Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations

Agency decision

Ask Donna

What actually matters in this document.

Text

DEPARTMENT OF HOMELAND

SECURITY

Federal Emergency Management

Agency

44 CFR Part 206

[Docket ID FEMA–2009–0006]

RIN 1660–AA63

Arbitration for Public Assistance

Determinations Related to Hurricanes

Katrina and Rita (Disasters DR–1603,

DR–1604, DR–1605, DR–1606, and DR–

1607)

AGENCY: Federal Emergency

Management Agency, DHS.

ACTION: Final rule.

SUMMARY: Pursuant to the American

Recovery and Reinvestment Act of 2009

(ARRA), this final rule establishes an

option for arbitration under the Public

Assistance program administered by the

Federal Emergency Management

Agency. Public Assistance grant award

determinations related to Hurricanes

Katrina and Rita under major disaster

declarations DR–1603, DR–1604, DR–

1605, DR–1606, and DR–1607 are

eligible for arbitration, within the limits

set by this rule.

DATES: Effective Date: August 31, 2009.

FOR FURTHER INFORMATION CONTACT: Tod

Wells, Deputy Director, Public

Assistance Division, Federal Emergency

Management Agency, 500 C Street, SW.,

Washington DC, 20472–3100, (phone)

202–646–3936, or (e-mail)

tod.wells@dhs.gov.

SUPPLEMENTARY INFORMATION:

sroberts on DSKD5P82C1PROD with RULES

I. Background

A. Public Assistance Process for Project

Approval

Under the Public Assistance program,

authorized by the Robert T. Stafford

Disaster Relief and Emergency

Assistance Act 1 (Stafford Act), the

Federal Emergency Management Agency

(FEMA) awards grants to State and local

governments, Indian Tribal

governments, and certain private

nonprofit organizations (‘‘eligible

applicant’’—44 CFR 206.222) to assist

them to respond to and recover from

Presidentially-declared emergencies and

major disasters as quickly as possible.

Specifically, the program provides

assistance for debris removal,

emergency protective measures, and

permanent restoration of infrastructure.

When the President declares an

1 Disaster Relief Act of 1974, Public Law 93–288,

88 Stat. 143 (May 22, 1974), as amended, 42 U.S.C.

5121 et seq.

VerDate Nov<24>2008

16:16 Aug 28, 2009

Jkt 217001

emergency or major disaster declaration

for a State, authorizing the Public

Assistance program, an eligible

applicant may apply for Public

Assistance. The applicant submits a

Request for Public Assistance (FEMA

Form 90–49) to FEMA through the

Grantee, which is usually the State, but

may be an Indian Tribal government. An

eligible applicant may be a State agency,

a local or Tribal government, or a

private nonprofit organization. See 44

CFR 206.222. Upon award, the Grantee

notifies the applicant of the award, and

the applicant becomes a subgrantee.

The basis for the Public Assistance

grant is a project worksheet. The project

worksheet documents the details of the

project, which is a logical grouping of

work required as a result of a declared

major disaster or emergency. A project

may include eligible work at several

sites, and may include more than one

project worksheet. A project worksheet

is the primary form used to document

the location, damage description and

dimensions, scope of work, and cost

estimate for each project. The Office of

Management and Budget has approved

the project worksheet form (FEMA Form

90–91) under information collection

number 1660–0017. When the scope of

work or estimated costs of a project

change, FEMA generates an additional

version of the project worksheet. It is

not uncommon to have several versions

of a project worksheet for one project, as

it may be difficult to predict costs and

scope of work at the beginning of a

project.

FEMA divides applications for Public

Assistance into two groups—large

projects and small projects—based on

the dollar amount of the project. The

threshold for large and small projects is

adjusted annually to reflect changes in

the Consumer Price Index for All Urban

Consumers published by the United

States Department of Labor. The

threshold for small projects in Fiscal

Year 2005 (Hurricanes Katrina and Rita

occurred in Fiscal Year 2005) was

$55,500. The project worksheet process

is slightly different for these two types

of projects. Since the arbitration process

applies only to large projects totaling

more than $500,000, this rulemaking

will address the process for reviewing

project worksheets for large projects.

Project worksheets for large projects

are developed by a FEMA Project

Specialist, working with the applicant/

subgrantee, and are submitted directly

to a FEMA Public Assistance

Coordinator (PAC) Crew Leader for

review and processing. Although large

projects are funded on documented

actual costs, work typically is not

complete at the time of project approval.

PO 00000

Frm 00035

Fmt 4700

Sfmt 4700

44761

Therefore, FEMA obligates large project

grants based on estimated costs. The

obligation process is the process by

which funds are made available to the

Grantee. The funds reside in a Federal

account until drawn down by the

Grantee and paid to the applicant/

subgrantee. When the applicant/

subgrantee or Grantee disagree with

FEMA’s determination about whether a

cost is eligible for reimbursement or

reasonable, among other project

worksheet determinations, FEMA

provides an appeals process to

adjudicate such disputes.

