable efforts to reduce an increased risk 
to their property from wildfires, floods, or other natural disasters. 
Consistent with the Act and with the Cerro Grande Fire Assistance 
process, paragraph (e)(5) provides that FEMA will reimburse claimants 
for reasonable efforts to reduce risk back to levels prevailing before 
the Fire. Such measures may include, for example, risk reduction 
projects that reduce an increased risk from flooding, mudslides, and 
landslides in and around burn scars in an amount not to exceed 25 
percent of the higher of compensation from all sources, (i.e., the Act, 
insurance, and FEMA assistance under the Stafford Act), for damage to 
the structure and lot, or the pre-fire value of the structure and lot. 
Claimants seeking compensation under paragraph (e)(5) must include the 
claim in a Notice of Loss filed not later than November 14, 2024 or an 
amended Notice of Loss filed not later than November 14, 2025. This is 
the deadline provided by section 104(d)(4)(C)(vii) of the Act. 
Claimants should take into account current building codes and standards 
and consider nature-based solutions \11\ to reduce their heightened 
risk. Claimants must complete the risk reduction project for which they 
receive compensation. FEMA believes paragraph (e)(5) clarifies the 
process for obtaining compensation for heightened risk reduction 
losses, regardless of the type of structure the claimant owns. FEMA is 
increasing the total compensation available for risk reduction projects 
given the general increase in costs of such projects since the Cerro 
Grande Fire Assistance process was implemented and to encourage 
claimants to consider implementing nature-based solutions to reduce the 
heightened risks to their property as a result of the Fire.\12\ FEMA 
seeks comment on whether the compensation is sufficient to reduce the 
heightened risk and whether nature-based solutions should be considered 
in risk reduction projects.
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    \11\ See https://www.fema.gov/emergency-managers/risk-management/nature-based-solutions (last accessed Oct. 31, 2022).
    \12\ FEMA seeks to encourage Claimants to consider nature-based 
solutions consistent with Executive Order 14072 ``Strengthening the 
Nation's Forests, Communities, and Local Economies,'' 87 FR 24851, 
Apr. 22, 2022.
---------------------------------------------------------------------------

    Paragraph (f) addresses insurance and other benefits. The Act 
allows FEMA to provide compensation only if damages have not been paid 
or will not be paid by insurance, a third party, or through another 
FEMA program. Claimants are not required to submit their claims to 
their insurance company nor are they required to pursue a settlement 
from their insurance company after filing a claim under the Act. FEMA 
encourages claimants to continue to pursue their insurance claims 
because this may expedite the process of reconstructing documentation 
that will be helpful to the claims process under the Act. If a claimant 
has received or expects to receive a payment from an insurance company, 
the actual or anticipated payment must be disclosed. If a claimant has 
not settled with the insurance company by the time FEMA is prepared to 
make a partial payment on the claim, FEMA will examine the insurance 
policy and determine what the agency reasonably expects the insurance 
company to pay. FEMA will review the issues again in the Authorized 
Official's determination. If the insurance company has not paid all 
that FEMA anticipated, FEMA can award the difference at the time that 
the Authorized Official's determination is made. FEMA notes that the 
State of New Mexico generally requires insurance companies to settle 
catastrophic claims brought by policyholders within 90 days of the date 
that the claim was reported to the insurer.\13\ FEMA expects that most, 
if not all, insurance claims will be paid before the Authorized 
Official's determination is issued. However, in the event that the 
insurance claim is resolved after the Authorized Official's 
determination is issued and as a result the claimant is due additional 
compensation under the Act, the claimant should ask the Claims Office 
to reconsider the matter under sections 296.34 or 296.35.
---------------------------------------------------------------------------

    \13\ See New Mexico Statutes Annotated Chapter 59A-16-20 (2021) 
found at https://nmonesource.com/nmos/nmsa/en/item/4438/index.do#!fragment/zoupio-_Toc110333083/BQCwhgziBcwMYgK4DsDWszIQewE4BUBTADwBdoAvbRABwEtsBaAfX2zgEYOAGAZn+4AOXgEoANMmylCEAIqJCuAJ7QA5KrERCYXAnmKVqraVIAbQgAIAggDkAIheR1khUko1adCAMp5SAIRUAJQBRABkQgDVbAGEQsVIwACNoT10QEREgA (last accessed Sept. 27, 
2022).
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    Those Injured Persons eligible for disaster assistance under the 
Public Assistance Program are expected to apply for all available 
assistance, and compensation will not be awarded for specific costs or 
losses that are eligible under that program. Consistent with the Act, 
FEMA clarifies that the Federal share of costs for Public Assistance 
projects is 100 percent. Similarly, compensation under the Act will not 
be awarded for losses or costs that have been reimbursed under the 
Federal Assistance to Individual and Households Program. Those 
individuals that obtain assistance under the Individuals and Households 
Program are not precluded from filing a claim under the Act. Claimants 
may seek compensation for losses or costs that exceed the amount 
provided under the Individuals and Households Program. FEMA encourages 
all Injured Persons to seek assistance under the FEMA programs for 
which they are eligible. Those individuals suffering injuries that are 
compensable under State or Federal worker's compensation laws must 
apply for all benefits under such laws. Note that gifts or donations 
made to claimants by non-governmental organizations and individuals, 
other than wages paid by the claimant's employer or insurance payments, 
will be disregarded in evaluating claims and need not be disclosed by 
claimants.

D. Subpart D--Claims Evaluation

    Subpart D explains the process after the claim is filed, including 
how claims are documented and how claimants can obtain payment if they 
agree with FEMA's evaluation.
1. Section 296.30 Establishing Injuries and Damages
    Section 296.30 explains FEMA's approach to documentation of 
injuries which is generally consistent with the Cerro Grande Fire 
Assistance process. This section explains who has the burden of proof, 
the forms needed when going through the claims process and who has the 
authority to settle claims. FEMA expects that claimants will provide 
whatever documentation is reasonably available to support their claim.

[[Page 68091]]

    Once a claimant has begun the process set out in section 296.30, 
the claims office assigns a Claims Reviewer to the claim. The Claims 
Reviewer will review, investigate, and objectively evaluate the claim 
for the Claims Office. Claims Reviewers cannot function as agents or 
representatives of the claimant. Claims Reviewers will be proactive in 
helping claimants identify injuries and in formulating a strategy for 
proving them and in assisting claimants in locating documentation that 
may be available from third-party sources. Claimants may be asked to 
sign release forms authorizing FEMA's Claims Reviewers to obtain 
information and documentation from third-party sources.
    Section 295.30(a) states that the claimant bears the burden of 
proof for establishing all elements of the injury and compensatory 
damages. This paragraph also provides claimants the opportunity to make 
a record supporting the claim by submitting any information or 
documentation that they deem relevant. The responsibility for making 
this record rests with the claimant, not the Claims Reviewer. As FEMA 
must support compensation decisions with evidence, the agency expects 
claimants will provide whatever evidence is reasonably available to 
corroborate the nature, extent, and value of their losses. If 
documentation or substantiating evidence of an injury or damage is not 
reasonably available (e.g., it burned in the fire), the Claims Office 
may determine that the claimant's statement alone will be sufficient to 
substantiate the injury or damage based on the unique circumstances 
presented by each case, taking into consideration potential alternative 
sources of substantiation and documentation. Paragraph (a) authorizes 
the Claims Office to ask claimants to provide affidavits to support the 
claim. FEMA is, however, sensitive to privacy concerns of claimants. 
Where FEMA believes an affidavit from a close associate of the claimant 
will strengthen the claim, the agency may suggest that the claimant 
obtain one. FEMA will not automatically reject the claim if the 
claimant declines to provide the affidavit. FEMA will consider all 
evidence in the record, including an alternative substantiation offered 
by the claimant, in making a decision. Paragraph (a) also reminds 
claimants that FEMA may require an inspection of real property as part 
of the claims process and their establishment of injuries and damages. 
FEMA is advising claimants who have suffered business losses that they 
may expedite resolution of their claim if they voluntarily provide 
copies of their income tax returns. Claimants who decline to submit 
their income tax return voluntarily during the claims review process 
must sign an affidavit agreeing to produce the returns if requested by 
the Department of Homeland Security's Office of the Inspector General 
(DHS OIG) or the General Accounting Office (GAO) in the course of an 
audit.
    Under paragraph (b), claimants are required to attest to the nature 
and extent of each injury of which compensation is sought in the Proof 
of Loss. Before the Authorized Official's determination can be issued, 
the claimant must sign the Proof of Loss. This Proof of Loss must be 
signed under penalty of perjury by the claimant or the claimant's legal 
representative in specific circumstances. Paragraph (b) also sets forth 
the deadline by which a Proof of Loss must be submitted after a Notice 
of Loss and allows discretion for good cause to extend that deadline. 
For example, a claimant, through no fault of their own, may not be able 
to access needed documentation in time to submit a claim and the 
Director of the Claims Office may consider those circumstances as good 
cause to extend the deadline. It is in both the claimant's interest and 
FEMA's interest that claims be expeditiously resolved. The intent of 
the Act is to compensate fire survivors as quickly as possible. 
Congress entrusted FEMA with administering an orderly compensation 
process. Section 104(d)(1)(A)(i) of the Act states that FEMA must 
determine the compensation due to a claimant within 180 days of the 
date upon which the Notice of Loss is filed. It is impossible for FEMA 
to fulfill this mandate if claimants are unwilling to provide specific 
details about their injuries by signing the Proof of Loss. While FEMA 
believes that Congress intended for the agency to have the flexibility 
to provide claimants with extra time document their injuries in 
appropriate cases, nothing in the Act suggests that claimants should be 
able to keep their claims open for an extended period of time. 
Claimants who submit their Notice of Loss should submit a signed Proof 
of Loss to the Claims Office not later than 150 days after the initial 
Notice of Loss was submitted. Adherence to this deadline will leave 
FEMA with 30 days to determine the compensation due to the claimant and 
enable the agency to meet the 180-day timeframe required by Congress. 
To provide a claims process that is orderly for all and to meet the 
agency's obligation to be good stewards of the Federal funds provided 
by Congress for administration of the program, Claimants must comply 
with the timeframes for signing a Proof of Loss set forth in this 
paragraph. Section 104(d)(1)(A)(i) of the Act assumes that the claimant 
will fully cooperate with FEMA in the adjudication of the claim to 
ensure a timely determination. FEMA will try to process claims in less 
than 180 days but may require the full 180-day period in many cases. 
Partial payments are intended to ease the burden on the claimant during 
this period.
    There is flexibility built into the process for claimants to tell 
FEMA about injuries and damages that they could not have discovered or 
did not remember when they signed the Proof of Loss. Sections 296.34 
and 296.35 explain this flexibility. If a claimant is not prepared to 
sign a Proof of Loss, for good cause, an extension may be requested 
from the Director of the Claims Office. Extensions will not be granted 
automatically, but only on consideration of the equities in the 
request. Alternatively, the claimant may withdraw the claim and re-file 
the claim once before November 14, 2024, when the injuries are better 
defined. If a claimant does not complete the Proof of Loss within the 
timeframes specified in this paragraph or fails to obtain an extension, 
the Claims Office may administratively close the claim.
    Paragraph (c) requires claimants who receive compensation to sign 
and return a Release and Certification Form, including for partial 
payments under section 296.33. The Release and Certification Form must 
be received before the Claims Office provides payment on the claim. 
FEMA is simplifying the process from the Cerro Grande Fire Assistance 
process to eliminate specific timelines and would rather tie the return 
of the form to payment. Section 104(e) of the Act provides that at the 
end of the process, the United States and all employees, officers, and 
agencies of the United States are released from all claims related to 
the Fire and the compensation settlement is conclusive for the 
claimant. The Act does not bar the United States from recovering 
payments made to the claimant after the return of the Release and 
Certification Form. The Act was intended to provide a more expeditious 
and less adversarial process for compensation than is available under 
the Federal Tort Claims Act. Paragraph (c) provides that the United 
States will not attempt to recover monies paid to claimants completing 
this process, except in the case of fraud or misrepresentation by the 
claimant or the claimant's representative, failure of the claimant to 
cooperate with an audit as required by section 296.36, or a

