Public Assistance Appeals and Arbitrations

Published date16 August 2021
Citation86 FR 45660
Record Number2021-17213
SectionRules and Regulations
CourtFederal Emergency Management Agency
Federal Register, Volume 86 Issue 155 (Monday, August 16, 2021)
[Federal Register Volume 86, Number 155 (Monday, August 16, 2021)]
                [Rules and Regulations]
                [Pages 45660-45685]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2021-17213]
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                DEPARTMENT OF HOMELAND SECURITY
                Federal Emergency Management Agency
                44 CFR Part 206
                [Docket ID: FEMA-2019-0012]
                RIN 1660-AB00
                Public Assistance Appeals and Arbitrations
                AGENCY: Federal Emergency Management Agency, DHS.
                ACTION: Final rule.
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                SUMMARY: This final rule implements the new right of arbitration
                authorized by the Disaster Recovery Reform Act of 2018 (DRRA) and
                revises the Federal Emergency Management Agency's regulations regarding
                first and second Public Assistance appeals.
                DATES: This rule is effective on January 1, 2022. Proposed information
                collection comments must be submitted on or before September 15, 2021.
                ADDRESSES: The docket for this rulemaking is available for inspection
                using the Federal eRulemaking Portal: http://www.regulations.gov and
                can be viewed by following that website's instructions.
                 Written comments and recommendations for the proposed information
                collection should be sent within 30 days of publication of this notice
                to www.reginfo.gov/public/do/PRAMain. Find this particular information
                collection by selecting ``Currently under 30-day Review--Open for
                Public Comments'' or by using the search function.
                FOR FURTHER INFORMATION CONTACT: Shabnaum Amjad, Deputy Associate Chief
                Counsel, Regulatory Affairs, Office of Chief Counsel, Federal Emergency
                Management Agency, 500 C Street SW, Washington, DC 20472. Phone: 202-
                212-2398 or email: [email protected].
                SUPPLEMENTARY INFORMATION:
                I. Proposed Rule
                 On August 31, 2020, the Federal Emergency Management Agency (FEMA)
                published a Notice of Proposed Rulemaking (NPRM) (85 FR 53725)
                proposing to revise its current Public Assistance (PA) appeals
                regulation at 44 CFR 206.206 to add in the new right to arbitration
                under the Disaster Recovery Reform Act of 2018 (DRRA),\1\ in
                conjunction with some revisions to the current appeals process. The
                DRRA adds arbitration as a permanent alternative to a second appeal
                under the PA Program. Additionally, applicants that have had a first
                appeal pending with FEMA for more than 180 calendar days may withdraw
                such appeal and submit a request for arbitration. In both cases, the
                amount in dispute must be greater than $500,000, or greater than
                $100,000 for an applicant for assistance in a rural area. The other
                major proposed revisions to 44 CFR 206.206 included adding definitions;
                adding subparagraphs to clarify what actions FEMA may take and will not
                take while an appeal is pending and stating that FEMA may issue
                separate guidance as necessary, similar to current 44 CFR 206.209(m);
                adding a finality of decision paragraph; requiring electronic
                submission for appeals and arbitrations documents; and clarifying
                overall time limits for first and second appeals.
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                 \1\ Disaster Recovery Reform Act of 2018, Public Law 115-254,
                132 Stat. 3186 (Oct. 5, 2018), 42 U.S.C. 5189a.
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                 These proposed rules for arbitration are separate and distinct from
                the arbitration provisions located in 44 CFR 206.209. Under Sec.
                206.209, applicants may request arbitration to resolve disputed PA
                applications under major disaster declarations for Hurricanes Katrina
                and Rita, pursuant to the
                [[Page 45661]]
                authority of the American Recovery and Reinvestment Act of 2009
                (ARRA).\2\
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                 \2\ American Recovery and Reinvestment Act of 2009, Public Law
                111-5, 123 Stat. 115 (Feb. 17, 2009), 26 U.S.C. 1 note.
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                 As amended by Section 1219 of the DRRA, 42 U.S.C. 5189a(d) names
                the Civilian Board of Contract Appeals (CBCA) as the entity responsible
                for conducting public assistance arbitrations. Therefore, FEMA
                recommends that applicants review the CBCA regulations at 48 CFR part
                6101, Rules of Procedure of the Civilian Board of Contract Appeals, and
                48 CFR part 6106, Rules of Procedure for Arbitration of Public
                Assistance Eligibility or Repayment, for additional CBCA rules of
                procedure, as both cover FEMA public assistance arbitrations.
                II. Discussion of Public Comments and FEMA's Responses
                 The public comment period of the NPRM closed on October 30, 2020.
                FEMA received germane comments from six separate commenters. The first
                anonymous commenter [FEMA-2019-0012-0002] was unconditionally
                supportive of the NPRM, as they found the DRRA population thresholds
                fair. The second commenter, a member of the public [FEMA-2019-0012-
                0003], addressed five separate issues regarding the NPRM in their
                comment including: Suggesting the use of ``applicant'' to refer to all
                entities; suggesting the use of ``appellant'' instead of ``applicant''
                and ``subrecipient''; stating that using the date of issuance of the
                FEMA determination instead of the date the ``appellant'' views the FEMA
                determination does not provide clarity; suggesting that the
                ``appellant'' now has 150 days to make a complete appeal with the new
                30-day deadline to provide additional information; and questioning
                whether the NPRM removed the first 60-day requirement to make the
                entire deadline 120-days regardless of when each entity appeals so long
                as it is within 120 days. The third commenter, also a member of the
                public [FEMA-2019-0012-0004], suggested FEMA adjust the amount in
                dispute thresholds for hyper-inflation. This commenter also submitted a
                duplicative comment which was withdrawn [FEMA-2019-0012-0005]. The
                second anonymous commenter submitted an unrelated comment [FEMA-2019-
                0012-DRAFT-0006], which was not posted to the Docket. The fourth
                commenter, from a State Emergency Management Agency [FEMA-2019-0012-
                0006], also asked whether the NPRM's combination of the applicant and
                recipient's 60-day submission requirements could equate to additional
                submission time for appeals. The fifth commenter, from the same State
                Emergency Management Agency [FEMA-2019-0012-0007], asked numerous
                questions regarding applicant and recipient proposed appeal submission
                timeframes. The sixth commenter, a State Division of Emergency
                Management (DEM) [FEMA-2019-0012-0008], generally supports the effort
                to amend the regulations. However, the State DEM believes many of the
                changes proposed in the NPRM conflict with the Robert T. Stafford
                Disaster Relief and Emergency Assistance Act (Stafford Act) \3\ and
                expressed concern with FEMA removing its own deadlines while strictly
                applying them to applicants and recipients. The State DEM included
                attachments of cases--or parts of cases--and a detailed table of their
                comments.
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                 \3\ Disaster Relief Act of 1974, Public Law 93-288, 88 Stat. 143
                (May 22, 1974), as amended, 42 U.S.C. 5121 et seq.
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                A. Adjustment Amount in Dispute Thresholds
                 Under Section 1219 of the DRRA, in order to request arbitration a
                PA applicant must dispute an amount that exceeds $500,000 (or $100,000
                for an applicant in a ``rural area'' with a population of less than
                200,000 and outside of an urbanized area).
                 One member of the public [FEMA-2019-0012-0004] commented that, for
                the most part, the proposed changes are well thought out and stand to
                reason. However, the commenter suggested that the amount in dispute
                threshold allow for future adjustment based upon hyper-inflation.
                Including provisions for hyper-inflation, this commenter posited, will
                allow FEMA to carry out its crucial work without returning to the
                rulemaking process if the dollar fluctuates in the future. A lower
                threshold could subsequently overwhelm the arbitration or appeal
                process.
                 Since the amount in dispute thresholds are statutorily set in
                Section 1219 of DRRA, it is not within FEMA's discretion to change them
                in this rulemaking. While FEMA appreciates the commenter's support,
                FEMA did not make any changes to the regulatory text at 206.206 as a
                result of the comment.
                B. Population Thresholds
                 The DRRA defines a rural area to mean an area with a population of
                less than 200,000 outside an urbanized area. The NPRM proposed to
                define the term ``urbanized area'' to mean the area as identified by
                the United States Census Bureau (USCB). The USCB defines an ``urbanized
                area'' as an area that consists of densely settled territory that
                contains 50,000 or more people.\4\ For clarity and to comply with
                publication requirements found in 1 CFR chapter I, FEMA has revised the
                final rule's definition of ``urbanized area'' as an area that consists
                of densely settled territory that contains 50,000 or more people.
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                 \4\ See ``Qualifying Urban Areas for the 2010 Census,'' 77 FR
                18651, Mar. 27, 2012.
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                 An anonymous commenter [FEMA-2019-0012-0002] supports the different
                population thresholds of the NPRM. The anonymous commenter suggested
                that the population requirements give all areas a fair chance of
                receiving Federal assistance. FEMA appreciates the anonymous
                commenter's support but, did not make any changes to the regulatory
                text at 206.206 as a result of the comment.
                C. ``Applicant/Subrecipient'' Different Entities Versus ``Applicant''
                for All Entities
                 A member of the public [FEMA-2019-0012-0003] commented that FEMA
                views the applicant/subrecipient as two different entities: An
                ``applicant'' is one that has applied for but not yet received funding,
                while a ``subrecipient'' has applied for and been awarded funding. This
                member of the public [FEMA-2019-0012-0003] also commented that the
                definition of ''applicant'' does not include ``subrecipient'' (although
                one could argue that all ``subrecipients'' are ``applicants,'' but not
                all ``applicants'' are ``subrecipients,'' so the use of ``applicant''
                for all entities could still be correct).
                 The ``applicant,'' as defined at 44 CFR 206.201(a), is a State
                agency, local government, or eligible private nonprofit organization
                (PNP) submitting an application to the recipient for assistance under
                the recipient's grant. The ``recipient,'' as defined at 44 CFR
                206.201(m), is the government to which a grant is awarded, and which is
                accountable for the use of the funds provided. The ``recipient'' is
                typically the State to which a grant is awarded.
                 In the NPRM, FEMA proposed changing the phrase ``applicant,
                subrecipient, or recipient'' to ``applicant or recipient'' since the
                definition of ``applicant'' at 44 CFR 206.201(a) already includes the
                term ``subrecipient.'' Since an ``applicant'' submits an application to
                the ``recipient'' for assistance under the recipient's grant, the
                ``recipient'' and the ``applicant'' are not interchangeable
                [[Page 45662]]
                phrases. It follows that the definition of ``applicant'' at 206.201(a)
                cannot include a ``recipient,'' so FEMA disagrees with the public
                commenter's [FEMA-2019-0012-0003] statement that the use of
                ``applicant'' for all entities could still be correct.
                 Therefore, FEMA did not make any changes to the regulatory text at
                206.206 as a result of the comment.
                D. ``Appellant'' Versus ``Applicant'' and ``Subrecipient''
                 A member of the public [FEMA-2019-0012-0003] also commented that
                there is a difference in ``applicant'' and ``subrecipient'' per 44 CFR
                206.201(a). FEMA disagrees with the statement that there is a
                difference in ``applicant'' and ``subrecipient'' per 206.201(a). As
                indicated above, the definition of ``applicant'' at 206.201(a) includes
                ``subrecipient,'' but not ``recipient.'' Therefore, FEMA did not make
                any changes to the regulatory text at 206.206 as a result of the
                comment.
                 The commenter further stated that the use of ``appellant'' allows
                for both ``applicants'' and ``subrecipients'' to be represented in the
                terminology. In the past, FEMA used the term ``appellant'' instead of
                ``applicant or recipient'' for the requirement of specifying the
                provisions in Federal law, regulator, or policy in dispute. In the
                NPRM, FEMA's reason for changing from ``appellant'' to ``applicant or
                recipient'' was for consistency in terminology and no substantive
                change was intended. Since FEMA's goal is consistency in terminology,
                FEMA will not add ``appellant'' as a defined term to paragraph (a) of
                44 CFR 206.206, as it could lead to confusion for the reader as to
                whether it refers to an ``applicant'' or a ``recipient.'' Therefore,
                FEMA did not make any changes to the regulatory text at 206.206 as a
                result of the comment.
                E. Other Definitions
                 The State DEM [FEMA-2019-0012-0008] commented that in 44 CFR
                206.206(a), FEMA should define ``Regional Administrator'' because
                applicants submit first appeals to the appropriate FEMA Regional office
                and then submit second appeals to the Assistant Administrator for the
                Recovery Directorate. The State DEM proposed to define ``Regional
                Administrators'' as ``the Administrator of the Federal Emergency
                Management Agency Regional Office in which the Applicant resides.''
                 FEMA decided against the commenter's suggested definition of
                ``Regional Administrator'' since 44 CFR 206.2(a)(21) already provides a
                definition for ``Regional Administrator'' with general applicability
                throughout part 206. Regional Administrator: An administrator of a
                regional office of FEMA, or his/her designated representative. As used
                in these regulations, Regional Administrator also means the Disaster
                Recovery Manager who has been appointed to exercise the authority of
                the Regional Administrator for a particular emergency or major
                disaster.
                 This second sentence in the definition of Regional Administrator at
                206.2(a)(21) is contrary to the structure proposed in the NPRM at
                206.206, as it says that the Regional Administrator also means the
                Disaster Recovery Manager. In the NPRM, the Regional Administrator/
                Disaster Recovery Manager is not making the FEMA determination.
                Otherwise, the submission of the first appeal to the Regional
                Administrator for review would mean that the Regional Administrator
                could review their own determination. Therefore, FEMA decided to add
                only the first sentence of the ``Regional Administrator'' definition at
                206.2(a)(21) to this final rule for consistency and clarity. So, FEMA
                added the following definition of ``Regional Administrator'' to the
                regulatory text: Regional Administrator means an administrator of a
                regional office of FEMA, or his/her designated representative.
                 Both, ``Administrator'' and ``Regional Administrator'' were added
                to Title V of the Homeland Security Act of 2002 by the Post-Katrina
                Emergency Management Reform Act of 2006.\5\ Therefore, it makes sense
                that they are defined terms under 44 CFR 206.206, as they are
                statutorily mandated FEMA positions.
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                 \5\ Post-Katrina Emergency Management Reform Act of 2006, 109-
                295, 120 Stat. 1394 (Oct. 4, 2006), 6 U.S.C. 701 note.
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                 The State DEM also recommended that FEMA define the term
                ``Assistant Administrator for the Recovery Directorate.'' FEMA chose
                not to provide a definition of ``Assistant Administrator for the
                Recovery Directorate'' since future FEMA reorganizations may change
                that position title. Additionally, the ``Assistant Administrator for
                the Recovery Directorate'' is not a FEMA statutorily mandated position.
                 Finally, the State DEM [FEMA-2019-0012-0008] suggested that FEMA
                define ``final agency determination'' to mean the decision of FEMA as
                provided through electronic transmission of a formal determination if
                the applicant or recipient does not submit a first appeal within the
                time limits. FEMA does not adopt the commenter's definition because the
                definition in the NPRM the is a more fulsome definition which covers
                all eventualities. In the NPRM, ``final agency determination'' means
                the decision of FEMA, if the applicant or recipient does not submit a
                first appeal within the time limits provided for in paragraph
                (b)(1)(ii)(A) of proposed Sec. 206.206; or the decision of FEMA, if
                the applicant or recipient withdraws the pending appeal and does not
                file a request for arbitration within 30 calendar days of the
                withdrawal of the pending appeal; or the decision of the FEMA Regional
                Administrator, if the applicant or recipient does not submit a second
                appeal within the time limits provided for in paragraph (b)(2)(ii)(A)
                of proposed Sec. 206.206. For this reason, FEMA declines to adopt the
                commenter's definition. Therefore, FEMA only added the definition of
                ``Regional Administrator'' to the regulatory text at 206.206(a) as a
                result of the comment.
                F. First and Second Appeals' Deadlines
                 Proposed paragraph 206.206(b)(1)(ii) of the NPRM addressed time
                limits for first appeals. Under proposed paragraph (b)(1)(ii)(A), the
                applicant may make a first appeal through the recipient within 60
                calendar days from the date of the FEMA determination that is the
                subject of the appeal. Moreover, the recipient must electronically
                forward to the Regional Administrator the applicant's first appeal with
                a recommendation within 120 calendar days from the date of the FEMA
                determination that is the subject of the appeal. There is no recourse
                for the applicant if the recipient misses the deadline to forward the
                appeal and recommendation to the Regional Administrator. There is also
                no recourse for the applicant in a second appeal where the recipient
                does not make the deadline.
                 Several commenters--including a member of the public [FEMA-2019-
                0012-0003], a State agency [FEMA-2019-0012-0007], and State DEM [FEMA-
                2019-0012-0008]--sought clarification on when, exactly, the applicant's
                initial 60-day deadline is triggered. For instance, is the deadline
                triggered on the day the applicant views the determination [FEMA-2019-
                0012-0003]? Does the deadline begin once the applicant has physically
                received the determination paperwork [FEMA-2019-0012-0008]? As FEMA was
                aware of this issue, the NPRM provided clarity by adding an electronic
                submission requirement for both first and second appeals. This
                requirement will enable FEMA to accurately track the transmittal and
                receipt of appeals since they will be
                [[Page 45663]]
                the same date, while providing the applicant with a clear timeline for
                compliance. Specifically the deadline is triggered by FEMA's
                transmittal of the determination, not the date the applicant views the
                determination.
                 Nonetheless, a member of the public [FEMA-2019-0012-0003]
                questioned whether the NPRM's proposal to change the language ``after
                receipt of a notice of the action that is being appealed'' to ``from
                the date of the FEMA determination that is the subject of the appeal''
                will actually assist FEMA with tracking. In her opinion, using the date
                of the issuance of the determination, rather than the date the
                ``appellant'' views the determination, does not provide clarity. Since
                the proposed language of the NPRM relies on the electronic submission
                for appeals, it would not matter when the FEMA determination that is
                subject of the appeal is viewed. With the switch to electronic
                submission, the date of the FEMA determination and the date of receipt
                are the same. Therefore, FEMA did not make any changes to the
                regulatory text as a result of the comments.
                 A State DEM [FEMA-2019-0012-0008] commented that it agrees with
                electronic submission to ease in tracking and ensuring timely receipt
                of appeals. However, the commenter stated, applicants and recipients do
                not always receive FEMA's determination on the same day as the date of
                the transmission letter. This could potentially reduce the amount of
                time for an applicant to appeal. In support of this comment, the State
                DEM submitted an emergency (as opposed to major disaster) declaration
                determination with what appeared to be a discrepancy between the date
                of receipt and the date of determination, as attachments. Upon further
                review, FEMA finds the discrepancy between the date of receipt and date
                of determination was an administrative error or an anomaly. FEMA is
                taking programmatic and technological steps to tie the date of
                determination to date of the determination's transmittal, but should a
                similar error or discrepancy recur in the future FEMA would use the
                date of transmittal as the deadline trigger.
                 Nonetheless, the State DEM suggested remedy language for both first
                and second appeals which would start the clock on the 60-day deadline
                on the confirmed receipt of FEMA's determination. Further, the
                commenter proposed language to create a rebuttable presumption in favor
                of the date of receipt claimed by the applicant or recipient. Because
                the NPRM proposed requiring electronic submission for both applicant
                and recipient and the NPRM proposed FEMA simultaneously electronically
                notify both applicant and recipient, these concerns are unfounded.