B. Public Assistance Appeal Process

Under 44 CFR 206.206

Traditionally, under the appeals

procedures in 44 CFR 206.206, an

eligible applicant, subgrantee, or

Grantee may appeal any determination

made by FEMA related to an application

for or the provision of Public

Assistance. There are two levels of

appeal. The first level appeal is to the

FEMA Regional Administrator. The

second level appeal is to the FEMA

Assistant Administrator for the Disaster

Assistance Directorate. Typical appeals

involve disputes regarding whether an

applicant, facility, item of work, or

project is eligible for Public Assistance,

whether approved costs are sufficient to

complete the work, whether a requested

time extension was properly denied,

whether a portion of the cost claimed

for the work is eligible, or whether the

approved scope of work is correct.

An applicant/subgrantee appellant

must file an appeal with the Grantee

within 60 days of the appellant’s receipt

of a notice of the determination that is

being appealed. The appellant must

provide documented justification to

support the position of the appellant.

This documentation should specify the

monetary amount in dispute and the

provisions in Federal law, regulation, or

policy with which the appellant

believes the initial action was

inconsistent. The Grantee reviews and

evaluates the appeal documentation.

The Grantee then prepares a written

recommendation on the merits of the

appeal and forwards that

recommendation to the FEMA Regional

Administrator within 60 days of its

receipt of the appeal. The Grantee need

not endorse the appeal position but

must forward all appeals it receives.

The Regional Administrator reviews

the appeal and takes one of two actions:

(1) Renders a decision on the appeal and

informs the Grantee of the decision; or

(2) requests additional information. The

appellant may be granted 60 days to

provide any additional information, and

the Regional Administrator provides a

E:\FR\FM\31AUR1.SGM

31AUR1

44762

Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations

decision on the appeal within 90 days

of receipt of that information. If the

appeal is granted, the Regional

Administrator takes appropriate action,

such as approving additional funding,

denying additional funding, or sending

a Project Specialist to meet with the

appellant to determine additional

eligible funding.

If the Regional Administrator denies

the appeal, the appellant may submit a

second appeal. The appellant must

submit the second appeal to the Grantee

within 60 days of receiving notice of the

Regional Administrator’s decision. The

Grantee must forward the second level

appeal with a written recommendation

to the Regional Administrator within 60

days of receiving the second appeal. The

Regional Administrator reviews the

information provided with the second

appeal and requests additional

information if necessary. The Regional

Administrator forwards the second

appeal with a recommendation for

action to the FEMA Assistant

Administrator as soon as practicable.

The FEMA Assistant Administrator

for the Disaster Assistance Directorate

reviews the second appeal and renders

a decision or requests additional

information from the appellant. In a

case involving highly technical issues,

FEMA may request an independent

scientific or technical analysis by a

group or person having expertise in the

subject matter of the appeal. Upon

receipt of requested information from

the appellant and any other requested

reports, FEMA renders a decision on the

second appeal within 90 days. This

decision constitutes the final

administrative decision of FEMA. See

44 CFR 206.206(e)(3).

sroberts on DSKD5P82C1PROD with RULES

C. The American Recovery and

Reinvestment Act of 2009

The President signed the American

Recovery and Reinvestment Act of 2009

(ARRA or Act), Public Law 111–5, into

law on February 17, 2009. Section 601

of the ARRA requires the President to

establish an arbitration panel under

FEMA’s Public Assistance program to

expedite recovery efforts from

Hurricanes Katrina and Rita within the

Gulf Coast region. The ARRA further

requires the arbitration panel to have

sufficient authority regarding the award

or denial of disputed Public Assistance

applications for covered hurricane

damage under sections 403, 406, or 407

of the Stafford Act. The ARRA limits

arbitration to projects that total more

than $500,000. By memorandum dated

August 6, 2009, the President assigned

to the Secretary of the U.S. Department

of Homeland Security the function of

VerDate Nov<24>2008

16:16 Aug 28, 2009

Jkt 217001

the President under section 601. See 74

FR 40055 (Aug. 10, 2009).

Three states in the Gulf Coast region

have Public Assistance project

worksheets from Hurricane Katrina that

are awaiting an initial determination

from FEMA: Louisiana, Mississippi, and

Alabama. Two states in the Gulf Coast

region have Public Assistance project

worksheets from Hurricane Rita that are

awaiting an initial determination from

FEMA: Louisiana and Texas. Any

funding of these project worksheets

would be under the following major

disaster declarations: DR–1603

(Louisiana—Hurricane Katrina), DR–

1604 (Mississippi—Hurricane Katrina),

DR–1605 (Alabama—Hurricane

Katrina), DR–1606 (Texas—Hurricane

Rita), and DR–1607 (Louisiana—

Hurricane Rita). Approximately 44

appeals are pending from these

declarations. Further, there are

approximately 2,188 Public Assistance

project worksheets from Louisiana and

Mississippi awaiting an initial

determination of eligibility under the

Public Assistance program from FEMA,

which, if disputed, may be appealed.

These project worksheets are at various

stages within the determination process.

