[Federal Register Volume 64, Number 196 (Tuesday, October 12, 1999)]
[Rules and Regulations]
[Pages 55158-55161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26352]


=======================================================================
-----------------------------------------------------------------------

FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Part 206

RIN 3067-AC89


Disaster Assistance; Redesign of Public Assistance Program 
Administration

AGENCY: Federal Emergency Management Agency (FEMA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: We (FEMA) have redesigned the Public Assistance Program to 
provide money to applicants more quickly and to make the application 
process simpler than before. Specific changes to regulations rename 
documents, define terms, adjust responsibilities, and edit the rule in 
a way that we hope makes the rule easier to read and understand. This 
rule reflects changes that we need to put the new Public Assistance 
Program into effect.

EFFECTIVE DATE: This rule is effective on November 12, 1999.

FOR FURTHER INFORMATION CONTACT: James D. Duffer, Federal Emergency 
Management Agency, room 713, 500 C Street SW., Washington DC 20472, 
(202) 646-3532, or (email) [email protected].

SUPPLEMENTARY INFORMATION: On November 20, 1998, we published an 
interim final rule on the redesigned Public Assistance Disaster Grant 
Program (Project Administration) in the Federal Register at 63 FR 
64423. We invited comments for 45 days ending on January 4, 1999. We 
received eight sets of comments: Five from States; one from an 
organization; and, one from an individual. Comments varied widely. One 
commenter objected to changing the regulations; some thought that 
certain amended language required more clarification; some proposed 
additions to the amendatory language; and, some supported the rule as 
written.
    We have carefully considered the comments and performed clarifying 
amendments to Sec. 206.201, Sec. 206.202, Sec. 206.204, Sec. 206.205, 
and Sec. 206.208 that are technical in nature and do not require 
republication of the rule for comment. Specifically, within 
Sec. 206.201 we added that a scope of work and cost estimate for a 
project are documented on a Project Worksheet. We amended Sec. 206.202 
to explain the State's responsibility better and to make the rule 
easier to understand in this regard. We replaced the term ``Damage 
Survey Report'' with ``Project Worksheet'' at Sec. 206.204. In 
Sec. 206.205 we amended the section to provide that final payment of 
the Federal share is made to the Grantee upon approval of the Project 
Worksheet, rather than the project. And in Sec. 206.208 we eliminated 
the damage survey report requirement for the implementation of direct 
Federal assistance and replaced it with a requirement for a mission 
assignment letter to the appropriate federal agency. Following is a 
summary of the comments and responses.
    Several States commented that the proposed amendments to the 
governing regulations were generally acceptable. Some suggested that 
additional changes to the rule were necessary to explain the meaning of 
the redesigned process better for improving the delivery of the Public 
Assistance Program. We believe that the comments have merit and where 
terminologies are not consistent we are making additional changes to 
define terms better and to adjust responsibilities as follows:
     Several commenters noted that we might have omitted State 
participation in the preparation of Project Worksheets from the 
responsibilities of the Grantee, which could result in 
misinterpretations with other sections of the rule. By way of 
explanation, we encourage applicants to formulate their own small 
projects and to prepare Project Worksheets. For those unable to do so, 
we will prepare Project Worksheets for small projects. We also prepare 
Project Worksheets for all large projects. The State is responsible for 
providing assistance to the applicant and FEMA, as appropriate, for the 
purposes of identifying and validating small and large projects. We 
edited Sec. 206.202(b)(2), Sec. 206.202(d)(1)(i) and 
Sec. 206.228(a)(2)(i) to explain the State's responsibility better and 
make the rule easier to understand in this regard.
     One commenter observed that Sec. 206.202(d)(1)(ii) of the 
interim rule mistakenly omitted the word ``substantive''. We corrected 
this section to include the word ``substantive'' in the text of the 
rule. Our intent (as we noted under What Changes Are We Making to the 
Rule?) is that the first substantive meeting (known as the Kickoff 
Meeting) is between the applicant, the Public Assistance Coordinator 
(PAC) and the Liaison (a State supplied position) when possible. The 
PAC contacts the subgrantee to arrange the Kickoff Meeting. At this 
meeting a subgrantee's damages will be discussed, needs assessed, and a 
plan of action put in place. The PAC will go over what we expect of the 
subgrantee and will provide detailed instructions on what to do and how 
to do it. The State Liaison will discuss State requirements for 
administering the programmatic and