[[Page 68092]]

material mistake by FEMA. The Act generally obligates FEMA to attempt 
to recover payments where there is evidence of civil or criminal fraud, 
misrepresentation, presentation of a false claim or where a claimant 
was not eligible for a partial payment received pursuant to the 
Act.\14\ FEMA may also recover overpayments where the agency made a 
material mistake in calculation of the damages owed to the claimant and 
in other appropriate cases.
---------------------------------------------------------------------------

    \14\ See Section 104(l), Public Law 117-180, 136 Stat. 2114, 
2168.
---------------------------------------------------------------------------

    Paragraph (d) authorizes the Director of the Claims Office to offer 
claimants an opportunity to settle or compromise a claim in whole or in 
part at any time during the process. This authority allows flexibility 
in the process to help claimants recover more efficiently and is 
consistent with the Cerro Grande Fire Assistance process.
2. Section 296.31 Reimbursement of Claim Expenses
    Early in the process, claimants should also discuss with the Claims 
Reviewer whether FEMA will require an appraisal or other third-party 
opinion of value to evaluate a claim. FEMA may order appraisals and 
third-party opinions directly or request the claimant to obtain them. 
Section 296.31 provides that if FEMA requests the claimant provide an 
appraisal or other third-party opinion, FEMA will reimburse the 
claimant for the reasonable cost of obtaining it. Paragraph (a) 
addresses the circumstances in which FEMA will reimburse a claimant for 
reasonable costs of third-party opinions obtained by the claimant. It 
provides that FEMA will do so only if the agency requests that the 
claimant procure the opinion. It is the claimant's responsibility to 
develop and submit whatever evidence they think is appropriate to 
support the claim. Claims preparation expenses are not regarded as 
compensatory damages under New Mexico law or under the Federal Tort 
Claims Act. Similarly, they are not recoverable under the Act. If FEMA 
requests that a claimant obtain a third-party opinion and the expert 
selected by the claimant believes they must consult with other experts 
to render the opinion, the claimant should notify the Claims Reviewer 
and provide an estimate of the total cost. FEMA will not reimburse the 
claimant for the cost of these other experts unless the Claims Office 
has expressly approved their use.
    Compensatory damages for time spent in claims preparation are not 
available under New Mexico law or the Federal Tort Claims Act. 
Moreover, there is no evidence Congress intended that claimants be 
compensated for the value of their time in preparing a claim. Providing 
compensation for a claimant's time would be difficult to administer, as 
FEMA would have to determine equitably the value of a claimant's time 
and to verify that claimants have expended the number of hours that are 
claimed. FEMA's payments under the Act are subject to independent audit 
by the GAO and the DHS OIG and claimants would likely find attempts by 
auditors to verify the payment for hours spent in the claims process 
highly intrusive. However, as with the Cerro Grande Fire Assistance 
process, FEMA is choosing to exercise discretion to provide a lump sum 
payment to claimants for miscellaneous and incidental expenses incurred 
in the claims process. Subrogation claimants and claimants whose only 
Fire-related loss is the cost of a flood insurance premium are not 
eligible for the lump sum payment. FEMA will provide a lump sum payment 
of five percent of the insured and uninsured loss (excluding flood 
insurance premiums), not to exceed $25,000. The minimum lump sum 
payment is $150.\15\ The payment amounts for these miscellaneous and 
incidental expenses are based upon the Cerro Grande Fire Assistance 
process and have been updated to reflect inflationary increases since 
that rule was published.\16\ FEMA believes that paragraph (b) 
represents a fair and reasonable accommodation between the agency's 
responsibility to spend Federal funds wisely and the desire to 
compensate claimants as fully as possible. The lump sum payment under 
paragraph (b) will be made after a properly executed Release and 
Certification Form is returned to the Claims Office and cannot be 
obtained through partial payment.
---------------------------------------------------------------------------

    \15\ The Cerro Grande Fire Assistance regulations at 44 CFR 
295.31(b) provided for a lump sum payment of $100 or 5% of the 
compensatory damages, not to exceed $15,000.
    \16\ Inflationary adjustments have been made based on the 
Consumer Price Index for All Urban Consumers as published by the 
U.S. Department of Labor. See generally https://www.bls.gov/data/inflation_calculator.htm.
---------------------------------------------------------------------------

3. Section 296.32 Determination of Compensation Due to Claimant
    Section 296.32 explains how FEMA will evaluate claims. Claims 
Reviewers do not have the authority to determine whether a claim is 
eligible for compensation or how much compensation will be paid. Their 
role is to work with the claimant to obtain relevant evidence, analyze 
the evidence, and make a recommendation to an Authorized Official. Each 
claim will be assigned to an Authorized Official, and only Authorized 
Officials have the authority to decide claims.
    When the Authorized Official has decided a claim, they will send a 
written notification to the claimant's address as it appears in the 
Claims Office records. The date that appears on this notification 
starts a 120-day clock during which a claimant must either accept the 
finding or appeal it. The procedure for appealing an Authorized 
Official's determination is explained in section 295.41. If the 
claimant has not acted at the end of this period, they may forfeit 
further rights to an Administrative Appeal. The Director of the Claims 
Office may modify the 120-day deadline if good cause exists.
4. Section 296.33 Partial Payments
    This section explains the partial payment process. Section 
104(d)(2) of the Act authorizes FEMA to make partial payments at the 
request of the claimant. As in the Cerro Grande Fire Assistance 
process, the Claims Office may make one or more partial payments to the 
claimant if there is a reasonable basis to estimate the claimant's 
damages. FEMA believes this section offers sufficient discretion to the 
agency to make partial payments of any amount and to expedite payments 
where it is appropriate to do so. The amount of a partial payment in 
any particular case will depend on the nature of the claim and in some 
cases, how well the claim is supported. FEMA encourages claimants who 
require expedited payments to discuss the matter with a Claims 
Reviewer. FEMA is updating the Cerro Grande Fire Assistance process by 
requiring claimants to sign a Release and Certification Form as part of 
the partial payment process. This change simplifies the requirement 
that the Form be submitted to receive any payment. While the Claims 
Office's decision to provide a partial payment cannot be appealed, 
acceptance of a partial payment does not affect the claimant's ability 
to pursue an appeal, arbitration, or other options under the Act with 
respect to any portion of a claim for which a Release and Certification 
Form is not executed.
5. Section 296.34 Supplementing Claims
    Section 104(d)(1)(A)(i) of the Act requires FEMA to determine and 
fix the amount to be paid for a claim within 180 days after the claim 
is submitted. To meet this deadline, FEMA may ask claimants to sign the 
Proof of Loss and require that the Authorized Officials render a 
definitive determination more expeditiously than some claimants

[[Page 68093]]

would prefer. Section 296.34 provides claimants with the flexibility to 
make additional claims after submitting a Proof of Loss and before 
submission of the Release and Certification Form. Before signing the 
Proof of Loss, the claimant may amend the Notice of Loss to seek 
compensation for injuries not referenced in the Notice of Loss. 
claimants who wish to amend the Notice of Loss should contact the 
Claims Reviewer. The additional injuries will be noted on the Proof of 
Loss and will be adjudicated in the Authorized Official's 
determination. Once the claimant has signed the Proof of Loss, they may 
request permission from the Director of the Claims Office to amend the 
Notice of Loss for consideration of one or more injuries not addressed 
in the Proof of Loss. The claimant should consult with the Claims 
Reviewer about the procedure for obtaining permission of the Director 
of the Claims Office. The Director of the Claims Office will grant the 
request if it is supported by good cause. If the request is granted, 
the Director will determine whether compensation is due for the 
additional injury under the Administrative Appeal procedures described 
in subpart E of part 296. The additional injury will not be considered 
until after the Authorized Official's determination is issued on the 
remainder of the claim. If the claimant decides to appeal the 
Authorized Official's determination on other injuries, the Director of 
the Claims Office will decide both matters in a single appeal 
proceeding. Claimants are reminded that they must put the Claims Office 
on notice of any injury not mentioned in the initial Notice of Loss not 
later than the deadline for filing an Administrative Appeal under 
section 296.41 or November 14, 2024, whichever is earlier. A written 
request for permission to amend a Notice of Loss after the Proof of 
Loss is signed must be on file with the Director of the Claims Office 
no later than the deadline for filing an Administrative Appeal under 
section 296.41 or November 14, 2024, whichever is earlier.
6. Section 296.35 Reopening a Claim
    Section 296.35 provides for reopening a claim after the claimant 
has submitted a Release and Certification Form again with the goal to 
allow claimants an opportunity to request damages in excess of those 
previously awarded. In appropriate cases, the claimant can use the 
reopening provision of this section to seek compensation for an injury 
not previously reported to FEMA. Specifically, claimants may request to 
reopen if, not later than November 14, 2025, the claimant desires 
heightened risk reduction compensation under section 296.21(e)(5); the 
claimant closed the sale of a home and wishes to present a claim for a 
decrease in the value of the real property under section 296.21(c)(3); 
or the claimant has incurred additional losses under section 
296.21(c)(1) as part of a reconstruction in excess of those previously 
awarded. Requests to reopen for good cause will only be granted in the 
Director's discretion. The Director's decision to reopen or not reopen 
a claim is not subject to review under the arbitration provisions of 
Subpart E of this part. Reopened claims will not be decided by the 
Director of the Claims Office but by an Authorized Official, after 
considering the recommendation of the Claims Reviewer. Claimants who 
are dissatisfied with the Authorized Official's determination on the 
reopened claim may appeal to the Director of the Claims Office pursuant 
to subpart E of part 296.
7. Section 296.36 Access to Records
    Claimants are required to grant the DHS OIG and the Comptroller 
General of the United States access to the subject property and to 
records and information in their control that are relevant to their 
claims for purposes of audit and investigation. These records include, 
but are not limited to, any relevant tax records. The Act requires that 
the GAO, a legislative branch agency, audit claims and payments made 
under the Act. The DHS OIG is responsible for investigating charges of 
fraud and abuse and auditing FEMA's programs.
8. Section 296.37 Confidentiality of Information
    The Privacy Act protects the confidentiality of information 
provided by individual claimants. This information may only be 
disclosed with the consent of the claimant or pursuant to a routine 
use, which has been disclosed to the public. Confidential, proprietary, 
and trade secret information provided by entities, such as business, 
Indian Tribes, Tribal entities, and government agencies, are not 
eligible for Privacy Act protection, but may be exempt from disclosure 
under the Freedom of Information Act. Non-individual claimants are 
encouraged to discuss the need to protect confidential information from 
disclosure with FEMA before the information is submitted. FEMA may not 
be able to prevent the disclosure of this information without awareness 
of its confidential nature.