For example, some are incomplete and

awaiting further information from the

applicant, some are undergoing site

visits, and some have additional

versions requiring FEMA review.

II. Discussion of the Rule

A. General

This regulation is promulgated

pursuant to section 601 of the ARRA

and establishes arbitration procedures to

resolve outstanding disputes regarding

Public Assistance projects over

$500,000 from the states of Louisiana,

Mississippi, Alabama, and Texas under

the following declarations: DR–1603,

DR–1604, DR–1605, DR–1606, and DR–

1607. Public Assistance applicants/

subgrantees under these declarations

may request arbitration in lieu of filing

an appeal under 44 CFR 206.206 for any

determination made by FEMA that is

eligible for appeal and meets the

$500,000 threshold. As discussed

below, Public Assistance applicants/

subgrantees under these declarations

who were engaged in the FEMA appeals

process as of February 17, 2009, and had

not received a final agency decision

prior to February 17, 2009, may request

arbitration in lieu of the appeal, even if

FEMA issued a final agency decision on

the appeal on or after February 17, 2009.

B. Applicability and Limitations

The purpose of the ARRA is to

expedite recovery efforts from

PO 00000

Frm 00036

Fmt 4700

Sfmt 4700

Hurricanes Katrina and Rita within the

Gulf Coast region. Therefore, the option

for arbitration is limited to Public

Assistance project worksheets filed

under one of the five major disaster

declarations declared for Hurricanes

Katrina and Rita in the Gulf Coast

region. In addition, the total amount of

the Public Assistance project must be

greater than $500,000. This dollar

limitation is set by section 601 of the

ARRA and is not within FEMA’s

discretion.

Arbitration is not an option if an

agency decision became final before

February 17, 2009, the date when

arbitration became a legal option for

Public Assistance applicants under the

ARRA. For those determinations made

prior to February 17, 2009, FEMA has

determined that a final decision will

exist in three instances: (1) When the

applicant/subgrantee did not file an

appeal within the 60-day appeal period;

(2) when the applicant/subgrantee failed

to file for a second appeal within 60

days of denial of its first appeal; or (3)

when FEMA issued an appeal decision

on a second appeal of the applicant/

subgrantee. See 44 CFR 206.206. If there

was a final decision before February 17,

2009, the applicant/subgrantee has

exhausted its administrative remedies

and may not elect arbitration.

The ARRA created the right to

arbitration as of its effective date. If the

applicant/subgrantee is eligible to file

an appeal under 44 CFR 206.206, or if

a first or second level appeal was

pending on or after February 17, 2009,

arbitration remains an option.

Applicants/subgrantees that had a first

or second level appeal pending on or

after February 17, 2009, may choose

arbitration, regardless of whether FEMA

has issued a decision on the appeal

since the effective date of the ARRA.

However, if the applicant/subgrantee

was eligible to appeal after the effective

date of the ARRA, but allowed the

appeal period to expire without filing an

appeal, the applicant/subgrantee is not

eligible to file an appeal and, therefore,

is not eligible for arbitration.

The stated purpose of the ARRA

arbitration provision is to ‘‘expedite’’

recovery efforts. Accordingly, a request

for arbitration is in lieu of filing or

continuing an appeal under 44 CFR

206.206. The use of only one review

procedure, arbitration or appeal, is more

expeditious than two consecutive

review procedures. The use of both

arbitration and the standard appeal

process would lengthen, not expedite,

the recovery process. Arbitration and

appeals each require significant time to

complete, and FEMA has determined

going forward that it would be contrary

E:\FR\FM\31AUR1.SGM

31AUR1

Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations

to Congressional intent to allow

applicants/subgrantees to pursue both

an appeal and arbitration.

sroberts on DSKD5P82C1PROD with RULES

C. Content of Request for Arbitration

and Other Submissions

A request for arbitration must contain

a written statement and all

documentation supporting the

applicant’s or subgrantee’s position. The

applicant/subgrantee may provide

supporting documentation not

previously included in the project

worksheet or the application to FEMA.

There is no limit on the amount of

documentation that may be provided.

The request should include all

information necessary for the arbitration

panel to make an informed decision.

The request should clearly set out the

applicant’s/subgrantee’s position. The

parties are encouraged to describe their

claims in sufficient detail to make the

circumstances of the dispute clear to the

arbitration panel.

Any party may be represented by

counsel or another authorized

representative. If represented, the party

must provide the name and address of

the representative to the other party, the

Grantee, and the arbitration panel.

All papers, notices, or other

documents submitted to the arbitration

panel by the applicant or subgrantee,

the Grantee, or FEMA must be

simultaneously served on each party’s

authorized representative or counsel.

The submitting party must make such

service by courier or overnight delivery

service (such as Federal Express, DHL,

United Parcel Service, or the United

States Postal Service overnight

delivery), addressed to the party,

representative, or counsel, as applicable,

at its last known address.

