[Federal Register Volume 66, Number 55 (Wednesday, March 21, 2001)]
[Rules and Regulations]
[Pages 15948-15966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-6917]



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Part II





Federal Emergency Management Agency





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44 CFR Part 295



Disaster Assistance; Cerro Grande Fire Assistance; Final Rule

  Federal Register / Vol. 66, No. 55 / Wednesday, March 21, 2001 / 
Rules and Regulations  

[[Page 15948]]


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FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Part 295

RIN 3067-AD12


Disaster Assistance; Cerro Grande Fire Assistance

AGENCY: Office of Cerro Grande Fire Claims, Federal Emergency 
Management Agency (FEMA).

ACTION: Final rule.

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SUMMARY: This final rule implements the Cerro Grande Fire Assistance 
Act (CGFAA), Public Law 106-246, and supersedes the interim final rule 
that we published on August 28, 2000 [65 FR 52260]. It applies to 
claims that were filed before the effective date of the final rule and 
claims filed after the effective date of the final rule, unless this 
rule provides otherwise.

EFFECTIVE DATE: March 21, 2001.

FOR FURTHER INFORMATION CONTACT: For further information on this 
regulation please contact Nathan Bergerbest, Office of the General 
Counsel, Federal Emergency Management Agency, 500 C Street SW., 
Washington, DC 20472, (202) 646-2685, or (e-mail) 
[email protected]. For claims forms and customer service 
information contact the Cerro Grande Fire Claims Administrative Office, 
Post Office Box 1480, Los Alamos, New Mexico 87544-1480, (telephone) 1-
888-748-1853 (toll-free).

SUPPLEMENTARY INFORMATION: The CGFAA requires that FEMA administer a 
program to provide compensation to survivors of the May 2000 Cerro 
Grande Fire in northern New Mexico. The Act required that FEMA publish 
implementing regulations within 45 days of enactment. FEMA met this 
deadline by publishing the interim final rule on August 28, 2000 [65 FR 
52260]. Due to the short period of time for completion of the interim 
final rule, it was published without opportunity for public comment.
    FEMA accepted public comment on the interim final rule for a sixty-
day period, which closed on October 27, 2000. FEMA received 69 written 
comments by mail and e-mail from various stakeholders, including the 
Cerro Grande Fire Survivors' Association, Los Alamos County, the Pueblo 
of Santa Clara, the Rio Grande Chapter of the Appraisal Institute and 
several insurance industry trade associations. These statistics include 
15 written comments submitted to FEMA before the interim final rule was 
issued. The 69 comments addressed 81 issues. We found all of the 
comments to be relevant and constructive. We considered each comment 
carefully in formulating this final rule.

Sectional Analysis

    Subpart A. Subpart A of the final rule (Secs. 295.1-295.7) provided 
general information on the CGFAA. We have made several editorial 
changes to Sec. 295.5, which provides an overview of the claims 
process, to reflect amendments to Secs. 295.30 and 295.32 of the 
interim final rule and to highlight the relationship between these 
sections and Sec. 295.21(a).
    Section 295.6 of the interim final rule addressed partial payments. 
A commenter suggested that partial payments should be made for at least 
70% of the claim amount, with expedited payments to those in need. We 
have not amended Sec. 295.6 because we believe that the existing 
language provides FEMA with sufficient discretion to make partial 
payments of any amount and to expedite payments when it is appropriate 
to do so. The amount of a partial payment in any particular case will 
depend upon the nature of the claim and in some cases, how well the 
claim is supported. We encourage Claimants who require expedited 
payments to discuss the matter with a Claims Reviewer.
    A new Sec. 295.7 authorizes the Director of OCGFC to offer 
Claimants an opportunity to settle or compromise a claim in whole or 
part.
    One commenter asked whether Claimants have access to policies 
adopted by the Office of Cerro Grande Fire Claims. We post copies of 
these policies on the World Wide Web at http://www.fema.gov/cerrogrande. They also are available for public inspection at OCGFC 
Customer Service Centers. The commenter also asked how members of the 
public might comment on the implementation of the CGFAA. Comments may 
be directed to the Director of OCGFC, Cerro Grande Fire Claims 
Administrative Office, Post Office Box 1480, Los Alamos, NM 87544-1480 
or dropped in one of the suggestion boxes that are in each of the 
Customer Service Centers.
    Subpart B. Subpart B explains the process for bringing a claim 
under the CGFAA. We are clarifying Secs. 295.10(a) and 295.11 to remind 
Claimants that the Notice of Loss must contain a brief description of 
each Loss. The term ``Loss'' is defined in Subpart F of the final rule, 
Sec. 295.50.\1\ This is important because FEMA cannot provide 
compensatory damages for a Loss unless the Claimant has reported it to 
FEMA by August 28, 2002. Secs. 295.33 and 295.34 of the final rule 
establish a process for notifying FEMA about Losses that are not 
mentioned in the initial Notice of Loss. However a Claimant tells FEMA 
about a Loss, whether in the initial Notice of Loss, an amendment under 
Sec. 295.33 or a request to reopen the claim under Sec. 295.34--we must 
know about the Loss by August 28, 2002.\2\
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    \1\ The term ``Loss'' refers to one of the several categories of 
compensable personal injuries, property losses, business losses, and 
financial losses described in Sec. 104(d)(4) of the CGFAA and in 
this regulation. A Claimant must tell us about his or her Losses in 
general terms in the Notice of Loss. A complete inventory of lost 
household effects need not be included in the Notice of Loss. For 
example, a Claimant who claims that household effects or personal 
property were lost to the Cerro Grande Fire may obtain compensation 
for a destroyed toaster, even though the toaster is not specifically 
listed on the Notice of Loss. However, Claimants who seek damages 
for personal injuries or losses involving real estate should 
describe the injury suffered with reasonable specificity.
    \2\ There are a few exceptions to this rule. A Claimant who 
tells FEMA that his or her home was damaged or destroyed by the 
Cerro Grande Fire may seek mitigation compensation under 
Sec. 295.21(d) without specifically mentioning it on the Notice of 
Loss. Similarly, eligible Claimants are eligible to receive a lump 
sum payment under Sec. 295.31(b) for incidental expenses incurred in 
claims preparation, without having to request these funds 
specifically in the Notice of Loss.
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    We amended Sec. 295.10(c) of the interim final rule to clarify who 
must sign the Notice of Loss. If the Claimant is an entity \3\ or an 
individual who lacks the legal capacity to sign the Notice of Loss, 
then and only then can a duly authorized legal representative of the 
Claimant sign the Notice of Loss. The same principle applies to 
affidavits submitted in support of claims, the Proof of Loss, and the 
Release and Certification Form. Public adjusters and attorneys should 
not sign CGFAA documents on behalf of individual Claimants who have the 
legal capacity to execute these documents. OCGFC will audit Notices of 
Loss that were filed under the interim final rule. If we determine that 
an attorney, public adjuster or other representative signed a Notice of 
Loss, which should have been signed by an individual Claimant, we will 
require that the Claimant submit a written ratification of the Notice 
of Loss. The Claimant will need to execute this ratification under 
penalty of perjury and subject to the provisions of 18 U.S.C. 1001, 
which provides penalties for false statements.
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    \3\ Entities are organizations such as corporations, sole 
proprietorship businesses (d/b/a's), partnerships, limited liability 
companies, trusts, estates, unincorporated associations, 
cooperatives, Indian tribes and government agencies.
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    Section 295.10(e) of the interim final rule does not permit the 
submission of Notices of Loss by facsimile. One

[[Page 15949]]

commenter suggested that FEMA should reconsider the decision. We have 
decided to retain the present policy because we believe that it 
substantially reduces the risk of lost documents.

Withdrawal of CGFAA Claims

    Commenters suggested that Claimants should have a short period 
following publication of the final rule to withdraw their claims under 
the CGFAA and pursue them under other mechanisms. FEMA believed that 
there was merit in the suggestion. However, FEMA cannot unilaterally 
implement regulations providing CGFAA Claimants with an opportunity to 
pursue their claims under other legal mechanisms, such as the Federal 
Tort Claims Act. We must consult with the Department of Justice and the 
Department of the Interior before making policy in this area.
    FEMA has discussed this issue with the Department of Justice and 
the Department of the Interior. The Department of Justice concluded 
that providing CGFAA Claimants with an opportunity to withdraw their 
fire act claims and proceed under other mechanisms, including the 
Federal Tort Claims Act, is contrary to Section 104(h) of the CGFAA. 
FEMA must respect this conclusion.