E. Subpart E--Dispute Resolution

    Subpart E discusses a claimant's rights if they disagree with 
FEMA's evaluation of the claim.
1. Section 296.40 Scope
    Claimants are afforded a right to appeal the initial determination 
to the Director of the Claims Office. This is referred to as an 
Administrative Appeal. If the claimant is dissatisfied with the 
Administrative Appeal decision, they may put the matter to binding 
arbitration or seek judicial review in federal court.
2. Section 296.41 Administrative Appeal
    Section 296.41 describes the Administrative Appeal process. 
Consistent with the Cerro Grande Fire Assistance process, claimants 
disagreeing with the conclusions of FEMA's Authorized Official under 
section 296.32 must pursue an Administrative Appeal before initiating 
arbitration or seeking judicial review in federal court. An 
Administrative Appeal decision constitutes the final decision of the 
Director of the Claims Office. Pursuant to paragraph (a), a written 
request for an Administrative Appeal must be postmarked or 
electronically stamped within 120 days after the date of the Authorized 
Official's determination.
    FEMA requests that claimants provide the Claims Reviewer with all 
relevant evidence supporting the claim. The goal of the process is to 
render equitable compensation decisions the first time, not to 
encourage Administrative Appeals or further proceedings. However, 
paragraphs (c) and (d) allow for the claimant to submit supplemental 
filings and to present any relevant factual evidence concerning the 
issues under appeal, even if it was not presented earlier in the 
process to ensure claimants are fully heard. Claimants who wish to 
raise new claims or damage theories after submitting a Proof of Loss 
should ask the Director of the Claims Office to supplement their claim 
under section 296.34 of this part.
    Under section 296.41, the Director of the Claims Office may request 
additional information, may schedule a conference, or may convene a 
hearing under paragraphs (e), (f), and (g) respectively. To ensure 
effective, efficient resolution of claims, FEMA is updating the process 
to allow claimants to request a mediator to facilitate a conference 
during the Administrative Appeal. This allows claimants to request a 
facilitator earlier in the process as part of the Administrative

[[Page 68094]]

Appeal at a conference in paragraph (f) instead of at the later 
arbitration stage of the process. FEMA believes this change will 
resolve claims faster consistent with the Act's purpose to 
expeditiously consider and settle claims. FEMA seeks comment on this 
update. Following the Administrative Appeal decision, if the claimant 
does not initiate arbitration or seek judicial review in the prescribed 
timelines, their concurrence with the decision will be conclusively 
presumed under paragraph (i). If the claimant concurs with the 
Director's decision, any additional damages will be paid upon receipt 
of a properly executed Release and Certification Form.
3. Sections 296.42 Arbitration
    Section 104(h)(3)(A) of the Act requires FEMA establish procedures 
under which a dispute regarding a claim may be settled by arbitration. 
Section 296.42 establishes these procedures. Consistent with the Cerro 
Grande Fire Assistance arbitration process, any issue decided in an 
Administrative Appeal may be referred to binding arbitration. Paragraph 
(a) requires the written request for arbitration be electronically 
stamped or postmarked no later than 60 days after the Administrative 
Appeal decision date. FEMA is updating the process to allow for 
electronic submission of arbitration requests and seeks comment on this 
update. Evidence not previously entered into the Administrative Record 
will not be considered during arbitration under paragraph (b). A 
claimant cannot arbitrate an issue unless it was raised and decided in 
the Administrative Appeal.
    As explained above, FEMA is updating the process to allow claimants 
to request a mediator to facilitate a conference during the 
Administrative Appeal in 296.41(f). FEMA believes this change will 
resolve claims faster consistent with the Act's purpose to 
expeditiously consider and settle claims. FEMA seeks comment on this 
update.
    Based on FEMA's experience with the arbitration process for the 
Cerro Grande Fire Assistance, the agency is updating paragraph (c) 
regarding arbitrator selection. Specifically, FEMA is changing the 
arbitrator selection process to a random drawing from a list of 
qualified arbitrators who have agreed to serve, rather than allowing 
the claimant to select an arbitrator from such a list for claims at or 
below a certain amount. This change would improve efficiency in the 
process and would not result in any inequity to claimants, as the 
selection would be from a random drawing. FEMA believes this change 
will result in a faster assignment of arbitrator to resolve the claim 
more efficiently consistent with the Act's goal to expeditiously 
consider and settle claims for injuries resulting from the Fire. FEMA 
seeks comment on this process. FEMA is also increasing the thresholds 
associated with the assignment of either one arbitrator or a panel of 
three arbitrators to reflect inflationary increases since the Cerro 
Grande regulation was published.\17\ Amounts in dispute of $500,000 or 
less will be decided by one arbitrator while a panel of three 
arbitrators will decide amounts in dispute exceeding $500,000.\18\ FEMA 
seeks comment on the increased thresholds.
---------------------------------------------------------------------------

    \17\ Inflationary adjustments have been made based on the 
Consumer Price Index for All Urban Consumers as published by the 
U.S. Department of Labor. See generally https://www.bls.gov/data/inflation_calculator.htm.
    \18\ The Cerro Grande Fire Assistance regulations at 44 CFR 
295.42(d) set the threshold at $300,000.
---------------------------------------------------------------------------

    In paragraph (d), FEMA seeks to modernize the arbitration process 
by generally offering virtual arbitration hearings to promote 
efficiency in the process. Additionally, given the scope of the Fire, 
FEMA is not providing a specific location for any in-person hearing, 
but rather allowing the Arbitration Administrator the flexibility to 
select a location in New Mexico for those limited circumstances in 
which an in-person hearing is held. Decisions will be in writing and 
provided to the Arbitration Administrator, the claimant, and the 
Director of the Claims Office under paragraph (e). FEMA seeks comment 
on these provisions.
    Consistent with the Cerro Grande Fire Assistance process, decisions 
will be rendered no later than 10 days after a hearing is concluded, 
although the Arbitration Administrator may extend the decision timeline 
with notice to both the claimant and the Director of the Claims Office. 
Written arbitration decisions will establish the compensation due to a 
claimant, if any, and the corresponding rationale. Consistent with the 
Cerro Grande Fire Assistance arbitration process, the Arbitration 
Administrator will forward a Release and Certification Form to the 
claimant with the written decision. Any additional compensation that is 
awarded as a result of the arbitration will be paid after the signed 
Release and Certification Form is received.
    Paragraphs (f) and (g) are generally consistent with the Cerro 
Grande Fire Assistance process. If additional compensation is awarded 
at arbitration, the Arbitration Administrator will forward the decision 
to the claimant with a Release and Certification Form. Such 
compensation will be paid to the claimant after the signed Form is 
received by the Arbitration Administrator. FEMA reiterates in paragraph 
(g) that arbitration decisions are not subject to any further appeal or 
review and are binding on the claimant and on FEMA. Paragraph (i) 
includes a provision that while the Arbitration Administrator will pay 
all fees and expenses of the arbitrator or arbitrators assigned, 
claimants are responsible for any expenses they incur as a result of 
the arbitration, including travel costs. This update to the Cerro 
Grande Fire Assistance process ensures fairness by eliminating the 
provision to allow the parties to jointly agree to pay such fees. FEMA 
seeks comment on this provision.
4. Section 296.43 Judicial Review
    Section 296.43 discusses judicial review of the Administrative 
Appeal decision, which remains consistent with the Cerro Grande Fire 
Assistance process and the provisions of the Act. Claimants may seek 
judicial review in lieu of arbitration if dissatisfied with the outcome 
of the Administrative Appeal decision. The suit must be filed in the 
United States District Court for the District of New Mexico within 60 
days of a final decision of the Administrator under the Act. Only 
evidence in the administrative record will be considered by the court. 
Claimants should be aware that section 104(i)(3) of the Act requires 
that the court uphold the Administrative Appeals decision if it is 
supported by substantial evidence on the record considered as a whole.

IV. Regulatory Analysis

A. Administrative Procedure Act (APA)

    For the reasons that follow, FEMA is issuing this rule as an 
interim final rule pursuant to statutory authority under the Act. 
Specifically, section 104(f)(1) requires FEMA to publish ``interim 
final regulations for the processing and payment of claims under this 
Act.'' Further, these regulations must be published ``not later than 45 
days after the date of enactment.'' Given Congress' specific authority 
to issue an interim final rule, the agency is proceeding without 
advance notice and comment as required under the APA. See 5 U.S.C. 
553(b) and (c).
    The APA also provides an exception to prior notice and comment for 
rules of agency organization, procedures, or practice. 5 U.S.C. 
553(b)(A). This interim final rule implements the Hermit's Peak/Calf 
Canyon Fire Assistance Act by detailing how FEMA will process and pay 
claims under the Act. The majority of the provisions in