D. Submission of the Request for

Arbitration

An applicant/subgrantee must submit

a request for arbitration simultaneously

to the Grantee, the applicable FEMA

Regional Administrator, and the

arbitration administrator. FEMA will

post an address, phone number, and fax

number for the arbitration administrator

on FEMA’s Web site at http://

www.fema.gov. Consistent with the

Section B above, any application or

project worksheet totaling more than

$500,000 that is eligible for appeal is

eligible for arbitration.

If there is a first or second level

appeal pending with FEMA, or if FEMA

issued a decision on a first or second

level appeal on or after February 17,

2009, the applicant/subgrantee must

submit the request for arbitration, as

well as a withdrawal of the pending

appeal, if applicable, simultaneously to

VerDate Nov<24>2008

16:16 Aug 28, 2009

Jkt 217001

the Grantee, the applicable FEMA

Regional Administrator, and the

arbitration administrator by October 30,

2009. Otherwise, if the applicant/

subgrantee seeks arbitration, it must

request arbitration in writing to the

Grantee within 30 calendar days after

receipt of notice of the determination

that is the subject of the arbitration

request, or by September 30, 2009,

whichever is later. Issues that may be

arbitrated would be the same as those

that are normally subject to appeal,

provided the total amount of the project

is greater than $500,000. As an example,

a subgrantee could appeal the amount of

the FEMA-approved costs, where the

subgrantee believes the eligible amount

should be greater. Examples of second

appeals can be found at http://

www.fema.gov/appeals/.

E. Submission by the Grantee

Within 15 calendar days of receipt of

the applicant’s or subgrantee’s request

for arbitration, the Grantee may forward

a written recommendation in support or

opposition of the applicant’s or

subgrantee’s request simultaneously to

the FEMA Regional Administrator, the

arbitration administrator, and the

applicant. In addition, the Grantee must

forward the name and address of the

Grantee’s authorized representative or

counsel.

In selecting 15 calendar days, FEMA

is implementing the intent of the ARRA.

The Act specifically requires the

arbitration process to ‘‘expedite’’

recovery efforts from Hurricanes Katrina

and Rita. A 15-calendar-day time limit

is intended to expedite the resolution of

the applicant’s or subgrantee’s dispute.

However, this 15-day time period will

allow sufficient time for the Grantee to

review the request and prepare a

recommendation without delaying the

arbitration process.

F. Submission of FEMA’s Response

Within 30 calendar days of receipt of

the applicant’s or subgrantee’s request,

FEMA will simultaneously submit a

response in support of its position, a

copy of the project worksheet(s), and

any supporting information to the

arbitration administrator, the Grantee,

and the applicant/subgrantee.

G. Selection of Arbitrators

The arbitration panels will be

composed of three judges drawn from

the Federal pool of current and senior

administrative law judges and other

similar officials serving in adjudicative

capacities on boards, commissions and

agencies. Each panel will be selected by

the arbitration administrator. The

individuals assigned to any one panel

PO 00000

Frm 00037

Fmt 4700

Sfmt 4700

44763

may change from case to case, as

assigned by the arbitration

administrator. The arbitration

administrator will notify all parties to

the arbitration of the names and

identities of the arbitrators selected for

the panel.

H. Preliminary Conference

Within 10 business days of the panel’s

receipt of FEMA’s response to the

request for arbitration, a preliminary

conference will be held by telephone

with the arbitrators, the parties and/or

their representatives. The preliminary

conference may address such issues as

the future conduct of the case, including

clarification of the issues and claims,

possible arbitrator disqualification, the

scheduling of hearings and the hearing

location, if applicable, and other

administrative matters.

I. Hearing

The panel will provide the applicant/

subgrantee and FEMA with an

opportunity to make an oral

presentation in person, by telephone

conference, or other means during

which all the parties may

simultaneously hear all other

participants. If the applicant/subgrantee

or FEMA would like to request a

hearing, it must be requested no later

than the preliminary conference. The

panel will determine the hearing

location, and its decision will be final

and binding. The panel will endeavor to

hold the hearing within 60 calendar

days of the preliminary conference,

unless the panel postpones the hearing

upon agreement of the parties, or at the

request of a party for good cause shown.

If the hearing is postponed, the panel

will set a new date within 10 business

days of the postponement.

The parties may not engage in

discovery or provide additional paper

submissions at the hearing. Each party

may present its position through oral

presentations by individuals designated

in advance of the hearing. If the panel

deems it appropriate or necessary, it

may request additional written materials

from either or both parties or seek the

advice or expertise of independent

scientific or technical subject matter

experts, such as engineers and

architects.

J. Review by the Arbitration Panel

In its review, the arbitration panel

will consider all relevant written

materials provided by the parties and

the Grantee. If a hearing is held, the

panel will also consider the oral

presentations made at the hearing. In

addition, the panel may, if it deems

appropriate or necessary, seek the

E:\FR\FM\31AUR1.SGM

31AUR1

44764

Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations

advice or expertise of independent

scientific or technical subject matter

experts, such as engineers or architects.