Subrogation Claims

    Section 295.13 of the interim final rule addressed subrogation 
claims. A number of comments addressed subrogation issues. An 
individual commenter suggested that FEMA should penalize insurance 
companies for delays in processing the claims of their policyholders by 
reducing subrogation payments under the CGFAA. Another commenter 
suggested that insurance companies receiving subrogation payments 
should be required to refund premiums to injured policyholders and be 
limited in the rates they charge injured policyholders in the future. 
FEMA lacks the authority under the CGFAA or any other law to regulate 
the conduct of insurance companies.
    Two comments from the insurance industry suggested that FEMA should 
request any additional information it needs to process a subrogation 
claim within 30 days of its submission. We have not adopted this 
suggestion because the law authorizes us to seek additional information 
concerning a claim at any time while we are evaluating the claim.
    Two insurance industry commenters asked whether FEMA would 
reimburse insurance companies for monies paid to injured policyholders, 
which was not required to be paid under the terms of the policy. The 
issue arose in two different contexts--the first in which the insurance 
company has paid an injured policyholder's living expenses in excess of 
policy limits. The other scenario involves the case in which the 
insurance company is not required to pay a policyholder for the cost of 
replacing a home unless the policyholder actually rebuilds. The OCGFC 
has provided guidance to the insurance industry on this issue. The 
guidance provides that OCGFC may reimburse insurance companies for 
reasonable payments, not required by the policy, made to injured 
policyholders on or before October 25, 2000. The OCGFC will not 
entertain subrogation claims for payments made in excess of policy 
limits or contrary to policy terms made after October 25, 2000.
    An insurance industry commenter suggested that their adjuster's 
determination of Loss should be binding on FEMA when considering a 
subrogation claim. The CGFAA requires that FEMA determine and fix the 
compensation due to all Claimants, including subrogation claimants. We 
cannot exempt subrogation claims from our evaluation process simply 
because a professional adjuster was involved in the formulation of the 
claim.
    Several comments related to Sec. 104(d)(1)(A)(ii) of the CGFAA, 
which suggests that FEMA should not pay subrogation claims until other 
claims have been paid. An individual commenter suggested that FEMA not 
pay any insurance subrogation claim until the insurance company has 
settled all of its obligations to policyholders who suffered damage 
from the Cerro Grande Fire. An insurance industry commenter suggested 
that it is appropriate for FEMA to process and pay a subrogation claim 
when an insurer has fulfilled its obligations to a particular 
policyholder. Another insurance industry commenter suggested that the 
OCGFC should consider partial payments on subrogation claims.
    After considering these comments, we decided to amend Sec. 295.6. 
FEMA will not accept a subrogation claim to recover payments made on an 
insurance policy until the insurer has paid the insured everything that 
the insurer believes that the insured is entitled to receive under the 
policy. A Subrogation Notice of Loss may be filed if there is a dispute 
between the insurer and the insured, which is pending before a third-
party (e.g., appraiser, arbitrator or court), provided that the insurer 
has made the final payment that it believes that the insured is 
entitled to receive under the policy. We must receive the Subrogation 
Notice of Loss by August 28, 2002.
    Subpart C. Subpart C of the interim final rule addressed damages 
available under the CGFAA. By far, the greatest number of comments 
submitted pertained to Subpart C issues. Before we published the 
interim final rule, Los Alamos County suggested that we publish a 
comprehensive, non-restrictive listing of the types of items that we 
can compensate a Claimant for under the Act. We sought comment on 
whether we should accept this suggestion.
    Numerous commenters suggested that we rule on whether specific 
losses are compensable. None suggested that we provide a comprehensive 
list of Losses that are compensable or eligible damages. FEMA continues 
to believe that we should consider the unique facts of each claim 
before making final decisions about whether losses are compensable and 
how to compensate Claimants for their losses. Claimants should not 
assume that a loss resulting from the Cerro Grande fire is not 
compensable simply because the regulations fail to address it 
specifically. Claimants should include all losses resulting from the 
Cerro Grande fire on the Notice of Loss.

Exclusions

    We received a significant number of comments on Sec. 295.21(b), 
which addresses compensation not available under the CGFAA. Section 
295.21(b) provides that FEMA will not reimburse Claimants for taxes 
owed as a consequence of receiving a CGFAA payment. One commenter 
suggested that the interim final rule be amended to make payments under 
the CGFAA tax-free. FEMA is not authorized under the CGFAA to determine 
the tax treatment of the payments that we make. We encourage Claimants 
to consult with their tax advisors or tax agencies about the tax 
consequences of receiving a CGFAA payment. FEMA has encouraged the tax 
agencies to implement public information programs concerning these 
issues.
    Section 295.21(b) also provides that we will not reimburse 
attorneys' and agents' fees. We intend the exclusion to apply to 
attorneys' and agents' fees incurred in the prosecution of a CGFAA 
claim. We also note that neither New Mexico law nor the CGFAA regard 
attorneys' fees and agents' fees incurred in the prosecution of an 
insurance claim as compensatory damages.
    Fifteen commenters suggested that we reimburse public adjuster fees 
in whole or in part. We considered the issue with an open mind. After 
careful reflection,

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we concluded that it is not appropriate to reimburse Claimants for 
public adjuster fees. We looked to New Mexico law and the Federal Tort 
Claims Act for guidance in resolving this question. Under New Mexico 
law public adjuster fees, like attorneys' fees, are not regarded as 
compensatory damages in tort actions. These fees are also not 
recoverable in Federal Tort Claims Act lawsuits.
    A number of Claimants argued that public adjuster fees should be 
reimbursed under the rubric of claims preparation expenses. The cost of 
organizing and presenting a claim is not regarded as compensatory 
damages in tort actions under New Mexico law nor is it recoverable in a 
Federal Tort Claims Act lawsuit.\4\ For these reasons we are unable to 
adopt the suggestion.
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    \4\ FEMA has exercised the discretion afforded by the CGFAA to 
make a lump sum payment to eligible Claimants for miscellaneous and 
incidental expenses. See, Sec. 295.31(b) of the final rule. Public 
adjuster fees can be paid from this allowance.
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    A commenter suggested that Claimants should not be prejudiced by 
their decision to work with a public adjuster. The decision on whether 
to use a public adjuster or other representative is the Claimant's 
alone. FEMA will not treat a Claimant who chooses to work with an 
attorney, public adjuster or other agent more favorably or less 
favorably than a Claimant who chooses to represent him or herself in 
the claims process.
    We also have considered whether statutory double damages provided 
in Sec. 30-32-4 of the New Mexico Statutes Annotated (1978) may be 
recovered under the CGFAA. The CGFAA provides that punitive damages are 
not recoverable. While we have not identified any New Mexico or federal 
court decision addressing the specific question of whether statutory 
damages under Sec. 30-32-4 are compensatory damages or punitive 
damages, the New Mexico Supreme Court noted in Hale v. Basin Motor 
Company, 110 N.M. 314, 320, 795 P.2d 1006, 1012 (1990) that 
``multiplication of damages pursuant to statutory authority is a form 
of punitive damages.'' Congress did not authorize FEMA to pay statutory 
damages under Sec. 30-32-4 in the CGFAA or its legislative history. It 
also failed to appropriate sufficient funds to pay damages in 
accordance with Sec. 30-32-4. These facts lead us to conclude that 
Congress believed statutory damages under Sec. 30-32-4 are punitive 
damages, rather than compensatory damages.

Home Replacement

    Section 295.21(d) of the interim final rule set out our approach to 
compensating those whose homes were destroyed by the Cerro Grande fire. 
The preamble to the interim final rule suggested that FEMA would look 
to construction costs in northern New Mexico when determining 
Replacement Cost of a home. Two commenters noted that there are 
variations in construction costs among communities in northern New 
Mexico. We have always intended to consider construction costs in the 
locality that a damaged or destroyed home existed before the fire in 
determining Replacement Costs. We made a clarifying revision to 
Sec. 295.21(d). We also defined the term ``Replacement Cost'' in 
Sec. 295.50.
    A number of comments addressed the Home Replacement Policy, adopted 
by OCGFC on November 1, 2000. Ordinarily we would not respond to 
comments concerning a policy in the preamble to a final rule. We are 
making an exception in this case because it is important for Claimants 
to understand how the Home Replacement Policy fits within the final 
rule.
    Option I of the Home Replacement Policy offers those Claimants 
whose homes were lost to the fire an opportunity to receive a lump sum 
payment for most of their home replacement costs. This lump sum offer 
is a type of compromise or settlement authorized by Sec. 295.7 of the 
final rule. Claimants who elect Option I will receive a lump sum 
payment for eligible home replacement costs under the terms of the 
policy, not under Sec. 295.21(d) of the final rule. While many 
Claimants have indicated to OCGFC that they will be able to replace 
their homes satisfactorily with the funds made available through Option 
I, some Claimants continue to believe that Option I is inadequate. 
These Claimants should elect Option II. Option II damages will be 
determined in accordance with Sec. 295.21(d).
    A commenter argued that FEMA should periodically adjust the lump 
sum award under Option I upward to account for inflation. OCGFC 
believes that it is important to address this question at this juncture 
so that Claimants do not delay their home replacement decision in the 
mistaken belief that the terms of the Option I will change over time. 
FEMA does not intend to change the square foot replacement rates 
specified in Option I of the Home Replacement Policy. Claimants who do 
not expect to rebuild immediately can protect their payments against 
inflation by prudently investing the funds until they are needed for 
construction. Option I payments will not be Discounted to Present 
Value. Claimants who remain concerned that inflation might erode the 
Option I award may find that Option II is more advantageous.
    One commenter suggested that the lump sum payment for a duplex that 
was converted to a single-family home should be compensated at the 
Option I rate for single-family homes. FEMA will not consider 
modifications made to the dwelling before the fire in determining which 
square foot replacement rate applies. A dwelling that was originally 
constructed as a duplex will be compensated as a duplex.
    An insurance industry commenter suggested that the Option I square 
foot replacement rates are unduly generous. FEMA disagrees. The square 
foot replacement rates were calculated after consultations with a 
reputable local architect and local contractors. These rates represent 
our estimate of reasonable Replacement Costs in the post-fire 
marketplace. FEMA expresses no opinion as to whether insurance 
companies were mandated to offer replacement cost settlements 
comparable to Option I under the terms of their policies.
    The Home Replacement Policy provides that FEMA will not 
``compensate for costs to replicate construction materials that are no 
longer readily available, that do not meet code or that are not 
reasonably necessary to replace the home.'' Several commenters took 
issue with this section of the policy. FEMA believes that this 
statement is consistent with Sec. 295.21(d) and the CGFAA. Replacement 
Cost is the cost of reconstructing something that is comparable in 
quality and utility to that which was destroyed.\5\ The term does not 
require that FEMA compensate Claimants to construct an exact replica 
using outdated construction materials that may have been standard or 
low cost in their day.
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    \5\ See Subpart F, Sec. 295.50 of the final rule.
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    A commenter suggested that FEMA provide an upgrade allowance on the 
theory that some homes destroyed by the fire were constructed with more 
durable materials than are available today. Our obligation under the 
CGFAA is to provide sufficient funds for a homeowner to rebuild a home 
comparable in quality and utility to the home that the Cerro Grande 
fire destroyed. Section 295.21(d) provides that we will fund upgrades 
to meet current codes. A mitigation allowance is made available over 
and above Replacement Cost.
    A commenter inquired whether FEMA would compensate a quad or duplex 
owner for the cost of buying out the interests of other owners in order 
to