[[Page 68095]]

this interim final rule are procedural because they create the 
procedural framework through which FEMA is able to efficiently 
implement a claims process to compensate victims of the Fire. The rule 
details how a claimant may seek compensation through a claims process 
with the Office of Hermit's Peak/Calf Canyon Fire Claims (``Claims 
Office'') from initiating a claim with a Notice of Loss through appeal 
and arbitration or judicial review of an Authorized Official's 
determination of the claim. This interim final rule provides the 
voluntary process by which an Injured Party may file a claim under the 
Act. Injured Persons may seek compensation through the Federal Tort 
Claims Act or a civil action in lieu of filing a claim under the Act. 
This interim final rule sets out the agency's procedure for how to 
voluntarily file a claim. Since this rule is procedural in nature, it 
is excepted from the notice and comment requirements under 5 U.S.C. 
553(b)(A).
    Consistent with Congress' direction in section 104(f)(1) of the Act 
that FEMA publish ``interim final regulations for the processing and 
payment of claims under [the] Act,'' good cause exists pursuant to 5 
U.S.C. 553(b)(B) as it would be impracticable and contrary to the 
public interest to require notice and comment rulemaking in this 
instance. Potential claimants are currently without (and awaiting) 
compensation for injuries they suffered due to a massive wildfire. They 
need to rebuild as soon as possible to regain normalcy, reduce erosion, 
and restore land health.\19\ The sooner the federal government can 
compensate them, the sooner they can begin the process of rebuilding 
and recovery. And so FEMA must establish the relevant regulatory 
framework without delay, so as to be able to respond expeditiously and 
without unnecessary confusion regarding the applicable procedures for 
claimants under the Act. Section 102(b)(2) lists as one of the two 
purposes of the Act to ``provide for the expeditious consideration and 
settlement of claims'' for the injuries suffered as a result of the 
Fire. The Fire constitutes the largest wildfire in New Mexico 
history.\20\ Over 340,000 acres of forest burned during the Fire and 
over half of the land impacted by the Fire consisted of privately-owned 
land, with just under 200,000 total acres burned.\21\ At least 160 
homes and a total of over 900 structures were destroyed during the 
Fire.\22\ Despite containment, the impact of the Fire continues to be 
felt in the impacted areas, causing flooding and setting off a drinking 
water crisis.\23\ The higher burn severity of soil on private lands 
increases the likelihood of flooding and mudslide impacts on those 
areas. Residents in the areas of the Fire have already suffered 
significant damage from flooding, including washed out roads and 
buildings, drowned pastures, and burned debris moved downstream.\24\ In 
addition, as noted above, Congress explicitly mandated in section 
104(f)(1) of the Act that FEMA promulgate these regulations 
expeditiously as interim final regulations, a factor that supports a 
finding of ``good cause.'' Pursuant to section 104(f)(1) of the Act, 
consistent with 5 U.S.C. 553(b)(B), and for the reasons stated above, 
FEMA therefore will dispense with prior public notice and the 
opportunity to comment on this rule before finalizing this rule and to 
make this interim final rule effective immediately upon publication.
---------------------------------------------------------------------------

    \19\ See New Mexico Forest and Watershed Restoration Institute, 
``Hermit's Peak and Calf Canyon Fire: The largest wildfire in New 
Mexico's recorded history and its lasting impacts'' Aug. 24, 2022 
found at https://storymaps.arcgis.com/stories/d48e2171175f4aa4b5613c2d11875653 (last accessed Sept. 27, 2022).
    \20\ See Bryan Pietsch and Jason Samenow, ``New Mexico blaze is 
now largest wildfire in state history,'' The Washington Post, May 
17, 2022 found at https://www.washingtonpost.come/nation/2022/05/17/calf-canyon-hermits-peak-fire-new-mexico/ (last accessed Sept. 15, 
2022).
    \21\ See New Mexico Forest and Watershed Restoration Institute, 
``Hermit's Peak and Calf Canyon Fire: The largest wildfire in New 
Mexico's recorded history and its lasting impacts'' Aug. 24, 2022 
found at https://storymaps.arcgis.com/stories/d48e2171175f4aa4b5613c2d11875653 (last accessed Sept. 27, 2022).
    \22\ Id.
    \23\ See Jordan Honeycutt, ``Rain brings flash flooding to 
Hermits Peak Calf Canyon burn scar,'' KRQE, July 13, 2022 found at 
https://www.krqe.com/news/new-mexico/rain-brings-flash-flooding-to-hermits-peak-calf-canyon-burn-scar/ (last accessed Sept. 27, 2022), 
and Simon Romero, ``How New Mexico's Largest Wildfire Set Off a 
Drinking Water Crisis,'' The New York Times, Sept. 26, 2022 found at 
https://www.nytimes.com/2022/09/26/us/new-mexico-las-vegas-fire-water.html (last accessed Sept. 27, 2022).
    \24\ See New Mexico Forest and Watershed Restoration Institute, 
``Hermit's Peak and Calf Canyon Fire: The largest wildfire in New 
Mexico's recorded history and its lasting impacts'' Aug. 24, 2022 
found at https://storymaps.arcgis.com/stories/d48e2171175f4aa4b5613c2d11875653 (last accessed Sept. 27, 2022).
---------------------------------------------------------------------------

    Based on the discussion above, FEMA further finds there is good 
cause, under 5 U.S.C. 553(d)(3), not to require a 30-day delayed 
effective date for this rulemaking because delaying implementation of 
the rule by 30 days is contrary to the goal of the statutory 
requirement to issue an interim final rule within 45 days after the 
Act's enactment, and delay would further negatively impact claimants 
seeking compensation through the Act. While FEMA believes the agency 
has the statutory authority pursuant to section 104(f)(1) of the Act 
and 5 U.S.C. 553 (b)(A), 553(b)(B), and 553(d)(3) to issue the rule 
without advance notice and comment and with an immediate effective 
date, FEMA is interested in the views of the public and requests 
comment on all aspects of the interim final rule.

B. Executive Order 12866, Regulatory Planning and Review and Executive 
Order 13563, Improving Regulation and Regulatory Review

    Executive Order 12866 (Regulatory Planning and Review) and 
Executive Order 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. This rule has been 
designated a ``significant regulatory action'' that is economically 
significant, under section 3(f)(1) of Executive Order 12866. 
Accordingly, the rule has been reviewed by the Office of Management and 
Budget.
    In this rule, FEMA is establishing the process by which claimants 
who were injured as a result of the Fire may apply for compensation 
under the Act. Affected State, local, and Tribal governments, private 
sector businesses, not-for-profit organizations, and individuals and 
households will be eligible to apply for compensation. This rule will 
result in costs to claimants for time to apply for and substantiate a 
claim, and for FEMA to process and adjudicate claims. Claimants will 
submit a Notice of Loss to FEMA, meet with a FEMA Claims Reviewer, 
obtain the documentation needed to substantiate claims, sign a Proof of 
Loss, and complete and return a Release and Certification Form. 
Additionally, affected insurance companies can submit a subrogation 
notice of loss for possible compensation under the Act. Claimants who 
disagree with FEMA's evaluation of the claim may also incur costs to 
appeal the determination. FEMA estimates over 57,000 claimants will 
seek compensation under the Act, totaling between 1.3 and 1.6 million 
burden hours over the two-year period,

[[Page 68096]]

depending on if all applicants submit all forms.\25\
---------------------------------------------------------------------------

    \25\ Not all Claimants will submit a Mitigation Assistance or a 
Subrogation Notice and Proof of Loss Form. FEMA estimates that 
57,450 applicants will incur between 22.75 and 27.75 burden hours, 
depending on the Forms they submit.
---------------------------------------------------------------------------

    The rule will result in additional transfer payments from FEMA to 
victims for the settlement of claims for injuries resulting from the 
Fire. Injuries may include property, business and/or financial losses. 
Congress appropriated $2.5 billion to provide for the expeditious 
consideration and settlement of these claims.\26\ The maximum total 
economic impact of this rule, therefore, is $2.5 billion (assuming that 
all funds awarded will be expended). These funds are for the settlement 
of actual compensatory damages measured by injuries suffered, FEMA's 
administration of the program, and DHS OIG oversight.\27\ However, 
without knowing the dollar amount of claims that will be filed for 
these injuries, it is impossible to predict the amount of the economic 
impact of this rule with any precision.
---------------------------------------------------------------------------

    \26\ Division A of Public Law 117-180, 136 Stat. 2144 (2022).
    \27\ Id.
---------------------------------------------------------------------------

    The Act requires claims must be submitted no later than two years 
after publication of this interim final rule or November 14, 2024.\28\ 
The Act requires that FEMA determine and fix the amount to be paid for 
a claim within 180 days after a claim is submitted.\29\ Although the 
impact of the rule could be spread over multiple years as claims are 
received, processed, and paid, the total economic effects of a specific 
payment would only occur once, rather than annually.
---------------------------------------------------------------------------

    \28\ Id.
    \29\ Division G of Public Law 117-180, 136 Stat. 2114 (2022).
---------------------------------------------------------------------------

    This rule will provide distributional benefits to victims of the 
Fire. FEMA has provided immediate assistance under the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act to those eligible 
for public and individual assistance pursuant to the President's 
declaration of a major disaster on May 4, 2022. The additional 
compensation from the Act will more fully compensate victims and allow 
affected State, local and Tribal governments, businesses, 
organizations, and individuals to rebuild.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 605(b)) applies only 
to rules for which an agency publishes a general notice of proposed 
rulemaking pursuant to 5 U.S.C. 553(b). As discussed previously, FEMA 
is not issuing a notice of proposed rulemaking. Accordingly, the RFA's 
requirements do not apply.

D. Unfunded Mandates Reform Act of 1995

    FEMA has not issued a notice of proposed rulemaking for this 
regulatory action; therefore, the written statement provisions of the 
Unfunded Mandates Reform Act of 1995, as amended, do not apply to this 
regulatory action.

E. Paperwork Reduction Act of 1995

    This rule contains information collections necessary to support 
FEMA's implementation of the Act. The Notice of Loss and Proof of Loss 
forms are a new collection (OMB Control Number 1660-NW162) submitted 
under OMB's emergency clearance procedures to allow FEMA to begin 
accepting claims immediately after publication of this interim final 
rule. Additionally, FEMA will seek public comments on the collection 
through the normal clearance process.

F. Privacy Act

    Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must 
determine whether implementation of a 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 rule. DHS has determined that this 
rulemaking does not affect the 1660-NW162 OMB Control Number's 
compliance with the E-Government Act of 2002 or the Privacy Act of 
1974, as amended. Specifically, DHS has concluded that the 1660-NW162 
OMB Control Number is covered by the DHS/FEMA/PIA-044 National Fire 
Incident Reporting Systems (NFIRS) Privacy Impact Assessment (PIA) and 
the DHS/FEMA/PIA-049 Individual Assistance (IA) Program PIA. 
Additionally, DHS has decided that the 1660-NW162 OMB Control Number is 
covered by DHS/FEMA-008 Disaster Recovery Assistance Files, 87 FR 7852 
(Feb. 10, 2022), DHS/ALL-004 General Information Technology Access 
Account Records System, 77 FR 70792 (Nov. 27, 2012), and DHS/ALL-013 
Department of Homeland Security Claims Records, 73 FR 63987 (Oct. 28, 
2008) System of Records Notices (SORNs).

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

    Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal Governments,'' 65 FR 67249, November 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 shall 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.
    FEMA has reviewed this interim final rule under Executive Order 
13175 and has determined that this interim final rule may have a 
substantial direct effect 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. FEMA will enter into consultation with 
the Indian Tribes that have been impacted by the Fire and whose Tribal 
entities or Tribal members have been impacted by the Fire during the 
public comment period of this rulemaking.