K. Decision: Time Limits

The panel will make every effort to

issue a written decision within 60

calendar days after the panel declares

the hearing closed, or if an oral

presentation was not requested, within

60 calendar days following the receipt

of FEMA’s response to the request for

arbitration. In general, 60 days is a

reasonable time for a panel to review the

determination, discuss the issues

involved, and issue a decision. It is

shorter than the 90 days allotted for first

and second level appeals under the

appeals process, and in keeping with

the purpose of the arbitration

provision—to expedite the recovery

process.

However, the issues involved in

Public Assistance determinations can be

technical and complex. In cases

involving highly technical and complex

matters, a decision of the panel may

take longer than 60 days. The appeal

regulation allows additional time for

review of an appeal when highly

technical issues are involved. See 44

CFR 206.206(d). Similarly, this

regulation provides for the possibility

that the arbitration panel will not be

able to render a decision within 60 days

on such issues.

L. Finality of Decision

A decision of the majority of the panel

will constitute a final decision, binding

on all parties. Final decisions are not

subject to further administrative review.

Final decisions are not subject to

judicial review, except as permitted by

9 U.S.C. 10.

sroberts on DSKD5P82C1PROD with RULES

M. Ex Parte Communications

No party, and no one acting on behalf

of any party, will have ex parte

communications with an arbitrator. This

means that neither the applicant/

subgrantee, the Grantee, nor FEMA may

communicate with an arbitrator about a

particular arbitration without the

participation of the other parties or their

representatives. If a party engages in an

ex parte communication, the party

engaged in such communication must

provide a summary or a transcript of the

entire communication to the other

parties.

N. Costs

FEMA will pay the fees of the

arbitrators, the costs of any expert

retained by the panel and the arbitration

facility costs, if any. The expenses for

each party, including attorney’s fees,

representative fees, copying costs, costs

VerDate Nov<24>2008

16:16 Aug 28, 2009

Jkt 217001

associated with attending any hearing,

and any other fees not specifically listed

in the regulation must be paid by the

party incurring the expense.

O. Guidance

FEMA will issue separate guidance as

necessary to supplement this regulation.

III. Regulatory Analysis

A. Administrative Procedure Act

The Administrative Procedure Act

(APA) requires an agency to publish a

rule for public comment prior to

implementation. 5 U.S.C. 553. The APA,

however, provides an exception to this

requirement for rules of agency

procedure or practice. 5 U.S.C. 553

(b)(3)(A).

This rule implements section 601 of

the ARRA by detailing how a Public

Assistance applicant or subgrantee may

request arbitration. It is therefore, a

procedural rule; it establishes

procedures for making an arbitration

request and the procedures FEMA will

follow in issuing an arbitration decision.

The rule does not affect eligibility under

the Public Assistance program; rather, it

adds an option for review of Public

Assistance applications to expedite

recovery efforts. FEMA already provides

for review of these determinations

through the appeal provisions of 44 CFR

206.206. This rule simply provides an

alternate procedure for seeking such a

review of FEMA determinations.

Further, because this rule is

procedural in nature and does not

confer any substantive rights, benefits or

obligations, FEMA finds that this rule

shall become effective immediately

upon publication of this final rule in the

Federal Register. 5 U.S.C. 553(d).

B. Executive Order 12866, Regulatory

Planning and Review

Under Executive Order 12866,

regulatory actions are subject to Office

of Management and Budget (OMB)

review and the requirements of the

Executive Order. The Executive Order

defines ‘‘significant regulatory action’’

as one that is likely to result in a rule

that may:

(1) Have an annual effect on the

economy of $100 million or more or

adversely affect in a material way the

economy, a sector of the economy,

productivity, competition, jobs, the

environment, public health or safety, or

State, local, or Tribal governments or

communities;

(2) Create a serious inconsistency or

otherwise interfere with an action taken

or planned by another agency;

(3) Materially alter the budgetary

impact of entitlements, grants, user fees,

PO 00000

Frm 00038

Fmt 4700

Sfmt 4700

or loan programs or the rights and

obligations of recipients thereof; or

(4) Raise novel legal or policy issues

arising out of legal mandates, the

President’s priorities, or the principles

set forth in the Executive Order.

This rule is entirely voluntary.

Applicants are not required to seek

arbitration under the authority and

requirements of this rule. This rule

provides an additional option to

applicants/subgrantees in lieu of appeal.

For those that choose to undergo

arbitration, this rule will result in a total

cost increase of $389,363 to applicants/

subgrantees, and a cost savings of

$4,242 to Grantees. This rule is not an

economically significant regulatory

action as defined in Executive Order

12866. This is not a significant rule

under Executive Order 12866; therefore,

OMB has not reviewed this rule.

Under FEMA’s standard appeal

procedures, an applicant/subgrantee

must file an appeal with documentation

supporting the appeal within 60 days of

the decision that is being appealed. The

Grantee then forwards the request to the

Regional Administrator within 60 days

of receipt, and in doing so may submit

a written recommendation to FEMA.

The Regional Administrator then

reviews the appeal and either makes a

determination or seeks additional

information from the applicant within

90 days.