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reconstruct a home on the same site. FEMA does not believe that it is 
reasonable to compensate the owner of a quad unit for the cost of 
buying out the other three owners.

Replacement Cost for Trees and Landscaping

    Section 295.21(d) of the interim final rule and the preamble 
indicated that Replacement Cost includes the reasonable cost of 
returning one's lot to pre-fire condition. OCGFC has issued a policy on 
how we will calculate a reasonable Replacement Cost for trees and 
landscaping lost to the fire. We developed the policy, which was issued 
on October 20, 2000, in consultation with arborists and after reviewing 
the Guide for Plant Appraisal, 9th Ed., authored by the Council of Tree 
and Landscape Appraisers. The policy provides that FEMA will compensate 
for the cost of replacing lost trees and landscaping in an amount up to 
25% of the pre-fire value of the structure and lot.
    Numerous comments addressed compensation for trees and landscaping. 
One of the commenters complimented FEMA for adopting the policy. Other 
commenters suggested that FEMA should reimburse Claimants for the costs 
that they actually incur in replacing trees, regardless of the cost.
    Under New Mexico tort law, damages are awarded for destroyed or 
damaged trees based upon the value of the trees destroyed or the 
difference in the value of the real estate with and without the trees. 
This is a less generous formula than Replacement Cost. The legislative 
history of the CGFAA suggests that FEMA should use Replacement Cost as 
the measure of damages for replacement of real and personal property, 
however it did not speak directly to trees and landscaping. FEMA 
believes that the Replacement Cost calculation it has established is 
consistent with the legislative intent and is incorporating the policy 
into Sec. 295.21(d).

Mitigation for Homeowners Who Rebuild Under Sec. 295.21(d)

    Section 104(d)(4)(C)(vii) of the CGFAA grants FEMA the authority to 
compensate for mitigation to address future wildfires, floods or other 
natural disasters as a component of financial loss. This section of the 
CGFAA also empowers FEMA with discretion to determine the 
reasonableness of mitigation compensation requests. Section 295.21(d) 
of the final rule provides that FEMA will compensate rebuilding 
homeowners for mitigation measures in an amount not to exceed 15% of 
compensation from all sources, i.e., the CGFAA, insurance and FEMA 
disaster assistance, to restore the structure and lot to its pre-fire 
condition.
    We also have revised Sec. 295.21(d) to clarify the procedures for 
obtaining mitigation compensation. In order to obtain mitigation 
compensation under Sec. 295.21(d), a Claimant must have a Notice of 
Loss that claims damage from the Cerro Grande fire to residential real 
property (home and/or lot) owned by the Claimant at the time of the 
fire. This Notice of Loss must be on file by August 28, 2002. A 
separate Request for Mitigation Assistance on an OCGFC form must be 
submitted not later than August 28, 2003. This is the deadline provided 
by Section 104(d)(4)(C)(vii) of the CGFAA. Claimants who receive 
mitigation compensation must construct the mitigation measures they 
have applied for. FEMA will audit the use of mitigation funds and can 
recoup funds which were paid for the construction of mitigation 
measures but were not properly spent.
    A number of comments addressed Sec. 295.21(d) of the interim final 
rule as it relates to mitigation. One of the commenters suggested that 
mitigation funds be available under Sec. 295.21(d) to Claimants who 
suffered smoke damage or repairable structural damage to their home and 
to those who suffered damage to their lot and/or landscaping. FEMA 
accepts this suggestion. The term ``Destruction of a Home'' has been 
defined in Subpart F, Sec. 295.50 to include these types of losses. 
This change enables FEMA to extend mitigation funds under 
Sec. 295.21(d) to those Claimants who did not experience the total loss 
of a home as well as those Claimants that did.
    Two commenters suggested that mitigation funds should be available 
to those who lost their homes but choose to purchase an existing home 
or rebuild on another site. Section 295.21(d) authorizes FEMA to 
compensate Claimants for mitigation measures ``that will reduce the 
property's vulnerability to the future risk of wildfire, flood or other 
natural disasters related to the Cerro Grande Fire.'' We interpret this 
provision to mean that anyone who lost a home to the Cerro Grande fire 
and who chooses to either build or purchase a home within the 
boundaries of Los Alamos, Rio Arriba, Sandoval or Santa Fe counties 
(including the Indian reservations and pueblos sited within those 
counties, such as the Santa Clara Pueblo and the San Ildefonso Pueblo) 
may seek mitigation funds. We have selected these counties because the 
Cerro Grande fire passed through them. Anyone who lost a home to the 
Cerro Grande fire but who chooses to rebuild in one of the other New 
Mexico counties which were part of the disaster area referred to in 
Sec. 102(a)(4) of the CGFAA may be eligible for mitigation funds if the 
Claimant can demonstrate an increased risk of fire, flood or other 
natural disaster at the new location as a result of the Cerro Grande 
fire.
    Several comments addressed the prerequisites to obtaining 
mitigation compensation in the interim final rule. In response to these 
comments, we are amending Sec. 295.51(d) to provide that a Claimant 
need not obtain local government approval of his or her proposed 
mitigation measures if none is required under applicable law or an 
agreement between OCGFC and the local government. However, if a permit, 
or other land use approval is required to construct the mitigation 
measures under federal, state, local or tribal law or a clearance is 
required under an agreement between a governmental entity and OCGFC, 
the permit, approval or clearance must be obtained before construction 
begins. OCGFC expects to enter into an agreement with Los Alamos County 
that will require local government approval before we will provide 
mitigation compensation for defensible space. Claimants should consult 
with the Claims Reviewer to determine whether OCGFC has entered into 
any other agreements concerning mitigation before construction begins.
    We also are relaxing the requirement that Claimants must obtain our 
approval of the proposed mitigation measures well before their 
construction. This requirement was initially formulated in response to 
concerns that environmental and historic preservation reviews required 
by law cannot be meaningfully undertaken after construction has begun. 
Since we have discretion to fund or not fund mitigation measures under 
Sec. 104(d)(4)(C)(vii) of the CGFAA, we must consider environmental and 
historic preservation issues when exercising this discretion.
    We will consider compensating property owners for mitigation 
measures after construction has begun or has been completed, but only 
if those requests qualify for a categorical exclusion under the 
National Environmental Policy Act. The criteria for categorical 
exclusions are explained in our agency-wide environmental review 
regulations which appear at 44 C.F.R. 10.8(d). A list of mitigation 
measures that fall within the categorical exclusions is available from 
the OCGFC. In addition, the mitigation measures cannot raise issues 
under other applicable environmental or historic preservation statutes.

[[Page 15952]]

    While we anticipate that many mitigation projects will meet these 
criteria, property owners who do not obtain our pre-approval of such 
measures run the risk that we will not be able to pay for them. 
Accordingly, we continue to encourage property owners to apply for 
mitigation funds well in advance of construction.
    One commenter suggested that mitigation funds should be made 
available to homeowners who did not suffer any damage to their home or 
lot from the Cerro Grande Fire. These property owners may seek 
mitigation compensation under Sec. 295.21(h) of the final rule, 
provided that they experience an increased risk of wildfire, flood or 
other natural disaster caused by the Cerro Grande fire and the 
community has provided for individual mitigation projects in its 
Mitigation Compensation Plan. They are not eligible for mitigation 
compensation under Sec. 295.21(d). A commenter suggested that FEMA make 
low interest loans available to those Claimants who wish to undertake 
flood mitigation projects for which compensation is not available under 
the CGFAA. The CGFAA does not provide us with any authority to make 
loans.

Real Estate Valuation Issues

    Section 295.21(e) is intended to implement Section 104(d)(4)(A)(ii) 
of the CGFAA, which authorizes FEMA to pay ``otherwise uncompensated 
damages resulting from the Cerro Grande fire for * * * a decrease in 
the value of real property.'' Section 295.21(e)(1) of the interim final 
rule provided for compensation of realized losses, while 
Sec. 295.21(e)(2) was addressed to unrealized losses.
    We are amending the Sec. 295.21(e)(1) and (2), to allow us to 
compensate for realized losses in the value of real property, i.e., 
land and structure, to the extent that such losses have not been fully 
compensated either through the Replacement Cost award under 
Sec. 295.21(d)(1) or otherwise. Section 295.21(e)(1) and (2) of the 
interim final rule did not allow us to compensate for an otherwise 
uncompensated loss of value to the structure. We have amended 
Sec. 295.21(e)(2) to clarify that FEMA will only compensate for 
unrealized losses in the value of real estate that are permanent in 
nature. This is consistent with New Mexico law. We also have amended 
both sections to clarify that they apply only to residential real 
estate. Losses involving the value of commercial real estate will be 
evaluated on a case by case basis, rather than under Sec. 295.21(e).

