Disaster Assistance; Cost-share Adjustment

FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Part 206

RIN 3067-AC72

Disaster Assistance; Cost-share Adjustment

AGENCY: Federal Emergency Management Agency (FEMA).

ACTION: Final rule.

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SUMMARY: This rule accomplishes three objectives. First, it establishes

the financial criteria under which we, FEMA, recommend to the President

a cost-share adjustment for permanent restorative work and for

emergency work under the Robert T. Stafford Disaster Relief and

Emergency Assistance Act (the Stafford Act). Second, the rule states

that we recommend capping the Federal share of assistance at ninety

percent (90%.) Third, we raise the $64 statewide per capita threshold

that we have used since 1985 for recommending cost-share adjustments to

current dollars, and will adjust that threshold annually in future

years. The new threshold is phased in over a gradual period. The rule

in no way affects the current process under which the President

sometimes grants one hundred percent (100%) Federal funding for

emergency work, including direct Federal assistance, for limited

periods following disaster declarations when the emergency needs

warrant it.

EFFECTIVE DATE: This rule is effective May 21, 1999.

FOR FURTHER INFORMATION CONTACT: Patricia Stahlschmidt, Response and

Recovery Directorate, Federal Emergency Management Agency, 500 C Street

SW., Washington, DC 20472, 202-646-4066, (facsimile) 202-646-4060, or

(email) [email protected].

SUPPLEMENTARY INFORMATION:

Background

On March 5, 1998, we published a proposed rule on cost-share

adjustment under the Stafford Act, 42 U.S.C. 5121 et seq. in the

Federal Register at 63 FR 10816. We invited comments for 60 days ending

on May 4, 1998. We received nine sets of comments: two from State and

local government organizations; six from States; and one from a local

government. Three commenters generally supported placing the criteria

in regulation and annually adjusting the threshold for inflation, and

one commenter agreed with the ninety percent (90%) cap on the Federal

share of assistance. Most commenters objected to various aspects

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of the rule. Following is a summary of the comments and our responses.

Evaluation of Cost-share Adjustments

One of the most frequent comments was that there was no evaluation

or analysis of the original threshold for recommending cost-share

adjustments, and therefore there is no basis for raising this threshold

to current dollars. Further comments along this line argued that the

proposed threshold fails to consider State capability and does not

provide an incentive for mitigation. We acknowledge that there was no

analysis of the original $64 per capita threshold for recommending

cost-share adjustments. However, that threshold is widely recognized

and we have used it consistently since 1985 when we recommended the

first cost-share adjustment. We do not intend, and never intended, to

measure State capability or to provide an incentive for mitigation

through this rule. Rather, the $64 threshold is simply a yardstick to

determine when the economic impact of a disaster is of such severity

that it warrants recommendation for a cost-share adjustment. We are

quite willing to work with our State partners to identify capability or

mitigation measures that might justify consideration of a cost-share

adjustment. However, we view that as a longer-term effort separate from

this rule. With respect to measuring economic impact, no commenters

offered alternatives to the use of a per capita impact although two did

suggest that we lower the threshold to $50 per capita. We believe

instead that the 1985 threshold should be brought up to current dollars

and adjusted annually using the Consumer Price Index for All Urban

Consumers, since that is the legislative basis for annually adjusting

the small project grants under the Public Assistance Program and grants

under the Individual and Family Grant Program.

Presidential Discretion for Cost-share Adjustments

Several commenters noted that the threshold for granting cost-share

adjustments unwisely limits Presidential discretion, and fails to

account for the unique circumstances of a disaster. We believe that the

rule adequately allows for Presidential discretion. First, the wording

of the rule has been revised to state that we would recommend to the

President when a cost-share adjustment is warranted in recognition of

the fact that the President retains the authority for actually granting

cost-share adjustments. Secondly, the rule clearly recognizes that,

irrespective of the economic threshold established here, the President

may continue the practice of granting up to one hundred percent (100%)

Federal funding for emergency work when he believes such action is

warranted in the early days of the disaster.