H. Executive Order 13132, Federalism

    Executive Order 13132, ``Federalism,'' 64 FR 43255, August 10, 
1999, sets forth principles and criteria that agencies must adhere to 
in formulating and implementing policies that have federalism 
implications, that is, regulations that have ``substantial direct 
effects on the States, on the relationship

[[Page 68097]]

between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government.'' 
Federal agencies must closely examine the statutory authority 
supporting any action that would limit the policymaking discretion of 
the States, and to the extent practicable, must consult with State and 
local officials before implementing any such action.
    FEMA has determined that this rulemaking does not have 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, and 
therefore does not have federalism implications as defined by the 
Executive Order. FEMA, however, seeks comment on this determination 
from any States that have been impacted by the Fire and who seek 
assistance pursuant to the Act.

I. National Environmental Policy Act of 1969 (NEPA)

    Under the National Environmental Policy Act of 1969 (NEPA), as 
amended, 42 U.S.C. 4321 et seq., an agency must prepare an 
environmental assessment or environmental impact statement for any 
rulemaking that significantly affects the quality of the human 
environment. FEMA has determined that this rulemaking does not 
significantly affect the quality of the human environment and 
consequently has not prepared an environmental assessment or 
environmental impact statement.
    Rulemaking is a major Federal action subject to NEPA. Categorical 
exclusion A3 included in the list of exclusion categories at Department 
of Homeland Security Instruction Manual 023-01-001-01, Revision 01, 
Implementation of the National Environmental Policy Act, Appendix A, 
issued November 6, 2014, covers the promulgation of rules, issuance of 
rulings or interpretations, and the development and publication of 
policies, orders, directives, notices, procedures, manuals, and 
advisory circulars if they meet certain criteria provided in A3(a)-(f). 
This interim final rule meets Categorical Exclusion A3(a), ``[t]hose of 
a strictly administrative or procedural nature,'' and A3(b), ``[t]hose 
that implement, without substantive change, statutory or regulatory 
requirements.'' FEMA has determined that there are no extraordinary 
circumstances that prevent the use of this categorical exclusion for 
this rulemaking action.

J. Executive Order 12898 Environmental Justice

    Under Executive Order 12898, ``Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations,'' 59 FR 7629 (Feb. 16, 1994), as amended by Executive 
Order 12948, 60 FR 6381, (Feb. 1, 1995), FEMA incorporates 
environmental justice into its policies and programs. The Executive 
Order requires each Federal agency to conduct its programs, policies, 
and activities that substantially affect human health or the 
environment in a manner that ensures that those programs, policies, and 
activities do not have the effect of excluding persons from 
participation in programs, denying persons the benefits of programs, or 
subjecting persons to discrimination because of race, color, or 
national origin.
    This rulemaking would not have a disproportionately high or adverse 
effect on human health or the environment, nor would it exclude persons 
from participation in FEMA programs, deny persons the benefits of FEMA 
programs, or subject persons to discrimination because of race, color, 
or national origin.

K. 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 rule to the Congress and to GAO pursuant to 
the CRA. The Office of Management and Budget has determined that this 
rule is ``economically significant,'' but FEMA believes this rule is 
not a ``major rule'' within the meaning of the CRA. FEMA believes this 
interim final rule is not subject to the additional review requirements 
under the CRA given the statutory mandate to issue this interim final 
rule within 45 days of the Act's enactment under section 104(f) of the 
Act. This interim final rule is a procedural rule and does not confer 
any substantive rights, benefits, or obligations but rather only sets 
out the agency's procedure for how to voluntarily file a claim under 
the Act. As such, this interim final rule is a ``rule of agency 
organization, procedure, or practice that does not substantially affect 
the rights or obligation of non-agency parties'' pursuant to 5 U.S.C. 
804(3)(C). Finally, even if this interim final rule is considered a 
``rule'' under the CRA, FEMA finds there is good cause to dispense with 
notice and public comment under 5 U.S.C. 808(2). Notice and public 
comment are impracticable and contrary to public interest given the 
Act's requirement for the agency to publish an interim final rule 
within 45 days of enactment and the Act's purpose to provide 
expeditious consideration and settlement of claims for victims of the 
Fire as explained above. Therefore, there is no delay in its effective 
date under the CRA.

List of Subjects in 44 CFR Part 296

    Administrative practice and procedure, Claims, Disaster assistance, 
Federally affected areas, Indians, Indians--lands, Indians--Tribal 
government, Organization and functions (Government agencies), Public 
lands, Reporting and recordkeeping requirements, State and local 
governments.

    For the reasons discussed in the preamble, the Federal Emergency 
Management Agency (FEMA) amends subchapter E of title 44 of the Code of 
Federal Regulations by revising the subchapter heading and adding part 
296 to read as follows:

SUBCHAPTER E--FIRE ASSISTANCE

PART 296--HERMIT'S PEAK/CALF CANYON FIRE ASSISTANCE

Sec.
Subpart A--General
296.1 Purpose of this part.
296.2 Policy.
296.3 Information and assistance.
296.4 Definitions.
296.5 Overview of the claims process.
296.6-296.9 [Reserved]
Subpart B--Bringing a Claim Under the Hermit's Peak/Calf Canyon Fire 
Assistance Act
296.10 Filing a claim under the Hermit's Peak/Calf Canyon Fire 
Assistance Act.
296.11 Deadline for notifying FEMA of injuries.
296.12 Election of remedies.
296.13 Subrogation.
296.14 Assignments.
296.15-296.19 [Reserved]
Subpart C--Compensation Available Under the Hermit's Peak/Calf Canyon 
Fire Assistance Act
296.20 Prerequisite to compensation.
296.21 Allowable damages.
296.22-296.29 [Reserved]

[[Page 68098]]

Subpart D--Claims Evaluation
296.30 Establishing injuries and damages.
296.31 Reimbursement of claim expenses.
296.32 Determination of compensation due to claimant.
296.33 Partial payments.
296.34 Supplementing claims.
296.35 Reopening a claim.
296.36 Access to records.
296.37 Confidentiality of information.
296.38-296.39 [Reserved]
Subpart E--Dispute Resolution
296.40 Scope.
296.41 Administrative appeal.
296.42 Arbitration.
296.43 Judicial review.

    Authority:  Pub. L. 117-180, 136 Stat. 2114, 2168; Homeland 
Security Act of 2002, 6 U.S.C. 101 et seq.

Subpart A--General


Sec.  296.1   Purpose.

    This part implements the Hermit's Peak/Calf Canyon Fire Assistance 
Act (Act), Division G of Public Law 117-180, 136 Stat. 2114, 2168, 
which requires the Federal Emergency Management Agency (FEMA) to 
establish the Office of Hermit's Peak/Calf Canyon Fire Claims (``Claims 
Office'') to receive, evaluate, process, and pay actual compensatory 
damages for injuries suffered from the Hermit's Peak/Calf Canyon Fire.


Sec.  296.2   Policy.

    It is our policy to provide for the expeditious resolution of 
damage claims through a process that is administered with sensitivity 
to the burdens placed upon claimants by the Hermit's Peak/Calf Canyon 
Fire.


Sec.  296.3   Information and assistance.

    Information and assistance concerning the Act is available from the 
Claims Office, Federal Emergency Management Agency online at https://www.fema.gov/hermits-peak.


Sec.  296.4   Definitions.

    Administrative Appeal means an appeal of the Authorized Official's 
Determination to the Director of the Claims Office in accordance with 
the provisions of Subpart E of this part.
    Administrative Record means all information submitted by the 
claimant and all information collected by FEMA concerning the claim, 
which is used to evaluate the claim and to formulate the Authorized 
Official's Determination. It also means all information that is 
submitted by the claimant or FEMA in an Administrative Appeal and the 
decision of the Administrative Appeal. It excludes the opinions, 
memoranda and work papers of FEMA attorneys and drafts of documents 
prepared by Claims Office personnel and contractors.
    Administrator means the Administrator of the Federal Emergency 
Management Agency.
    Arbitration Administrator means the FEMA official responsible for 
administering arbitration procedures to resolve disputes regarding a 
claim. Contact information for the Arbitration Administrator can be 
found online at https://www.fema.gov/hermits-peak.
    Authorized Official means an employee of the United States who is 
delegated with authority by the Director of the Claims Office to render 
binding determinations on claims and to determine compensation due to 
claimants under the Act.
    Authorized Official's Determination means a report signed by an 
Authorized Official and mailed to the claimant evaluating each element 
of the claim as stated in the Proof of Loss and determining the 
compensation, if any, due to the claimant.
    Claimant means a person who has filed a Notice of Loss under the 
Act.
    Claims Office means the Office of Hermit's Peak/Calf Canyon Fire 
Claims.
    Claims Reviewer means an employee of the United States or a Claims 
Office contractor or subcontractor who is authorized by the Director of 
the Claims Office to review and evaluate claims submitted under the 
Act.
    Days means calendar days, including weekends and holidays.
    Director means an Independent Claims Manager appointed by the 
Administrator who will serve as the Director of the Claims Office.
    Good Cause, for purposes of extending the deadline for filing, 
supplementing a claim, or reopening a claim includes, but is not 
limited to: instances where a claimant, through no fault of their own, 
may not be able to access needed documentation in time to submit a 
claim or transmit relevant information or data; or where damage is 
found after a claim has been submitted; or other instances in which the 
Director of the Claims Office, in their discretion, determines that an 
undue hardship or change in circumstances on the claimant warrants an 
extension of a deadline or the supplementation or reopening of existing 
claims.
    Hermit's Peak/Calf Canyon Fire means
    (1) The fire resulting from the initiation by the U.S. Forest 
Service of a prescribed burn in the Santa Fe National Forest in San 
Miguel County, New Mexico on April 6, 2022;
    (2) The pile burn holdover resulting from the prescribed burn by 
the U.S. Forest Services which reemerged on April 19, 2022; and
    (3) The merger of the two fires described in paragraphs (1) and (2) 
of this definition, reported as the Hermit's Peak Fire or the Hermit's 
Peak Fire/Calf Canyon Fire.
    Household means a group of people, related or unrelated, who live 
together on a continuous basis and does not include members of an 
extended family who do not regularly and continuously cohabit.
    Household Including Tribal Members means a Household that existed 
on April 6, 2022, which included one or more Tribal Members as 
continuous residents.
    Indian Tribe means the recognized governing body of any Indian or 
Alaska Native Tribe, band, nation, pueblo, village, community, 
component band, or components reservation individually identified 
(including parenthetically) in the list published most recently as of 
September 30, 2022, pursuant to section 104 of the Federally Recognized 
Indian Tribe List Act of 1994.
    Individual Assistance means the FEMA program established under 
Subchapter IV of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, as amended, 42 U.S.C. 5121, et seq., which provides 
assistance to individuals and families adversely affected by a major 
disaster or an emergency.
    Injured Person means an individual, regardless of citizenship or 
alien status; or an Indian Tribe, Tribal corporation, corporation, 
partnership, company, association, county, township, city, State, 
school district, or other non-Federal entity that suffered injury 
resulting from the Hermit's Peak/Calf Canyon Fire. The term Injured 
Person includes an Indian Tribe with respect to any claim relating to 
property or natural resources held in trust for the Indian Tribe by the 
United States. Lenders holding mortgages or security interests on 
property affected by the Hermit's Peak/Calf Canyon Fire and lien 
holders are not an ``Injured Person'' for purposes of the Act.
    Injury means ``injury or loss of property, or personal injury or 
death,'' as used in the Federal Tort Claims Act, 28 U.S.C. 1346(b)(1).
    Notice of Loss means a form supplied by the Claims Office through 
which an Injured Person or Subrogee makes a claim for possible 
compensation under the Act.
    Proof of Loss means a statement attesting to the nature and extent 
of the claimant's injuries.
    Public Assistance Program means the FEMA program established under