Mitigation Under Sec. 295.21(h)

    Section 295.21(h) addresses mitigation projects that are not 
eligible under Sec. 295.21(d). Section 104(d)(4)(c)(vii) of the CGFAA 
authorizes FEMA to compensate Claimants for reasonable mitigation 
measures, as determined by the Director. The final rule budgets up to 
15% of the $455 million appropriated by Congress for the payment of 
fire claims and 15% of any subsequent appropriations for the payment of 
fire claims to fund reasonable mitigation measures under 
Sec. 295.21(h). However, it is our intention to only fund mitigation 
measures that we believe will reduce risks that were heightened by the 
Cerro Grande fire and which make sense in our professional judgment.
    Several amendments made to Sec. 291.21(h) clarify the deadlines for 
seeking compensation for specific mitigation projects undertaken 
pursuant to FEMA-approved Mitigation Compensation Plans. In order to 
obtain mitigation compensation under Sec. 295.21(h), a Claimant must 
have a Notice of Loss on file with OCGFC, even if the Claimant's only 
Cerro Grande Fire related losses are for mitigation expenses. This 
Notice of Loss must specifically denote mitigation expense as an item 
of Loss and must be on file by August 28, 2002. A separate request for 
compensation of specific mitigation measures must be submitted not 
later than August 28, 2003. The mitigation measures that are funded 
must be constructed.
    A Claimant may request mitigation compensation before, during or 
after construction work on the mitigation measures begins. However, 
environmental and historic preservation reviews of the mitigation 
activity must be conducted. We will not approve mitigation compensation 
if the Claimant started construction before receiving our approval 
unless the mitigation activities qualify for a categorical exclusion 
under the National Environmental Policy Act and do not raise issues 
under other applicable environmental or historic preservation statutes.
    One commenter suggested that our approval of Mitigation 
Compensation Plans submitted by governmental entities under 
Sec. 295.21(h) should be conclusively presumed if we have not approved 
them within 30 days of the date when they were submitted. OCGFC plans 
to complete its review of Mitigation Compensation Plans within 60 days 
of submission. In some cases, we may require additional time to 
consider a Mitigation Compensation Plan. We do not believe that it is 
appropriate to impose an inflexible deadline for approval of Mitigation 
Compensation Plans.

Other Losses

    Numerous comments suggested that the Director of FEMA exercise his 
discretion to establish new categories of compensable Loss as permitted 
by various provisions of the CGFAA. We adopted a few of these 
suggestions. However, we reserve the discretion to establish new 
categories of compensable Loss if merited by particular cases.
    Two commenters suggested that we compensate for flood insurance 
premiums incurred by Claimants who are concerned that the fire may have 
increased the risk of flood. One commenter suggested that we should not 
compensate for flood insurance premiums if the Claimant is not at risk 
of flooding due to natural features. Section 104(d)(4)(C)(viii) of the 
CGFAA authorizes us to compensate those Claimants who were not required 
to maintain flood insurance before the fire, but are required to 
maintain flood insurance as a consequence of the fire for premiums 
incurred through May 12, 2002. We believe that the statutory language 
is too restrictive to compensate all of those who legitimately may 
desire to obtain flood insurance out of the fear of heightened flood 
risk. Because there has not been sufficient time to revise flood zone 
maps since the Cerro Grande fire, some Claimants who may have 
legitimate reason for concern may not be ``required'' to maintain flood 
insurance. We have decided to exercise the discretion to establish a 
new category of financial loss to address these concerns. A new 
Sec. 295.21(j) of the final rule addresses flood insurance.
    Two commenters from the insurance industry asked us to provide for 
the reimbursement of catastrophic claims expenses as a business or 
financial loss. These expenses cannot be recovered as part of a 
subrogation claim. Under New Mexico law, claim adjustment expenses are 
not regarded as compensatory damages but costs. The CGFAA provides for 
recovery of compensatory damages, not costs. We amended Sec. 295.21(b) 
of the final rule to indicate that insurance company claims expenses 
are not compensable under the Act.
    We are also exercising the discretion under the CGFAA to compensate 
individual Claimants who have incurred reasonable out of pocket 
expenses for the treatment of a mental health condition resulting from 
the Cerro Grande fire which are not covered by insurance. Reimbursement 
will be available only if the condition cannot be

[[Page 15953]]

effectively treated through no-cost outpatient crisis counseling 
services in the communities affected by the Cerro Grande fire. This new 
category is described in Sec. 295.21(k) of the final rule. Damages for 
mental health conditions are not recoverable under New Mexico law, 
except in a very limited class of cases. We will not entertain 
subrogation claims for mental health treatment unless those expenses 
could be recovered in a tort action under New Mexico law.
    In the preamble to the interim final rule, we sought comment on 
whether we should reimburse those who provided merchandise, equipment 
or other items of value to fire victims without charge or at a 
discount. We have decided to create a new category of financial loss 
for donations. This new category is described in Sec. 295.25(l) of the 
final rule.

Duplication of Benefits

    We have relocated the duplication of benefits provisions, which 
appeared in Sec. 295.21(i) of the interim final rule, to Sec. 295.21(m) 
of the final rule. Two comments addressed the duplication of benefits 
provisions. The first comment, submitted by an insurance industry 
commenter, pertains to debris removal. The commenter suggests that we 
should reimburse insurance companies that made debris removal payments 
to policyholders in cases where Los Alamos County removed the debris at 
no cost to the policyholder. Insurance companies may seek reimbursement 
of these payments in their subrogation claims. However, we will not 
reimburse insurers in cases where the debris was removed by Los Alamos 
County unless the insurance policy required that the payment be made to 
the policyholder notwithstanding that such services were provided free 
of charge to the policyholder by the local government.
    The second comment asks us to interpret Sec. 104(d)(1)(C) of the 
CGFAA, which provides that compensatory damages will be reduced by the 
amount of insurance proceeds that will be paid. If a Claimant has not 
settled with the insurance company by the time we are prepared to make 
a partial payment on the claim, we will examine the insurance policy 
and determine what we reasonably expect the insurance company to pay. 
We will review the issue again in the Authorized Official's 
Determination. If the insurance company has not paid all that we 
anticipated, we can award the difference at the time that the 
Authorized Official's Determination is made. We note that the Public 
Regulation Commission of the State of New Mexico required insurance 
companies to settle claims brought by policyholders who suffered fire-
related losses within 90 days of the date that the claim was reported 
to the insurer. We expect that most, if not all, insurance claims will 
have been paid before the Authorized Official's Determination is 
issued. However, in the event that the insurance claim is resolved 
after the Authorized Official's Determination is issued and as a result 
the Claimant is due additional compensation under the CGFAA, the 
Claimant should ask the OCGFC to reconsider the matter under 
Secs. 295.33 or 295.34.

Subpart D

    Subpart D of the interim final rule addressed the process by which 
FEMA will evaluate claims. On the one hand, it has always been our 
intention that this process be non-adversarial and collaborative. On 
the other hand, we must base our compensation decisions on information, 
not speculation. We have reorganized Subpart D to more clearly describe 
our expectation of how the process is to work.

Burden of Proof and Documentation of Losses

    Section 295.21(a) of the interim final rule advised Claimants that 
they bear the burden of establishing all elements of their Losses and 
damages. Sections 295.5 and 295.30 of the interim final rule suggested 
that Claimants could expect some assistance in documenting their claims 
from the Claims Reviewer. Some Claimants appear to have taken this to 
mean that the burden of establishing Losses and damages has shifted 
from the Claimant to the Claims Reviewer. Although the customer service 
responsibilities of the Claims Reviewers are substantial, there are 
limitations. The primary responsibility of the Claims Reviewer is to 
review, investigate and objectively evaluate claims for the OCGFC. Our 
Claims Reviewers cannot function as agents or representatives of the 
Claimant.
    Here are some of the ways that we expect Claims Reviewers to help 
Claimants. In routine cases, we expect the Claims Reviewers to be 
proactive in helping the Claimant to identify Losses and formulating a 
strategy for proving them. In more complex cases, the Claimant will 
need to take the lead in assembling the claim and should not await 
direction from the Claims Reviewer. Claims Reviewers should also help 
Claimants to obtain reasonably available substitute documentation to 
support their Losses if the original documentation was either lost to 
the fire or through the passage of time.
    We have rewritten Sec. 295.30(a) in an effort to clear up any 
remaining confusion between the responsibilities of the Claimant and 
the role of the Claims Reviewer. Section 295.30(a) of the final rule 
states that the Claimant bears the burden of proof for establishing all 
elements of the Loss and compensatory damages. This language is 
excerpted from Sec. 295.21(a) of the interim final rule. It also 
provides Claimants with the opportunity to make a record supporting the 
claim by submitting any information or documentation that they deem 
relevant. The responsibility for making this record rests with the 
Claimant, not the Claims Reviewer.
    Since we must support our compensation decisions with evidence, we 
expect that Claimants will provide whatever evidence is reasonably 
available to corroborate the nature, extent and value of their losses. 
If documentation or substantiating evidence of a Loss or damage is not 
reasonably available (e.g., it burned in the fire), OCGFC may determine 
that the Claimant's statement, given under penalty of perjury, is 
sufficient to substantiate that portion of the claim. We will determine 
whether the Claimant's statement alone will be sufficient to 
substantiate the Loss or damage based on the unique circumstances 
presented by each case, taking into consideration potential alternative 
sources of substantiation and documentation.
    Section 295.30(a) of the final rule authorizes OCGFC to ask that 
Claimants provide affidavits to support the claim. For example, we are 
advising Claimants who have suffered business losses that they may 
expedite resolution of their claim if they voluntarily provide copies 
of their income tax returns. Claimants who decline to submit their 
income tax return voluntarily during the claims review process must 
sign an affidavit agreeing to produce the returns if requested by our 
Office of the Inspector General or the General Accounting Office in the 
course of an audit.
    A number of comments addressed affidavits. One commenter suggested 
that we should not ask people to obtain affidavits from family members 
and others in the community who might be familiar with their losses. We 
are sensitive to the privacy concerns of our Claimants. Where we 
believe an affidavit from a close associate of the Claimant will 
strengthen the claim, we may suggest that the Claimant obtain one. We 
will not automatically reject the claim, however, if the Claimant 
declines to provide the affidavit. We will consider all of the evidence 
in the