If the Regional Administrator denies

the appeal, the applicant/subgrantee

may submit a second appeal to the

Grantee within 60 days of the Regional

Administrator’s denial. The Grantee

must forward the second appeal to the

Regional Administrator within 60 days

of receipt. The Regional Administrator

then forwards the second appeal to

FEMA headquarters as soon as possible.

Upon receipt, FEMA headquarters either

requests additional information,

requests independent scientific or

technical analysis from experts, or

makes a determination within 90 days.

Under the arbitration procedures

contained in this rule, an applicant/

subgrantee must submit a request for

arbitration, with documentation

supporting the request, simultaneously

to the Grantee, applicable FEMA

Regional Administrator, and the

arbitration administrator. For those that

do not have a pending appeal with

FEMA, this request is due within 30

days of receipt of notice of the

determination that is the subject of the

arbitration request. If there is an appeal

pending with FEMA, or if FEMA has

issued a decision on a first or second

level appeal on or after February 17,

2009, the request for arbitration with

supporting documentation, and if

E:\FR\FM\31AUR1.SGM

31AUR1

sroberts on DSKD5P82C1PROD with RULES

Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations

applicable, a statement that they

withdraw the pending appeal, must be

sent simultaneously to the Grantee, the

applicable FEMA Regional

Administrator, and the arbitration

administrator by October 30, 2009. The

Grantee may forward a recommendation

to the Regional Administrator and the

arbitration administrator, with a copy to

the applicant, within 15 days of receipt

from the applicant/subgrantee.

Once formed, the panel will conduct

a preliminary conference by telephone,

and if requested, the parties will be

provided a hearing to make an oral

presentation in person, by telephone

conference or other means during which

all the parties may simultaneously hear

all other participants. The location will

be chosen by the panel. The panel may,

if it deems appropriate or necessary,

seek the advice or expertise of

independent scientific or technical

subject matter experts, or request

additional information from the parties.

The panel will then endeavor to issue a

written decision within 60 days after the

hearing or, if there is no hearing, after

receipt of FEMA’s response to the

request for arbitration.

As of July 17, 2009, FEMA had 2,188

project worksheets that had not yet

received an initial determination from

FEMA as well as 44 pending appeals for

disasters DR–1603, DR–1604, DR–1605,

DR–1606, and DR–1607 that are for

projects over $500,000. Adding the 44

existing appeals to the 2,188 projects

which may result in appealable

determinations creates a total of 2,232

potential projects that may be eligible

for arbitration. Not all project

worksheets will have contested

determinations that will result in

arbitration, and not all pending appeals

will be withdrawn in favor of

arbitration. To generate the cost

estimates for this rulemaking, FEMA

used existing data for first appeals.

FEMA receives an average of 364

appeals per year. Conservatively

estimating that 80 percent of those

appeals involve large projects, FEMA

estimates that 291 appeals are

associated with the total 5,008 large

projects obligated by FEMA per year. As

a result, FEMA estimates that 5.81

percent of large projects are appealed

(5.81% = 291/5,008). By applying this

percentage, FEMA estimates that 127

appeals are expected from the 2,188

large projects over $500,000 that have

not yet received an initial determination

from FEMA for disasters DR–1693, DR–

1604, DR–1605, DR–1606, and DR–1607

(5.81% × 2,188 = 127).

The arbitration process requires the

applicant/subgrantee to submit a request

for arbitration simultaneously to the

VerDate Nov<24>2008

16:16 Aug 28, 2009

Jkt 217001

Grantee, the applicable FEMA Regional

Administrator, and the arbitration

administrator in the form of a written

statement from the applicant/

subgrantee, which FEMA conservatively

estimates will take an applicant/

subgrantee approximately one hour to

complete.2 Within 15 days of receipt of

the request for arbitration, the Grantee

may forward a recommendation to

FEMA and the arbitration administrator

(with a copy to the applicant/

subgrantee), which FEMA estimates will

take the Grantee approximately one

hour to complete. FEMA therefore

estimates that it will take 127

applicants/subgrantees a cumulative

127 hours to prepare requests for

arbitration and the four potential

Grantees (the States of LA, MS, TX, and

AL) a cumulative 127 hours to prepare

and forward their recommendation to

FEMA and the arbitration administrator.

FEMA obtained the national average

hourly wage for a managerial ($36.50)

position in State government from the

Bureau of Labor Statistics (2009) ‘‘May

2007 National Industry-specific

Occupational Employment and Wage

Estimates’’, NAICS 999200—State

Government (OES Designation). The

managerial wage rate was for the

‘‘General and Operations Managers

position (standard occupational

classification (SOC) code #: 11–1021).’’