Multiple Disasters

Several commenters noted that the rule contains no provision for

multiple disasters within a State. We agree, and have revised the rule

to state that we will consider the effect of major disaster

declarations in a State within the preceding twelve months. The final

rule does not specifically indicate how we will consider multiple

disasters because that would depend on the circumstances. We need to

consider the timing of the disasters, the size, and the location when

we review the impact of multiple disasters. For example, two very large

disasters that strike the same area of a State might have a much

greater economic impact than widely disbursed small disasters in the

State even though the cumulative per capita impact might be similar.

Statewide Population Factors

A number of other commenters noted that the per capita threshold

should consider the relative densities within a State, or should be

based on the county and not on statewide population. We will continue

to base the threshold on the statewide population to reflect the

supplemental nature of Federal disaster assistance and the State's

preeminent role in this partnership. The declaration process itself

analyzes the localized impacts of the disaster when we recommend which

counties should be granted Federal disaster assistance. If a State

wishes to adjust the nonfederal cost-share burden in certain areas of

the State it can do so through the State/applicant split of the

nonfederal cost-share.

Actual Stafford Act Obligations To Measure per Capita Impact

Several commenters noted that the nonfederal share and State

administrative costs should be included in the calculation of statewide

per capita impact, and that the threshold should be based on estimates.

We currently consider only actual obligations when determining the per

capita impact of a disaster and will continue that practice. Actual

obligations provide a better and more consistent measure of the impact

of a disaster than do estimates, which can vary widely from disaster to

disaster and can change dramatically over the course of the disaster.

In order to be consistent in our method of measuring the per capita

impact we will also continue our practice of measuring Stafford Act

obligations only. State administrative costs have been and will

continue to be considered when we measure per capita costs though we do

not include our administrative costs in the calculation.

Limitation on Use of Sliding Scales

Three commenters noted that Sec. 320 of the Stafford Act precludes

any geographic area from receiving assistance under the Act solely by

virtue of an arithmetic formula or sliding scale based on income or

population. We are well aware of this provision of the Act but do not

violate it because the rule does not prohibit any geographic area from

receiving assistance under the Act. The rule merely determines when a

more favorable cost-share adjustment may be recommended.

Gross Domestic Product as a Measure of Impact

One commenter noted that in the 1993 floods that affected nine

Midwestern States the President used 0.1 percent of the gross domestic

product (GDP) as the measure to determine that a cost-share adjustment

would be recommended for all nine States. That GDP measurement was not

mentioned in the proposed rule because it has come to be a one-time-

only measurement. In more recent multi-state flood disasters in the

Upper Midwest and Ohio River basins we considered only the per capita

threshold as the basis for recommending a cost-share adjustment.

Timeframe for Implementation

One commenter noted that the proposed timeframe for implementation

is no longer relevant. We recognize that it is no longer relevant. Due

to the length of time for publication, comment and review of comments,

the timeframe for implementation of the new threshold will now begin in

calendar year 1999 on May 21, 1999 and not in fiscal year 1998. The

phase-in period to bring the threshold up to current dollars has also

been extended to address concerns about the increase in the threshold.

National Environmental Policy Act

44 CFR part 10 categorically excludes this rule from its

requirements. We have not prepared an environmental assessment.

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Executive Order 12866, Regulatory Planning and Review

This rule is not a significant regulatory action within the meaning

of section 2(f) of E.O. 12866 of September 30, 1993, 58 FR 51735, but

attempts to adhere to the regulatory principles set forth in E.O.

12866. The Office of Management and Budget has not reviewed this rule

under E.O. 12866.

Paperwork Reduction Act

This rule does not contain a collection of information and

therefore is not subject to the provisions of the Paperwork Reduction

Act of 1995.

Executive Order 12612, Federalism

This rule involves no policies that have federalism implications

under E.O. 12612, Federalism, dated October 16, 1987.