[[Page 55159]]

grant management requirements of the Public Assistance Program. This 
meeting is also the place to bring any questions or concerns that the 
subgrantee may have about how the public assistance process works.
     One commenter said that a change should be made to the 
Payment of Claims for small projects. Under the previous process for 
small projects, final payment of the Federal share was made to the 
Grantee upon project approval (each project was separately identified 
on a Damage Survey Report). The comment has merit because the 
redesigned process approves all small projects listed on a Project 
Worksheet as a single grant. We edited Sec. 206.205(a) to say that we 
make final payment of the Federal share of these projects to the 
Grantee when we approve the Project Worksheet.
     Another commenter proposed a change to eliminate the term 
DSR under Sec. 206.208(c)(1), Direct Federal Assistance. In the past, 
the Regional Director had to prepare a damage survey report 
establishing the scope and estimated cost of eligible work before 
execution of the work by another Federal agency that had the mission 
assignment to provide direct Federal assistance. This requirement was a 
pre-Federal Response Plan activity. We edited this section to eliminate 
the DSR requirement. However, the mission assignment letter to the 
agency providing direct Federal assistance will define the eligible 
scope of work, the estimated cost of the eligible work and the billing 
frequency.
     Another commenter observed for Sec. 206.204(e) that we 
needed to eliminate the term DSR (Damage Survey Report) and replace it 
with PW (Project Worksheet). We made that change.
    We also received comments that were unrelated to matters of 
terminology or consistency in the interim rule. Following is our 
summary of and response to these comments:
     A commenter observed that the grantee and subgrantee must 
be trained before a disaster and that we should provide adequate 
funding for training and publications to implement the Public 
Assistance Program properly. In response, our priority is to train FEMA 
staff to better deliver the redesigned Public Assistance Program. 
Although we do not propose a formal training program for States and 
applicants, we are providing educational and training materials in a 
variety of forms and delivery methods to educate States and applicants. 
To prepare States to train applicants we have provided limited training 
to the States (e.g. train-the-trainer classes). We are relying on 
States and locals to avail themselves of the training materials mounted 
on our web site that includes clearly marked areas for Public 
Assistance Program information and publications.
     One commenter expressed that there could be confusion with 
the terms ``we'' and ``you'' as used throughout the text of the 
proposed language. We have considered the possibility and agree. To 
reduce the potential for confusion, terminology changes throughout text 
of the proposed language have been made to reflect the term's 
``Grantee'' and ``subgrantee'' as appropriate.
     Another commenter noted that allowable administrative 
costs for subgrantees are insufficient to complete program 
responsibilities and said the allowance should be increased. The 
statutory allowance to assist in the cost of requesting, obtaining and 
administering Federal assistance is outside the scope of the changes to 
the regulations.
     A commenter asserted that FEMA should retain the 
requirement to explain in writing to a State Program Administrator any 
delays beyond 45 days in the obligation of Federal funds. We appreciate 
the comment but we do not take that view. We keep our obligation to 
explain delays but remove the requirement for written explanation. The 
program relies greatly on open communication, which we effect in a 
variety of ways. For instance, soon after the declaration, FEMA and 
State officials will meet to develop a public assistance recovery 
strategy, which will address FEMA and State staffing plans. As other 
examples, State staff assigned to the Resource Pool may assist in 
recovery efforts by providing technical assistance to applicants 
requesting assistance with their small project formulation activities, 
by validating an applicant's small projects, by assisting in the 
formulation of large projects, or by reviewing an applicant's case 
management file. Through the Federal, State and local partnership all 
participants will know why delays greater than 45 days in obligating 
Federal funds may occur both through open communication and through the 
review of an applicant's case management file. We believe that it would 
be redundant to duplicate this information in writing separately, when 
the same information is available from either the Public Assistance 
Coordinator (PAC), the State Liaison, or an applicant's case management 
file.
     Another commenter observed that we had deleted 
Sec. 206.202(f). We appreciate the comment and note that the final rule 
retains that section in its original form.
     A commenter stated that the redesigned Public Assistance 
Program should not be implemented until we closed out one of the 
``pilot'' disasters and audited the program result. We appreciate the 
comment but we do not take that view. State and local officials who 
participated in the pilot enthusiastically endorsed the redesigned 
process. Changes to the regulations incorporate the lessons that we 
learned from the pilot. The evaluation of program performance is an 
essential part of the redesigned program. An overall survey program 
began in late 1997 specifically for this purpose. We conducted an 
initial survey, Public Assistance Program Evaluation and Customer 
Satisfaction Baseline Survey, from December 1997 through February 1998 
and we published results of the survey in April 1998. The Baseline 
Survey revealed that, while a majority of respondents were satisfied 
with the overall Public Assistance (PA) Program and its major 
components, customer satisfaction levels were below our performance 
expectations. In response, our headquarters and regional staffs 
designed performance standards and targets for the PA Program to make 
the Program a more customer-responsive and performance-based operation. 
We published the standards in June 1998 in Public Assistance Program 
Performance Standards. We are now conducting a series of Post-Disaster 
Surveys to evaluate the effectiveness of new processes for the delivery 
of financial assistance and services to customers.
     Another commenter observed that Sec. 206.228(a)(2)(i)(A-D) 
had been left out of the November 20, 1998 Federal Register notice. We 
appreciate the comment and when we found the error we published a 
correction in the Federal Register, 64 FR 41827, August 2, 1999, to 
ensure that we retain the subparagraphs. They are in the final rule.
     A commenter expressed the desire to have Federal Register 
notices appear on the FEMA Website. We believe the comment has merit 
and have asked our Office of the General Counsel to post all FEMA-
generated Federal Register publications on the FEMA Website.