[[Page 68099]]

Subchapter IV of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, as amended, 42 U.S.C. 5121, et seq., which provides 
grants to States, local governments, Indian Tribes and private 
nonprofit organizations for emergency measures and repair, restoration, 
and replacement of damaged facilities.
    Release and Certification Form means a document in the manner 
prescribed by section 104(e) of the Act that all claimants who have 
received or are awarded compensatory damages under the Act must execute 
and return to the Claims Office as required by Sec.  296.30(c).
    Subsistence Resources means food and other items obtained through 
hunting, fishing, firewood gathering, timbering, grazing or 
agricultural activities undertaken by the claimant without financial 
remuneration, on land damaged by the Hermit's Peak/Calf Canyon Fire.
    Subrogee means an insurer or other third party that has paid to a 
claimant compensation for Injury and is subrogated to any right that 
the claimant has to receive payment under the Act.
    Tribal Member means an enrolled member of an Indian Tribe.


Sec.  296.5   Overview of the claims process.

    (a) The Act is intended to provide persons who suffered Injury from 
the Hermit's Peak/Calf Canyon Fire with a simple, expedited process to 
seek compensation from the United States. This section provides a brief 
explanation of the claims process for claims other than subrogation 
claims. It is not intended to supersede the more specific regulations 
that follow and explain the claims process in greater detail. To obtain 
compensation under the Act, an Injured Person must submit all Hermit's 
Peak/Calf Canyon Fire related claims against the United States or any 
employee, officer, or agency of the United States to the FEMA Claims 
Office. An Injured Person who elects to accept an award under the Act 
is barred from accepting an award pursuant to a claim under the Federal 
Tort Claims Act or a civil action against the United States or any 
employee, officer, or agency of the United States arising out of or 
relating to the same subject matter. Judicial review of FEMA decisions 
under the Act is available.
    (b) The first step in the process is to file a Notice of Loss with 
the Claims Office. The Claims Office will provide the claimant with a 
written acknowledgement that the claim has been filed and a claim 
number.
    (c) Shortly thereafter, a Claims Reviewer will contact the claimant 
to review the claim. Claims Reviewer will help the claimant formulate a 
strategy for obtaining any necessary documentation or other support. 
This assistance does not relieve the claimant of their responsibility 
for establishing all elements of the injuries and the compensatory 
damages that are sought, including that the Hermit's Peak/Calf Canyon 
Fire caused the injuries. After the claimant has had an opportunity to 
discuss the claim with the Claims Reviewer, a Proof of Loss will be 
presented to the claimant for signature. After any necessary 
documentation has been obtained and the claim has been fully evaluated, 
the Claims Reviewer will submit a report to the Authorized Official. 
The Claims Reviewer is responsible for providing an objective 
evaluation of the claim to the Authorized Official.
    (d) The Authorized Official will review the report and determine 
whether compensation is due to the claimant. The claimant will be 
notified in writing of the Authorized Official's determination. If the 
claimant is satisfied with the decision, payment will be made after the 
claimant returns a completed Release and Certification Form. If the 
claimant is dissatisfied with the Authorized Official's determination, 
an administrative appeal may be filed with the Director of the Claims 
Office. If the claimant remains dissatisfied after the appeal is 
decided, the dispute may be resolved through binding arbitration or 
heard in the United States District Court for the District of New 
Mexico.

Subpart B--Bringing a Claim Under the Hermit's Peak/Calf Canyon 
Fire Assistance Act


Sec.  296.10   Filing a claim under the Hermit's Peak/Calf Canyon Fire 
Assistance Act.

    (a) Any Injured Person may bring a claim under the Act by filing a 
Notice of Loss. A claim submitted on any form other than a Notice of 
Loss will not be accepted. The claimant must provide a brief 
description of each injury on the Notice of Loss.
    (b) A single Notice of Loss may be submitted on behalf of a 
household containing Injured Persons provided that all Injured Persons 
on whose behalf the claim is presented are identified.
    (c) The Notice of Loss must be signed by each claimant, if the 
claimant is an individual, or by a duly authorized legal representative 
of each claimant, if the claimant is an entity or an individual who 
lacks the legal capacity to sign the Notice of Loss. If one is signing 
a Notice of Loss as the legal representative of a claimant, the signer 
must disclose their relationship to the claimant. FEMA may require a 
legal representative to submit evidence of their authority to act.
    (d) The Claims Office will provide Notice of Loss forms through the 
mail, electronically, in person at the Claims Office or by telephone 
request. The Notice of Loss form can also be downloaded from the 
internet at https://www.fema.gov/hermits-peak.
    (e) A Notice of Loss may be filed with the Claims Office by mail, 
electronically, or in person. Details regarding the filing process can 
be found at https://www.fema.gov/hermits-peak.
    (f) A Notice of Loss that is completed and properly signed is 
deemed to be filed on the date it is received and acknowledged by the 
Claims Office.


Sec.  296.11   Deadline for notifying FEMA of injuries.

    The deadline for filing a Notice of Loss is November 14, 2024. 
Except as provided in Sec.  296.35 with respect to a request to reopen 
a claim, an injury that has not been described: on a Notice of Loss, on 
a supplement to a Notice of Loss or a request to supplement a Notice of 
Loss under Sec.  296.34 received by the Claims Office on or before 
November 14, 2024 cannot be compensated under the Act. The Act 
establishes this deadline and does not provide any extensions of the 
filing deadline.


Sec.  296.12   Election of remedies.

    (a) An Injured Person who accepts an award under the Act waives the 
right to pursue all claims for injuries arising out of or relating to 
the same subject matter against the United States or any employee, 
officer, or agency of the United States through the Federal Tort Claims 
Act or a civil action authorized by any other provision of law.
    (b) An Injured Person who accepts an award through a Federal Tort 
Claims Act claim or a civil action against the United States or any 
employee, officer, or agency of the United States relating to the 
Hermit's Peak/Calf Canyon Fire waives the right to pursue any claim 
arising out of or relating to the same subject matter under the Act.


Sec.  296.13   Subrogation.

    An insurer or other third party with the rights of a subrogee, who 
has compensated an injured person for Hermit's Peak/Calf Canyon Fire 
related injuries, may file a Notice of Loss under the Act for the 
subrogated claim. A subrogee may file a Notice of Loss without regard 
to whether the Injured Person who received payment from the subrogee 
filed a Notice of Loss. A Subrogation Notice of Loss should be filed 
after the subrogee has made all

[[Page 68100]]

payments that it believes the Injured Person is entitled to receive for 
Hermit's Peak/Calf Canyon Fire related injuries under the terms of the 
insurance policy or other agreement between the subrogee and the 
Injured Person, but not later than November 14, 2024. By filing a 
Notice of Loss for any subrogated claim, the subrogee elects the Act as 
its exclusive remedy against the United States or any employee, 
officer, or agency of the United States for all subrogated claims 
arising out of the Hermit's Peak/Calf Canyon Fire. Subrogation claims 
must be made on a Notice of Loss form furnished by the Claims Office.


Sec.  296.14   Assignments.

    Assignment of claims and the right to receive compensation for 
claims under the Act is prohibited and will not be recognized by FEMA.

Subpart C--Compensation Available Under the Hermit's Peak/Calf 
Canyon Fire Assistance Act


Sec.  296.20   Prerequisite to compensation.

    In order to receive compensation under the Act, a claimant must be 
an Injured Person who suffered an injury as a result of the Hermit's 
Peak/Calf Canyon Fire and sustained damages.


Sec.  296.21   Allowable damages.