                Therefore, FEMA did not make any changes to the regulatory text at
                206.206(b)(1)(ii) and (b)(2)(ii) as a result of the comments.
                G. First and Second Appeals' Deadlines--60/60-Day Versus 120-Day
                 A member of the public [FEMA-2019-0012-0003] queried: Is the NPRM
                to remove the first 60-day requirement for the appellant to appeal, and
                make the entire deadline 120 days regardless of when each entity
                appeals so long as it is within 120 days? This simplifies the
                timeliness requirement for all parties she stated, but the proposed
                language is confusing as to whether the 60-day deadline remains for the
                applicant. By the NPRM, she continues, the applicant could appeal on
                day 120 and the recipient could forward on same that day. In this
                scenario, the commenter believed the submission would remain timely.
                The commenter stated that this removes some of the intent behind the
                timeliness requirements for each party to responsibly review the
                appeal.
                 The applicant's 60-day deadline remains, as the Stafford Act
                requires it for appeals. See 423(a) of the Stafford Act. In order to
                resolve the confusion identified by the public commenter [FEMA-2019-
                0012-0003], FEMA has added regulatory text to both the first and second
                appeals paragraphs of the final rule for clarity and consistency.
                Specifically, FEMA replaced the second to the last sentence of the
                appeals paragraphs of the final rule at 206.206(b)(1)(ii)(A) and
                (b)(2)(ii)(A) with the following: ``[i]f the applicant or the recipient
                do not meet their respective 60-calendar day and 120-calendar day
                deadlines, FEMA will deny the appeal.'' This is consistent with current
                FEMA policy. See page 40 of the Public Assistance Program and Policy
                Guide,\6\ which says that ``[i]f either the Applicant or Recipient does
                not meet the respective 60-day deadlines, FEMA will deny the appeal as
                untimely.''
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                 \6\ Public Assistance Program and Policy Guide Version 4
                (fema.gov).
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                 Also in reference to the 120-day deadline, a State agency [FEMA-
                2019-0012-0006] inquired: Does this mean that if the applicant appeals
                to the recipient 45 days from the FEMA determination, that the
                recipient still has 120 calendar days from the date of the FEMA
                determination to transmit the appeal to FEMA? In the above scenario, an
                applicant that appeals 45 days after its FEMA determination would then
                leave the recipient with 75 days to forward the appeal to FEMA. The
                NPRM is in no way extending the 120-day deadline.
                 A separate comment from the same State agency [FEMA-2019-0012-0007]
                correctly stated that the applicant still has a firm 60-day deadline to
                submit its appeal to the applicant. The commenter then inquired whether
                FEMA will deny any appeal as untimely if the applicant submits its
                appeal to the recipient after the 60-day deadline, but FEMA receives
                the appeal within 120 days. In this scenario, the commenter is correct
                that FEMA would deny this appeal as untimely. Even if the recipient
                ultimately submitted the appeal to FEMA within 120 days from the date
                of determination, if an applicant submits its appeal to the recipient
                outside of the 60 days, it has exceeded the deadline imposed by Section
                423 of the Stafford Act. As stated above, FEMA added new regulatory
                text in the final rule to both the first and second appeals paragraphs
                for clarity and consistency. The new language states that if the
                applicant or the recipient do not meet their respective 60-calendar day
                and 120-calendar day deadlines, FEMA will deny the appeal.
                 Finally, the State DEM [FEMA-2019-0012-0008] suggested that the
                regulatory language was misleading because it implies that FEMA will
                deny all first appeals it does not receive by the recipient's 120-day
                deadline and is not clear that applicant's untimeliness will jeopardize
                the appeal. As the scenarios above make clear, both an applicant and
                recipient's untimeliness will continue to jeopardize either a first or
                second appeal based upon their respective 60-calendar day and 120-
                calendar day deadlines. For these reasons, FEMA made changes to the
                regulatory text regarding first appeals at 206.206(b)(1)(ii)(A) and
                regarding second appeals at (b)(2)(ii)(A) as a result of the comments.
                H. Denial Based Upon Timeliness
                 The State DEM [FEMA-2019-0012-0008] objected to FEMA denying either
                a first or second appeal based upon timeliness. The State DEM argued
                that FEMA lacked the authority to unilaterally deny an appeal based
                upon timeliness because this is not specifically permitted by the
                Stafford Act. The State DEM stated that it was ``administratively
                unfair'' for FEMA to deny second appeals solely based on timeliness
                without considering the merits thereof.
                [[Page 45664]]
                 The State DEM specifically proposed language prohibiting FEMA from
                denying a second appeal based on untimeliness if a determination on the
                merits would be in the applicant or recipient's favor. It offered
                language barring FEMA from denying an otherwise timely second appeal
                solely on the grounds that the relevant first appeal was untimely. To
                bolster its argument, the State DEM attached an exhibit wherein FEMA
                rejected a second appeal based on the first appeal being untimely even
                though, the State DEM argued, FEMA incorrectly de-obligated funds
                initially. Had FEMA examined the issue on the merits the argument
                continues, the applicant would have prevailed.
                 Section 423 of the Stafford Act requires an applicant to submit an
                appeal within 60 days. FEMA does not have the unilateral authority to
                alter or ignore this requirement. The State DEM's suggestions would
                have the effect of removing timeliness as a meaningful consideration
                for appeals. Further, FEMA has no ability to extend the deadlines
                listed in Section 423, just as it lacks express authority to waive
                timelines. FEMA is solely implementing requirements prescribed by law.
                In addition, the start of the mandatory 60-day period, the date of
                FEMA's determination, and the date of the applicant and recipient's
                receipt thereof should be identical with the implementation of
                electronic transmission. Since electronic transmission addresses the
                State DEM's concerns regarding the start of the appeals period and FEMA
                cannot waive, alter, or modify the 60-day appeal deadline in the
                Stafford Act, FEMA did not make any changes to the regulatory text at
                206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) as a result of these comments.
                However, as stated above FEMA added new regulatory text in the final
                rule to both the first and second appeals paragraphs for clarity and
                consistency. The new language states that if the applicant or the
                recipient do not meet their respective 60-calendar day and 120-calendar
                day deadlines, FEMA will deny the appeal.
                 The State DEM [FEMA-2019-0012-0008] also suggested that the
                regulatory language in 206.206(b)(3)(iii)(B)(2) of the NPRM be modified
                to permit requests for arbitration from untimely appeals. This comment
                and proposed language would render timeliness moot, as applicants could
                make an untimely appeal and then attempt to arbitrate the rejection on
                timeliness. Section 423 of the Stafford Act only permits an applicant
                to submit an appeal within 60 days; FEMA does not have the authority to
                alter or ignore this deadline. Consequently, FEMA did not make any
                changes to the regulatory text at 206.206(b)(3)(iii)(B)(2) as a result
                of these comments.
                 However, FEMA provided clarifying edits to 206.206(b)(3)(iii)(B)(2)
                in the final rule, so that an applicant understands that if they choose
                arbitration pursuant to Section 423(d) of the Stafford Act, as FEMA has
                not responded to an applicant's first appeal within 180 days, then they
                must withdraw the pending appeal before they file the request for
                arbitration. Basically, the applicant cannot arbitrate and appeal at
                the same time. Additionally, FEMA provided clarifying edits to
                206.206(b)(3)(iii)(B)(2) to remove the phrase ``and the CBCA.'' FEMA
                deleted this phrase, as a pending first appeal would not be pending
                before the CBCA, so the applicant would have no reason to notify the
                CBCA of the first appeal withdrawal.
                 So in the final rule, FEMA has split the first sentence of
                206.206(b)(3)(iii)(B)(2) into two sentences that say if the first
                appeal was timely submitted, and the Regional Administrator has not
                rendered a decision within 180 calendar days of receiving the appeal,
                an applicant may arbitrate the decision of FEMA. To request
                arbitration, the applicant must first electronically submit a
                withdrawal of the pending appeal simultaneously to the recipient and
                the FEMA Regional Administrator. Plus, FEMA added clarifying language
                to the last sentence of 206.206(b)(3)(iii)(B)(2) by replacing ``may''
                with ``must'' and by adding the phrase ``to the recipient, the CBCA,
                and FEMA'' after arbitration. So, 206.206(b)(3)(iii)(B)(2) in the final
                rule says that the applicant must then submit a request for arbitration
                to the recipient, the CBCA, and FEMA within 30 calendar days from the
                date of the withdrawal of the pending appeal. FEMA wants to clarify
                that if an applicant withdraws a first appeal, then the applicant must
                submit a request for arbitration within 30 calendar days. If the
                applicant does not follow the requirements of 206.206(b)(3)(iii)(B)(2),
                then the applicant's request for arbitration will be denied for
                timeliness.
                I. Simultaneously Provide Decisions to Applicants & Recipients
                 The State DEM [FEMA-2019-0012-0008] commented that it agrees with
                electronic submission to ease in tracking and ensuring timely receipt
                of appeals, and suggested FEMA also provide its decisions
                electronically to both the applicant and recipient simultaneously. This
                is the course of action that FEMA proposed in the NPRM's
                206.206(b)(1)(iii); therefore, FEMA did not make any changes to the
                regulatory text as a result of this comment.
                J. FEMA Exceeds 90-Day Deadline
                 A State DEM [FEMA-2019-0012-0008] commented that in both paragraphs
                206.206(b)(1)(ii)(C) and (b)(2)(ii)(C) of the NPRM, FEMA allows itself
                90 days from receipt of the appeal, rather than the date of the appeal
                itself, to respond per Section 423(b) of the Stafford Act. The State
                DEM further suggests regulatory text changes imposing penalties for any
                response beyond the 90-day deadline.
                 First and foremost, the date an applicant makes an appeal is not
                the same date FEMA receives the appeal because it must first pass
                through the recipient. In addition, though FEMA endeavors to render all
                appeals decisions within 90 days, it is an agile agency with emergent
                responsibilities. Nevertheless, FEMA remains stewards of Federal monies
                and must perform a thorough review to ensure grants follow the law.
                This constant conflict demands an ongoing shift of resources and
                priorities. With the final rule's implementation of electronic
                transmission, FEMA determinations should be received electronically
                when issued. The Regional Administrator will provide electronic notice
                of the disposition of the appeal to the applicant and the recipient
                thereby avoiding delays inherent in methods such as carrier delivery.
                FEMA will know the date received as it will be the same as the
                electronic transmission date. Lastly, FEMA notes that, pursuant to
                Section 423(d) of the Stafford Act, if the agency fails to respond to
                an applicant's first appeal within 180 days, said applicant may choose
                to arbitrate the dispute provided they meet all the other arbitration
                threshold requirements. Consequently, FEMA did not make any changes to
                the regulatory text at 206.206(b)(1)(ii)(C) and (b)(2)(ii)(C) as a
                result of the comments.
                K. 90-Day Deadline for Technical Information
                 Proposed paragraphs 206.206(b)(1)(iii) and (b)(2)(iii) provide
                that, for highly technical matters, the Regional Administrator may
                submit the appeal to an independent scientific or technical person/
                group having expertise in the subject matter of the appeal for advice
                or recommendation. The period of this review may be in addition to
                other allotted time periods.
                 In lieu of the above, a State DEM [FEMA-2019-0012-0008] commented
                that FEMA does not have the authority
                [[Page 45665]]
                to expand the time it has to render a determination on a first or
                second appeal. Moreover, the State DEM argued, the time taken to seek
                technical advice should be deducted from FEMA's allotted 90 days, as
                FEMA should have already conducted a proper full technical review prior
                to making a final agency determination.
                 FEMA, as the steward of Federal monies, must always pursue the
                public's best interest by ensuring that all grants follow the law. For
                highly technical matters, the Agency has a responsibility to seek
                outside guidance if it lacks the requisite expertise inhouse. This will
                allow the Agency to make the correct decision and serve the greater
                good of distributing equitable disaster assistance. Moreover, pursuant
                to Section 423(d) of the Stafford Act, if FEMA fails to respond to an
                applicant's first appeal within 180 days, said applicant may choose to
                arbitrate the dispute provided they meet all the other arbitration
                threshold requirements. For these reasons, FEMA did not alter the
                regulatory text at 206.206(b)(1)(iii) and (b)(2)(iii) as a result of
                the comments.
                L. 30 Days To Provide Additional Information
                 In the NPRM, under paragraphs 206.206(b)(1)(ii)(B) and
                (b)(2)(ii)(B), FEMA proposed allowing the recipient only 30-calendar
                days to provide any additional information to the Regional
                Administrator; instead of having the Regional Administrator include the
                date by which the information must be provided. Quantifying the period
                for additional information better allows FEMA to issue timely
                determinations on first and second appeals.
                 A member of the public [FEMA-2019-0012-0003] commented that the
                proposed change allows an appellant to provide additional information
                even 30 days after the appeal submittal. This change would not serve
                the public's interest of FEMA issuing timely determinations on first
                appeal she argued. In this instance, FEMA would be required to delay
                its adjudication by 30 days while it waits for the window of
                opportunity to submit additional information on a first appeal to pass.
                Thus, if this change was implemented, an appellant would have 150 days
                to make a complete appeal. While the member of the public [FEMA-2019-
                0012-0003] is correct that the new 30-day deadline may add to the
                appeals timeline, it could also shorten the timeline of future appeals
                by quantifying the deadline. FEMA intends to provide a fair deadline
                for additional information. Therefore, FEMA did not make any changes to
                the regulatory text at 206.206(b)(1)(ii)(B) and (b)(2)(ii)(B) as a
                result of the comment.
                M. Untimeliness and Imposition of Penalties Upon FEMA
                 The State DEM [FEMA-2019-0012-0008] proposed the imposition of
                penalties on FEMA when it exceeds the 90-day deadline for requesting
                additional information for both first and second appeals. This
                commenter also suggested that if FEMA misses its deadline, recipients
                and applicants should not be held to their deadlines, and FEMA should
                be barred from requesting information to substantiate timeliness. The
                State DEM also proposed a requirement for FEMA to provide monthly
                status updates concerning each appeal to the applicant and recipient.
                As noted above, the Stafford Act does not include any remedies or
                corrective actions in the event that FEMA fails to meet the 90-day
                deadline to decide appeals. However, FEMA has a public assistance
                second appeals tracker available to the public at https://www.fema.gov/about/openfema/data-sets/fema-public-assistance-second-appeals-tracker.
                 With regards to the State DEM's [FEMA-2019-0012-0008] suggestion
                that untimeliness on FEMA's part should relieve applicants and
                recipients from complying with their own deadlines. Section 423 of the
                Stafford Act requires an applicant to submit an appeal within 60 days;
                FEMA does not have the authority to alter or ignore this requirement.
                FEMA does have a duty to be a responsible steward of public monies and
                must therefore conduct a thorough review of all grants to ensure
                compliance with the law, even if that review happens to exceed the 90-
                day deadline provided for disposition of appeals. Finally, FEMA will
                not impose additional responsibilities upon itself, such as status
                updates, outside of what is prescribed by law. Consequently, FEMA did
                not make any changes to the regulatory text as a result of the comment.
                N. Implementation
                 A State DEM [FEMA-2019-0012-0008] commented that 206.206(b)(1)(v)
                and (b)(2)(v) do not have deadlines or timelines for implementing a
                successful appeal. The State DEM suggested that FEMA adopt an actual
                deadline to avoid delaying project development without explanation to
                the applicant or recipient. The State DEM suggested language stating
                that if the Regional Administrator grants an appeal, FEMA must begin
                implementing the action within 30 days of the determination date, or at
                a minimum, provide the applicants and recipient with a status update
                indicating when the action would be implemented. In a separate comment,
                the agency also suggested requiring the Assistant Administrator for the
                Recovery Directorate to perform this action regarding second appeals.
                 FEMA finds the proposed language to be unnecessary because it
                effectively requires FEMA to impose requirements on itself not
                otherwise imposed by Congress. FEMA trusts the discretion of its
                Regional Administrators \7\ to make appropriate decisions on addressing
                successful appeals. Also, providing status updates would unintendedly
                affect FEMA's ability to meet timelines for other actions. Therefore,
                FEMA did not make any changes to the regulatory text at
                206.206(b)(1)(v) and (b)(2)(v) as a result of the comment.
                ---------------------------------------------------------------------------
                 \7\ The Assistant Administrator for the Recovery Directorate
                will direct the Regional Administrator to take appropriate
                implementing action(s) regarding successful second appeals.
                ---------------------------------------------------------------------------
                O. Content of Arbitration Request
                 A State DEM [FEMA-2019-0012-0008] commented on
                206.206(b)(3)(iii)(C), which states that a request for arbitration must
                contain a written statement that specifies the amount in dispute, all
                documentation supporting the position of the applicant, the disaster
                number, and the name and address of the applicant's authorized
                representative or counsel. Additional supplemental documentation is
                permitted as ordered by the CBCA.
                 The State DEM believed the language was confusing because ``all
                documentation'' implied applicants could not submit supplemental
                information within a request for arbitration. The State DEM suggested
                removing the word ``all'' and adding language to allow supplemental
                documentation as requested by the CBCA. FEMA notes that the CBCA
                already has rules on supplemental materials located at 48 CFR 6106.608,
                Evidence; timing [Rule 608]. Accordingly, FEMA did not make any changes
                to the regulatory text at 206.206(b)(3)(iii)(C) as a result of the
                comment.
                P. Emergency Versus Major Disaster Declaration Determinations
                 As mentioned before, the State DEM [FEMA-2019-0012-0008] submitted
                an emergency declaration determination as their second and third
                attachment to their comment related to timeliness of appeals. In the
                third attachment, FEMA cites to 44 CFR 206.206 for the authority to
                appeal this emergency declaration determination. During the course of
                adjudicating this comment, FEMA
                [[Page 45666]]
                reviewed how the NPRM discussed emergency versus major disaster
                determinations.
                 In the NPRM, FEMA limited arbitrations to major disaster
                declaration determinations at proposed 206.206(b)(3)(i)(A) since the
                right of arbitration is housed in paragraph (d) of Section 423 of the
                Stafford Act. Section 423 is under Title IV of the Stafford Act, which
                is entitled ``Major Disaster Assistance Programs.'' Also, subparagraph
                (d)(5)(A) of 423 of the Stafford Act states that the applicant shall
                submit to the arbitration process established under the authority
                granted under Section 601 of Public Law 111-5. FEMA's corresponding
                regulations under 206.209 are entitled ``Arbitration for Public
                Assistance determinations related to Hurricanes Katrina and Rita (Major
                disaster declarations DR-1603, DR-1604, DR-1605, DR-1606, and DR-
                1607).'' Therefore, FEMA limited arbitration in the NPRM to major
                disaster declarations.
                 Yet, there was no corresponding limitation in the appeals section
                of the NPRM because applicants may appeal emergency declaration
                decisions. As a result of the deliberation surrounding a response to
                this comment, FEMA did discover that the NPRM imprecisely stated in the
                Executive Orders 12866 and 13563 section that ``[t]his proposed rule
                does not apply to emergency disaster declarations.'' Rather, it should
                have stated that ``[t]he Regulatory Evaluation does not include a
                discussion of emergency disaster declarations; since, arbitration is
                only available to dispute the determinations of major disaster
                declarations.'' There was no need to analyze the cost for applicants to
                appeal determinations of emergency disaster declarations in the NPRM,
                since FEMA currently allows for such and the NPRM did not limit appeals
                to major disaster declaration determinations. FEMA did not make any
                changes to the regulatory text at 206.206 as a result of this comment
                but it did update the Regulatory Evaluation as noted above.