National Environmental Policy Act

    Our regulations categorically exclude this rule from the 
preparation of environmental impact statements and environmental 
assessments as an administrative action in support of normal day-to-day 
grant activities. We have not prepared an environmental assessment or 
an environmental impact statement.

[[Page 55160]]

Executive Order 12866, Regulatory Planning and Review

    We do not expect this rule (1) to affect adversely the availability 
of disaster assistance funding to small entities, (2) to have 
significant secondary or incidental effects on a substantial number of 
small entities, or (3) to create any additional burden on small 
entities.
    As Director I certify that this rule is not a significant 
regulatory action within the meaning of section 2(f) of E.O. 12866 of 
September 30, 1993, 58 FR 51735, and that it attempts to adhere to the 
regulatory principles set forth in E.O. 12866. The Office of Management 
and Budget has not reviewed this rule under E.O. 12866.

Paperwork Reduction Act

    This rule does not contain a collection of information and 
therefore is not subject to the provisions of the Paperwork Reduction 
Act of 1995.

Executive Order 12612, Federalism

    In publishing this rule, we considered the President's Executive 
Order 12612 on Federalism. This rule makes no changes in the division 
of governmental responsibilities between the Federal government and the 
States. Grant administration procedures under 44 CFR Part 13, Uniform 
Administrative Requirements for Grants and Cooperative Agreements to 
State and Local Governments, remain the same. We have not prepared a 
Federalism assessment.

Executive Order 12778, Civil Justice Reform

    This rule meets the applicable standards of section 2(b)(2) of 
Executive Order 12778, Civil Justice Reform, dated October 25, 1991, 3 
CFR, 1991 Comp., p. 359.

Congressional Review of Agency Rulemaking

    We have submitted this final rule to the Congress and to the 
General Accounting Office under the Congressional Review of Agency 
Rulemaking Act, Pub. L. 104-121. The rule is not a ``major rule'' 
within the meaning of that Act. It is an administrative action in 
support of normal day-to-day activities. It does not result in nor is 
it likely to result in an annual effect on the economy of $100,000,000 
or more; it will not result in a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions; and it will not have ``significant 
adverse effects'' on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises.
    This final rule is exempt (1) from the requirements of the 
Regulatory Flexibility Act, and (2) from the Paperwork Reduction Act. 
The rule is not an unfunded Federal mandate within the meaning of the 
Unfunded Mandates Reform Act of 1995, Pub. L. 104-4. It does not meet 
the $100,000,000 threshold of that Act, and any enforceable duties are 
imposed as a condition of Federal assistance or a duty arising from 
participation in a voluntary Federal program.

List of Subjects in 44 CFR Part 206

    Disaster assistance, Public assistance.

    Accordingly, the interim rule published at 63 FR 64425, Nov. 20, 
1998, amending 44 CFR part 206 is adopted as final with the following 
changes:

PART 206--DISASTER ASSISTANCE

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

    Authority: The Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, 42 U.S.C. 5121 et seq.; Reorganization Plan No. 3 of 
1978, 43 FR 41943, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 44 FR 
19367, 3 CFR, 1979 Comp., p. 376; E.O. 12148, 44 FR 43239, 3 CFR, 
1979 Comp., p. 412; and E.O. 12673, 54 FR 12571, 3 CFR, 1989 Comp., 
p. 214.