Executive Order 12778, Civil Justice Reform

This rule meets the applicable standards of section 2(b)(2) of E.O.

12778.

Congressional Review of Agency Rulemaking

We have sent this final rule to the Congress and to the General

Accounting Office under the Congressional Review of Agency Rulemaking

Act, Pub. L. 104-121. The rule is not a ``major rule'' within the

meaning of that Act. It is an administrative action in support of

normal day-to-day activities. It establishes the financial criteria

under which we would recommend a cost-share adjustment for permanent

restorative work and for emergency work, and recommends capping the

Federal cost-share for permanent restorative work at ninety percent

(90%). The rule does not result in nor is it likely to result in an

annual effect on the economy of $100,000,000 or more. It will not

result in a major increase in costs or prices for consumers, individual

industries, Federal, State, or local government agencies, or geographic

regions. It will not have ``significant adverse effects'' on

competition, employment, investment, productivity, innovation, or on

the ability of United States-based enterprises to compete with foreign-

based enterprises.

This final rule is exempt (1) from the requirements of the

Regulatory Flexibility Act, and (2) from the Paperwork Reduction Act.

The rule is not an unfunded Federal mandate within the meaning of the

Unfunded Mandates Reform Act of 1995, Pub. L. 104-4. It does not meet

the $100,000,000 threshold of that Act, and any enforceable duties are

imposed as a condition of Federal assistance or a duty arising from

participation in a voluntary Federal program.

List of Subjects in 44 CFR Part 206

Administrative practice and procedure, Disaster assistance,

Intergovernmental relations, Reporting and recordkeeping requirements.

Accordingly, 44 CFR Part 206 is amended as follows:

PART 206 SUBPART B--THE DECLARATION PROCESS

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

follows:

Authority: The Robert T. Stafford Disaster Relief and Emergency

Assistance Act, 42 U.S.C. 5121 et seq.; Reorganization Plan No. 3 of

1978, 43 FR 41943, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 44 FR

19367, 3 CFR, 1979 Comp., p. 376; E.O. 12148, 44 FR 43239, 3 CFR,

1979 Comp., p. 412; and E.O. 12673, 54 FR 12571, 3 CFR, 1989 Comp.,

p. 214.

2. We are adding Sec. 206.47 to read as follows.

Sec. 206.47 Cost-share adjustments.

(a) We pay seventy-five percent (75%) of the eligible cost of

permanent restorative work under section 406 of the Stafford Act and

for emergency work under section 403 and section 407 of the Stafford

Act, unless the Federal share is increased under this section.

(b) We recommend an increase in the Federal cost share from

seventy-five percent (75%) to not more than ninety percent (90%) of the

eligible cost of permanent work under section 406 and of emergency work

under section 403 and section 407 whenever a disaster is so

extraordinary that actual Federal obligations under the Stafford Act,

excluding FEMA administrative cost, meet or exceed a qualifying

threshold of:

(1) Beginning in 1999 and effective for disasters declared on or

after May 21, 1999, $75 per capita of State population;

(2) Effective for disasters declared after January 1, 2000, and

through December 31, 2000, $85 per capita of State population;

(3) Effective for disasters declared after January 1, 2001, $100

per capita of State population; and,

(4) Effective for disasters declared after January 1, 2002 and for

later years, $100 per capita of State population, adjusted annually for

inflation using the Consumer Price Index for All Urban Consumers

published annually by the Department of Labor.

(c) When we determine whether to recommend a cost-share adjustment

we consider the impact of major disaster declarations in the State

during the preceding twelve-month period.

(d) If warranted by the needs of the disaster, we recommend up to

one hundred percent (100%) Federal funding for emergency work under

section 403 and section 407, including direct Federal assistance, for a

limited period in the initial days of the disaster irrespective of the

per capita impact.

Dated: April 14, 1999.

James L. Witt,

Director.

[FR Doc. 99-9934 Filed 4-20-99; 8:45 am]

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