                III. Summary of Other Changes
                 The NPRM at 44 CFR 206.206(a) proposed to define the term
                ``urbanized area'' to mean the area as identified by the United States
                Census Bureau (USCB). The USCB defines an ``urbanized area'' as an area
                that consists of densely settled territory that contains 50,000 or more
                people. For clarity and to comply with publication requirements found
                in 1 CFR chapter I, FEMA has revised the final rule's definition of
                ``urbanized area'' as an area that consists of densely settled
                territory that contains 50,000 or more people.
                 FEMA realized that the NPRM at 206.206 was silent regarding the
                recipient-related first and second appeal time limits. Section 423(a)
                of the Stafford Act allows appeals within 60 days. Therefore, in the
                first appeal time limits portion of the final rule FEMA aligned with
                this requirement by adding the following sentence at the end of
                206.206(b)(1)(ii)(A): A recipient may make a recipient-related first
                appeal within 60 calendar days from the date of the FEMA determination
                that is the subject of the appeal and must electronically submit their
                first appeal to the Regional Administrator. FEMA also had to make a
                corresponding addition to the second appeal time limits portion of the
                final rule by adding the following sentence to the end of
                206.206(b)(2)(ii)(A): If the Regional Administrator denies a recipient-
                related first appeal in whole or in part, the recipient may make a
                recipient-related second appeal within 60 calendar days from the date
                of the Regional Administrator's first appeal decision and the recipient
                must electronically submit their second appeal to the Assistant
                Administrator for the Recovery Directorate.
                 FEMA realized that the NPRM at 206.206(b)(3)(i)(A) does not follow
                the language of Section 423(d)(1) of the Stafford Act, which says that
                an applicant for assistance may request arbitration to dispute the
                eligibility for assistance or repayment of assistance. Rather, the NPRM
                at 206.206(b)(3)(i)(A) states that an applicant may request arbitration
                if there is a disputed agency determination. Therefore, in the final
                rule FEMA is removing the phrase ``disputed agency determination'' from
                paragraph 206.206(b)(3)(i)(A) and adding ``dispute of the eligibility
                for assistance or of the repayment of assistance'' in its place.
                 FEMA also realized that the NPRM at 206.206(b) does not follow the
                language of Section 423 of the Stafford Act, which says that an
                applicant for assistance may request arbitration to dispute the
                eligibility for assistance or repayment of assistance. Rather, the NPRM
                at 206.206(b) says that an eligible applicant or recipient may appeal
                or an eligible applicant may arbitrate any determination previously
                made related to an application for or the provision of PA according to
                the procedures of this section. Because the regulatory text does not
                follow the statutory language, FEMA is removing the phrase ``or an
                eligible applicant may arbitrate'' from 206.206(b) and FEMA is adding a
                second sentence to 206.206(b) that says: ``An eligible applicant may
                request arbitration to dispute the eligibility for assistance or
                repayment of assistance.''
                 FEMA is making these technical changes because FEMA does not have
                the discretion to deviate from statutorily imposed restrictions.
                Section 423(a) of the Stafford Act allows an applicant to appeal any
                decision regarding eligibility for, from, or amount of assistance.
                Whereas, Section 423(d)(1) of the Stafford Act allows an applicant to
                arbitrate the eligibility for assistance or repayment of assistance.
                Since Congress did not use the same language, there is a difference
                between what an applicant can arbitrate and what an applicant can
                appeal, which FEMA must delineate in its regulations at 44 CFR 206.206.
                Since these requirements are statutorily imposed and FEMA has no
                discretion FEMA may make these edits as technical changes in the final
                rule.
                 Additional technical changes to the final rule are at 44 CFR
                206.206(b)(1)(iv)(B)(1) and (b)(2)(iv)(B)(1) as the Office of
                Management and Budget (OMB) revised the cross references from 2 CFR
                200.338 to 2 CFR 200.339; as, OMB revised sections of their Guidance
                for Grants and Agreements. (See 85 FR 49506, Aug. 13, 2020.)
                 The final rule also includes corrections of typographical errors
                and other non-substantive stylistic changes from the NPRM. FEMA made a
                typographical error under the Executive Orders 12866 and 13563 section
                Impartiality heading. In the NPRM, the Executive Orders 12866 and 13563
                section stated that CBCA found in favor of the applicant fully or
                partially in less than 20 percent of the time. The ``20 percent'' was a
                typographical error. It should have read ``55 percent'' to align with
                the correct data, which was listed on Table 13 of the NPRM. In this
                final rule, the data for the Executive Orders 12866 and 13563 section
                has been updated with the most recent 10-years of available data at the
                time of the analysis. Therefore, FEMA has replaced ``less than 20''
                with ``about 13'' in the final rule to make sure that the narrative of
                the percentage that the CBCA found in favor of the applicant fully or
                partially aligns with Table 13.
                 The final rule also includes other non-substantive changes from the
                NPRM. For instance, FEMA added a footnote to the Executive Orders 12866
                and 13563 section under the Cost to Government/FEMA heading that ``FEMA
                estimates that we could need up to four expert witnesses. FEMA's expert
                witnesses may or may not speak at the hearing. Additionally, FEMA may
                hire an expert witness so that FEMA can consult with
                [[Page 45667]]
                them about the subject matter.'' The footnote adds clarity to the
                statement that FEMA assumes that it would use four expert witnesses per
                case. This change is for clarification purposes only.
                 In this final rule, FEMA added onto footnote 11 in the Executive
                Orders 12866 and 13563 section under the first bullet point under the
                Assumptions heading that ``[i]n the final rule, the data for the
                Executive Orders 12866 and 13563 section has been updated with the most
                recently available data at the time of the analysis.'' The edits to
                footnote 11 clarifies that the Executive Orders 12866 and 13563 section
                contains the most recent data at the time of the analysis and that the
                figures will be in the most recent dollars. For the NPRM, 2018 dollars
                were used based off the Bureau of Labor Statistics (BLS) Consumer Price
                Index (CPI) data. In the final rule, 2019 dollars were used based off
                the BLS CPI data as it became available. This addition is for
                clarification purposes only.
                 Another non-substantive stylistic change from the NPRM was made to
                the definition of ``applicant'' and ``recipient'' in 206.206(a).
                Instead of saying that the ``applicant'' or the ``recipient'' ``refers
                to,'' the final rule regulatory text says that the ``applicant'' or the
                ``recipient'' ``has the same meaning as.'' So, the definitions in the
                final rule regulatory text are: Applicant has the same meaning as the
                definition at Sec. 206.201(a) and Recipient has the same meaning as
                the definition at Sec. 206.201(m).
                 The final non-substantive stylistic and grammar changes from the
                NPRM were made to 206.206(c) in the final rule. First, FEMA split the
                paragraph into two subparagraphs based on whether the subparagraph
                dealt with the finality of a FEMA decision or a CBCA decision. Then,
                FEMA corrected a grammar error in the first sentence of 206.206(c)(1)
                by revising ``constitute'' to ``constitutes.'' Since, FEMA split
                paragraph 206.206(c) from the NPRM into two subparagraphs in the final
                rule, FEMA had to include that final decisions are not subject to
                further administrative review in both subparagraphs, as it applies to
                the finality of both FEMA and CBCA decisions.
                IV. Regulatory and Statutory Analyses
                A. Executive Order 12866, as Amended, Regulatory Planning and Review
                and Executive Order 13563, Improving Regulation and Regulatory Review
                 Executive Orders 12866 (``Regulatory Planning and Review'') and
                13563 (``Improving Regulation and Regulatory Review'') direct agencies
                to assess the costs and benefits of available regulatory alternatives
                and, if regulation is necessary, to select regulatory approaches that
                maximize net benefits (including potential economic, environmental,
                public health and safety effects, distributive impacts, and equity).
                Executive Order 13563 emphasizes the importance of quantifying both
                costs and benefits, of reducing costs, of harmonizing rules, and of
                promoting flexibility.
                 OMB has designated this rule as a non-significant regulatory
                action, under section 3(f) of Executive Order 12866. Accordingly, OMB
                has not reviewed it.
                Need for Regulatory Action
                 When FEMA determines that an applicant or recipient is ineligible
                for PA funding, or if the applicant or recipient disputes the amount
                awarded, FEMA has implemented a process to appeal the decision. First,
                the applicant or recipient can appeal to the FEMA Regional
                Administrator (RA), who will make a determination on the appeal. If the
                applicant or recipient does not submit a second appeal of the RA's
                determination, the result of the first appeal is the final agency
                determination. If the applicant or recipient is not satisfied with the
                result of the first appeal, they can submit a second appeal to the FEMA
                Assistant Administrator for the Recovery Directorate. The result of the
                second appeal is a final decision of FEMA.
                 This rule implements provisions for arbitration in lieu of a second
                appeal, or in cases where an applicant has had a first appeal pending
                with FEMA for more than 180 calendar days. Applicants choosing
                arbitration would have their case heard by a panel of judges with the
                CBCA. A decision by the majority of the CBCA panel constitutes a final
                decision that would be binding on all parties. Final decisions would
                not be subject to further administrative review.
                 Pursuant to 42 U.S.C. 5189a, as amended by Section 1219 of the
                DRRA, to request arbitration, an applicant (1) must have a dispute
                arising from a disaster declared after January 1, 2016; (2) must be
                disputing an amount that exceeds $500,000 (or $100,000 for an applicant
                in a ``rural area'' with a population of less than 200,000 and outside
                of an urbanized area); and, (3) must have submitted a first appeal and
                has either received a denial of the first appeal or has not received a
                decision after 180 calendar days.
                 This final rule will directly affect applicants or recipients
                disputing FEMA PA eligibility determinations or disputing the amount
                awarded for PA projects. Applicants are required to submit appeals
                through their State, or in the case of a Tribal declaration,\8\ their
                Tribal government (recipients). The recipient will then forward the
                request to the FEMA Regional Administrator, along with a recommendation
                for a first appeal.
                ---------------------------------------------------------------------------
                 \8\ Tribes may choose to apply for PA independently as a
                recipient (tribal declaration) or may submit through their State as
                a subrecipient.
                ---------------------------------------------------------------------------
                 If an applicant has not received a decision on their first appeal
                after 180 days and meets the other two previously-outlined criteria,
                they may withdraw the first appeal and request arbitration.
                Alternatively, if the applicant does not agree with the Regional
                Administrator's decision on the first appeal, they may either submit a
                second appeal to the FEMA Assistant Administrator for the Recovery
                Directorate or request arbitration. A panel of judges with the CBCA
                would hear any arbitration cases. The applicant would send a
                representative and possibly expert witnesses to the arbitration
                hearing. The recipient would also send a representative to support the
                applicant. FEMA representatives and expert witnesses would also attend
                the hearing to defend FEMA's determination in the case of an applicant
                not receiving the first appeal decision within 180 days or to defend
                FEMA's first appeal decision.
                 The final rule will codify regulations for the arbitration process
                as directed by 42 U.S.C. 5189a(d)(5). Applicants are eligible for
                arbitration for disputes arising from major disasters declared on or
                after January 1, 2016. This process is already available, and eligible
                applicants have been notified of this option.\9\
                ---------------------------------------------------------------------------
                 \9\ On December 18, 2018, FEMA implemented section 1219 of DRRA
                by posting a Fact Sheet on its website. After CBCA published their
                March 5, 2019 proposed rule, see 84 FR 7861, FEMA updated the:
                Section 1219 Public Assistance Appeals and Arbitration Fact Sheet
                (3-27-19). After CBCA finalized their rule on June 21, 2019, see 84
                FR 29085, FEMA again updated the Fact Sheet. The current Fact Sheet
                can be found at: https://www.fema.gov/sites/default/files/2020-07/fema_DRRA-1219-public-assistance-arbitration-right_fact-sheet.pdf.
                (2-20). Accessed June 8, 2021.
                ---------------------------------------------------------------------------
                 As amended by Section 1219 of the DRRA, 42 U.S.C. 5189a(d) names
                the CBCA as the entity responsible for conducting these arbitrations.
                The CBCA has promulgated regulations at 48 CFR part 6106 establishing
                its arbitration procedures for such purpose.\10\
                ---------------------------------------------------------------------------
                 \10\ 48 CFR part 6101, Rules of Procedure of the Civilian Board
                of Contract Appeals, also covers PA arbitrations.
                ---------------------------------------------------------------------------
                 This final rule establishes a 60-calendar day deadline for
                submitting
                [[Page 45668]]
                requests for arbitration (Sec. 206.206(b)(3)(iii)(B)) so that
                submission time limits for second appeals and arbitrations are the
                same. FEMA believes that there should be consistency between the time
                to request arbitration and the time to submit second appeals for
                administrative ease and to reduce potential confusion amongst
                applicants.
                Affected Population
                 The final rule will affect disputes from PA applicants arising from
                major disaster declarations. Specifically, applicants that (1)
                submitted a first appeal and received a negative decision, or, (2) have
                a first appeal pending for more than 180 days and wish to withdraw the
                appeal in favor of arbitration. Applicants may only request arbitration
                for disputes in excess of $500,000, or $100,000 in rural areas, and for
                disputes that arise from major disasters declared on or after January
                1, 2016.
                Summary of Regulatory Changes
                 FEMA is revising its PA appeals regulation at 44 CFR 206.206 to add
                in the new right to arbitration under DRRA, in conjunction with some
                revisions to the appeals process. DRRA added arbitration as a permanent
                alternative to a second appeal under the PA Program, or for applicants
                that have had a first appeal pending with FEMA for more than 180
                calendar days that may withdraw such appeal and submit a request for
                arbitration, provided the dispute is in excess of $500,000, or $100,000
                in rural areas, and for disputes that arise from major disasters
                declared on or after January 1, 2016. The other major revisions to 44
                CFR 206.206 include adding definitions; adding subparagraphs to clarify
                what actions FEMA may take and will not take while an appeal is pending
                and state that FEMA may issue separate guidance as necessary, similar
                to current 44 CFR 206.209(m); adding a finality of decision paragraph;
                requiring electronic submission for appeals and arbitrations documents;
                and clarifying overall time limits for first and second appeals.
                 In the final rule, a non-substantive stylistic change from the NPRM
                was made to the definition of ``applicant'' and ``recipient'' in Sec.
                206.206(a). Instead of saying that the ``applicant'' or the
                ``recipient'' ``refers to,'' the final rule regulatory text says that
                the ``applicant'' or the ``recipient'' ``has the same meaning as.'' So,
                the definitions in the final rule regulatory text are: Applicant has
                the same meaning as the definition at Sec. 206.201(a) and Recipient
                has the same meaning as the definition at Sec. 206.201(m).
                 In this final rule, FEMA is adding a definition of Regional
                Administrator and making changes to the regulatory text regarding first
                appeals and second appeals at Sec. 206.206(b)(1)(ii)(A) and
                (b)(2)(ii)(A) as a result of the 60-day appeals deadline comments.
                 Additionally, in this final rule, FEMA is making technical
                revisions at Sec. Sec. 206.206(b) and 206.206(b)(3)(i)(A) to align the
                regulatory text with the dispute of the eligibility for assistance or
                repayment of assistance language of Section 423(d)(1) of the Stafford
                Act.
                 FEMA realized that the NPRM at Sec. 206.206 was silent regarding
                the recipient-related first and second appeal time limits. Section
                423(a) of the Stafford Act allows appeals within 60 days. Therefore, in
                the first appeal time limits portion of the final rule FEMA aligned
                with this requirement by adding the following sentence at the end of
                Sec. 206.206(b)(1)(ii)(A): A recipient may make a recipient-related
                first appeal within 60 calendar days from the date of the FEMA
                determination that is the subject of the appeal and must electronically
                submit their first appeal to the Regional Administrator. FEMA also had
                to make a corresponding addition to the second appeal time limits
                portion of the final rule by adding the following sentence to the end
                of Sec. 206.206(b)(2)(ii)(A): If the Regional Administrator denies a
                recipient-related first appeal in whole or in part, the recipient may
                make a recipient-related second appeal within 60 calendar days from the
                date of the Regional Administrator's first appeal decision and the
                recipient must electronically submit their second appeal to the
                Assistant Administrator for the Recovery Directorate. This regulatory
                change is not expected to have a significant economic impact.
                 FEMA provided clarifying edits to Sec. 206.206(b)(3)(iii)(B)(2) in
                the final rule, so that an applicant understands that if they choose
                arbitration pursuant to Section 423(d) of the Stafford Act, as FEMA has
                not responded to an applicant's first appeal within 180 days, then they
                must withdraw the pending appeal before they file the request for
                arbitration. Basically, the applicant cannot arbitrate and appeal at
                the same time. Plus, FEMA provided clarifying edits to Sec.
                206.206(b)(3)(iii)(B)(2) to remove the phrase ``and the CBCA.'' FEMA
                deleted this phrase, as a pending first appeal would not be pending
                before the CBCA, so the applicant would have no reason to notify the
                CBCA of the first appeal withdrawal.
                 For clarity and to comply with publication requirements found in 1
                CFR chapter I, FEMA has revised the final rule's definition of
                ``urbanized area'' as an area that consists of densely settled
                territory that contains 50,000 or more people.
                 Additional technical changes to the final rule are at 44 CFR
                206.206(b)(1)(iv)(B)(1) and (b)(2)(iv)(B)(1) as the Office of
                Management and Budget (OMB) revised the cross references from 2 CFR
                200.338 to 2 CFR 200.339; as, OMB revised sections of their Guidance
                for Grants and Agreements. (See 85 FR 49506, Aug. 13, 2020.)
                 So in the final rule, FEMA has split the first sentence of Sec.
                206.206(b)(3)(iii)(B)(2) into two sentences that say if the first
                appeal was timely submitted, and the Regional Administrator has not
                rendered a decision within 180 calendar days of receiving the appeal,
                an applicant may arbitrate the decision of FEMA. To request
                arbitration, the applicant must first electronically submit a
                withdrawal of the pending appeal simultaneously to the recipient and
                the FEMA Regional Administrator. This regulatory change will not have
                an economic impact.
                 FEMA also added clarifying language to the last sentence of Sec.
                206.206(b)(3)(iii)(B)(2) by replacing ``may'' with ``must'' and by
                adding the phrase ``to the recipient, the CBCA, and FEMA'' after
                arbitration. So, Sec. 206.206(b)(3)(iii)(B)(2) in the final rule says
                that the applicant must then submit a request for arbitration to the
                recipient, the CBCA, and FEMA within 30 calendar days from the date of
                the withdrawal of the pending appeal. FEMA wants to clarify that if an
                applicant withdraws a first appeal, then the applicant must submit a
                request for arbitration within 30 calendar days. If the applicant does
                not follow the requirements of Sec. 206.206(b)(3)(iii)(B)(2), then the
                applicant's request for arbitration will be denied for timeliness. This
                regulatory change will not have an economic impact.