    2. Revise Sec. 206.200(b) to read as follows:


Sec. 206.200  General.

* * * * *
    (b) What policies apply to FEMA public assistance grants? (1) The 
Stafford Act requires that we deliver eligible assistance as quickly 
and efficiently as possible consistent with Federal laws and 
regulations. We expect the Grantee and the subgrantee to adhere to 
Stafford Act requirements and to these regulations when administering 
our public assistance grants.
    (2) The regulations entitled ``Uniform Requirements for Grants and 
Cooperative Agreements to State and Local Governments,'' published at 
44 CFR part 13, place requirements on the State in its role as Grantee 
and gives the Grantee discretion to administer federal programs under 
their own procedures. We expect the Grantee to:
    (i) Inform subgrantees about the status of their applications, 
including notifications of our approvals of Project Worksheets and our 
estimates of when we will make payments;
    (ii) Pay the full amounts due to subgrantees as soon as practicable 
after we approve payment, including the State contribution required in 
the FEMA-State Agreement; and
    (iii) Pay the State contribution consistent with State laws.
    3. Amend section Sec. 206.201 by revising the heading and the 
definitions of project and project approval in paragraphs (i) and (j) 
to read as follows:


Sec. 206.201  Definitions used in this subpart.

* * * * *
    (i) A project is a logical grouping of work required as a result of 
the declared major disaster or emergency. The scope of work and cost 
estimate for a project are documented on a Project Worksheet (FEMA Form 
90-91).
    (1) We must approve a scope of eligible work and an itemized cost 
estimate before funding a project.
    (2) A project may include eligible work at several sites.
    (j) Project approval means the process in which the Regional 
Director, or designee, reviews and signs an approval of work and costs 
on a Project Worksheet or on a batch of Project Worksheets. Such 
approval is also an obligation of funds to the Grantee.
* * * * *
    4. Revise Sec. 206.202 to read as follows:


Sec. 206.202  Application procedures.

    (a) General. This section describes the policies and procedures 
that we use to process public assistance grants to States. Under this 
section the State is the Grantee. As Grantee you are responsible for 
processing subgrants to applicants under 44 CFR parts 13, 14, and 206, 
and your own policies and procedures.
    (b) Grantee. You are the grant administrator for all funds provided 
under the Public Assistance grant program. Your responsibilities under 
this section include:
    (1) Providing technical advice and assistance to eligible 
subgrantees;
    (2) Providing State support for project identification activities 
to include small and large project formulation and the validation of 
small projects;
    (3) Ensuring that all potential applicants are aware of available 
public assistance; and
    (4) Submitting documents necessary for the award of grants.
    (c) Request for Public Assistance (Request). The Grantee must send 
a completed Request (FEMA Form 90-49) to the Regional Director for each 
applicant who requests public assistance. You must send Requests to the 
Regional Director within 30 days after designation of the area where 
the damage occurred.
    (d) Project Worksheets. (1) An applicant's authorized local

[[Page 55161]]

representative is responsible for representing the applicant and for 
ensuring that the applicant has identified all eligible work and 
submitted all costs for disaster-related damages for funding.
    (i) We or the applicant, assisted by the State as appropriate, will 
prepare a Project Worksheet (FEMA Form 90-91) for each project. The 
Project Worksheet must identify the eligible scope of work and must 
include a quantitative estimate for the eligible work.
    (ii) The applicant will have 60 days following its first 
substantive meeting with us to identify and to report damage to us.
    (2) When the estimated cost of work on a project is less than 
$1,000, that work is not eligible and we will not approve a Project 
Worksheet for the project. Periodically we will review this minimum 
approval amount for a Project Worksheet and, if needed, will adjust the 
amount by regulation.
    (e) Grant approval. (1) Before we obligate any funds to the State, 
the Grantee must complete and send to the Regional Director a Standard 
Form (SF) 424, Application for Federal Assistance, and a SF 424D, 
Assurances for Construction Programs. After we receive the SF 424 and 
SF 424D, the Regional Director will obligate funds to the Grantee based 
on the approved Project Worksheets. The Grantee will then approve 
subgrants based on the Project Worksheets approved for each applicant.
    (2) When the applicant submits the Project Worksheets, we will have 
45 days to obligate Federal funds. If we have a delay beyond 45 days we 
will explain the delay to the Grantee.
    (f) Exceptions. The following are exceptions to the procedures and 
time limitations outlined in paragraphs (c), (d), and (e) of this 
section.
    (1) Grant applications. An Indian tribe or authorized tribal 
organization may submit a SF 424 directly to the RD when the Act 
authorizes assistance and a State is legally unable to assume the 
responsibilities that these regulations prescribe.
    (2) Time limitations. The RD may extend the time limitations shown 
in paragraphs (c) and (d) of this section when the Grantees justifies 
and makes a request in writing. The justification must be based on 
extenuating circustances beyond the grantee's or subgrantee's control.
    5. Amend Sec. 206.204 by revising paragraph (e) to read as follows:


Sec. 206.204  Project performance.

* * * * *
    (e) Cost Overruns. (1) During the execution of approved work a 
subgrantee may find that the actual project costs exceed the approved 
Project Worksheet estimates. Such cost overruns normally fall into the 
following three categories:
    (i) Variations in unit prices;
    (ii) Change in the scope of eligible work; or
    (iii) Delays in timely starts or completion of eligible work.
    (2) The subgrantee must evaluate each cost overrun and, when 
justified, submit a request for additional funding through the Grantee 
to the RD for a final determination. All requests for the RD's approval 
will contain sufficient documentation to support the eligibility of all 
claimed work and costs. The Grantee must include a written 
recommendation when forwarding the request. The RD will notify the 
Grantee in writing of the final determination. FEMA will not normally 
review an overrun for an individual small project. The normal procedure 
for small projects will be that when a subgrantee discovers a 
significant overrun related to the total final cost for all small 
projects, the subgrantee may submit an appeal for additional funding in 
accordance with Sec. 206.206, within 60 days following the completion 
of all its small projects.
* * * * *
    6. Amend Sec. 206.205 by revising paragraph (a) to read as follows:


Sec. 206.205  Payment of Claims.

    (a) Small Projects. Final payment of the Federal share of these 
projects will be made to the Grantee upon approval of the Project 
Worksheet. The Grantee will make payment of the Federal share to the 
subgrantee as soon as practicable after Federal approval of funding. 
Before the closeout of the disaster contract, the Grantee must certify 
that all such projects were completed in accordance with FEMA approvals 
and that the State contribution to the non-Federal share, as specified 
in the FEMA-State Agreement, has been paid to each subgrantee. Such 
certification is not required to specify the amount spent by a 
subgrantee on small projects. The Federal payment for small projects 
shall not be reduced if all of the approved funds are not spent to 
complete a project. However, failure to complete a project may require 
that the Federal payment be refunded.
* * * * *
    7. Amend Sec. 206.208 by revising paragraph (c)(1) to read as 
follows:


Sec. 206.208  Direct Federal Assistance.

* * * * *
    (c) Implementation. (1) If the RD approves the request, a mission 
assignment will be issued to the appropriate Federal agency. The 
mission assignment letter to the agency will define the scope of 
eligible work, the estimated cost of the eligible work and the billing 
period frequency. The Federal agency must not exceed the approved 
funding limit without the authorization of the RD.
* * * * *
    8. Amend Sec. 206.228 by revising paragraph (a)(2)(i) to read as 
follows:


Sec. 206.228  Allowable costs.

* * * * *
    (a) * * *
    (1) * * *
    (2) Statutory Administrative Costs--(i) Grantee. Under section 
406(f)(2) of the Stafford Act, we will pay you, the State, an allowance 
to cover the extraordinary costs that you incur to formulate Project 
Worksheets for small and large projects, to validate small projects, to 
prepare final inspection reports, project applications, final audits, 
and to make related field inspections by State employees. Eligible 
costs include overtime pay and per diem and travel expenses, but do not 
include regular time for your State employees. The allowance to the 
State will be based on the following percentages of the total amount of 
Federal assistance that we provide for all subgrantees in the State 
under sections 403, 406, 407, 502, and 503 of the Act:
    (A) For the first $100,000 of total assistance provided (Federal 
share), three percent of such assistance.
    (B) For the next $900,000, two percent of such assistance.
    (C) For the next $4,000,000, one percent of such assistance.
    (D) For assistance over $5,000,000, one-half percent of such 
assistance.
* * * * *
    Dated: October 1, 1999.
James L. Witt,
Director.
[FR Doc. 99-26352 Filed 10-8-99; 8:45 am]
BILLING CODE 6718-02-P