[[Page 15954]]

record, including any alternative substantiation offered by the 
Claimant, in making a decision.
    We also have noted some resistance to our request for an affidavit 
to support a partial payment. We will ordinarily make partial payments 
only when we have a reasonable basis to estimate the Claimant's 
damages. The affidavit may be necessary to provide us with the 
reasonable basis to make a partial payment early in the claims process. 
In response to comments from the community, OCGFC has established 
policy on when we will request affidavits.

Proof of Loss

    Before the Authorized Official's Determination can be issued, the 
Claimant must sign the Proof of Loss. The interim final rule did not 
establish a deadline by which the Claimant must sign the Proof of Loss. 
We expected that most Claimants would want to resolve their claims 
expeditiously, consistent with the spirit of the legislation, and did 
not initially see a need for one.
    Some members of the public have commented that it is legitimate to 
delay submission of the Proof of Loss until August 28, 2002. It has 
also been suggested that suggestion that FEMA is asking Claimants to 
submit their Proofs of Loss expeditiously for FEMA's convenience. In 
response, we respectfully submit that it is in both the Claimant's 
interest and FEMA's interest that claims be expeditiously resolved. The 
intent of the CGFAA is to compensate fire survivors as quickly as 
possible.
    Congress entrusted FEMA with administering an orderly compensation 
process. The CGFAA states that FEMA must determine the compensation due 
to a Claimant within 180 days of the date upon which the Notice of Loss 
is filed. It is impossible for FEMA to fulfill this mandate if 
Claimants are unwilling to provide specific details about their losses 
by signing the Proof of Loss. While we believe that Congress intended 
for FEMA to have the flexibility to provide Claimants with extra time 
to tell us about their losses in appropriate cases, nothing in the 
CGFAA or its legislative history suggests that Claimants should be able 
to keep their claims open for a full two year period.
    For these reasons, we have added a new Sec. 295.30(b) to the final 
rule, which addresses the Proof of Loss in non-subrogation cases.\6\ 
Claimants who submitted their initial Notice of Loss before January 1, 
2001 have 90 days from March 21, 2001 to submit a Proof of Loss, 
without regard to whether they previously requested an extension of 
time from FEMA. We are providing this automatic 90 day extension out of 
respect for those Claimants who wanted a reasonable time to review the 
final rule before submitting the Proof of Loss. This extension does not 
preclude any Claimant from submitting the Proof of Loss earlier.
---------------------------------------------------------------------------

    \6\ Subrogation Claimants under Sec. 295.13 sign the Proof of 
Loss at the same time that the Notice of Loss is submitted. The 
Notice of Loss and Proof of Loss have been consolidated on a single 
form.
---------------------------------------------------------------------------

    However, Claimants who file their initial Notice of Loss on or 
after January 1, 2001 must submit the Proof of Loss within 150 days 
after the initial Notice of Loss is filed. Adherence to this deadline 
will leave us with 30 days to determine the compensation due to the 
Claimant and enable us to meet the 180 day timeframe envisioned by 
Congress.
    To provide a claims process that it orderly for all and to meet our 
obligation to live within the financial means provided by Congress for 
administration of the program, we must insist that Claimants comply 
with the timeframes for signing a Proof of Loss that are set forth in 
this final rule. There is flexibility built into our process for 
Claimants to tell us about Losses and damages that they could not have 
discovered or did not remember when they signed the Proof of Loss. 
Sections 295.33 and 295.34 explain this flexibility. These sections 
will be applied equitably, not arbitrarily.
    If a Claimant is not prepared to sign a Proof of Loss, for good 
cause, an extension may be requested from the Director of OCGFC. 
Extensions will not be granted automatically but only on consideration 
of the equities in the request. Alternatively, the Claimant may 
withdraw the claim, repay any partial payment and re-file the claim 
once before August 28, 2002, when the losses are better defined. If a 
Claimant does not complete the Proof of Loss within the timeframes 
specified in the final rule or obtain an extension, OCGFC may 
administratively close the claim and require the Claimant to repay any 
partial payment that we made on the claim.

The Authorized Official's Determination

    The CGFAA gives us 180 days from the date when a Notice of Loss is 
submitted to determine the compensation due to a Claimant. This 
provision assumes that the Claimant will fully cooperate with FEMA in 
the adjudication of the claim. We will try to process claims in less 
than 180 days, but may require the full 180-day period in many cases. 
Partial payments are intended to ease the burden on the Claimant during 
this period.
    A commenter asked several questions about the Authorized Officials. 
The Authorized Officials are employees of FEMA who are responsible for 
deciding claims. The Authorized Officials make their decisions based 
upon the written information in the claim file using the criteria set 
forth in the CGFAA, these regulations and OCGFC policies. Hearings are 
not part of the Authorized Official's Determination process. While the 
Authorized Officials are permitted to contact the Claims Reviewers to 
clarify information in the claims file, they are not permitted to 
discuss the merits of a claim with the Claimant before making their 
decision. If a Claimant has questions about the status of a claim or 
Authorized Official's Determination, the Claimant should contact the 
Claims Reviewer, rather than the Authorized Official directly.

Release and Certification Form

    We have added a new subsection (c) to Sec. 295.30 concerning the 
Release and Certification Form. Authority for the Release and 
Certification Form provided by Sec. 104(e) of the CGFAA. Some Claimants 
have suggested that they can keep their claims open indefinitely by 
refusing to sign the Release and Certification Form. We do not believe 
that this view is consistent with the letter or the spirit of the 
CGFAA, which encourages us to close claims expeditiously. Section 
295.34 provides a limited mechanism for Claimants to reopen their 
claims after signing the Release and Certification Form.
    Section 295.30(c) establishes deadlines for the return of a 
completed Release and Certification Form. If a Claimant does not 
request an Administrative Appeal of the Authorized Official's 
Determination, the Release and Certification Form should be returned 
within 120 days of the date that appears on the Authorized Official's 
Determination. If the Claimant brings an Administrative Appeal, 
arbitrates or seeks judicial review, the signed Release and 
Certification Form should be returned within 60 days of the date when 
the subsequent decision is not subject to further review (that is the 
date when no further appeals are available).
    Section 104(e) of the CGFAA provides that at the end of the process 
the United States and employees of the United States are released from 
all claims and liabilities related to the Cerro Grande Fire and the 
compensation settlement is conclusive on the Claimant. However, the 
CGFAA does not bar the United States from recovering payments made to 
the Claimant after return of the Release and Certification Form.

[[Page 15955]]

    Claimants have complained to OCGFC about this apparent 
inconsistency. We find these concerns to be compelling. Claimants who 
choose to bring their claims under the Federal Tort Claims Act have the 
certainty that any settlement between the claimant and the United 
States will be final and binding on both parties, except in 
extraordinary cases. The CGFAA was intended to provide a more 
expeditious and less adversarial process for compensation than is 
available under the Federal Tort Claims Act. This objective will be 
severely compromised if we second-guess compensation decisions after 
the Claimant has accepted our final decision. Moreover, our failure to 
remedy the inconsistency may result in unnecessary arbitrations or 
judicial review of our decisions, since the decisions of arbitrators 
and judges are binding on the government.
    Section 295.30(c) of the final rule provides that the United States 
will not attempt to recover monies paid to a Claimant who signs a 
Release and Certification Form, except in the event of fraud or 
misrepresentation by the Claimant or the Claimant's representative, a 
mistake on our part or the Claimant's failure to cooperate with audits 
as required by Sec. 295.35. Federal law obligates us to attempt to 
recover payments made to the wrong party. We also may recover 
overpayments where we made a material mistake in calculation of the 
damages owed to the Claimant and in other appropriate cases.