                 The final non-substantive stylistic and grammar changes from the
                NPRM were made to Sec. 206.206(c) in the final rule. First, FEMA split
                the paragraph into two subparagraphs based on whether it dealt with the
                finality of a FEMA decision or a CBCA decision. Then, FEMA corrected a
                grammar error in the first sentence of Sec. 206.206(c)(1) by revising
                ``constitute'' to ``constitutes.'' Since, FEMA split paragraph
                206.206(c) from the NPRM into two subparagraphs in the final rule, FEMA
                had to include that final decisions are not subject to further
                [[Page 45669]]
                administrative review in both subparagraphs, as it applies to the
                finality of both FEMA and CBCA decisions.
                Assumptions
                 This analysis used the following assumptions:
                 All monetary values are presented in 2019 dollars. FEMA
                used the Bureau of Labor Statistics (BLS) Consumer Price Index for All
                Urban Consumers (CPI-U): U.S. city average, all items, by month, Annual
                Average as published December 2019.\11\
                ---------------------------------------------------------------------------
                 \11\ Historical Consumer Price Index for All Urban Consumers
                (CPI-U): U.S. city average, all items, by month. Bureau of Labor
                Statistics: Consumer Price Index 2019. Accessed October 23, 2020.
                https://www.bls.gov/cpi/tables/supplemental-files/archive-2019.zip.
                In the final rule, the data for the Executive Orders 12866 and 13563
                section has been updated with the most recently available data at
                the time of the analysis.
                ---------------------------------------------------------------------------
                 This analysis does not include a discussion of emergency
                disaster declarations; since, arbitration is only available to dispute
                the determinations of major disaster declarations.\12\
                ---------------------------------------------------------------------------
                 \12\ The NPRM incorrectly stated in the Executive Orders 12866
                and 13563 section that ``[t]his proposed rule does not apply to
                emergency disaster declarations.'' The NPRM should have stated that
                here was no need to the cost for applicants to appeal determinations
                of emergency disaster declarations because FEMA currently allows for
                such and the NPRM did not limit appeals to major disaster
                declaration determinations.
                ---------------------------------------------------------------------------
                 FEMA assumed the length of time for an arbitration case is
                based on the hearing location.
                 FEMA used 2019 wage rates for all parties involved in
                arbitration cases.
                Baseline
                 Following guidance in OMB Circular A-4, FEMA assessed the impacts
                of this final rule against a pre-statutory baseline. The pre-statutory
                baseline is an assessment of what the world would look like if the
                relevant statute(s) had not been adopted. In this instance, FEMA has
                been accepting arbitration cases since the implementation of DRRA, and
                retroactive to January 1, 2016. Since the statute has already been
                implemented and because this rule is not making additional substantive
                changes, the rule has no cost or benefits related to the new right of
                arbitration under a no-action baseline. The costs, benefits, and
                transfers of this rule are measured against the pre-statutory baseline.
                The benefit of this rule is making information publicly available in
                the CFR for transparency and to prevent any confusion on the most up-
                to-date arbitration process.
                 Currently, FEMA has no permanent regulations for arbitrations
                outside of Hurricanes Katrina and Rita. Since the passage of the DRRA,
                certain PA applicants under declarations since January 1, 2016 may
                request arbitration pursuant to 42 U.S.C. 5189a(d). On June 21, 2019,
                CBCA published a final rule (see 84 FR 29085) and FEMA has published a
                corresponding fact sheet. Between January 1, 2016 and November 9, 2020,
                FEMA received 20 requests for arbitration.\13\ Three of these cases are
                still in progress, so FEMA does not have available data on the outcome
                of these cases. Of the 17 closed cases, FEMA prevailed in 10 cases, the
                applicant prevailed in 4 cases, and the applicant withdrew from the
                arbitration process prior to a decision in 3 cases. These figures will
                change as FEMA continues to receive arbitration requests.
                ---------------------------------------------------------------------------
                 \13\ The number of arbitration requests was provided by FEMA's
                Office of Chief Counsel Disaster Disputes Branch as of November 9,
                2020.
                ---------------------------------------------------------------------------
                 While arbitration is available for disaster declarations
                retroactive to January 1, 2016, the process did not become available to
                applicants until FEMA published guidance in December 2018, and FEMA did
                not begin receiving arbitration requests until March 7, 2019. This
                means that FEMA only has 19 months of historical data, and therefore,
                FEMA relied on older arbitration regulations as a proxy for the
                expected number of arbitration cases arising out of this final rule.
                 FEMA previously had regulations permitting arbitrations arising
                from disaster declarations for Superstorm Sandy. No applicants
                requested arbitration pursuant to these regulations. The authority for
                these arbitrations has sunset and FEMA has since removed the
                regulations. FEMA has regulations, at 44 CFR 206.209, permitting
                arbitrations arising from disaster declarations for Hurricanes Katrina
                and Rita. This regulation is only available for PA applicants under
                Hurricane Katrina and Rita disaster declarations. The number of
                arbitrations submitted under this authority and the process relied on
                to conduct these arbitrations provide insight to project the number of
                arbitration cases in this final rule. While the Katrina/Rita
                arbitration regulations have some key differences from this final
                regulation, such as time frames and allowing applicants to request
                arbitration in lieu of first appeals, it is the best historical data
                that FEMA has available to estimate the number of expected arbitration
                cases for this final rule.
                 FEMA recognized that the regulations at 44 CFR 206.209 have a 30-
                day time limit for submitting arbitration requests; whereas, this final
                rule has a 60 calendar-day time limit for arbitrations. FEMA was not
                able to estimate the impact these additional 30 days may have on the
                number of arbitrations submitted.
                Number of Potential Arbitration Cases
                 In addition to reviewing the limited historical data available on
                the 20 arbitration cases, FEMA also examined the number of arbitrations
                submitted from the Hurricane Katrina and Rita disasters pursuant to 44
                CFR 206.209, in lieu of filing a first appeal, from 2010 through 2019
                to derive an estimate of the number of arbitration cases that
                applicants might submit per year pursuant to 42 U.S.C. 5189a(d).
                Pursuant to 42 U.S.C. 5189(d)(5)(A), arbitrations authorized by the
                DRRA must follow the process established in 44 CFR 206.209 for Katrina
                and Rita arbitrations, so FEMA relied on the annual average percentage
                of cases submitted under this regulation as a basis for estimating the
                number of cases that would arise for this final rule. This analysis was
                conducted using data from 2010 through 2019.\14\ Applicants could
                arbitrate in lieu of a first appeal only if the amount of the project
                was greater than $500,000.\15\ During this period, applicants submitted
                a total of 73 arbitrations and a total 225 first appeals.\16\ From this
                available data, applicants chose arbitration in lieu of a first appeal
                32 percent of the time ((73 / 225) x 100 = approximately 32 percent).
                ---------------------------------------------------------------------------
                 \14\ The proposed rule stated that ``The authority to arbitrate
                in lieu of a filing a first appeal for Hurricanes Katrina and Rita
                became available in February 2009 and 2017 is the latest calendar
                year where complete data was available at the time of this
                analysis.'' Review under the Executive Orders 12866 and 13563
                section in the proposed rule was conducted with data available at
                the time. FEMA typically uses 10 years of historical data for their
                analysis. However, 10 years of historical data was not available at
                the time of the analysis of the proposed rule. For this final rule,
                FEMA was able to use 10 years of historical data, 2010 through 2019.
                Hurricane Katrina and Rita occurred in 2005. FEMA notes that as time
                passes, fewer applicants are submitting requests for public
                assistance each year, as over 15 years has passed since the Katrina/
                Rita declarations.
                 \15\ Please note that arbitration cases for Hurricanes Katrina
                and Rita are not bound by a threshold for rural areas as is this
                rule. FEMA does not know if this limitation will result in more or
                less cases submitted.
                 \16\ Data on appeals and arbitrations is provided by FEMA's
                Office of Chief Counsel Disaster Disputes Branch. Not all these
                first appeals would have been eligible for arbitration. To be
                eligible for arbitration, the amount in dispute would have had to
                have been greater than $500,000. FEMA does not have amount in
                dispute data available for these cases, so the arbitration
                percentage may be overstated.
                ---------------------------------------------------------------------------
                 Pursuant to 42 U.S.C. 5189(d)(5)(B), arbitration is authorized by
                the DRRA in lieu of a second appeal where the dispute is more $500,000,
                or $100,000 for rural areas. For second appeals
                [[Page 45670]]
                estimates, FEMA looked at all PA appeals from 2010 through 2019, rather
                than just the appeals resulting from Hurricanes Katrina and Rita since
                a second appeal was available to all applicants. FEMA found that there
                were 874 second appeals submitted.\17\ Of that total, FEMA had data on
                the amount in dispute for 751 appeals. FEMA applied the urban/rural and
                minimum project amount requirements to these appeals and found that 353
                or 47 percent would have been eligible for arbitration under this final
                rule ((353 / 751) x 100 = approximately 47 percent).\18\
                ---------------------------------------------------------------------------
                 \17\ During the period of 2010-2019, 874 second level appeals
                were submitted. FEMA has amount in dispute data for 751 cases. FEMA
                does not have the amount in dispute data on the 123 cases because
                FEMA did not maintain electronic records for appeals prior to 2015.
                Prior to 2015, this data was manually entered into a database with
                many fields left blank.
                 \18\ Out of 751 cases, 258 had an amount in dispute greater than
                $500,000 and would be eligible regardless of the urban/rural
                classification. 288 cases were for amounts between $100,000 and
                $500,000, of which 95 were classified as rural. 353 (= 258 + 95)
                cases out of 751, or 47 percent would have met the eligibility
                requirements for arbitration in lieu of a second appeal.
                ---------------------------------------------------------------------------
                 FEMA used the number of second appeals by year, then applied the
                percent eligible for arbitration under the final rule of 47 percent,
                then applied the percent choosing arbitration in lieu of a first appeal
                of 32 percent to calculate the expected number of arbitration cases
                from 2010 to 2019 as shown in Table 1.
                 Table 1--Total and Annual Average Estimated Arbitration Cases per Year
                ----------------------------------------------------------------------------------------------------------------
                 Percent eligible Expected number
                 CY Number of second under final rule Percent choosing of arbitration
                 appeals (%) arbitration (%) cases
                ----------------------------------------------------------------------------------------------------------------
                2010................................ 93 47 32 14
                2011................................ 107 47 32 16
                2012................................ 92 47 32 14
                2013................................ 102 47 32 15
                2014................................ 82 47 32 12
                2015................................ 43 47 32 6
                2016................................ 83 47 32 12
                2017................................ 76 47 32 11
                2018................................ 110 47 32 17
                2019................................ 86 47 32 13
                 ---------------------------------------------------------------------------
                 Total........................... 874 ................. ................. 130
                 ---------------------------------------------------------------------------
                 Average..................... 87 ................. ................. 13
                ----------------------------------------------------------------------------------------------------------------
                 Based on historical data from 2010 through 2019 and case data from
                44 CFR 206.209, FEMA estimates that there would be an average of 13
                arbitration cases in lieu of a second appeal per year under the final
                rule.
                 Arbitration has been available under 42 U.S.C. 5189a(d)(5) since
                January 1, 2016. So far, 20 cases were submitted, with three submitted
                for a first appeal lasting more than 180 days. Based on this limited
                data, FEMA estimates that 15 percent of arbitration cases would result
                from a withdrawal of a first appeal.\19\ Applying the 15 percent
                arbitration rate to the annual average number of expected arbitration
                cases would result in two additional arbitration case per year (15
                percent x 13 cases = 1.95, rounded to two cases). Therefore, FEMA
                estimates an average of 15 arbitration cases per year (13 + 2 = 15
                arbitrations per year).
                ---------------------------------------------------------------------------
                 \19\ Calculation: (3 cases where a first appeal lasted more than
                180 days / 20 arbitration cases) x 100 = 15 percent.
                ---------------------------------------------------------------------------
                 In this final rule, FEMA is removing the phrase ``or an eligible
                applicant may arbitrate'' from ``206.206(b) and FEMA added a second
                sentence to 206.206(b) that says: ``[a]n eligible applicant may request
                arbitration to dispute the eligibility for assistance or repayment of
                assistance'' so that it follows the Stafford Act. This change in this
                final rule will not impact the number of arbitration cases per year
                since applicants can still request to arbitrate the case. However, the
                results of the arbitration may be impacted by the change in language.
                FEMA further discusses this point in our transfers and uncertainty
                analysis sections.
                Costs
                 Based on experience from the arbitrations conducted for Hurricanes
                Katrina and Rita, costs from this final rule would arise mainly from
                travel expenses; opportunity costs of time for the applicant and
                applicant's representatives, recipient's representatives, and FEMA's
                representatives; and contract costs for applicants and FEMA to retain
                legal counsel and experts. Cost estimates are based on the expected
                number of arbitration cases per year. Since FEMA does not reimburse for
                applicant arbitration expenses, FEMA does not have data on the expenses
                incurred by applicants who have arbitrated from Hurricanes Katrina and
                Rita to serve as a proxy for this final rule. Other provisions of the
                final rule, such as timeframe requirements, electronic filing
                requirements, technical advice and clarifications would not have
                associated costs. FEMA does not expect the electronic filing
                requirement to have associated costs since nearly all applicants have
                access to internet and email, and most submit arbitration requests
                through their attorneys. The final timeframe requirements would align
                the submission deadlines for arbitration and appeals and would not
                place additional burdens on the applicants. FEMA currently provides
                technical advice as needed, so this would not be a new practice under
                this final rule.
                 The arbitration process is highly customizable for the applicant.
                The applicant may choose to use an attorney, or several attorneys to
                represent them during the arbitration process. The applicant may also
                choose not to hire legal representation at all. Additionally, the
                applicant may use any number of expert witnesses or none. Because of
                the variability in the way arbitrations are conducted, FEMA is
                presenting what it considers a typical case upon which to base its cost
                estimates. This ``typical case'' is based on recent experience with the
                20 arbitration cases already filed. Generally, the applicant will use
                one or two attorneys and at least one expert witness. However, the
                arbitration
                [[Page 45671]]
                process is extremely flexible, and an applicant can use whatever
                resources it thinks would be most appropriate for its case. For
                example, in one case, the applicant hired several non-local attorneys
                for representation. In another case, the arbitration was conducted via
                written reports only, and no hearing was conducted.
                 Costs to the CBCA are not discussed in this analysis. CBCA
                promulgated their own regulations regarding their procedures for FEMA
                arbitration cases. Under DRRA, CBCA will be responsible for covering
                the costs of conducting arbitration hearings. All other parties
                including the applicant, the recipient, and FEMA would be responsible
                for covering their own expenses. The final rule does not mandate any
                costs for the applicant or recipient. The arbitration process would be
                entirely voluntary on the part of the applicant. Applicants would
                choose to request arbitration if they determine that the cost of
                arbitration is justified by the potential benefits.
                 This analysis estimates a range of potential costs based on the
                applicant's or recipient's use of attorneys for representation. The
                final rule would not require attorneys to represent any party for
                arbitration. However, FEMA would be represented by attorneys at any
                arbitration hearing.
                 The costs to the applicant, recipient, and FEMA would be due to
                travel and opportunity cost of time and contract costs for legal
                counsel and experts. To estimate the opportunity cost of time, FEMA
                assumed that each case would take each party 46.5 hours (rounded to 47
                hours) to prepare for the hearing, attend the hearing, and for post
                hearing work.\20\ Hearings have historically lasted two working days,
                or 16 hours.\21\ Additional time would be required for travel as is
                discussed later in this analysis. FEMA also assumes that each party
                would make use of expert witnesses in support of their case.
                Additionally, FEMA generally pays for a court reporter.
                ---------------------------------------------------------------------------
                 \20\ Based on information provided by FEMA Office of Chief
                Counsel Disaster Disputes Branch.
                 \21\ Based on information provided by FEMA Office of Chief
                Counsel Disaster Disputes Branch.
                ---------------------------------------------------------------------------
                 Regulations at 44 CFR 206.209 have a 30-day time limit for
                submitting arbitration requests; whereas, this final rule has a 60
                calendar-day time limit for arbitrations. Since the 60 calendar-day
                appeals deadline is current FEMA policy there will be no additional
                costs for the regulatory text changes at Sec. 206.206(b)(1)(ii)(A) and
                (b)(2)(ii)(A) since it has already been accounted for.
                Opportunity Cost of Time and Wages
                 A typical arbitration request requires the work of several people,
                including lawyers to represent the applicants, a court reporter to take
                a transcript of the hearing, and State, local, Tribal, or PNP managers
                who are responsible for compiling and submitting the original PA
                request. Applicants will also typically supply expert witnesses when
                making their case to the CBCA panel. FEMA used wage rates for General
                and Operations Managers to represent State, Tribal, local, and PNP
                managers. Many PA projects involve repair or replacement of buildings
                and infrastructure, so FEMA assumes that Engineers would be the most
                likely occupation used as expert witnesses.
                 FEMA used hourly wage rates from the Bureau of Labor Statistics
                Occupational Employment Statistics for the following occupations:
                $69.86 for Lawyers (SOC 23-1011), $31.25 for Court Reporters and
                Simultaneous Captioners (SOC 23-2093), $48.45 for Engineers (SOC 17-
                2000), and $59.15 for General and Operations Managers (SOC 11-
                1021).\22\ To account for the benefits paid by employers, FEMA used a
                wage multiplier of 1.46,\23\ resulting in fully-loaded hourly wages of
                $102.00 for Lawyers, $45.63 for Court Reporters and Simultaneous
                Captioners, $70.74 for Engineers, and $86.36 for General and Operations
                Managers.
                ---------------------------------------------------------------------------
                 \22\ U.S. Bureau of Labor Statistics. National Occupational
                Employment and Wage Estimates United States. May 2019. Accessed
                August 18, 2020. https://www.bls.gov/oes/2019/may/oes_nat.htm.
                 \23\ Bureau of Labor Statistics, Employer Costs for Employee
                Compensation, Table 1. ``Employer costs per hour worked for employee
                compensation and costs as a percent of total compensation: Civilian
                workers, by major occupational and industry group, March 2019.''
                Available at http://www.bls.gov/news.release/archives/ecec_06182020.pdf. Accessed August 18, 2020. The wage multiplier is
                calculated by dividing total compensation for all workers of $37.73
                by wages and salaries for all workers of $25.91 per hour yielding a
                benefits multiplier of approximately 1.46.
                ---------------------------------------------------------------------------
                 FEMA used the 2019 hourly wage tables for the Washington-Baltimore-
                Arlington, DC-MD-VA-WV-PA \24\ locality rate for FEMA employees
                participating in arbitration cases. Based on current FEMA practice,
                FEMA assumes that GS-13 employees would perform both legal and other
                services for an arbitration case and the work would be reviewed by a
                manager at the GS-15 level. The hourly GS-13 Step 5 salary was $53.85,
                and the hourly GS-15 step 5 salary was $74.86. In order to account for
                the benefits paid by employers, FEMA used a 1.46 multiplier to
                calculate loaded wage rates of $78.62 for a GS-13 Federal employee and
                $109.30 for a GS-15 Federal employee.
                ---------------------------------------------------------------------------
                 \24\ U.S. Office of Personnel Management. 2019 General Schedule
                (GS) Locality Pay Tables. August 19, 2020. https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2019/DCB_h.pdf.