    (a) Allowable damages. The Act provides for the payment of actual 
compensatory damages for Injury or loss of property, business loss, and 
financial loss. The laws of the State of New Mexico will apply to the 
calculation of damages. Damages must be reasonable in amount.
    (b) Exclusions. Punitive damages, statutory damages under section 
30-32-4 of the New Mexico Statutes Annotated (2019), interest on 
claims, attorney's fees and agents' fees incurred in prosecuting a 
claim under the Act or an insurance policy, and adjusting costs 
incurred by an insurer or other third party with the rights of a 
subrogee that may be owed by a claimant as a consequence of receiving 
an award are not recoverable from FEMA. The cost to a claimant of 
prosecuting a claim under the Act does not constitute compensatory 
damages and is not recoverable from FEMA, except as provided in Sec.  
296.31(b).
    (c) Loss of property. Compensatory damages may be awarded for an 
uninsured or underinsured property loss, a decrease in the value of 
real property, damage to physical infrastructure, cost resulting from 
lost subsistence, cost of reforestation or revegetation not covered by 
any other Federal program, and any other loss that the Administrator 
determines to be appropriate for inclusion as a loss of property.
    (1) Real property and contents. Compensatory damages for the damage 
or destruction of real property and its contents may include the 
reasonable cost of reconstruction of a structure comparable in design, 
construction materials, size, and improvements, taking into account 
post-fire construction costs in the community in which the structure 
existed before the fire and current building codes and standards. 
Compensatory damages may also include the cost of removing debris and 
burned trees, including hazardous materials or soils, stabilizing the 
land, replacing contents, and compensation for any decrease in the 
value of land on which the structure sat pursuant to paragraph (c)(3) 
of this section.
    (2) Reforestation and revegetation. Compensation for the 
replacement of destroyed trees and other landscaping will not exceed 25 
percent of the pre-fire value of the structure and lot.
    (3) Decrease in the value of real property. Compensatory damages 
may be awarded for a decrease in the value of real property that a 
claimant owned before the Hermit's Peak/Calf Canyon Fire if:
    (i) The claimant sells the real property in a good faith, arm's 
length transaction that is closed no later than November 14, 2024 and 
realizes a loss in the pre-fire value; or
    (ii) The claimant can establish that the value of the real property 
was permanently diminished as a result of the Hermit's Peak/Calf Canyon 
Fire.
    (4) Subsistence. Compensatory damages will be awarded for lost 
Subsistence Resources.
    (i) FEMA may reimburse an injured party for the reasonable cost of 
replacing Subsistence Resources customarily and traditionally used by 
the claimant on or before April 6, 2022, but no longer available to the 
claimant as a result of the Hermit's Peak/Calf Canyon Fire. For each 
category of Subsistence Resources, the claimant must elect to receive 
compensatory damages either for the increased cost of obtaining 
Subsistence Resources from lands not damaged by the Hermit's Peak/Calf 
Canyon Fire or for the cost of procuring substitute resources in the 
cash economy.
    (ii) FEMA may consider evidence submitted by claimants, Indian 
Tribes, and other knowledgeable sources in determining the nature and 
extent of a claimant's subsistence uses.
    (iii) Compensatory damages for subsistence losses will be paid for 
the period between April 6, 2022 and the date when Subsistence 
Resources can reasonably be expected to return to the level of 
availability that existed before the Hermit's Peak/Calf Canyon Fire. 
FEMA may rely upon the advice of experts in making this determination.
    (iv) Long-term damage awards for subsistence resources will be made 
to claimants in the form of lump sum cash payments.
    (d) Business loss. Compensatory damages may be awarded for damage 
to tangible assets or inventory, including timber, crops, and other 
natural resources; business interruption losses; overhead costs; 
employee wages for work not performed; loss of business net income; and 
any other loss that the Administrator determines to be appropriate for 
inclusion as a business loss.
    (e) Financial loss. Compensatory damages may be awarded for 
increased mortgage interest costs, insurance deductibles, temporary 
living or relocation expenses, lost wages or personal income, emergency 
staffing expenses, debris removal and other cleanup costs, costs of 
reasonable heightened risk reduction, premiums for flood insurance, and 
any other loss that the Administrator determines to be appropriate for 
inclusion as financial loss.
    (1) Recovery loans. FEMA will reimburse claimants awarded 
compensation under the Act for interest paid on loans, including Small 
Business Administration disaster loans obtained after April 6, 2022 for 
damages resulting from the Fire. Interest will be reimbursed for the 
period beginning on the date that the loan was taken out and ending on 
the date when the claimant receives a compensation award (other than a 
partial payment). Claimants are required to use the proceeds of their 
compensation award to repay Small Business Administration disaster 
loans. FEMA will cooperate with the Small Business Administration to 
formulate procedures for assuring that claimants repay Small Business 
Administration disaster loans contemporaneously with the receipt of 
their compensation award.
    (2) Flood insurance. FEMA will reimburse claimants for flood 
insurance premiums to be paid on or before May 31, 2024 if, as a result 
of the Hermit's Peak/Calf Canyon Fire, a claimant who was not required 
to purchase flood insurance before the Hermit's Peak/Calf Canyon Fire 
is required to purchase flood insurance or the claimant did not 
maintain flood insurance before the Fire but purchased flood insurance 
after the Fire due to fear of heightened flood risk. Alternatively, 
FEMA may provide flood

[[Page 68101]]

insurance to such claimants directly through a group or blanket policy.
    (3) Out of pocket expenses for treatment of mental health 
conditions. FEMA may reimburse an individual claimant for reasonable 
out of pocket expenses incurred for treatment of a mental health 
condition rendered by a licensed mental health professional, which 
condition resulted from the Hermit's Peak/Calf Canyon Fire. FEMA will 
not reimburse for treatment rendered after April 6, 2024.
    (4) Donations. FEMA will compensate claimants for the cost of 
merchandise, use of equipment or other non-personal services, directly 
or indirectly donated to survivors of the Hermit's Peak/Calf Canyon 
Fire not later than September 20, 2022. Donations will be valued at 
cost.
    (5) Heightened Risk Reduction. FEMA will reimburse claimants for 
the costs incurred to implement reasonable measures necessary to reduce 
risks from natural hazards heightened by the Hermit's Peak/Calf Canyon 
Fire to the level of risk prevailing before the Hermit's Peak/Calf 
Canyon Fire. Such measures may include, for example, risk reduction 
projects that reduce an increased risk from flooding, mudslides, and 
landslides in and around burn scars. Compensation under this section 
may not exceed 25 percent of the higher of payments from all sources 
(i.e., the Act, insurance proceeds, FEMA assistance under the Stafford 
Act) for damage to the structure and lot, or the pre-fire value of the 
structure and lot. Claimants seeking compensation for heightened risk 
reduction must include the claim in their Notice of Loss by November 
14, 2024 or an amended Notice of Loss filed no later than November 14, 
2025. Claimants should take into account current building codes and 
standards and must complete the risk reduction project for which they 
receive compensation.
    (f) Insurance and other benefits. The Act allows FEMA to compensate 
Injured Persons only for damages not paid, or will not be paid, by 
insurance or other third-party payments or settlements.
    (1) Insurance. Claimants who carry insurance will be required to 
disclose the name of the insurer(s) and the nature of the insurance and 
provide the Claims Office with such insurance documentation as the 
Claims Office reasonably requests.
    (2) Coordination with FEMA's Public Assistance Program. Injured 
Persons eligible for disaster assistance under FEMA's Public Assistance 
Program are expected to apply for all available assistance. Pursuant to 
the Act, the Federal share of the costs for Public Assistance projects 
is 100 percent. Compensation will not be awarded under the Act for 
injuries or costs that are eligible under the Public Assistance 
Program.
    (3) Benefits provided by FEMA's Individual Assistance program. 
Compensation under the Act will not be awarded for injuries or costs 
that have been reimbursed under the Federal Assistance to Individual 
and Households Program or any other FEMA Individual Assistance Program.
    (4) Worker's compensation claims. Individuals who have suffered 
injuries that are compensable under State or Federal worker's 
compensation laws must apply for all benefits available under such 
laws.
    (5) Benefits provided by non-governmental organizations and 
individuals. Gifts or donations made to a claimant by a non-
governmental organization or an individual, other than wages paid by 
the claimant's employer or insurance payments, will be disregarded in 
evaluating claims and need not be disclosed to the Claims Office by 
claimants.

Subpart D--Claims Evaluation


Sec.  296.30   Establishing injuries and damages.

    (a) Burden of proof. The burden of proving injuries and damages 
rests with the claimant. A claimant may submit for the Administrative 
Record a statement explaining why the claimant believes that the 
injuries and damages are compensable and any documentary evidence 
supporting the claim. Claimants will provide documentation, which is 
reasonably available, including photographs and video, to corroborate 
the nature, extent, and value of their injuries and/or to execute 
affidavits in a form established by the Claims Office. FEMA may 
compensate a claimant for an injury in the absence of supporting 
documentation, in its discretion, on the strength of an affidavit or 
Proof of Loss executed by the claimant, if documentary evidence 
substantiating the injury is not reasonably available. FEMA may also 
require an inspection of real property. FEMA may request that a 
business claimant execute an affidavit, which states that the claimant 
will provide documentary evidence, including but not limited to income 
tax returns, if requested by the DHS Office of the Inspector General or 
the Government Accountability Office during an audit of the claim.
    (b) Proof of Loss. All claimants are required to attest to the 
nature and extent of each injury for which compensation is sought in 
the Proof of Loss. The Proof of Loss, which will be in a form specified 
by the Claims Office, must be signed by the claimant or the claimant's 
legal representative if the claimant is not an individual or is an 
individual who lacks the legal capacity to execute the Proof of Loss. 
The Proof of Loss must be signed under penalty of perjury. Non-
subrogation claimants should submit a signed Proof of Loss to the 
Claims Office not later than 150 days after the date when the Notice of 
Loss was submitted. This deadline may be extended at the discretion of 
the Director of the Claims Office for good cause. If a non-subrogation 
claimant fails to submit a signed Proof of Loss within the timeframes 
set forth in this section and does not obtain an extension from the 
Director of the Claims Office, the Claims Office may administratively 
close the claim and require the claimant to repay any partial payments 
made on the claim. Subrogation claimants will submit the Proof of Loss 
contemporaneously with filing the Notice of Loss.
    (c) Release and Certification Form. All claimants who receive 
compensation under the Act are required to sign a Release and 
Certification Form, including for partial payments under Sec.  296.33. 
The Release and Certification Form must be executed by the claimant or 
the claimant's legal representative if the claimant is an entity or 
lacks the legal capacity to execute the Release and Certification Form. 
A Release and Certification Form must be received by the Claims Office 
before the Claims Office provides payment on the claim. The United 
States will not attempt to recover compensatory damages paid to a 
claimant who has executed and returned a Release and Certification Form 
within the periods provided above, except in the case of fraud or 
misrepresentation by the claimant or the claimant's representative, 
failure of the claimant to cooperate with an audit as required by Sec.  
296.36 or a material mistake by FEMA.
    (d) Authority to settle or compromise claims. Notwithstanding any 
other provision of this part, the Director of the Claims Office may 
extend an offer to settle or compromise a claim or any portion of a 
claim at any time during the process outlined in this part, which if 
accepted by the claimant will be binding on the claimant and on the 
United States, except that the United States may recover funds 
improperly paid to a claimant due to fraud or misrepresentation on the 
part of the claimant or the claimant's representative, a material 
mistake on FEMA's part or the claimant's failure to

[[Page 68102]]

cooperate in an audit as required by Sec.  296.36.


Sec.  296.31   Reimbursement of claim expenses.

    (a) FEMA will reimburse claimants for the reasonable costs they 
incur in providing documentation requested by the Claims Office. FEMA 
will also reimburse claimants for the reasonable costs they incur in 
providing appraisals, or other third-party opinions, requested by the 
Claims Office. FEMA will not reimburse claimants for the cost of 
appraisals or other third-party opinions not requested by the Claims 
Office.
    (b) FEMA will provide a lump sum payment for incidental expenses 
incurred in claims preparation to claimants that are awarded 
compensatory damages under the Act after a properly executed Release 
and Certification Form has been returned to the Claims Office. The 
amount of the lump sum payment will be the greater of $150 or 5% of the 
Act's compensatory damages and insurance proceeds recovered by the 
claimant for Hermit's Peak/Calf Canyon Fire related injuries (not 
including the lump sum payment or monies reimbursed under the Act for 
the purchase of flood insurance) but will not exceed $25,000. 
Subrogation claimants and claimants whose only Hermit's Peak/Calf 
Canyon Fire related loss is for flood insurance premiums will not be 
eligible.


Sec.  296.32   Determination of compensation due to claimant.