Reimbursement of Claims Expenses

    Section 295.31(a) addresses the circumstances in which we will 
reimburse a Claimant for reasonable costs of third party opinions 
obtained by the Claimant. It provides that we will do so only if we 
request that the Claimant procure the opinion. One commenter, a real 
estate development firm, suggested that we should reimburse Claimants 
for third-party opinions whenever valuation of land is at issue. The 
commenter was concerned that its claim might be denied if the Claimant 
failed to provide the opinion (because it was not requested by us) and 
we did not obtain one either. As noted earlier in the preamble, it is 
the Claimant's responsibility to develop and submit whatever evidence 
he or she thinks is appropriate to support the claim. Claims 
preparation expenses are not regarded as compensatory damages under New 
Mexico law or under the Federal Tort Claims Act. Similarly, they are 
not recoverable under the CGFAA. For these reasons, we believe that 
Sec. 295.31(a) of the interim final rule accurately expresses our 
position on third party opinions.
    The Rio Grande Chapter of the Appraisal Institute commented that 
its member appraisers sometimes need to consult with experts in other 
fields in order to render an opinion. They inquired whether we will 
reimburse Claimants for the charges of these other experts. If we 
request that a Claimant obtain a third party opinion and the expert 
selected by the Claimant believes that he or she must consult with 
other experts in order to render the opinion, the Claimant should 
notify the Claims Reviewer and provide an estimate of the total cost. 
We will not reimburse the Claimant for the cost of these other experts 
unless OCGFC has expressly approved their use
    Fifteen commenters suggested that we should reimburse Claimants for 
the actual hours they have spent seeking compensation under the CGFAA. 
Most suggested that Claimants should be compensated at an uncapped 
hourly rate. We have carefully considered these comments, but we cannot 
accommodate them for several reasons. First and foremost, compensatory 
damages for time spent in claims preparation are not available under 
New Mexico law or the Federal Tort Claims Act. Moreover, there is no 
evidence that Congress intended that Claimants be compensated for the 
value of their time.
    The open-ended compensation program suggested by the commenters 
would be difficult to administer. One difficulty we would face is how 
to determine equitably the value of a Claimant's time. Another is how 
to verify that Claimants have expended the number of hours that they 
are claiming. Our payments under the CGFAA are subject to independent 
audit by the General Accounting Office and our Inspector General. 
Claimants would likely find attempts by the auditors to verify the 
payment for hours spent in the claims process highly intrusive.
    However, we are exercising our discretion under 
Sec. 104(d)(4)(C)(ix) of the CGFAA to provide a lump sum payment to 
most individual and business Claimants for miscellaneous and incidental 
expenses incurred in the claims process. Claimants whose only fire 
related loss is the cost of a flood insurance premium are not eligible 
for the lump sum payment.
    The decision to exercise this discretion was initially made through 
an OCGFC policy. The policy has been refined and incorporated into 
Sec. 295.31(b). In response to comments on the policy, we are 
increasing the lump sum payment to 5% of the insured and uninsured loss 
(excluding flood insurance premiums), not to exceed $15,000. The 
minimum payment remains $100. We believe that Sec. 295.31(b) represents 
a fair and reasonable accommodation between our responsibility to spend 
government funds wisely and our desire to compensate Claimants as fully 
as possible.
    The lump sum payment under Sec. 295.31(b) will be made after a 
properly executed Release and Certification Form is returned to OCGFC 
and cannot be obtained through partial payment. Claimants who suffered 
no Cerro Grande fire related loss but have applied to us for 
reimbursement of flood insurance premiums will not be eligible to 
receive the lump sum payment.
    An insurance industry commenter suggested that insurance companies 
be eligible to receive a lump sum payment for each subrogation claim 
submitted. We disagree. Insurance companies are ordinarily compensated 
for the costs of pursuing subrogation claims through the premiums they 
collect from policyholders.

Supplementing and Reopening Claims

    Sections 295.33 and 295.34 of the interim final rule address the 
procedures for supplementing and reopening claims. The final rule 
amends these sections to clarify and streamline the process. We are 
amending Sec. 295.33, which provides for supplementing claims before 
the signing of a Release and Certification Form, along the following 
lines:
     Before signing the Proof of Loss, the Claimant may amend 
the Notice of Loss to seek compensation for Losses not mentioned on the 
Notice of Loss. Claimants who wish to amend the Notice of Loss should 
contact the Claims Reviewer. The additional Losses will be noted on the 
Proof of Loss and will be adjudicated in the Authorized Official's 
Determination.
     Once the Claimant has signed the Proof of Loss, he or she 
must obtain permission from the Director of OCGFC to amend the Notice 
of Loss. The Claimant should consult with the Claims Reviewer about the 
procedure for obtaining permission of Director of OCGFC. The Director 
of OCGFC will grant the request if it is supported by good cause. If 
the request is granted, the Director will determine whether 
compensation is due for the additional Loss under the Administrative 
Appeal procedures described in Subpart E. The additional Loss will not 
be considered until after the Authorized Official's Determination is 
issued on the remainder of the claim. If the Claimant decides to appeal 
the Authorized

[[Page 15956]]

Official's Determination on other Losses, the Director of OCGFC will 
decide both matters in a single appeal proceeding.
     Claimants are reminded that they must put OCGFC on notice 
of any Loss not mentioned on the initial Notice of Loss not later than 
August 28, 2002. This deadline was established by Sec. 104(b) of the 
CGFAA. All amendments to Notices of Loss must be made in writing and 
submitted in accordance with OCGFC procedures. An amendment to a Notice 
of Loss must be received by August 28, 2002. A written request for 
permission to amend a Notice of Loss after the Proof of Loss is signed 
must be on file with the Director of OCGFC no later than August 28, 
2002.
    Section 295.34 provides for reopening claims after a Release and 
Certification Form is signed. The primary purpose of Sec. 295.34 is to 
provide the Claimant with an opportunity to request damages in excess 
of those previously awarded, not to raise Losses for the first time. 
However, in appropriate cases, the Claimant can use the reopener 
provision to seek compensation for a Loss not previously reported to us 
provided that the Claimant files the request to reopen not later than 
August 28, 2002.
    We are amending Sec. 295.34 to clarify that the Claimant may reopen 
a claim for the reasons stated in subsections (a)(1), (2) and (3) as a 
matter of right, provided that the request is timely filed. Requests to 
reopen for the reasons stated in subsection (a)(4) will only be granted 
in the Director's discretion. The Director of OCGFC may establish a 
cutoff for filing requests to reopen under subsections (a)(3) and (4). 
Reopened claims will not be decided by the Director of the OCGFC but by 
an Authorized Official, after considering the recommendation of the 
Claims Reviewer. Claimants who are dissatisfied with the Authorized 
Official's Determination on the reopened claim may appeal to the 
Director of OCGFC.
    One commenter suggested that the Director's discretionary decision 
to reopen or not reopen a claim under Sec. 295.34(a)(4) is subject to 
review by an arbitrator. We disagree. Arbitration under the CGFAA is 
available only if a Claimant is dissatisfied with the damages that have 
been awarded by FEMA. The Director's decision to reopen or not reopen a 
claim is not subject to review under the arbitration provisions of 
Subpart E.

Subpart E

    All of the comments pertaining to Subpart E addressed the 
arbitration provisions that appear in Sec. 295.42. The interim final 
rule invited comment on the size and composition of arbitration panels. 
The responders suggested that arbitration panels consist of three 
members, one selected by each party and the third selected by the two 
arbitrators. We considered these suggestions but note that like the 
provision in the interim final rule, this process would place only one 
neutral arbitrator on each panel. However, we acknowledge the concern 
that larger panels should decide larger disputes and are amending 
Sec. 295.42(d) in response to the comments. If the amount in 
controversy in an arbitration is $300,000 or less, the dispute will be 
heard by one arbitrator selected by the Claimant in the manner 
prescribed by the interim final rule. However, if the amount in 
controversy exceeds $300,000, three arbitrators selected at random by 
the Alternate Dispute Resolution Office will decide the dispute. We 
have adopted random selection to assure that the entire panel will be 
neutral. This is similar to the way that U.S. District Court Judges in 
the District of New Mexico are assigned cases.
    All arbitrators will be selected from the Alternate Dispute 
Resolution Office's list of qualified arbitrators. Some commenters 
expressed concern about the objectivity of arbitrators pre-qualified by 
our Alternate Dispute Resolution Office. Our Alternate Dispute 
Resolution Office is a neutral office that encourages the use of 
alternative dispute resolution mechanisms.
    The Alternate Dispute Resolution Office invited nominations for the 
Cerro Grande arbitration panel from numerous individuals involved in 
alternative dispute resolution in New Mexico. These individuals hold 
leadership roles in the New Mexico State Court System, the Office of 
the Chief Circuit Mediator for the Tenth Circuit, U.S. Court of 
Appeals, the American Bar Association, and the State Bar of New Mexico. 
The Alternate Dispute Resolution Office advises that the list of 
qualified arbitrators will be finalized shortly. Once finalized, 
biographies of each of the arbitrators will be posted on the OCGFC 
Internet site and available from the Alternate Dispute Resolution 
Office.