                ---------------------------------------------------------------------------
                Travel
                 Arbitration cases are heard by a panel of judges of the CBCA, which
                is based in Washington, DC. The arbitration process is very
                customizable, so applicants can choose to have the hearings locally,
                where a CBCA judge would travel to their location, and FEMA would also
                send its representatives. Alternatively, cases could be heard at the
                CBCA, and the applicant would travel to Washington, DC, along with any
                lawyers and expert witnesses. Finally, the applicant could choose to
                have the CBCA review documents, and nobody would be required to travel.
                Because PA applicants are located throughout the U.S. and can be
                travelling from any location within the U.S., FEMA used average
                nationwide travel costs to estimate the travel costs for this rule.
                 The U.S. General Service Administration (GSA) provides guidance on
                travel policy, hotel rates, and meals and incidentals for Federal
                employees. FEMA used GSA data on hotel prices and per diem rates to
                estimate travel expense costs of attending a hearing in person.\25\
                Because data on travel expenses for non-Federal employees is not
                available, FEMA used the Federal lodging and per diem rates for
                applicants traveling to Washington, DC to attend hearings. According to
                GSA, in 2019, the average price of a hotel room in Washington, DC was
                $216 per night \26\ and outside of the Washington, DC metro area was
                $94 per night.\27\ The per diem rate for meals and incidentals on the
                first and last travel days \28\ is $57 and $76 for other travel
                [[Page 45672]]
                day(s) in Washington, DC. Similarly, the per diem rates for meals and
                incidentals on the first and last day is $41 and $55 for the other days
                outside of Washington, DC.\29\
                ---------------------------------------------------------------------------
                 \25\ U.S. General Services Administration. ``FY 2019 Per Diem
                Rates for District of Columbia.'' Accessed on August 19, 2020.
                Standard CONUS rate used for lodging and MI&E. https://www.gsa.gov/travel/plan-book/per-diem-rates/per-diem-rates-lookup/?action=perdiems_report&state=DC&fiscal_year=2019&zip=&city=. Per
                diem rates are calendar year instead of fiscal year.
                 \26\ FEMA took the average of the 12 month per diem lodging
                rates provided by GSA for Washington, DC from October 2018 to
                September 2019, available at https://www.gsa.gov/travel/plan-book/per-diem-rates/per-diem-rates-lookup/?action=perdiems_report&state=DC&fiscal_year=2019&zip=&city=.
                 \27\ U.S. General Service Administration. ``FY 2019 Per Diem
                Rates--Effective October 1, 2018.'' Accessed on May 24, 2021.
                Standard CONUS rate used for lodging and MI&E. https://www.gsa.gov/cdnstatic/FY2019_PerDiemRatesMasterFile_0.xls. Per diem rates are
                calendar year instead of fiscal year.
                 \28\ U.S. General Services Administration. ``M&IE Breakdown.''
                Accessed on May 24, 2021. https://www.gsa.gov/travel/plan-book/per-diem-rates/mie-breakdown. Per GSA, first and last travel days meals
                and incidentals expenses (M&IE) for the first and last calendar day
                of travel is calculated at 75 percent of the total M&IE.
                 \29\ U.S. General Service Administration. ``FY 2019 Per Diem
                Rates--Effective October 1, 2018.'' Accessed on May 24, 2021.
                Standard CONUS rate used for lodging and MI&E. https://www.gsa.gov/cdnstatic/FY2019_PerDiemRatesMasterFile_0.xls. Per diem rates are
                calendar year instead of fiscal year.
                ---------------------------------------------------------------------------
                 The U.S. Department of Transportation (DOT) provides information on
                the price of domestic airfare.\30\ According to the Bureau of
                Transportation Statistics, the annual unadjusted cost of an average
                domestic flight within the United States, the average airfare was $355
                roundtrip in 2019.\31\ The total travel costs for applicants attending
                hearings in Washington, DC that typically last 3 nights and 4 days
                would be $1,269 per person ($355 average airfare + ($216 hotel in
                Washington, DC x 3 nights) + ($76 meals and incidentals x 2 days of
                stay) + ($57 meals and incidentals x 2 travel days)) = $1,269).
                ---------------------------------------------------------------------------
                 \30\ Bureau of Transportation Statistics. ``Annual Fares 1995-
                2019 4Q 2019'' (.xlsx) March 23, 2020. U.S. Department of
                Transportation. https://www.bts.gov/sites/bts.dot.gov/files/Annual%20Fares%201995-2020%201Q2020.xlsx.
                 \31\ Unadjusted 2019 dollars. Excludes airline tickets under
                $50.
                ---------------------------------------------------------------------------
                Expert Witnesses
                 FEMA assumes that each party would make use of expert witnesses to
                support their case. The expert witnesses would be required to travel to
                the hearing at the expense of the party that hired them. Based on
                historical experience, preparing for the hearing is estimated to take
                20 hours, the duration of the hearing is estimated to be 16 hours and
                the travel time is estimated at 11 hours for a total of 47 hours for a
                hearing in Washington, DC. Therefore, the opportunity costs of time for
                one expert witness to attend a hearing would be $3,325 ($70.74
                engineers wages x 47 hours). Thus, the total cost for one expert
                witness' travel and opportunity cost of time is $4,594 ($1,269 +
                $3,325). Table 2 shows the detailed costs per expert witness to attend
                a hearing in Washington, DC. To provide a range of estimates since
                cases vary, a hearing at the applicant's location for an expert witness
                would cost $2,547 ($70.74 engineers wages x 36 hours \32\). This total
                assumes the expert witness is local and therefore incurs no travel
                costs.
                ---------------------------------------------------------------------------
                 \32\ FEMA deducts the 11 hours of travel time from the total of
                47 hours used for a hearing in Washington, DC to come up with the
                total time for a hearing at the applicant's location assuming the
                expert witness is also local. Therefore, 36 hours is derived from
                the 20 hours estimated for preparing for the hearing and 16 hours
                for the duration of the hearing.
                 Table 2--Estimated Cost per Expert Witness, Washington, DC Hearing
                 [2019$]
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Opportunity costs of
                 Round trip flight Three nights of lodging Meals and incidentals Total travel expenses time for a hearing in Total expert witness
                 at $219 per night Washington, DC cost
                (A) (B) (C) (D) = (A + B + C) (E) (D + E)
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 $355 $648 $266 $1,269 $3,325 $4,594
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Cost for the Applicant
                 The typical total cost for the applicant includes travel expenses
                (round trip flight, three nights of lodging, and meals and incidentals)
                and opportunity costs of time for the applicant, the applicant's
                representatives, and the expert witnesses. The total travel expenses
                for the applicant and the representative would be $2,538 ($1,269 x 2
                personnel = $2,538), if the hearing is held in Washington, DC. As
                previously discussed in this analysis, costs include 47 hours for
                hearing preparation, attending the hearing, and post hearing work, plus
                11 hours of travel time for applicants and the applicant's
                representative. FEMA notes that an applicant can choose not to bring a
                representative or an applicant's representative could be one attorney
                or in some cases more than one attorney. To provide a range of costs,
                FEMA analyzes the typical case where one attorney or no attorneys are
                present. If the applicant's representative is an attorney, the
                opportunity costs of time would be $10,925 (($102.00 per hour wages for
                a lawyer x 58 hours) + ($86.36 per hour wages for a general and
                operations manager x 58 hours) = $10,925). If the applicant does not
                use an attorney as their representative, the opportunity costs of time
                would be $10,018 (2 general and operations managers at $86.36 each x 58
                hours = $10,018). Table 3 shows the range of total costs to the
                applicant which include the opportunity costs of time and the travel
                costs.
                 Table 3--Range of Applicant Costs--Washington, DC Hearing
                 [2019$]
                ----------------------------------------------------------------------------------------------------------------
                 Opportunity cost
                 of time Travel Total
                ----------------------------------------------------------------------------------------------------------------
                1 Attorney and 1 Non-Attorney.......................... $10,925 $2,538 $13,463
                2 Non-Attorneys........................................ 10,018 2,538 12,556
                ----------------------------------------------------------------------------------------------------------------
                 The total cost to the applicant if they were to travel to
                Washington, DC for a hearing with a representative and two expert
                witnesses, ranges from $21,744 ((2 expert witnesses at a cost of $4,594
                each) + $12,556 applicant cost) if the representatives are 2 non-
                attorneys to $22,651 ((2 expert witnesses at $4,594 each) + $13,463
                applicant and attorney cost) if the representatives are 1 attorney and
                1 non-attorney.
                [[Page 45673]]
                 For a local hearing, the costs to the applicant would include 47
                hours of opportunity costs of time for the applicant and representative
                (assuming the representative is local), and 36 hours of opportunity
                costs of time to attend the hearing for two expert witnesses (assuming
                the expert witnesses are local) and would range from $13,211 ((2
                general and operations managers at $86.36 each x 47 hours) + (2 expert
                witnesses at $70.74 each x 36 hours) = $13,211) to $13,946 (($86.36 for
                a general and operations manager x 47 hours) + ($102.00 for an attorney
                x 47 hours) + (2 expert witnesses at $70.74 each x 36 hours) = $13,946)
                depending on who the recipient uses as a representative. Table 4 shows
                the range of total costs for an applicant for hearings held at the
                applicant's location.
                 Table 4--Applicant Costs--Local Hearing
                 [2019$]
                ----------------------------------------------------------------------------------------------------------------
                 Opportunity cost
                 Expert witnesses of time Total
                ----------------------------------------------------------------------------------------------------------------
                1 Attorney and 1 Non-Attorney.......................... $5,093 $8,853 $13,946
                2 Non-Attorneys........................................ 5,093 8,118 13,211
                ----------------------------------------------------------------------------------------------------------------
                Cost for the Recipient
                 The recipient would not present information in the arbitration case
                but would send one or more representatives in a supporting role for the
                applicant. The cost per arbitration case for the recipient is the
                opportunity costs of time for the representatives totaling $10,018 (2
                general and operations managers at $86.36 each x 58 hours = $10,018)
                and travel expenses $2,538 (2 representatives x $1,269) of those
                attending the hearing in Washington, DC. As shown in table 5, the total
                cost to the recipient would be $12,556 if the hearing was held in
                Washington, DC.
                 Table 5--Estimated Recipient Costs, Washington, DC Hearing
                 [2019$]
                ----------------------------------------------------------------------------------------------------------------
                 Opportunity cost
                 of time Travel Total
                ----------------------------------------------------------------------------------------------------------------
                General and Operations Managers..................... $10,018 $2,538 $12,556
                ----------------------------------------------------------------------------------------------------------------
                 For a local hearing, two representatives would spend 47 hours on
                the case and the cost to the recipient would be $8,118 (2 general and
                operations managers at $86.36 each x 47 hours = $8,118).
                Cost to Government/FEMA
                 FEMA would require two attorneys for a typical arbitration case, a
                GS-13 step 5 attorney and a GS-15 step 5 supervisory attorney, to
                review and to prepare a response to the request for arbitration. Based
                on historical experience, the two attorneys' total time from
                preparation to post hearing is 47 hours.\33\ The opportunity costs of
                time of the attorneys, including preparation and review of a case, is
                $8,832 (($78.62 GS-13 Step 5 attorney x 47 hours) + ($109.30 GS 15 Step
                5 Supervisory Attorney x 47) hours = $8,832).
                ---------------------------------------------------------------------------
                 \33\ Based on information provided by FEMA Office of Chief
                Counsel Disaster Disputes Branch.
                ---------------------------------------------------------------------------
                 Based on historical experience, FEMA would also require four non-
                attorneys (e.g., GS-13 Step 5 program analysts) to support the
                arbitration case only for the duration of the hearing. The opportunity
                costs of time associated with the program analysts would be $5,032 (4
                GS-13 Step 5 program analysts at $78.62 each x 16 hours = $5,032).
                Thus, the total opportunity costs of time for all six FEMA personnel
                would be $13,864. FEMA would also call their own expert witnesses to
                attend the hearing. Based on historical experience, FEMA assumes that
                it would use four expert witnesses per case \34\ for a total of $10,188
                ($2,547 cost per expert witness x 4 expert witnesses = $10,188). The
                expert witnesses provide testimony on a range of subjects, for example
                soil degradation or building construction.
                ---------------------------------------------------------------------------
                 \34\ FEMA estimates that we could need up to four expert
                witnesses. FEMA's expert witnesses may or may not speak at the
                hearing. Additionally, FEMA may hire an expert witness so that FEMA
                can consult with them about the subject matter.
                ---------------------------------------------------------------------------
                 Arbitration hearings do not require transcription services.
                However, FEMA has historically hired a court reporter for hearings and
                provided the transcript to the CBCA for their records. FEMA will
                continue to pay for a court reporter for the duration of a hearing
                under the final rule, but will not provide a transcript to the CBCA.
                The opportunity costs of time for the court reporter services for a
                transcript would be $730 per arbitration case ($45.63 per hour wages
                for Court Reporters and Simultaneous Captioners x 16 hours of
                arbitration time = $730).
                 The estimated total cost to FEMA, including staff time, expert
                witnesses, and transcript services, would be $24,782 per case. Table 6
                presents the cost of each component by opportunity cost of time and
                other costs.
                 Table 6--Estimated FEMA Costs--Washington, DC Hearing
                 [2019$]
                ----------------------------------------------------------------------------------------------------------------
                 Cost for FEMA employees (2
                 Cost for four expert Cost of court reporter attorneys and 4 program Total per-case cost to
                 witnesses analysts) FEMA
                ----------------------------------------------------------------------------------------------------------------
                 $10,188 $730 $13,864 $24,782
                ----------------------------------------------------------------------------------------------------------------
                [[Page 45674]]
                 For a hearing at the applicant's location, FEMA representatives
                would need to travel to the location of the hearing. Costs for a local
                hearing would be higher for FEMA due to paying for travel time as well
                as actual travel costs. Travel costs are estimated using the figures
                previously mentioned and would be $1,269 per person for a total of
                $2,538, if 2 attorneys travel to the applicant's location.
                Additionally, FEMA estimates that the time would increase to 58 hours
                due to 11 hours of travel time for the attorneys totaling (2 attorneys
                at $109.30 each x 58 hours) $12,679 plus $5,032 for non-travelling
                program analysts resulting in a total cost of $17,711. The total
                estimated costs to FEMA for a local hearing are presented in Table 7.
                 Table 7--Estimated FEMA Costs--Local
                 [2019$]
                ----------------------------------------------------------------------------------------------------------------
                 Opportunity costs of
                 Cost for four expert Cost of court time for FEMA Travel costs (2 Total per-case cost
                 witnesses reporter employees attorneys) to FEMA
                ----------------------------------------------------------------------------------------------------------------
                 $10,188 $730 $ 17,711 $2,538 $31,167
                ----------------------------------------------------------------------------------------------------------------
                 In addition to these costs, FEMA's PA Program hired an Arbitration
                Coordinator at the GS-13 Step 5 level with an annual salary of
                $116,353. With the 1.46 multiplier for a fully loaded wage rate, the
                additional cost to FEMA is $169,875 per year. Therefore, the annual
                total costs to FEMA range from $194,657 ($169,875 + $24,782) if the
                hearing is held in Washington, DC to $201,042 ($169,875 + $31,167) if
                the hearing is held at the applicant's location.
                Total Costs
                 The total cost per case vary based on who the applicant uses as a
                representative, and whether the hearing is held in Washington, DC or
                local to the applicant. Government and FEMA costs would be higher for a
                hearing held local to the applicant, and likewise, applicant and
                recipient costs would be higher if the hearing was held in Washington,
                DC. FEMA estimates that the total costs per case to range between
                $52,496 and $59,989. Table 8 presents the range of estimated costs per
                arbitration case.
                 Table 8--Total Cost Per Case
                 [2019$]
                ----------------------------------------------------------------------------------------------------------------
                 FEMA Applicant Recipient Total
                ----------------------------------------------------------------------------------------------------------------
                Low................................. $31,167 $13,211 $8,118 $52,496
                High................................ 24,782 22,651 12,556 59,989
                ----------------------------------------------------------------------------------------------------------------
                 As established earlier in this analysis, FEMA estimates an average
                of 15 arbitration cases per year. Therefore, FEMA estimates the total
                annual costs to range between $957,315 ((15 cases x $31,167 per case) +
                $169,875 to hire a new FEMA employee + (15 cases x $13,211 per case for
                applicant) + (15 cases x $8,118 per case for the recipient) = $957,315)
                (low) and $1,069,710 ((15 cases x $24,782 per case) + $169,875 for a
                new FEMA employee + (15 cases x $22,651 per case for the applicant) +
                (15 cases x $12,556 for the recipient) = $1,069,710) (high). Table 9
                shows the estimated total costs per year of this final rule. The low-
                cost estimate assumes that all hearings would be held at the
                applicant's location, while the high estimate assumes hearings would be
                held in Washington, DC.
                 Table 9--Total Cost Per Year for 15 Cases
                 [2019$]
                ----------------------------------------------------------------------------------------------------------------
                 FEMA Applicant Recipient Total
                ----------------------------------------------------------------------------------------------------------------
                Low................................. $637,380 $198,165 $121,770 $957,315
                High................................ $541,605 $339,765 $188,340 $1,069,710
                ----------------------------------------------------------------------------------------------------------------
                 Tables 10 and 11 show the total 10-year costs and 10-year costs
                annualized at 3 percent and 7 percent.
                 Table 10--10-Year Cost Totals Using 3 Percent and 7 Percent Discount Rates
                 [Low estimate, 2019$]
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Annual costs Annual costs
                 Year FEMA costs Applicant costs Recipient costs Total costs discounted at discounted at
                 3% \1\ 7% \1\
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                1........................................... $637,380 $198,165 $121,770 $957,315 $929,432 $894,687
                2........................................... 637,380 198,165 121,770 957,315 902,361 836,156
                3........................................... 637,380 198,165 121,770 957,315 876,079 781,454
                4........................................... 637,380 198,165 121,770 957,315 850,562 730,331
                5........................................... 637,380 198,165 121,770 957,315 825,788 682,552
                [[Page 45675]]
                
                6........................................... 637,380 198,165 121,770 957,315 801,736 637,899
                7........................................... 637,380 198,165 121,770 957,315 778,385 596,168
                8........................................... 637,380 198,165 121,770 957,315 755,713 557,166
                9........................................... 637,380 198,165 121,770 957,315 733,702 520,716
                10.......................................... 637,380 198,165 121,770 957,315 712,332 486,650
                 -----------------------------------------------------------------------------------------------------------
                 Total................................... 6,373,800 1,981,650 1,217,700 9,573,150 8,166,090 6,723,779
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Annualized.................................. ................ ................ ................ ................ 957,315 957,315
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                \1\ The annualized amounts for 7 percent and 3 percent are equal in this table because the amounts for each year are identical and the first year is
                 discounted.