The Bureau of Labor Statistics’ hourly

wage reflects only the direct cost of

employment. FEMA, therefore,

multiplied the wage rates by 1.4 to

derive the full employment costs for a

managerial ($51.10) position in State

government. FEMA estimates that it will

take applicants/subgrantees and

Grantees the same amount of time to

prepare requests for arbitration as it

takes them to prepare requests for

appeal. Therefore, FEMA estimates that

this rulemaking will result in a cost

savings of $6,490 (= 127 × 51.10) for

applicants/subgrantees and $6,490 (=

127 × 51.10) for Grantees. These cost

savings occur because there is no

requirement for an applicant/subgrantee

to resubmit documentation through a

second round of review to exhaust its

administrative remedies under

arbitration, as there is in the appeals

process. This method is intended to

reduce the administrative burden on

2 This figure was generated using similar

estimates from other Federal agencies requests for

arbitration. For example, National Mediation Board

receives about 80 ‘‘Requests for Arbitration Panel

for Airline System Boards of Adjustment’’ annually

with a burden estimate of 20 hours per year (74 FR

10098); or Federal Mediation and Conciliation

Service’s ‘‘Request for Arbitration Services’’ form,

receiving approximately 10,000 per year and

estimating about 10 minutes to complete (71 FR

69130).

PO 00000

Frm 00039

Fmt 4700

Sfmt 4700

44765

applicants/subgrantees. Applicant/

subgrantees may only seek one method

for resolution of the dispute—appeal or

arbitration—not both.

In addition to the 2,188 project

worksheets which have not yet received

an initial determination from FEMA, as

noted above, as of July 17, 2009, FEMA

currently has 44 pending appeals.

Although it is not expected that all of

these appeals will be withdrawn in

favor of arbitration, as a conservative

estimate for the purposes of this

analysis, FEMA estimates that all 44

will withdraw in favor of arbitration.

Therefore these applicants/subgrantees

will also submit a request for arbitration

containing a statement that they

withdraw their appeal. FEMA estimates

it will take the applicant/subgrantee

approximately one hour to prepare its

request and the Grantee one hour to

prepare its recommendation and

forward it to FEMA and the arbitration

administrator. Using the $51.10 wage

rate established above, FEMA estimates

that this change will have a total cost of

$2,248 (= 44 × $51.10) to applicants/

subgrantees and $2,248 (= 44 × $51.10)

to Grantees.

The panel will conduct a preliminary

conference by telephone, and if

requested, the parties will make an oral

presentation in person, by telephone

conference or other means during which

all the parties may simultaneously hear

all other participants at a location

designated by the panel. In person

appearance at a hearing is entirely

voluntary, at the applicant’s/

subgrantee’s discretion. If they choose to

appear, however, the costs to do so are

incurred by the applicant/subgrantee.

Because the hearings may be conducted

via telephone or other means during

which all the parties may

simultaneously hear all other

participants, most applicants are not

expected to have any travel costs. For

those who are granted an in-person

hearing, the panel may choose to have

the hearing in Washington, DC. It is also

likely that more than one person will

attend. This is based on FEMA’s

experience meeting with applicants on

second appeals, which usually involves

about six people. This includes

representatives from the applicant, the

State, and any consultants. Assuming

round trip air travel for a team of six

people and that 25 percent of the

applicants/subgrantees will make an inperson appearance, (43 = 25% × (127 +

44)), FEMA estimates that the travel cost

to applicants/subgrantees will be

E:\FR\FM\31AUR1.SGM

31AUR1

44766

Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations

$89,526 (= 43 × 6 × $347 3)). In addition,

should an applicant/subgrantee choose

to appear in person, it will incur (1)

lodging, meals, and incidental expenses,

and (2) the regular-time cost of the

employee who attends the hearing in

lieu of performing that employee’s

regular duties. Assuming that

attendance at a hearing will require two

work days to travel to and attend the

hearing, lodging, meals, and incidental

expenses will be $93,138 (= 43 × 6

people × $361 4). The time cost to

applicants/subgrantees will be $210,941

(= 43 × 6 people × 16 hours × $51.10).

Therefore, the total cost to applicants/

subgrantees for in-person presentation

at a hearing is estimated to be $393,605

(= $89,526 + $93,138 + $210,941).

FEMA will pay the fees of the

arbitrators, the costs of any expert

retained by the panel, and the

arbitration facility costs, if any. Even

though FEMA cannot quantify this cost

change, it is not likely to be

economically significant given the

number of arbitrations expected from

disasters DR–1603, DR–1604, DR–1605,

DR–1606, and DR–1607. Additionally, it

will save the Federal government the

time and costs it would have incurred

to process appeals. FEMA estimates that

this rule will result in a cost increase of

$389,363 to applicants/subgrantees, and

a cost saving of $4,242 to Grantees.

Table 1 details the impact of the final

rule. FEMA did not annualize the

impact because this rule applies only to

disasters DR–1603, DR–1604, DR–1605,

DR–1606, and DR–1607. FEMA has

determined that this rule will not have

a significant economic impact of $100

million or more per year.

TABLE 1—QUANTIFIED IMPACT OF THE FINAL RULE

Applicants/

Subgrantees

Requests for arbitration ...........................................................................................................................................

Requests forwarded for arbitration ..........................................................................................................................

Withdraw in favor of arbitration ...............................................................................................................................

In-person presentation .............................................................................................................................................