Subpart F

    Section 295.21(c) of the interim final rule provided that lump sum 
payments awarded for future damages will be ``discounted to present 
value.'' One commenter asked for a definition. A definition, derived 
from Sec. 13-1822 of the New Mexico Uniform Jury Instructions (Civil), 
has been added to Sec. 295.50 of the final rule. Discounting to present 
value is widely used by courts in New Mexico and elsewhere when 
calculating a single payment of damages for losses that are likely to 
be sustained over a long period of time. The mathematical calculation 
assumes that a significant part of the damage award will be invested at 
the time that the award is received and funds will be drawn down over a 
period of time as needed to replace a lost item or service. Discounting 
reduces damages by the amount of investment income the recipient is 
likely to receive before he or she spends the money to replace what was 
lost. We intend to discount damages to present value only where losses 
are likely to be realized over a long period of time, e.g., long-term 
business losses and long-term subsistence losses. We do not intend to 
discount damages paid to rebuilding homeowners.
    The term ``Loss'' has been defined in Sec. 295.50 of the final 
rule. The defined term ``Injury,'' which previously appeared in 
Sec. 295.50, has been deleted and subsumed into the definition of Loss. 
The import of this change is discussed in the section of this preamble 
that addresses Subpart A of the rule.
    The term ``Replacement Cost'' also is defined. The definition in 
Sec. 295.50 of the final rule is similar to that which appeared in the 
preamble to the interim final rule at 65 FR 52261 (August 28, 2000).

National Environmental Policy Act

    This final rule involves claims and payment of claims to persons 
injured as a result of the Cerro Grande fire. Such claims will be paid 
with no substantive relation to the claimant's subsequent use of the 
money for prescribed activities and with no limitations on how 
claimants will use the money. Such activities under the rule are not 
subject to the National Environmental Policy Act (NEPA). The final rule 
provides for compensation to mitigate future damages. FEMA has prepared 
a list of mitigation measures that are consistent with the agency's 
existing NEPA categorical exclusions. Claimants may propose other 
mitigation measures. We cannot identify what those measures will be and 
cannot perform a NEPA review at this stage. As claimants propose 
mitigation expenditures each will be subject to NEPA review. FEMA 
reserves the discretion to deny funding for mitigation expenditures 
which do not fall within a categorical exclusion or to conduct more 
extensive environmental review, if warranted. We

[[Page 15957]]

have not prepared an environmental assessment of this final rule.

Paperwork Reduction Act

    This final rule contains several information collection 
requirements subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3520). Under the Paperwork Reduction Act, a person may not be 
penalized for failing to comply with an information collection that 
does not display a currently valid OMB control number.
    At the time we published the interim final rule in the Federal 
Register, we submitted several information collections to OMB for 
emergency approval and obtained an OMB number and expiration date for 
the following collections:
    Notice of Loss, OMB number 3067-0280, Expiration Date 04/30/01. 
This form has been revised and will be submitted to OMB for a second 
emergency approval under the provisions of 5 CFR 1320.13, Emergency 
Processing. The request will allow us to use the revised Notice of Loss 
form while we seek your comments.
    Proof of Loss, OMB number 3067-0282, expiration date 3/31/01. This 
form was submitted to OMB under their emergency processing procedures 
and will be resubmitted to allow us to use the Proof of Loss form while 
we seek your comments.
    Subrogation and Proof of Loss, OMB number 3067-0284, expiration 
date 04/30/01. This form will be resubmitted to OMB under their 
emergency processing procedures to allow us to use the Subrogation and 
Proof of Loss form while we seek your comments.
    A new information collection titled ``Request for Mitigation 
Assistance'' will be submitted to OMB for emergency processing. OMB's 
approval to use this series of forms will allow us to collect data 
while we seek your comments on this form.
    Local governments with land use regulatory authority or Indian 
tribes that want specific mitigation measures to reduce the heightened 
risks of wildfire, flood or other natural hazards resulting from the 
Cerro Grande Fire or that seek compensation for the cost of such 
measures expended before August 28, 2000, or both, will have to submit 
a Mitigation Compensation Plan (Plan). The Plan must be in writing and 
may address property specific mitigation measures and community level 
mitigation measures. We do not prescribe any specific data requirements 
and rely on the governmental entity to develop the content of the plan. 
Because we do not prescribe specificity of data elements for inclusion 
in the Plan, we have determined that it is not subject to the OMB 
Paperwork Reduction Act clearance process and will not submit a 
clearance package for approval.
    Claimants will have to execute a Release and Certification Form, 
which is a document that a Claimant must complete and return in order 
to receive payment of compensation awarded pursuant to the CGFAA. These 
forms require minimal time and effort to complete and are exempt from 
the Information Collection Provisions of the Paperwork Reduction Act 
under OMB guidance.
    These OMB clearance packages will be submitted to OMB no later than 
March 19, 2001 for approval under 5 CFR 1320.13 by March 26, 2001.
    This rule serves as the notice for the 60-day and 30-day comment 
period for the publication of final rules with information collections 
that have not received final approval by OMB. At the end of the 60-day 
comment period, we will consider the comments that you submit and may 
make changes to the form as needed. At the conclusion of the comment 
period, we will resubmit these clearance packages to OMB for a three-
year approval. We will not implement the new or revised collections 
until OMB approves them and assigns them an OMB control number.
    Supplementary Information. This collection is in accordance with 
our responsibilities under 44 CFR 295 to provide assistance to 
claimants who were injured as a result of the Cerro Grande fire. The 
funds that we provide will help to alleviate the suffering and damage 
that resulted from the Cerro Grande fire.
    Collections of Information.

----------------------------------------------------------------------------------------------------------------
            Title                 Type of information collection    OMB No.                 Abstract
----------------------------------------------------------------------------------------------------------------
Notice of Loss--Cerro Grande     Revision of a currently            3067-0280  The Notice of Loss under the
 Fire Assistance Acts.            approved collection.                          Cerro Grande Fire Assistance
                                                                                Act--claimant makes a binding,
                                                                                conclusive and irrevocable
                                                                                election to have all injuries
                                                                                from the Cerro Grande Fire
                                                                                reviewed by us for compensation
                                                                                under the CGFAA.
Interview......................  Extension of a currently           3067-0280  Once a Claimant files a Notice of
                                  approved collection.                          Loss, the Claimant and the
                                                                                Claims Reviewer meet to discuss
                                                                                the nature of the loss sustained
                                                                                by the Claimant, the Claimant's
                                                                                documentation, insurance claims
                                                                                made, to be made, or insurance
                                                                                payments that the Claimant has
                                                                                received, and other documents
                                                                                such as affidavits that FEMA may
                                                                                need to substantiate the claims.
Documentation of Claims........  Extension of a currently           3067-0280  Following the interview the
                                  approved collection.                          Claimant and the Claims Reviewer
                                                                                may work both independently and
                                                                                together to obtain the
                                                                                documentation needed to
                                                                                substantiate the claims.
Subrogation Notice and Proof of  Extension of a currently           3067-0284  The Subrogation Notice of Loss
 Loss Form--Cerro Grande Fire     approved collection.                          under the Cerro Grand Fire
 Assistance Claims.                                                             Assistance Act form--an
                                                                                insurance company makes a
                                                                                binding conclusive and
                                                                                irrevocable election to have all
                                                                                subrogation claims of the
                                                                                company from the Cerro Grande
                                                                                Fire reviewed by FEMA for
                                                                                compensation under the CGFAA.
Proof of Loss--Cerro Grande      Extension of a currently           3067-0282  The Proof of Loss form is a
 Fire Assistance Claims.          approved collection.                          statement, signed by a Claimant
                                                                                under the penalty of perjury and
                                                                                subject to provisions of 18
                                                                                U.S.C. 1001 that the claim is
                                                                                true and correct, attesting to
                                                                                the nature and extent of the
                                                                                Claimant's injuries.
Request for Mitigation           New............................  ...........  Claimants may submit a Request
 Assistance.                                                                    for Mitigation Assistance to
                                                                                request mitigation funding in
                                                                                connection with rebuilding a
                                                                                damaged or destroyed structure.
                                                                                The funding will be a maximum of
                                                                                15 percent of the amount
                                                                                compensated for replacement,
                                                                                repair or restoration the
                                                                                structure and the land from all
                                                                                sources.
----------------------------------------------------------------------------------------------------------------


[[Page 15958]]


----------------------------------------------------------------------------------------------------------------
                                                                                                    Estimated
               Title                  Number of             Average hours per response            annual  burden
                                     respondents                                                      hours
----------------------------------------------------------------------------------------------------------------
Notice of Loss--Cerro Grande Fire         18,000  0.75 hour or 45 minutes......................           13,500
 Assistance Acts.
Interview.........................        18,000  Range from 1.5 to 2 hours....................    27,000-36,000
Documentation of Claims...........        18,000  20 hours.....................................          360,000
Subrogation Notice and Proof of           12,000  1.5 hours....................................           18,000
 Loss Form--Cerro Grande Fire
 Assistance Claims.
Proof of Loss--Cerro Grande Fire          18,000  0.5 hour.....................................            9,000
 Assistance Claims.
Request for Mitigation Assistance.         1,800  3 hours......................................            5,400
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
Estimated total...................  ............  .............................................          441,900
----------------------------------------------------------------------------------------------------------------

    Affected Public: State, local and tribal governments, private 
sector businesses, not-for-profit organizations, and individuals and 
households. The information collections are used to allow claimants to 
apply for compensation under the Cerro Grande Fire Assistance Act.
    Comments: We ask for written comments to: (a) Evaluate whether the 
proposed data collection is necessary for the Agency's proper 
performance of the program, including whether the information will have 
practical utility; (b) evaluate the accuracy of the Agency's estimate 
of the burden of the proposed collection of information, including the 
validity of the methodology and assumptions used; (c) enhance the 
quality, utility, and clarity of the information to be collected; and 
(d) minimize the burden of the collection of information on those who 
are to respond, including through the use of appropriate automated 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses. Please send comments on or before May 21, 
2001.
    Addresses: Interested persons should submit written comments to the 
Desk Officer for the Federal Emergency Management Agency, Office of 
Management and Budget, Office of Information and Regulatory Affairs, 
725 17th Street, NW., Washington, DC 20503 on or before April 20, 2001. 
We will continue to accept comments through May 21, 2001. Please send 
written comments on the information collections, including our burden 
estimates to Muriel B. Anderson, Chief, Records Management Branch, 
Program Services Division, Operations Support Directorate, Federal 
Emergency Management Agency, 500 C Street, SW., room 316, Washington, 
DC 20472, (telephone) (202) 646-2625, (facsimile) (202) 646-3347, or 
(e-mail) [email protected].