                 Table 11--10-Year Cost Totals Using 3 Percent and 7 Percent Discount Rates
                 [High estimate, 2019$]
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Annual costs Annual costs
                 Year FEMA costs Applicant costs Recipient costs Total costs discounted at discounted at
                 3% \1\ 7% \1\
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                1........................................... $541,605 $339,765 $188,340 $1,069,710 $1,038,553 $999,729
                2........................................... 541,605 339,765 188,340 1,069,710 1,008,304 934,326
                3........................................... 541,605 339,765 188,340 1,069,710 978,936 873,202
                4........................................... 541,605 339,765 188,340 1,069,710 950,423 816,077
                5........................................... 541,605 339,765 188,340 1,069,710 922,741 762,688
                6........................................... 541,605 339,765 188,340 1,069,710 895,865 712,793
                7........................................... 541,605 339,765 188,340 1,069,710 869,772 666,162
                8........................................... 541,605 339,765 188,340 1,069,710 844,439 622,581
                9........................................... 541,605 339,765 188,340 1,069,710 819,844 581,851
                10.......................................... 541,605 339,765 188,340 1,069,710 795,965 543,786
                 -----------------------------------------------------------------------------------------------------------
                 Total................................... 5,416,050 3,397,650 1,883,400 10,697,100 9,124,842 7,513,195
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Annualized.................................. ................ ................ ................ ................ 1,069,710 1,069,710
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                \1\ The annualized amounts for 7 percent and 3 percent are equal in this table because the amounts for each year are identical and the first year is
                 discounted.
                 FEMA continues to believe that there will not be any implementation
                or familiarization costs. FEMA currently has an arbitration process
                that is very similar to the final rule for cases arising from
                Hurricanes Katrina and Rita. Additionally, FEMA has already notified
                eligible applicants, dating back to January 1, 2016 of their
                eligibility for arbitration under DRRA Section 1219.
                 Further, applicants will not have familiarization costs because the
                process for requesting arbitration will consist of an email request and
                will use materials previously submitted in the application for PA
                funding.
                Benefits
                 The benefits of this final rule are qualitative in nature and apply
                mostly to the applicant. FEMA believes that this final rule will
                further its mission of supporting State, Tribal, and local governments,
                as well as eligible PNPs by offering them an alternative procedure for
                disputing PA eligibility and funding decisions. Applicants retain the
                option to submit a second appeal. The final rule offers an alternative
                that the applicant might see as more impartial because the arbitration
                cases would be heard by CBCA judges, as opposed to second appeals that
                would continue to be conducted entirely within FEMA. Additionally,
                applicants have the opportunity to present their case in person and
                call expert witnesses to support their claims. These two options allow
                applicants to choose a course of action that is most appropriate to
                their circumstances.
                Customization
                 Applicants may select arbitration, if they consider this process
                more customizable. The arbitration process provides applicants with the
                opportunity to appear in person before an impartial panel and present
                evidence as to why they are disputing a FEMA determination. Applicants
                can also retain expert witnesses to provide support to their position.
                Expert witnesses provide testimony within their technical specialty to
                assist the arbitration panel in understanding the underlying work for
                which FEMA ultimately decides eligibility.
                 Additionally, applicants have the opportunity to respond in real
                time to evidence presented by FEMA, allowing them more control over the
                dispute than they might have under a second appeal. Applicants may opt
                to hire an expert witness in arbitration to help present the disputed
                information in a manner more favorable to the applicant. The ability to
                hire expert witnesses may provide applicants with additional utility
                and may be an incentive to select arbitration.
                 The final rule also allows applicants to present the same technical
                documentation in both the appeals and arbitration procedures. An
                applicant who submits a first appeal but elects withdrawal in favor of
                arbitration may opt to reuse the information in the request for
                arbitration that was previously submitted in the first appeal.
                [[Page 45676]]
                Applicants may gain utility from the convenience of reusing documents.
                Impartiality
                 It is not possible to quantify an applicant's increased utility due
                to perceived impartiality. The purpose of arbitration is to create a
                process to resolve the issues in a manner satisfactory to all parties.
                Based on past cases, FEMA has granted or partially granted about 23
                percent of the second appeals submitted by applicants.\35\ CBCA has
                found in favor or partially in favor for the applicant about 13 percent
                of Katrina/Rita arbitrations.\36\
                ---------------------------------------------------------------------------
                 \35\ Based on information provided by FEMA Office of Chief
                Counsel Disaster Disputes Branch.
                 \36\ Based on information provided by FEMA Office of Chief
                Counsel Disaster Disputes Branch.
                ---------------------------------------------------------------------------
                 The applicant may nevertheless perceive they have a better
                opportunity to gain additional Federal funding through arbitration.
                Applicants may select arbitration to have cases reviewed by a third
                party, rather than an appeal process that is conducted entirely by
                FEMA. Applicants may perceive this to be a more impartial system, if
                the forum encourages both parties to solicit discussion rather than
                ``paper'' based appeals. Applicants may expect that impartiality would
                best achieve the objective of an equitable resolution.
                 Tables 12 and 13 analyze the historical outcomes from second
                appeals and arbitration from 44 CFR 206.209. Because of the
                unpredictable nature and unique circumstances of every disaster, these
                figures may not be representative of future outcomes, as the outcomes
                are based on the arbitration policies for Hurricanes Rita and Katrina
                and the unique circumstances of each case.
                 Table 12--Second Appeals Outcomes
                 [2010-2019]
                ------------------------------------------------------------------------
                 Second appeal outcome Number of cases Percent
                ------------------------------------------------------------------------
                Granted........................... 138 15.8
                Denied............................ 594 68.0
                Partially Granted................. 78 8.9
                Active............................ 37 4.2
                Other \1\......................... 27 3.1
                 -------------------------------------
                 Total......................... 874 100.0
                ------------------------------------------------------------------------
                \1\ The category of Other includes appeal decision not available,
                 remand, rescind, arbitration, and withdrawn.
                 Table 13--Arbitration Outcomes Under 44 CFR 206.209
                 [2010-2019]
                ------------------------------------------------------------------------
                 Arbitration outcome Number of cases Percent
                ------------------------------------------------------------------------
                Matters Resolved Without CBCA 24 33.3
                 Decision.........................
                In Favor of FEMA.................. 22 30.6
                In Favor of Applicant............. 6 8.3
                Partial in Favor of Applicant..... 3 4.2
                Withdrawn......................... 12 16.7
                Other \2\......................... 5 6.9
                 -------------------------------------
                 Total......................... 72 100
                ------------------------------------------------------------------------
                \2\ The category of Other includes other decision, dismissed, and
                 ongoing cases.
                Transfers
                 FEMA is unable to quantify transfers because of the
                unpredictability of the results of this final rule. Transfers would
                arise from the possibility that FEMA may award a different amount of
                grant funding under the arbitration process than it would under current
                regulations that only allow for a second appeal. However, it would be
                speculative for FEMA to make an estimate as to the potential changes in
                grant disbursement that would result from this final rule.
                Impacts
                 Table 14 summarizes the costs, benefits, and transfer impacts of
                this final rule.
                 Table 14--OMB Circular A-4 Accounting Table
                ----------------------------------------------------------------------------------------------------------------
                 Estimates Units
                 -----------------------------------------------------------------------------------
                 Category Discount rate
                 Low estimate High estimate Dollar year (%) Period covered
                ----------------------------------------------------------------------------------------------------------------
                Benefits:
                 Annualized Monetized.... $0 $0 2019 7 10 Years.
                 -----------------------------------------------------------------------------------
                 0 0 2019 3 10 Years.
                 -----------------------------------------------------------------------------------
                 Annualized Quantified... 0 0
                 --------------------------------
                [[Page 45677]]
                
                 0 0
                 -----------------------------------------------------------------------------------
                 Qualitative............. Additional option for review of PA projects and decisions.
                 Greater perception of impartiality in the arbitration process.
                 Ability to customize arbitration process.
                ----------------------------------------------------------------------------------------------------------------
                Costs:
                 Annualized Monetized.... 957,315 1,069,710 2019 7 10 Years.
                 --------------------------------
                 957,315 1,069,710 2019 3 10 Years.
                 -----------------------------------------------------------------------------------
                 Annualized Quantified... 0 0
                 --------------------------------
                 0 0
                 -----------------------------------------------------------------------------------
                 Qualitative............. Longer time frame to resolve disputes under arbitration option.
                 -----------------------------------------------------------------------------------
                Transfers................... Possible changes to PA grant disbursements.
                ----------------------------------------------------------------------------------------------------------------
                Effects:
                 Small Entities.......... FEMA expects 11 arbitration cases per year from small entities with an estimated
                 cost of between $13,211 and $22,651 per small entity.
                 -----------------------------------------------------------------------------------
                 Wages................... None.
                 -----------------------------------------------------------------------------------
                 Growth.................. None.
                ----------------------------------------------------------------------------------------------------------------
                Uncertainty Analysis
                 The estimates of the costs of the final rule are subject to
                uncertainty due to the uniqueness of each arbitration case. The cost
                estimates can vary widely depending on complexity and other factors. As
                a result, the cost estimate could be overstated or understated.
                 There are several sources of uncertainty in this analysis: The
                number of eligible applicants, the final deadlines for filing, and the
                potential number of arbitration cases. Major disasters do not occur on
                a regular time interval. The severity of the disaster would affect the
                number of applicants that decide to apply for funding in the PA
                Program. The number of eligible applicants can vary year-to-year.
                 Historical data used in this analysis was based on the arbitration
                process for Hurricanes Katrina and Rita, which is different in a couple
                of key respects from this final arbitration process. While the cost
                shares for Katrina and Rita were 100 percent, cost shares for future
                disaster declarations may be as high as 25 percent for applicants.\37\
                Because Katrina/Rita applicants were not required to pay for any
                portion of their project cost, they had an incentive to apply for more
                costly projects and pursue arbitration when denied. Future disasters
                with a cost share may lead applicants to be more conservative in
                applying for PA projects, which may result in fewer arbitration
                requests than was indicated in the primary estimate.
                ---------------------------------------------------------------------------
                 \37\ ``The Federal share of assistance is not less than 75
                percent of the eligible cost. The recipient determines how the non-
                Federal share (up to 25 percent) is split with the subrecipients
                (i.e., eligible applicants).'' Program Overview: Public Assistance.
                FEMA. https://www.fema.gov/assistance/public/program-overview. Last
                accessed on: May 25, 2021.
                ---------------------------------------------------------------------------
                 Additionally, the timeframe for submitting arbitration requests
                under 44 CFR 206.209 was 30 days. However, FEMA is implementing a 60-
                day submission deadline for arbitration submissions under DRRA
                requirements to align with the 60-day submission timeframe for second
                appeals. This additional time may affect the number of arbitration
                cases submitted in the future, but FEMA cannot reliably predict these
                impacts at this time.
                Alternatives
                 FEMA identified several alternative regulatory approaches to the
                requirements in this final rule. The alternatives included: (1) Not
                issuing a mandatory regulation; (2) an alternate definition of rural;
                and (3) not requiring electronic submission.
                 FEMA did not consider the first alternative option of not issuing a
                mandatory regulation. The DRRA mandates FEMA to promulgate a rule
                allowing the option of arbitration in lieu of a second appeal and
                specifies the CBCA as the arbitration administrator. As such, FEMA must
                pursue a regulatory action.
                 FEMA considered using an alternate definition of rural, such as
                OMB's nonmetropolitan area definition. OMB's nonmetropolitan area is
                defined as areas outside the boundaries of metropolitan areas.\38\
                ---------------------------------------------------------------------------
                 \38\ 2010 Standards for Delineating Metropolitan and
                Micropolitan Statistical Areas; Notice. Office of Management and
                Budget. See 75 FR 37246, June 28, 2010. https://www.govinfo.gov/content/pkg/FR-2010-06-28/pdf/2010-15605.pdf. Last accessed: May 25,
                2021.
                ---------------------------------------------------------------------------
                 Nonmetropolitan areas are outside the boundaries of metropolitan
                areas and are further subdivided into two types:
                 1. Micropolitan (micro) areas, which are nonmetro labor-market
                areas centered on urban clusters of 10,000-49,999 persons and defined
                with the same criteria used to define metro areas.
                 2. All remaining counties, often labeled ``noncore'' counties
                because they are not part of ``core-based'' metro or micro areas.
                 OMB defines metropolitan areas to include:
                 1. Central counties with one or more urbanized areas; urbanized
                areas are densely-settled urban entities with 50,000 or more people.
                 2. Outlying counties that are economically tied to the core
                counties as measured by labor-force commuting. Outlying counties are
                included if 25
                [[Page 45678]]
                percent of workers living in the county commute to the central
                counties, or if 25 percent of the employment in the county consists of
                workers coming out from the central counties--the so-called ``reverse''
                commuting pattern.
                 FEMA did not recommend using OMB's definition because it combines
                rural area populations into Metropolitan counties. The OMB definition
                would also result in some rural areas, such as the Grand Canyon, being
                considered a metropolitan county. This alternative would not result in
                reducing the impact on small entities, while accomplishing the stated
                objective of the rule.
                 FEMA considered not requiring applicants to submit a request for
                arbitration electronically. Current practices allow FEMA to accept hard
                copy submissions (through U.S. Mail or other means) for first and
                second appeals. In addition, FEMA currently accepts electronic
                submissions for requests for arbitration under 44 CFR 206.209. FEMA
                chose to require electronic submissions as it would provide FEMA with
                enhanced ability to track and establish deadlines in the arbitration
                process. CBCA's rule requires applicants to use an electronic method to
                submit their documentation and request for arbitration to CBCA. Thus,
                requiring electronic submission will not pose an undue burden on most
                applicants.
                B. Regulatory Flexibility Act
                 The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) and
                Executive Order 13272 (67 FR 53461, Aug. 16, 2002) require agency
                review of proposed and final rules to assess their impact on small
                entities. An agency must prepare a Final Regulatory Flexibility
                Analysis (FRFA) unless it determines and certifies that a rule, if
                promulgated, will not have a significant economic impact on a
                substantial number of small entities. This final rule will not have a
                significant economic impact on a substantial number of small entities.
                In accordance with the Regulatory Flexibility Act, a FRFA must contain
                the following statements, including descriptions of the reason(s) for
                the rulemaking, its objective(s), the affected small entities, any
                additional burden for book or record keeping and other compliance
                requirements; any Federal rules that duplicate, overlap, or conflict
                with the rulemaking, and significant alternatives considered. The
                following sections address these subjects individually in the context
                of this final rule.
                1. Statement of a need for, and objectives of the rule.
                 PA helps State and local governments respond to and recover from
                the challenges faced during major disasters and emergencies. To support
                State and local governments facing those challenges, Congress passed
                DRRA.
                 Under the PA Program, as authorized by the Stafford Act, FEMA
                awards grants to eligible applicants to assist them in responding to
                and recovering from Presidentially-declared emergencies and major
                disasters. The recipient, as defined at 44 CFR 206.201(m), is the
                government to which a grant is awarded, and which is accountable for
                the use of the funds provided. Generally, the State for which the
                emergency or major disaster is declared is the recipient. The recipient
                can also be an Indian Tribal government. The applicant, as defined at
                44 CFR 206.201(a), is a State agency, local government, or eligible PNP
                submitting an application to the recipient for assistance under the
                State's grant.
                 The PA Program provides Federal funds for debris removal, emergency
                protective measures, repair and replacement of roads and bridges,
                utilities, water treatment facilities, public buildings, and other
                infrastructure. When the President declares an emergency or major
                disaster declaration authorizing disbursement of funds through the PA
                Program, that presidential declaration automatically authorizes FEMA to
                accept applications from eligible applicants under the PA Program. To
                apply for a grant under the PA Program, the eligible applicant must
                submit a Request for PA to FEMA through the recipient. Upon award, the
                recipient notifies the applicant of the award, and the applicant
                becomes a subrecipient.
                 Applicants currently have a right to arbitration to dispute FEMA
                eligibility determinations associated with Hurricanes Katrina and Rita;
                see 44 CFR 206.209. The DRRA amended the Stafford Act and FEMA
                promulgated a regulation providing all applicants the right to request
                arbitration for disputes under all disaster declarations after January
                1, 2016 that are above certain dollar amount thresholds. This final
                rule implements the Section 1219 requirements of DRRA and will grant
                applicants an additional method of recourse.
                2. Statement of the significant issues raised by the public comments in
                response to the Initial Regulatory Flexibility Analysis (IRFA), a
                statement of the assessment of the agency of such issues, and a
                statement of any changes made to the proposed rule as a result of such
                comments.
                 FEMA did not receive any comments on the IRFA for this rule, and
                therefore did not make any changes to this FRFA from the proposed rule
                due to public comments.
                3. The response of the agency to any comments filed by the Chief
                Counsel for Advocacy of the Small Business Administration (SBA) in
                response to the proposed rule, and a detailed statement of any change
                made to the final rule as a result of the comments.
                 FEMA did not receive any comments on the proposed rule from the
                Chief Counsel for Advocacy of the SBA.
                4. A description of and an estimate of the number of small entities to
                which the rule will apply or an explanation of why no such estimate is
                available.
                 ``Small entity'' is defined in 5 U.S.C. 601. The term ``small
                entity'' can have the same meaning as the terms ``small business,''
                ``small organization,'' and ``small governmental jurisdiction.''
                Section 601(3) defines a ``small business'' as having the same meaning
                as ``small business concern'' under Section 3 of the SBA. This includes
                any small business concern that is independently owned and operated and
                is not dominant in its field of operation. Section 601(4) defines a
                ``small organization'' as any not-for-profit enterprise which is
                independently owned and operated and is not dominant in their field of
                operation. Section 601(5) defines ``small governmental jurisdiction''
                as governments of cities, counties, towns, townships, villages, school
                districts, or special districts, with a population of less than 50,000.
                 The SBA also stipulates in its size standards of how large an
                entity may be and still be classified as a ``small entity.'' These
                small business size standards are matched to industries described in
                the North American Industry Classification System to determine if an
                entity is considered small.
                 This final rule does not place any additional requirements on small
                entities. It does, however, offer them an alternative means to dispute
                FEMA's determination for PA eligibility. If the entity chooses to
                dispute a PA determination, and they select
                [[Page 45679]]
                arbitration rather than a second appeal, they would be responsible for
                their share of the cost of the arbitration process.
                 All small entities would have to meet the final requirements to be
                eligible for arbitration. FEMA identified 3,478 applicants for FEMA's
                PA Program \39\ that would be eligible for arbitration under the final
                requirements for the time frame from 2010 through 2019. FEMA used
                Slovin's formula \40\ and a 90 percent confidence interval to determine
                the sample size. FEMA sampled 97 of these applicants and found that 74
                (76 percent) met the definition of a small entity based on the
                population size of local governments (less than 50,000 population),\41\
                or PNPs based on size standards set by the SBA.\42\ The remaining 23
                entities were not found to be considered small entities. Eligible small
                entities included 67 small government agencies and seven PNP
                organizations. Based on information presented in the Executive Orders
                12866 and 13563 section, FEMA estimates 15 arbitration cases per year.
                If 76 percent of these are small entities, FEMA estimates 11
                arbitration requests per year from small entities with an average cost
                of between $13,211 and $22,651 per case. Eleven small entities do not
                represent a substantial number of small entities impacted by this final
                rule and the costs imposed to these small entities are not significant.
                ---------------------------------------------------------------------------
                 \39\ FEMA reported 3,778 applicants in the NPRM to this rule.
                The number of applicants has since been adjusted to account for more
                recent data and new timeframe for analysis. The NPRM contained data
                from 2009-2017 due to the limited data available at that time. This
                final rule contains data from 2010-2019.