·$6,490

2,248

393,605

·$6,490

2,248

........................

Sub-total ...........................................................................................................................................................

389,363

·4,242

Grand Total ...............................................................................................................................................

C. Regulatory Flexibility Act (RFA)

The Regulatory Flexibility Act (RFA)

(5 U.S.C. 601–612), and section 213(a) of

the Small Business Regulatory

Enforcement Fairness Act of 1996,

Public Law 104–121, 110 Stat. 847, 858–

9 (Mar. 29, 1996) (5 U.S.C. 601 note)

require that special consideration be

given to the effects of proposed

regulations on small entities. The RFA

mandates that an agency conduct a RFA

analysis when an agency is ‘‘required by

section 553 * * * to publish general

notice of proposed rulemaking for any

proposed rule.’’ 5 U.S.C. 603(a).

Accordingly, an RFA is not required

when a rule is exempt from notice and

comment rulemaking under 5 U.S.C.

553(b). FEMA has determined that this

rule is exempt from notice and comment

rulemaking because it is a rule of agency

procedure. See 5 U.S.C. 553(b)(3)(A).

Therefore, an RFA analysis under 5

U.S.C. 603 is not required for this rule.

D. National Environmental Policy Act

(NEPA)

sroberts on DSKD5P82C1PROD with RULES

Grantees

assistance provided under sections 403,

406, and 407 of the Stafford Act are

statutorily excluded from NEPA and the

preparation of environmental impact

statements and environmental

assessments by section 316 of the

Stafford Act. 42 U.S.C. 5159; 44 CFR

10.8(c). NEPA implementing regulations

governing FEMA activities at 44 CFR

10.8(d)(2)(ii) categorically exclude the

preparation, revision, and adoption of

regulations from the preparation of an

environmental assessment or

environmental impact statement, where

the rule relates to actions that qualify for

categorical exclusions. Action taken or

assistance provided under sections 403

and 407 of the Stafford Act are

categorically excluded under 44 CFR

10.8(d)(2)(xix). Because no other

extraordinary circumstances have been

identified, this rule does not require the

preparation of either an environmental

assessment or an environmental impact

statement as defined by NEPA.

This rulemaking is categorically

excluded from further review under the

National Environmental Policy Act

(NEPA), Public Law 91–190, 83 Stat.

852 (Jan. 1, 1970) (42 U.S.C. 4321 et

seq.), as amended. Action taken or

E. 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,

February 16, 1994, FEMA incorporates

environmental justice into its policies

3 Average domestic airfare in the 4th quarter of

2008 from the U.S. Department of Transportation’s

Bureau of Transportation Statistics (BTS), May 6,

2009, http://www.bts.gov/press_releases/2009/

bts021_09/html/bts021_09.html.

4 The amount of $361 includes hotel expense for

one night, and meals and incidental expenses for

two days. The per diem rate for the District of

Columbia is obtained from the U.S. General

Services Administration, May 2009, http://

VerDate Nov<24>2008

16:16 Aug 28, 2009

Jkt 217001

PO 00000

Frm 00040

Fmt 4700

Sfmt 4700

385,121

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

our programs, denying persons the

benefits of our programs, or subjecting

persons to discrimination because of

their race, color, or national origin.

No action that FEMA can anticipate

under this rule will have a

disproportionately high or adverse

human health and environmental effect

on any segment of the population.

Accordingly, the requirements of

Executive Order 12898 do not apply to

this rule.

F. Congressional Review of Agency

Rulemaking

FEMA has sent this final rule to the

Congress and to the Government

Accountability Office under the

Congressional Review of Agency

Rulemaking Act, (‘‘Congressional

Review Act’’), Public Law 104–121, 110

Stat. 873 (Mar. 29, 1996) (5 U.S.C. 804).

This rule is not a ‘‘major rule’’ within

the meaning of the Congressional

Review Act.

www.gsa.gov/Portal/gsa/ep/

contentView.do?queryYear=2009&

contentType=GSA_BASIC&contentId=17943&

queryState=District+of+Columbia&noc=T.

E:\FR\FM\31AUR1.SGM

31AUR1

Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations

G. Unfunded Mandates Reform Act of

1995

The Unfunded Mandates Reform Act

of 1995, Public Law 104–4, 109 Stat. 48

(Mar. 22, 1995) (2 U.S.C. 1501 et seq.),

applies to any notice of proposed

rulemaking that would implement any

rule which includes a Federal mandate

that may result in the expenditure by

State, local, and Tribal governments, in

the aggregate, or by the private sector, of

$100 million or more in any one year.

If the rulemaking includes a Federal

mandate, the Act requires an agency to

prepare an assessment of the anticipated

costs and benefits of the Federal

mandate. The Act also pertains to any

regulatory requirements that might

significantly or uniquely affect small

governments. Before establishing any

such requirements, an agency must

develop a plan allowing for input from

the affected governments regarding the

requirements. FEMA has determined

that this rule will not result in the

expenditure by State, local, and Tribal

governments, in the aggregate, nor by

the private sector, of $100 million or