    (a) Authorized Official's report. After the Claims Office has 
evaluated all elements of a claim as stated in the Proof of Loss, the 
Authorized Official will issue, and provide the claimant with a copy 
of, the Authorized Official's determination.
    (b) Claimant's options upon issuance of the Authorized Official's 
determination. Not later than 120 days after the date that appears on 
the Authorized Official's determination, the claimant must either 
accept the determination by submitting a Release and Certification Form 
to FEMA and/or initiate an Administrative Appeal in accordance with 
Sec.  296.41. Claimants must sign the Release and Certification Form to 
receive payment on their claims (including for partial payments). The 
claimant will receive payment of compensation awarded by the Authorized 
Official after FEMA receives the completed Release and Certification 
Form. If the claimant does not either submit a Release and 
Certification Form to FEMA or initiate an Administrative Appeal no 
later than 120 days after the date that appears on the Authorized 
Official's determination, the claimant will be conclusively presumed to 
have accepted the Authorized Official's determination. The Director of 
the Claims Office may modify the deadlines set forth in this subsection 
at the request of a claimant for good cause shown.


Sec.  296.33   Partial payments.

    The Claims Office at the request of a claimant may make one or more 
partial payments on any aspect of a claim that is severable. Receipt by 
a claimant of a partial payment is contingent on the claimant signing a 
Release and Certification Form for the severable part of the claim for 
which partial payment is being made. Acceptance of a partial payment in 
no way affects a claimant's ability to pursue an Administrative Appeal 
of the Authorized Official's determination or to pursue other rights 
afforded by the Act with respect to any portion of a claim for which a 
Release and Certification Form has not been executed. The Claims Office 
decision on whether to provide a partial payment cannot be appealed.


Sec.  296.34   Supplementing claims.

    A claimant may amend the Notice of Loss to include additional 
claims at any time before signing a Proof of Loss. After the claimant 
has submitted a Proof of Loss and before submission of a Release and 
Certification Form, a claimant may request that the Director of the 
Claims Office consider one or more injuries not addressed in the Proof 
of Loss. The request must be submitted in writing to the Director of 
the Claims Office and received not later than the deadline for filing 
an Administrative Appeal under Sec.  296.32 or November 14, 2024, 
whichever is earlier. It must be supported by the claimant's 
explanation of why the injury was not previously reported. If good 
cause is found to consider the additional injury, the Director will 
determine whether compensation is due to the claimant for the Loss 
under the Administrative Appeal procedures described in Sec.  296.41.


Sec.  296.35   Reopening a claim.

    The Director of the Claims Office may reopen a claim if requested 
to do so by the claimant, notwithstanding the submission of the Release 
and Certification Form, for the limited purpose of considering issues 
raised by the request to reopen if, not later than November 14, 2025, 
the claimant desires heightened risk reduction compensation in 
accordance with Sec.  296.21(e)(5); the claimant closed the sale of a 
home and wishes to present a claim for decrease in the value of the 
real property under Sec.  296.21(c)(3); the claimant has incurred 
additional losses under Sec.  296.21(c)(1) as part of a reconstruction 
in excess of those previously awarded; or the Director of the Claims 
Office otherwise determines that claimant has demonstrated good cause.


Sec.  296.36   Access to records.

    For purpose of audit and investigation, a claimant will grant the 
DHS Office of the Inspector General and the Comptroller General of the 
United States access to any property that is the subject of a claim and 
to any and all books, documents, papers, and records (including any 
relevant tax records) maintained by a claimant or under the claimant's 
control pertaining or relevant to the claim.


Sec.  296.37   Confidentiality of information.

    Confidential information submitted by individual claimants is 
protected from disclosure to the extent permitted by the Privacy Act. 
These protections are described in the Privacy Act Notice provided with 
the Notice of Loss. Other claimants should consult with FEMA concerning 
the availability of confidentiality protection under exemptions to the 
Freedom of Information Act and other applicable laws before submitting 
confidential, proprietary or trade secret information.

Subpart E--Dispute Resolution


Sec.  296.40   Scope.

    This subpart describes a claimant's right to bring an 
Administrative Appeal in response to the Authorized Official's 
Determination. It also describes the claimant's right to pursue 
arbitration or seek judicial review following an Administrative Appeal.


Sec.  296.41   Administrative appeal.

    (a) Notice of appeal. A claimant may request that the Director of 
the Claims Office review the Authorized Official's determination by 
written request to the Appeals Docket, Office of Hermit's Peak/Calf 
Canyon Claims, postmarked or delivered within 120 days after the date 
that appears on the Authorized Official's determination pursuant to 
Sec.  296.32. The claimant will submit along with the notice of appeal 
a statement explaining why the Authorized Official's determination was 
incorrect. Information regarding where to file can be found at https://www.fema.gov/hermits-peak.
    (b) Acknowledgement of appeal. The Claims Office will acknowledge 
receipt of an appeal. Following the receipt of a timely filed appeal, 
the Director of the Claims Office will obtain the Administrative Record 
from the

[[Page 68103]]

Authorized Official and transmit a copy to the claimant.
    (c) Supplemental filings. The claimant may supplement their 
statement accompanying the appeal and provide any additional 
documentary evidence supporting the appeal within 60 days after the 
date when the appeal is filed. The Director of the Claims Office may 
extend these timeframes or authorize additional filings either on their 
own initiative or in response to a request by the claimant for good 
cause shown.
    (d) Admissible evidence. The claimant may rely upon any relevant 
evidence to support the appeal, regardless of whether the evidence was 
previously submitted to the Claims Reviewer for consideration by the 
Authorized Official.
    (e) Obtaining evidence. The Director of the Claims Office may 
request from the claimant or from the Authorized Official any 
additional information that is relevant to the issues posed by the 
appeal in their discretion.
    (f) Conferences. The Director of the Claims Office may schedule a 
conference to gain a better understanding of the issues or to explore 
settlement or compromise possibilities. The claimant may also request a 
conference. Conferences will generally be conducted virtually. In 
limited circumstances, the Director may convene an in-person conference 
at a location in New Mexico designated by the Director. A claimant may 
request that the Director of the Claims Office appoint a mediator at 
FEMA's expense to facilitate such conferences.
    (g) Hearings. The Director of the Claims Office may exercise the 
discretion to convene an informal hearing to receive oral testimony 
from witnesses or experts. The rules under which hearings will be 
conducted will be established by the Director of the Claims Office and 
provided to the claimant. Formal rules of evidence applicable to court 
proceedings will not be used in hearings under this subsection. 
Hearings will generally be conducted virtually, be transcribed, and the 
transcript will be entered in the Administrative Record. In limited 
circumstances, the Director may convene an in-person hearing at a 
location in New Mexico designated by the Director.
    (h) Decision on appeal. After the allotted time for submission of 
evidence has passed, the Director of the Claims Office will close the 
Administrative Record and render a written decision on the 
Administrative Appeal. The Director of the Claims Office's decision on 
the Administrative Appeal will constitute the final decision of the 
Administrator of FEMA under sections 104(d)(2)(B) and 104(i)(1) of the 
Act.
    (i) Claimant's options following appeal. The claimant's concurrence 
with the decision in the Administrative Appeal will be conclusively 
presumed unless the claimant initiates arbitration in accordance with 
Sec.  296.42 or seeks judicial review in accordance with Sec.  296.43. 
If the claimant concurs with the Director's determination, payment of 
any additional damages awarded by the Director will be made to the 
claimant upon receipt of a properly executed Release and Certification 
Form.


Sec.  296.42   Arbitration.

    (a) Initiating arbitration. A claimant who is dissatisfied with the 
outcome of the Administrative Appeal may elect to submit the dispute to 
a binding arbitration process. A claimant may initiate arbitration by 
submitting a written request to the Arbitration Administrator for 
Hermit's Peak/Calf Canyon Claims. Additional information regarding how 
to submit a written arbitration request can be found at https://www.fema.gov/hermits-peak. The written request for arbitration must be 
electronically stamped or postmarked no later than 60 days after the 
date that appears on the Administrative Appeal decision.
    (b) Permissible claims. A claimant may not arbitrate an issue 
unless it was raised and decided in the Administrative Appeal. 
Arbitration will be conducted on the evidence in the Administrative 
Record. Evidence not previously entered into the Administrative Record 
will not be considered.
    (c) Selection of arbitrator. The Arbitration Administrator will 
maintain a list of qualified arbitrators who have agreed to serve. The 
arbitration will be decided by one arbitrator if the amount in dispute 
is $500,000 or less and a panel of three arbitrators if the amount in 
dispute exceeds $500,000. Arbitrators will be assigned by the 
Arbitration Administrator through a random drawing.
    (d) Conduct of arbitration. Pursuant to guidelines from the 
Arbitration Administrator, which will be provided directly to claimants 
who have filed a request for arbitration, the arbitration process will 
include an arbitration hearing with consideration of the claimant's 
written request for arbitration, the Administrative Record, and oral 
testimony. Hearings will generally be conducted virtually. In limited 
circumstances, the arbitrator may convene an in-person hearing at a 
location in New Mexico designated by the Arbitration Administrator.
    (e) Decision. After a hearing and reviewing the evidence, the 
arbitrator(s) will render a written decision and will transmit the 
decision to the Arbitration Administrator, the claimant, and the 
Director of the Claims Office. If a panel of three arbitrators conducts 
the arbitration, at least two of the three arbitrators must sign the 
decision. The arbitrator(s) should render a decision no later than 10 
Days after a hearing is concluded. The Arbitration Administrator may 
extend the time for a decision with notice to the claimant and the 
Director of the Claims Office. The decision will establish the 
compensation due to the claimant, if any, and the reasons therefor.
    (f) Action on arbitration decision. The Arbitration Administrator 
will forward the arbitration decision to the claimant and, if 
additional compensation is awarded to the claimant, a Release and 
Certification Form. Additional compensation awarded in the arbitration 
will be paid to the claimant after the signed Release and Certification 
Form is received by the Arbitration Administrator.
    (g) Final decision. The decision of the arbitrator(s) will be final 
and binding on all parties and will not be subject to any 
administrative or judicial review. The arbitrator(s) may correct 
clerical, typographical or computational errors as requested by the 
Arbitration Administrator.
    (h) Administration of arbitration. The Arbitration Administrator 
oversees arbitration procedures and will resolve any procedural 
disputes arising in the course of the arbitration.
    (i) Expenses. The Arbitration Administrator will pay all fees and 
expenses of the arbitrator(s). The claimant is responsible for any 
expenses they incur, including travel costs.


Sec.  296.43   Judicial review.

    As an alternative to arbitration, a claimant dissatisfied with the 
outcome of an Administrative Appeal may seek judicial review of the 
decision by bringing a civil lawsuit against FEMA in the United States 
District Court for the District of New Mexico. This lawsuit must be 
brought within 60 Days of the date that appears on the Administrative 
Appeal decision. Pursuant to section 104(i) of the Act, the court may 
only consider evidence in the Administrative Record. The court will 
uphold FEMA's decision if it is supported by substantial

[[Page 68104]]

evidence on the record considered as a whole.

Deanne Criswell,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2022-24728 Filed 11-10-22; 8:45 am]
BILLING CODE 9111-68-P