                 \40\ Slovin's formula is n = N/(1 + N*e-2). 3,478/(1 + 3,478 x
                0.1-2) = 97 (rounded).
                 \41\ Information on population sizes was obtained using the U.S.
                Census Bureau's City and Town Population Totals 2010-2018. Available
                at https://www.census.gov/data/tables/time-series/demo/popest/2010s-total-cities-and-towns.html.
                 \42\ Small Business Administration. ``Table of Size Standards''
                (.xlxs). Available at https://www.sba.gov/document/support-table-size-standards. Revenue and employment information for individual
                PNP's was obtained from PNP websites.
                ---------------------------------------------------------------------------
                5. Description of the projected reporting, recordkeeping, and other
                compliance requirements of the rule, including an estimate of the
                classes of small entities which will be subject to the requirement and
                the types of professional skills necessary for preparation of the
                report or record.
                 Arbitration--As an alternative to the appeal process, applicants
                may request arbitration of the disputed determination. To be eligible
                for Section 423 arbitration, a PA applicant's request must meet all
                three of the following conditions: (1) The amount in dispute arises
                from a disaster declared after January 1, 2016; (2) the disputed amount
                exceeds $500,000 (or $100,000 if the applicant is in a ``rural area,''
                defined as having a population of less than 200,000 living outside an
                urbanized area); and (3) the applicant submitted a first appeal with
                FEMA pursuant to the requirements established in 44 CFR 206.206.
                 The applicant must submit a Request for Arbitration to the
                recipient, CBCA, and FEMA. The Request for Arbitration must contain a
                written statement, which specifies the amount in dispute, all
                documentation supporting the position of the applicant, the disaster
                number, and the name and address of the applicant's authorized
                representative or counsel. FEMA estimates that it will take an
                applicant 2 hours to complete the Request for Arbitration (these 2
                hours are accounted for in the economic analysis through the 47 hours
                of hearing preparation time for applicants) with a wage rate of $86.36
                for a general and operations manager. FEMA estimates the opportunity
                cost of time for completing the request will be $172.72 per applicant.
                With an estimated 11 cases per year, FEMA estimates the total burden
                for completing the request is $1,900 per year. The person completing
                the request would need to be familiar with PA regulations and policies.
                6. Description of the steps the agency has taken to minimize the
                significant economic impact on small entities consistent with the
                stated objectives of applicable statutes, including a statement of the
                factual, policy, and legal reasons for selecting the alternative
                adopted in the final rule and why each of the other significant
                alternatives to the rule considered by the agency which affect the
                impact on small entities was rejected.
                 The alternatives included: (1) Using another definition for
                ``rural'' and (2) not requiring electronic submission.
                 FEMA considered using OMB's nonmetropolitan area definition as an
                alternate definition of the term ``rural.'' OMB's nonmetropolitan area
                is defined as areas outside the boundaries of metropolitan areas and
                are further subdivided into two types:
                 1. Micropolitan (micro) areas, which are nonmetro labor-market
                areas centered on urban clusters of 10,000-49,999 persons and defined
                with the same criteria used to define metro areas.
                 2. All remaining counties, often labeled ``noncore'' counties
                because they are not part of ``core-based'' metro or micro areas.
                 OMB defines metropolitan areas to include:
                 1. Central counties with one or more urbanized areas; urbanized
                areas are densely-settled urban entities with 50,000 or more people.
                 2. Outlying counties that are economically tied to the core
                counties as measured by labor-force commuting. Outlying counties are
                included if 25 percent of workers living in the county commute to the
                central counties, or if 25 percent of the employment in the county
                consists of workers coming out from the central counties--the so-called
                ``reverse'' commuting pattern.
                 FEMA did not recommend using the OMB's definition as it combines
                rural area populations into Metropolitan counties. The OMB definition
                would also result in some rural areas, such as the Grand Canyon, being
                considered a metropolitan county. This alternative would not result in
                reducing the impact on small entities while accomplishing the stated
                objective of the rule.
                 FEMA considered not requiring electronic submission. Current
                practices allow FEMA to accept physical mail for appeals. In addition,
                FEMA currently accepts electronic submissions for requests for
                arbitration under 44 CFR 206.209. As CBCA provided an electronic
                address for applicants to submit their request for arbitration and
                documentation, applicants must use electronic method if they choose the
                arbitration process. Thus, electronic submission will not pose an
                additional undue burden on applicants that are considered small
                entities.
                Conclusion
                 This rule codifies legislative requirements included in the DRRA,
                which adds arbitration as a permanent alternative to a second appeal
                under the PA Program. Additionally, applicants that have had a first
                appeal pending with FEMA for more than 180 calendar days may withdraw
                such appeal and submit a request for arbitration. On December 18, 2018,
                FEMA implemented section 1219 of DRRA by posting a Fact Sheet on its
                website. On June 21, 2019, CBCA published a final rule (see 84 FR
                29085) and FEMA has published a corresponding fact sheet. PA
                arbitration has been available for disasters declared after January 1,
                2016. FEMA certifies that this regulation will not have a significant
                economic impact on a substantial number of small entities.
                C. Unfunded Mandates Reform Act
                 The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 658, 1501-1504,
                1531-1536, 1571 (the Act), pertains to any final rulemaking which
                implements any
                [[Page 45680]]
                rule that includes a Federal mandate that may result in the expenditure
                by State, local, and Tribal governments, in the aggregate, or by the
                private sector, of $100 million (adjusted annually for inflation) or
                more in any one year. If the rulemaking includes a Federal mandate, the
                Act requires an agency to prepare an assessment of the anticipated
                costs and benefits of the Federal mandate. The Act also pertains to any
                regulatory requirements that might significantly or uniquely affect
                small governments. Before establishing any such requirements, an agency
                must develop a plan allowing for input from the affected governments
                regarding the requirements. Exemptions from the Act are found at 2
                U.S.C. 1503, they include any regulation or final regulation that
                ``provides for emergency assistance or relief at the request of any
                State, local, or tribal government or any official of a State, local,
                or tribal government.'' Thus, FEMA finds this rule to be exempt from
                the Act.
                 Additionally, FEMA has determined that this rule would not result
                in the expenditure by State, local, and Tribal governments, in the
                aggregate, nor by the private sector, of $100 million or more (adjusted
                annually for inflation) in any one year because of a Federal mandate,
                and it would not significantly or uniquely affect small governments.
                Therefore, no actions are deemed necessary under the provisions of the
                Unfunded Mandates Reform Act of 1995.
                D. Paperwork Reduction Act of 1995
                 As required by the Paperwork Reduction Act of 1995 (PRA), Public
                Law 104-13, 109 Stat. 163, (May 22, 1995) (44 U.S.C. 3501 et seq.), an
                agency may not conduct or sponsor, and a person is not required to
                respond to, a collection of information unless the collection of
                information displays a valid control number.
                 This proposed information collection previously published in the
                Federal Register on August 31, 2020 at 85 FR 53725 as part of the NPRM.
                Since the proposed information collection published on August 31, 2020,
                FEMA completed an emergency revision of information collection 1660-
                0017. In the emergency information collection for 1660-0017 FEMA added
                the FEMA Template 104-FY-21-100 Equitable COVID-19 Response and
                Recovery: Vaccine Administration Information which resulted in 51,016
                new Total No. of Responses with an .5 Average Burden per response of
                (in hours) which resulted in 25,508 Total Annual Burden (in hours)
                totaling $1,445,028 in additional Total Annual Respondent Cost. Also,
                FEMA is correcting the wage rate used to calculate the Estimated Total
                Annual Respondent Cost in the NPRM, which resulted in a decrease of the
                Estimated Total Annual Respondent Cost from $29,601,921 to $27,845,344.
                FEMA incorrectly used the wage rate for the whole industry, instead of
                the State government industry wage rate. \43\ Additionally, the NPRM
                incorrectly listed the proposed decrease to the Estimated Total Annual
                Cost to the Federal Government as $29,976, an error of $2,498. Rather,
                the NPRM should have listed a proposed decrease of $27,478 in
                arbitration travel costs; as, we do not have to include them per the
                PRA exceptions for civil & administrative actions. See 44 U.S.C.
                3518(c). Additionally, the Staff Salaries changed as the wage rate
                multiplier changed from 1.6 to 1.45. Finally, the NPRM incorrectly
                listed the Estimated Total Annual Costs to the Federal Government, as
                $1,890,650, when the NPRM should have listed it as $1,930,187, due to
                the previously mentioned changes. No comments were received regarding
                the proposed information collection. The purpose of this section is to
                notify the public that FEMA will submit the information collection
                abstracted below to OMB for review and clearance. This final rule
                serves as the 30-day comment period pursuant to 5 CFR 1320.12. FEMA
                invites the public to comment on this collection of information.
                ---------------------------------------------------------------------------
                 \43\ Bureau of Labor Statistics, Occupational Employment and
                Wage Statistics. https://www.bls.gov/oes/. Last accessed: June 10,
                2021.
                ---------------------------------------------------------------------------
                Collection of Information
                 Title: PA Program.
                 Type of information collection: Revision of a currently approved
                collection.
                 OMB Number: 1660-0017.
                 Form Forms: FEMA Form 009-0-49 Request for Public Assistance; FEMA
                Form 009-0-91 Project Worksheet (PW); FEMA Form 009-0-91A Project
                Worksheet (PW)--Damage Description and Scope of Work; FEMA Form 009-0-
                91B Project Worksheet (PW)--Cost Estimate Continuation Sheet; FEMA Form
                009-0-91C Project Worksheet (PW)--Maps and Sketches Sheet; FEMA Form
                009-0-91D Project Worksheet (PW)--Photo Sheet; FEMA Form 009-0-120
                Special Considerations Questions; FEMA Form 009-0-121 PNP Facility
                Questionnaire; FEMA Form 009-0-123 Force Account Labor Summary Record;
                FEMA Form 009-0-124 Materials Summary Record; FEMA Form 009-0-125
                Rented Equipment Summary Record; FEMA Form 009-0-126 Contract Work
                Summary Record; FEMA Form 009-0-127 Force Account Equipment Summary
                Record; FEMA Form 009-0-128 Applicant's Benefits Calculation Worksheet;
                FEMA Form 009-0-111, Quarterly Progress Report; FEMA Form 009-0-141,
                FAC-TRAX System, FEMA Template 104-FY-21-100 Equitable COVID-19
                Response and Recovery: Vaccine Administration Information.
                 Abstract: The information collected is utilized by FEMA to make
                determinations for PA grants based on the information supplied by the
                respondents.
                 Affected Public: State, local, or Tribal Government.
                 Estimated Number of Respondents: 1,068.
                 Estimated Number of Responses: 449,084.
                 Estimated Total Annual Burden Hours: 491,533.
                 The final regulation would provide applicants an additional choice
                in FEMA's appeals and arbitration processes: Applicants must choose
                either submitting a second appeal or submitting a request for
                arbitration. Or, an applicant may select arbitration if the Regional
                Administrator has received a first appeal but has not rendered a
                decision within 180 calendar days of receipt. There is no change to the
                number of responses due to the final rule, as applicants can only
                choose one option. The final rule's implementation would not impact the
                total number of responses or burden hours.
                 FEMA estimated it will take approximately 2 hours to prepare an
                electronic appeal or arbitration. This estimate is based on the
                assumption that most of the information necessary for preparing the
                appeal or arbitration request is found in the existing Project
                Worksheet.
                 Recipients will also provide a recommendation per each applicant
                request for an appeal or arbitration. The total number of
                recommendations would not change because of the final rule. FEMA
                estimates it will take approximately 1 hour to prepare a
                recommendation.
                 Currently, the estimated time to complete a request and submit a
                letter of recommendation for an appeal is three hours. FEMA also
                estimates the time to complete a request and submit an electronic
                recommendation for arbitration would also be three hours. The applicant
                could re-use the same information from the request for an appeal or
                arbitration and the recipient would review similar information in
                providing its recommendation. The final
                [[Page 45681]]
                rule would not impact the estimate of the burden hours.
                 Table 15 provides estimates of annualized cost to respondents for
                the hour burdens for the collection of information.
                 Table 15--Estimated Annualized Burden Hours and Costs
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Number of Avg. burden Total Total
                 Number of responses Total per annual Avg. hourly annual
                 Type of respondent Form name/form No. respondents per number of response burden (in wage rate respondent
                 respondent responses (in hours) hours) cost
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                State, Local or Tribal Government. FEMA Form 009-0-49, 56 129 7,224 0.25 1,806 $56.65 $102,310
                 Request for PA.
                State, Local or Tribal Government. FEMA Form 009-0-91, 56 840 47,040 1.5 70,560 56.65 3,997,224
                 Project Worksheet (PW)
                 and a Request for Time
                 Extension.
                State, Local or Tribal Government. FEMA Form 009-0-91A 56 784 43,904 1.5 65,856 56.65 3,730,742
                 Project Work Sheet (PW)
                 Damage Description and
                 Scope of Work.
                State, Local or Tribal Government. FEMA Form 009-0-91B, 56 784 43,904 1.3333 58,537 56.65 3,316,121
                 Project Worksheet (PW)
                 Cost Estimate
                 Continuation Sheet and
                 Request for additional
                 funding for Cost
                 Overruns.
                State, Local or Tribal Government. FEMA Form 009-0-91C 56 728 40,768 1.5 61,152 56.65 3,464,261
                 Project Worksheet (PW)
                 Maps and Sketches Sheet.
                State Local or Tribal Government.. FEMA Form 009-0-91D 56 728 40,768 1.5 61,152 56.65 3,464,261
                 Project Worksheet (PW)
                 Photo Sheet.
                State, Local or Tribal Government. FEMA Form 009-0-120, 56 840 47,040 0.5 23,520 56.65 1,332,408
                 Special Considerations
                 Questions/.
                State, Local or Tribal Government. FEMA Form 009-0-128, 56 784 43,904 0.5 21,952 56.65 1,243,581
                 Applicant's Benefits
                 Calculation Worksheet/.
                State, Local or Tribal Government. FEMA Form 009-0-121, PNP 56 94 5,264 0.5 2,632 56.65 149,103
                 Facility Questionnaire.
                State, Local or Tribal Government. FEMA Form 009-0-123, 56 94 5,264 0.5 2,632 56.65 149,103
                 Force Account Labor
                 Summary Record.
                State, Local or Tribal Government. FEMA Form 009-0-124, 56 94 5,264 0.25 1,316 56.65 74,551
                 Materials Summary Record/
                 .
                State, Local or Tribal Government. FEMA Form 009-0-125, 56 94 5,264 0.5 2,632 56.65 149,103
                 Rented Equipment Summary
                 Record.
                State, Local or Tribal Government. FEMA Form 009-0-126, 56 94 5,264 0.5 2,632 56.65 149,103
                 Contract Work Summary
                 Record/.
                State, Local or Tribal Government. FEMA Form 009-0-127, 56 94 5,264 0.25 1,316 56.65 74,551
                 Force Account Equipment
                 Summary Record/.
                State, Local or Tribal Government. State Administrative Plan 56 1 56 8 448 56.65 25,379
                 and State Plan
                 Amendments/No Form.
                State, Local or Tribal Government. FEMA Form 009-0-111, 56 4 224 100 22,400 56.65 1,268,960
                 Quarterly Progress
                 Report.
                State, Local or Tribal Government. Request for Appeals or 56 9 504 3 1,512 56.65 85,655
                 Arbitrations &
                 Recommendation/No Forms.
                State, Local or Tribal Government. Request for Arbitration & 4 5 20 3 60 56.65 3,399
                 Recommendation resulting
                 from Hurricanes Katrina
                 or Rita/No Form.
                State, Local or Tribal Government. FEMA Form 009-0-141, FAC- 56 913 51,128 1.25 63,910 56.65 3,620,502
                 TRAX System.
                State, Local or Tribal Government. FEMA Template 104-FY-21- 56 911 51,016 0.5 25,508 56.65 1,445,028
                 100 Equitable COVID-19
                 Response and Recovery.
                 ------------------------------------------------------------------------------------------
                 Total......................... ......................... 1,068 ........... 449,084 ........... 491,533 ........... 27,845,344
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Note: The ``Avg. Hourly Wage Rate'' for each respondent includes a 1.62 multiplier to reflect a fully-loaded wage rate.
                 Estimated Total Annual Respondent Cost: $27,845,344.
                 Estimated Respondents' Operation and Maintenance Costs: N/A.
                 Estimated Respondents' Capital and Start-Up Costs: N/A.
                 Estimated Total Annual Costs to the Federal Government: $1,930,187.
                E. Privacy Act
                 Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must
                determine whether implementation of a final regulation will result in a
                system of records. A ``record'' is any item, collection, or grouping of
                information about an individual that is maintained by an agency,
                including, but not limited to, his/her education, financial
                transactions, medical history, and criminal or employment history and
                that contains his/her name, or the identifying number, symbol, or other
                identifying particular assigned to the individual, such as a finger or
                voice print or a photograph. See 5 U.S.C. 552a(a)(4). A ``system of
                records'' is a group of records under the control of an agency from
                which information is retrieved by the name of the individual or by some
                identifying number, symbol, or other identifying particular assigned to
                the individual. An agency cannot disclose any record which is contained
                in a system of records except by following specific procedures.
                 In accordance with DHS policy, FEMA has completed a Privacy
                Threshold Analysis (PTA) for this final rule. DHS has determined that
                this final rule does not affect the 1660-0017 OMB Control Number's
                current compliance with the E-Government Act of 2002 or the Privacy Act
                of 1974, as amended. As a result, DHS has concluded that the 1660-0017
                OMB Control Number is covered by the DHS/FEMA/PIA-013 Grants Management
                Programs Privacy Impact Assessment (PIA). Additionally, DHS has decided
                that the 1660-0017 OMB Control Number is covered by the DHS/FEMA--009
                Hazard Mitigation,
                [[Page 45682]]
                Disaster Public Assistance, and Disaster Loan Programs System of
                Records, 79 FR 16015, Mar. 24, 2014 System of Records Notice (SORN).
                F. National Environmental Policy Act of 1969 (NEPA)
                 Section 102 of the National Environmental Policy Act of 1969
                (NEPA), 83 Stat. 852 (Jan. 1, 1970) (42 U.S.C. 4321 et seq.) requires
                Federal agencies to consider the impacts of their proposed actions on
                the quality of the human environment. Each agency can develop
                categorical exclusions (catexes) to cover actions that have been
                demonstrated to not typically trigger significant impacts to the human
                environment individually or cumulatively. If an action does not qualify
                for a catex and has the potential to significantly affect the
                environment, agencies develop environmental assessments (EAs) to
                evaluate those actions. The Council on Environmental Quality's
                procedures for implementing NEPA, 40 CFR parts 1500 through 1508,
                require Federal agencies to prepare Environmental Impact Statements
                (EISs) for major Federal actions significantly affecting the quality of
                the human environment. At the end of the EA process, the agency will
                determine whether to make a Finding of No Significant Impact or whether
                to initiate the EIS process.
                 Rulemaking is a major Federal action subject to NEPA. The list of
                catexes at DHS Instruction Manual 023-01-001-01 (Revision 01),
                ``Implementation of the National Environmental Policy Act (NEPA),''
                Appendix A, includes a catex for the promulgation of certain types of
                rules, including rules that implement, without substantive change,
                statutory or regulatory requirements and rules that interpret or amend
                an existing regulation without changing its environmental effect.
                (Catex A3(b) and (d)).
                 The purpose of this rule is to finalize the proposed regulations to
                implement the new right of arbitration authorized by the DRRA, and to
                revise FEMA's regulations regarding first and second PA appeals.
                Additionally, in response to a public comment, FEMA is adding a
                definition of Regional Administrator. Plus, FEMA made changes to the
                regulatory text regarding first appeals and second appeals at
                206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) as a result of the 60-day
                appeals deadline comments. Finally, FEMA is making two technical
                revisions at 206.206(b) and 206.206(b)(3)(i)(A) to align the regulatory
                text with the dispute of the eligibility for assistance or repayment of
                assistance language of Section 423(d)(1) of the Stafford Act. These
                changes are to implement statutory requirements and to amend existing
                regulation without changing its environmental effect, consistent with
                Catex A3(b) and (d), as defined in DHS Instruction Manual 023-01-001-01
                (Rev. 01), Appendix A. No extraordinary circumstances exist that will
                trigger the need to develop an EA or EIS. See DHS Instruction Manual
                023-01-001-01 V(B)(2).
                G. Executive Order 13175, Consultation and Coordination With Indian
                Tribal Governments
                 Executive Order 13175, ``Consultation and Coordination With Indian
                Tribal Governments,'' 65 FR 67249, Nov. 9, 2000, applies to agency
                regulations that have Tribal implications, that is, regulations that
                have substantial direct effects on one or more Indian tribes, on the
                relationship between the Federal Government and Indian Tribes, or on
                the distribution of power and responsibilities between the Federal
                Government and Indian Tribes. Under this Executive Order, to the extent
                practicable and permitted by law, no agency will promulgate any
                regulation that has Tribal implications, that imposes substantial
                direct compliance costs on Indian Tribal governments, and that is not
                required by statute, unless funds necessary to pay the direct costs
                incurred by the Indian Tribal government or the Tribe in complying with
                the regulation are provided by the Federal Government, or the agency
                consults with Tribal officials.
                 The purpose of this rule is to finalize the proposed regulations to
                implement the new right of arbitration authorized by the DRRA, and to
                revise FEMA's regulations regarding first and second PA appeals.
                Additionally, in response to a public comment, FEMA is adding a
                definition of Regional Administrator. Plus, FEMA made changes to the
                regulatory text regarding first appeals and second appeals at
                206.206(b)(1)(ii)(A) and (b)(2)(ii)(A) as a result of the 60-day
                appeals deadline comments. Finally, FEMA is making two technical
                revisions at 206.206(b) and 206.206(b)(3)(i)(A) to align the regulatory
                text with the dispute of the eligibility for assistance or repayment of
                assistance language of Section 423(d)(1) of the Stafford Act.
                 Under the final rule, Indian Tribal Governments have the same
                opportunity to participate in arbitrations as other eligible
                applicants; however, given the participation criteria required under 42
                U.S.C. 5189a(d) and its voluntary nature, FEMA anticipates a very small
                number, if any Indian Tribal Governments, will participate in the new
                permanent right of arbitration. FEMA also anticipates a very small
                number of Indian Tribal Governments will be affected by the other major
                revisions to 44 CFR 206.206. As a result, FEMA does not expect this
                final rule to have a substantial direct effect on one or more Indian
                Tribal Governments or impose direct compliance costs on Indian Tribal
                Governments. Additionally, since FEMA anticipates a very small number,
                if any Indian Tribal Governments will participate in the arbitration
                portion of the final rule nor will be affected by the rest of the
                finalized revisions to 44 CFR 206.206, FEMA does not expect the
                regulations to have substantial direct effects on the relationship
                between the Federal Government and Indian Tribal Governments or on the
                distribution of power and responsibilities between the Federal
                Government and Indian Tribal Governments.
                H. Executive Order 13132, Federalism
                 A rule has implications for federalism under Executive Order 13132
                ``Federalism'' (64 FR 43255, Aug. 10, 1999), if it has a substantial
                direct effect on the States, on the relationship between the national
                government and the States, or on the distribution of power and
                responsibilities among the various levels of government. FEMA has
                analyzed this final rule under Executive Order 13132 and determined
                that it does not have implications for federalism.
                I. Executive Order 12630, Taking of Private Property
                 This rule will not effect a taking of private property or otherwise
                have taking implications under Executive Order 12630, ``Governmental
                Actions and Interference With Constitutionally Protected Property
                Rights'' (53 FR 8859, Mar. 18, 1988).
                J. Executive Order 12898, Environmental Justice
                 Executive Order 12898 ``Federal Actions To Address Environmental
                Justice in Minority Populations and Low-Income Populations'' (59 FR
                7629, Feb. 16, 1994), as amended by Executive Order 12948 (60 FR 6381,
                Feb. 1, 1995) mandates that Federal agencies identify and address, as
                appropriate, disproportionately high and adverse human health or
                environmental effects of their programs, policies, and activities on
                minority and low-income populations. It requires each Federal agency to
                conduct its programs, policies, and activities that substantially
                affect human health or the environment in a manner that ensures that
                those programs, policies, and activities do not
                [[Page 45683]]
                have the effect of excluding persons from participation in, denying
                persons the benefit of, or subjecting persons to discrimination because
                of their race, color, or national origin or income level. The purpose
                of this rule is to finalize the proposed regulations to implement the
                new right of arbitration authorized by the DRRA, and to revise FEMA's
                regulations regarding first and second PA appeals. Additionally, in
                response to a public comment, FEMA is adding a definition of Regional
                Administrator. Plus, FEMA made changes to the regulatory text regarding
                first appeals and second appeals at 206.206(b)(1)(ii)(A) and
                (b)(2)(ii)(A) as a result of the 60-day appeals deadline comments.
                Finally, FEMA is making two technical revisions at 206.206(b) and
                206.206(b)(3)(i)(A) to align the regulatory text with the dispute of
                the eligibility for assistance or repayment of assistance language of
                Section 423(d)(1) of the Stafford Act. There are no adverse effects and
                no disproportionate effects on minority or low-income populations.
                K. Executive Order 12988, Civil Justice Reform
                 This final rule meets applicable standards in Sections 3(a) and
                3(b)(2) of Executive Order 12988, ``Civil Justice Reform'' (61 FR 4729,
                Feb. 7, 1996), to minimize litigation, eliminate ambiguity, and reduce
                burden.
                L. Executive Order 13045, Protection of Children From Environmental
                Health Risks and Safety Risks
                 This final rule will not create environmental health risks or
                safety risks for children under Executive Order 13045, ``Protection of
                Children From Environmental Health Risks and Safety Risks'' (62 FR
                19885, Apr. 23, 1997).
                M. Congressional Review of Agency Rulemaking
                 Under the Congressional Review of Agency Rulemaking Act (CRA), 5
                U.S.C. 801-808, before a rule can take effect, the Federal agency
                promulgating the rule must submit to Congress and to the Government
                Accountability Office (GAO) a copy of the rule; a concise general
                statement relating to the rule, including whether it is a major rule;
                the proposed effective date of the rule; a copy of any cost-benefit
                analysis; descriptions of the agency's actions under the Regulatory
                Flexibility Act and the Unfunded Mandates Reform Act; and any other
                information or statements required by relevant executive orders.
                 FEMA has submitted this final rule to the Congress and to GAO
                pursuant to the CRA. OMB has determined that this rule is not a ``major
                rule'' within the meaning of the CRA.
                List of Subjects in 44 CFR Part 206
                 Administrative practice and procedure, Coastal zone, Community
                facilities, Disaster assistance, Fire prevention, Grant programs--
                housing and community development, Housing, Insurance,
                Intergovernmental relations, Loan programs--housing and community
                development, Natural resources, Penalties, Reporting and recordkeeping
                requirements.
                 For the reasons stated in the preamble, the Federal Emergency
                Management Agency amends 44 CFR part 206 as follows:
                PART 206--FEDERAL DISASTER ASSISTANCE
                0
                1. The authority citation for part 206 continues to read as follows:
                 Authority: Robert T. Stafford Disaster Relief and Emergency
                Assistance Act, 42 U.S.C. 5121 through 5207; Homeland Security Act
                of 2002, 6 U.S.C. 101 et seq.; Department of Homeland Security
                Delegation 9001.1.
                0
                2. Revise Sec. 206.206 to read as follows:
                Sec. 206.206 Appeals and arbitrations.
                 (a) Definitions. The following definitions apply to this section:
                 Administrator means the Administrator of the Federal Emergency
                Management Agency.
                 Amount in dispute means the difference between the amount of
                financial assistance sought for a Public Assistance project and the
                amount of financial assistance for which FEMA has determined such
                Public Assistance project is eligible.
                 Applicant has the same meaning as the definition at Sec.
                206.201(a).
                 Final agency determination means: (1) The decision of FEMA, if the
                applicant or recipient does not submit a first appeal within the time
                limits provided for in paragraph (b)(1)(ii)(A) of this section; or
                 (2) The decision of FEMA, if the applicant or recipient withdraws
                the pending appeal and does not file a request for arbitration within
                30 calendar days of the withdrawal of the pending appeal; or
                 (3) The decision of the FEMA Regional Administrator, if the
                applicant or recipient does not submit a second appeal within the time
                limits provided for in paragraph (b)(2)(ii)(A) of this section.
                 Recipient has the same meaning as the definition at Sec.
                206.201(m).
                 Regional Administrator means an administrator of a regional office
                of FEMA, or his/her designated representative.
                 Rural area means an area with a population of less than 200,000
                outside an urbanized area.
                 Urbanized area means an area that consists of densely settled
                territory that contains 50,000 or more people.
                 (b) Appeals and Arbitrations. An eligible applicant or recipient
                may appeal any determination previously made related to an application
                for or the provision of Public Assistance according to the procedures
                of this section. An eligible applicant may request arbitration to
                dispute the eligibility for assistance or repayment of assistance.
                 (1) First Appeal. The applicant must make a first appeal in writing
                and submit it electronically through the recipient to the Regional
                Administrator. The recipient must include a written recommendation on
                the applicant's appeal with the electronic submission of the
                applicant's first appeal to the Regional Administrator. The recipient
                may make recipient-related appeals to the Regional Administrator.
                 (i) Content. A first appeal must:
                 (A) Contain all documented justification supporting the applicant
                or recipient's position;
                 (B) Specify the amount in dispute, as applicable; and
                 (C) Specify the provisions in Federal law, regulation, or policy
                with which the applicant or recipient believes the FEMA determination
                was inconsistent.
                 (ii) Time Limits. (A) The applicant may make a first appeal through
                the recipient within 60 calendar days from the date of the FEMA
                determination that is the subject of the appeal and the recipient must
                electronically forward to the Regional Administrator the applicant's
                first appeal with a recommendation within 120 calendar days from the
                date of the FEMA determination that is the subject of the appeal. If
                the applicant or the recipient do not meet their respective 60-calendar
                day and 120-calendar day deadlines, FEMA will deny the appeal. A
                recipient may make a recipient-related first appeal within 60 calendar
                days from the date of the FEMA determination that is the subject of the
                appeal and must electronically submit their first appeal to the
                Regional Administrator.
                 (B) Within 90 calendar days following receipt of a first appeal, if
                there is a need for additional information, the Regional Administrator
                will provide electronic notice to the recipient and applicant. If there
                is no need for additional information, then FEMA will not provide
                notification. The Regional Administrator will generally allow the
                [[Page 45684]]
                recipient 30 calendar days to provide any additional information.
                 (C) The Regional Administrator will provide electronic notice of
                the disposition of the appeal to the applicant and recipient within 90
                calendar days of receipt of the appeal or within 90 calendar days
                following the receipt of additional information or following expiration
                of the period for providing the information.
                 (iii) Technical Advice. In appeals involving highly technical
                issues, the Regional Administrator may, at his or her discretion,
                submit the appeal to an independent scientific or technical person or
                group having expertise in the subject matter of the appeal for advice
                or recommendation. The period for this technical review may be in
                addition to other allotted time periods. Within 90 calendar days of
                receipt of the report, the Regional Administrator will provide
                electronic notice of the disposition of the appeal to the recipient and
                applicant.
                 (iv) Effect of an Appeal. (A) FEMA will take no action to implement
                any determination pending an appeal decision from the Regional
                Administrator, subject to the exceptions in paragraph (b)(1)(iv)(B) of
                this section.
                 (B) Notwithstanding paragraph (b)(1)(iv)(A) of this section, FEMA
                may:
                 (1) Suspend funding (see 2 CFR 200.339);
                 (2) Defer or disallow other claims questioned for reasons also
                disputed in the pending appeal; or
                 (3) Take other action to recover, withhold, or offset funds if
                specifically authorized by statute or regulation.
                 (v) Implementation. If the Regional Administrator grants an appeal,
                the Regional Administrator will take appropriate implementing
                action(s).
                 (vi) Guidance. FEMA may issue separate guidance as necessary to
                supplement paragraph (b)(1) of this section.
                 (2) Second Appeal. If the Regional Administrator denies a first
                appeal in whole or in part, the applicant may make a second appeal in
                writing and submit it electronically through the recipient to the
                Assistant Administrator for the Recovery Directorate. The recipient
                must include a written recommendation on the applicant's appeal with
                the electronic submission of the applicant's second appeal to the
                Assistant Administrator for the Recovery Directorate. The recipient may
                make recipient-related second appeals to the Assistant Administrator
                for the Recovery Directorate.
                 (i) Content. A second appeal must:
                 (A) Contain all documented justification supporting the applicant
                or recipient's position;
                 (B) Specify the amount in dispute, as applicable; and
                 (C) Specify the provisions in Federal law, regulation, or policy
                with which the applicant or recipient believes the FEMA determination
                was inconsistent.
                 (ii) Time Limits. (A) If the Regional Administrator denies a first
                appeal in whole or in part, the applicant may make a second appeal
                through the recipient within 60 calendar days from the date of the
                Regional Administrator's first appeal decision and the recipient must
                electronically forward to the Assistant Administrator for the Recovery
                Directorate the applicant's second appeal with a recommendation within
                120 calendar days from the date of the Regional Administrator's first
                appeal decision. If the applicant or the recipient do not meet their
                respective 60-calendar day and 120-calendar day deadlines, FEMA will
                deny the appeal. If the Regional Administrator denies a recipient-
                related first appeal in whole or in part, the recipient may make a
                recipient-related second appeal within 60 calendar days from the date
                of the Regional Administrator's first appeal decision and the recipient
                must electronically submit their second appeal to the Assistant
                Administrator for the Recovery Directorate.
                 (B) Within 90 calendar days following receipt of a second appeal,
                if there is a need for additional information, the Assistant
                Administrator for the Recovery Directorate will provide electronic
                notice to the recipient and applicant. If there is no need for
                additional information, then FEMA will not provide notification. The
                Assistant Administrator for the Recovery Directorate will generally
                allow the recipient 30 calendar days to provide any additional
                information.
                 (C) The Assistant Administrator for the Recovery Directorate will
                provide electronic notice of the disposition of the appeal to the
                recipient and applicant within 90 calendar days of receipt of the
                appeal or within 90 calendar days following the receipt of additional
                information or following expiration of the period for providing the
                information.
                 (iii) Technical Advice. In appeals involving highly technical
                issues, the Assistant Administrator for the Recovery Directorate may,
                at his or her discretion, submit the appeal to an independent
                scientific or technical person or group having expertise in the subject
                matter of the appeal for advice or recommendation. The period for this
                technical review may be in addition to other allotted time periods.
                Within 90 calendar days of receipt of the report, the Assistant
                Administrator for the Recovery Directorate will provide electronic
                notice of the disposition of the appeal to the recipient and applicant.
                 (iv) Effect of an Appeal. (A) FEMA will take no action to implement
                any determination pending an appeal decision from the Assistant
                Administrator for the Recovery Directorate, subject to the exceptions
                in paragraph (b)(2)(iv)(B) of this section.
                 (B) Notwithstanding paragraph (b)(2)(iv)(A) of this section, FEMA
                may:
                 (1) Suspend funding (see 2 CFR 200.339);
                 (2) Defer or disallow other claims questioned for reasons also
                disputed in the pending appeal; or
                 (3) Take other action to recover, withhold, or offset funds if
                specifically authorized by statute or regulation.
                 (v) Implementation. If the Assistant Administrator for the Recovery
                Directorate grants an appeal, the Assistant Administrator for the
                Recovery Directorate will direct the Regional Administrator to take
                appropriate implementing action(s).
                 (vi) Guidance. FEMA may issue separate guidance as necessary to
                supplement paragraph (b)(2) of this section.
                 (3) Arbitration. (i) Applicability. An applicant may request
                arbitration from the Civilian Board of Contract Appeals (CBCA) if:
                 (A) There is a dispute of the eligibility for assistance or of the
                repayment of assistance arising from a major disaster declared on or
                after January 1, 2016; and
                 (B) The amount in dispute is greater than $500,000, or greater than
                $100,000 for an applicant for assistance in a rural area; and
                 (C) The Regional Administrator has denied a first appeal decision
                or received a first appeal but not rendered a decision within 180
                calendar days of receipt.
                 (ii) Limitations. A request for arbitration is in lieu of a second
                appeal.
                 (iii) Request for Arbitration. (A) An applicant may initiate
                arbitration by submitting an electronic request simultaneously to the
                recipient, the CBCA, and FEMA. See 48 CFR part 6106.
                 (B) Time Limits. (1) An applicant must submit a request for
                arbitration within 60 calendar days from the date of the Regional
                Administrator's first appeal decision; or
                 (2) If the first appeal was timely submitted, and the Regional
                Administrator has not rendered a decision within 180 calendar days of
                [[Page 45685]]
                receiving the appeal, an applicant may arbitrate the decision of FEMA.
                To request arbitration, the applicant must first electronically submit
                a withdrawal of the pending appeal simultaneously to the recipient and
                the FEMA Regional Administrator. The applicant must then submit a
                request for arbitration to the recipient, the CBCA, and FEMA within 30
                calendar days from the date of the withdrawal of the pending appeal.
                 (C) Content of request. The request for arbitration must contain a
                written statement that specifies the amount in dispute, all
                documentation supporting the position of the applicant, the disaster
                number, and the name and address of the applicant's authorized
                representative or counsel.
                 (iv) Expenses. Expenses for each party will be paid by the party
                who incurred the expense.
                 (v) Guidance. FEMA may issue separate guidance as necessary to
                supplement paragraph (b)(3) of this section.
                 (c) Finality of decision. (1) A FEMA final agency determination or
                a decision of the Assistant Administrator for the Recovery Directorate
                on a second appeal constitutes a final decision of FEMA. Final
                decisions are not subject to further administrative review.
                 (2) In the alternative, a decision of the majority of the CBCA
                panel constitutes a final decision, binding on all parties. See 48 CFR
                6106.613. Final decisions are not subject to further administrative
                review.
                Deanne B. Criswell,
                Administrator, Federal Emergency Management Agency.
                [FR Doc. 2021-17213 Filed 8-13-21; 8:45 am]
                BILLING CODE 9111-19-P
                

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