Executive Order 12866, Regulatory Planning and Review

    Under Executive Order 12866, 58 FR 51735, October 4, 1993, a 
significant regulatory action is subject to OMB review and the 
requirements of the Executive Order. The Executive Order defines 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    We have determined that this rule is a ``significant regulatory 
action'' under the terms of Executive Order 12866. It will have an 
annual effect on the economy of more than $100 million, but we do not 
expect it to affect adversely in a material way the economy, a sector 
of the economy, productivity, competition, jobs, the environment, 
public health or safety, or State, local, or tribal governments or 
communities. The rule and its underlying statute are designed to 
compensate individuals, businesses, not-for-profit organizations, 
State, local, and tribal governments or communities for injuries as a 
result of the Cerro Grande fire. Because of the urgent requirement to 
meet and settle the needs of persons injured as a result of the Cerro 
Grande fire and in order to comply with the mandates of the CGFAA, we 
have not prepared a regulatory analysis of the rule.
    The Office of Management and Budget (OMB) has reviewed the final 
rule under Executive Order 12866.

Executive Order 12898, Environmental Justice

    Under Executive Order 12898, ``Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations,'' 59 FR 7629, February 16, 1994, we have undertaken to 
incorporate environmental justice into our policies and programs. The 
Executive Order requires each Federal agency to conduct its programs, 
policies, and activities that substantially affect human health or the 
environment, in a manner that ensures that those programs, policies, 
and activities do not have the effect of excluding persons from 
participation in, denying persons the benefits of, or subjecting 
persons to discrimination because of their race, color, or national 
origin. No action that we can anticipate under the final rule will have 
a disproportionately high and adverse human health and environmental 
effect on any segment of the population. In addition, the final rule 
does not impose substantial direct compliance costs on those 
communities. Accordingly, the requirements of the Executive Order do 
not apply to this final rule.

Executive Order 13175, Consultation and Coordination With Indian 
Tribal Governments

    We have reviewed the final rule under Executive Order 13175, which 
became effective on February 6, 2001. We expect that several pueblos 
and individual members of tribes will seek compensation under the final 
rule for Cerro Grande fire-related losses, including compensation for 
lost subsistence from hunting, fishing, firewood gathering, timbering, 
grazing or agricultural activities conducted on land damaged by the 
Cerro Grande fire. One of these pueblos submitted written comments to 
the rulemaking docket. We find that the final rule does not have 
``tribal implications'' as defined in

[[Page 15959]]

Executive Order 13175 because it will not have a substantial direct 
effect on one or more Indian tribes, on the relationship between the 
Federal Government and Indian tribes, or on the distribution of power 
and responsibilities between the Federal Government and Indian tribes. 
Moreover, the final rule does not impose substantial direct compliance 
costs on tribal governments, nor does it preempt tribal law, impair 
treaty rights or limit the self-governing powers of tribal governments.

Executive Order 13132, Federalism

    This Executive Order sets forth principles and criteria that 
agencies must adhere to in formulating and implementing policies that 
have federalism implications, that is, regulations that have 
substantial direct effects on the States, or on the distribution of 
power and responsibilities among the various levels of government. 
Federal agencies must closely examine the statutory authority 
supporting any action that would limit the policymaking discretion of 
the States, and to the extent practicable, must consult with State and 
local officials before implementing any such action.
    We have reviewed final rule under E.O.13132 and have determined 
that the rule does not have federalism implications as defined by the 
Executive Order. The rule establishes the procedures and criteria for 
claimants, including the State of New Mexico, to apply for Federal 
compensation for injuries as a result of the Cerro Grande fire. It 
neither limits nor preempts any policymaking discretion of the State 
that the State might otherwise have.

Congressional Review of Agency Rulemaking

    We have sent this final rule to the Congress and to the General 
Accounting Office under the Congressional Review of Agency Rulemaking 
Act, 5 U.S.C. 801-808. The rule is a ``major rule'' within the meaning 
of that Act. It will result in an annual effect on the economy of 
$100,000,000 or more. However, we do not expect that it will result in 
a major increase in costs or prices for consumers, individual 
industries, Federal, State, or local government agencies, or geographic 
regions. Nor do we expect that it will 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.
    In compliance with Sec. 808(2) of the Congressional Review of 
Agency Rulemaking Act, 5 U.S.C. 808(2), for good cause we find that 
notice and public procedure on this final rule are impracticable, 
unnecessary, or contrary to the public interest in light of the urgent 
requirement to meet the needs of persons injured as a result of the 
Cerro Grande fire, expedite resolution of claims, and in order to 
comply with the mandates of the Cerro Grande Fire Assistance Act. 
Accordingly, this final rule is effective on March 21, 2001.

Administrative Procedure Act Determination

    The Cerro Grande Fire Assistance Act provides FEMA with 180 days to 
determine the compensation due to the Claimant. The interim final rule 
required that Claimants accept FEMA's determination or appeal it within 
120 days of the date upon which it is made. The 180 day deadline for 
Claimants who filed claims immediately prior to or immediately after 
publication of the interim final rule ran in late February 2001. Many 
of these claimants feel that they need to review the final rule before 
deciding whether to accept or appeal FEMA's determination. Other 
Claimants have delayed submission of the Proof of Loss awaiting the 
final regulations. The New Mexico congressional delegation has 
encouraged FEMA to publish the final rule expeditiously and make it 
effective with all deliberate speed. The primary purpose of the CGFAA 
is to provide Claimants with expeditious compensation for their losses. 
FEMA believes that this objective will be compromised if the effective 
date of the final rule were delayed for an additional 30 days. In 
accordance with 5 U.S.C. 553(d)(3), I find that there is good cause for 
the final rule to take effect immediately upon publication in the 
Federal Register in order to meet the urgent needs of those injured as 
a result of the Cerro Grande fire and to comply with the mandates of 
the Cerro Grande Fire Assistance Act.

List of Subjects in 44 CFR Part 295

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

    Accordingly, the Federal Emergency Management Agency amends 44 CFR 
Chapter I by revising subchapter E, consisting of part 295, to read as 
follows:

SUBCHAPTER E--CERRO GRANDE FIRE ASSISTANCE

PART 295--CERRO GRANDE FIRE ASSISTANCE

Subpart A--General
Sec.
295.1   Purpose.
295.2   Policy.
295.3   Information and assistance.
295.4   Organization of the rule.
295.5   Overview of the claims process.
295.6   Partial payments.
295.7   Authority to settle or compromise claims.
Subpart B--Bringing a Claim under the CGFAA
295.10  Bringing a claim under the CGFAA.
295.11   Deadline for notifying FEMA of losses.
295.12   Election of remedies.
295.13   Subrogation.
295.14   Assignments.
Subpart C--Compensation Available under the CGFAA
295.20   Prerequisite to compensation.
295.21   Allowable compensation.
Subpart D--Claims Evaluation
295.30   Establishing losses and damages.
295.31   Reimbursement of claim expenses.
295.32   Determination of compensation due to claimant.
295.33   Supplementing claims.
295.34   Reopening a claim.
295.35   Access to records.
295.36   Confidentiality of information.
Subpart E--Dispute Resolution
295.40  Scope.
295.41   Administrative appeal.
295.42   Arbitration.
295.43   Judicial review.
Subpart F--Glossary


Sec. 295.50  Definitions.

    Authority: Pub. L. 106-246, 114 Stat. 511, 584; Reorganization 
Plan No. 3 of 1978, 43 FR 41493, 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.

Subpart A--General


Sec. 295.1  Purpose.

    This part implements the Cerro Grande Fire Assistance Act (CGFAA), 
Public Law 106-246, 114 Stat. 584, which requires that the Federal 
Emergency Management Agency (FEMA) establish a process to evaluate, 
process and pay claims injuries and property damage resulting from the 
Cerro Grande Fire.


Sec. 295.2  Policy.

    It is our policy to provide for the expeditious resolution of 
meritorious claims through a process that is administered with 
sensitivity to the

[[Page 15960]]

burdens placed upon Claimants by the Cerro Grande Fire.


Sec. 295.3  Information and assistance.

    Information and assistance concerning the CGFAA is available from 
the Office of Cerro Grande Fire Claims (OCGFC), Federal Emergency 
Management Agency, P.O. Box 1480, Los Alamos, New Mexico, 87544-1480, 
or telephone 1-888-748-1853 (toll free). The Cerro Grande Fire 
Assistance site on the World Wide Web can be accessed at http://www.fema.gov/cerrogrande. In the interest of brevity, we do not restate 
the provisions of the CGFAA in most instances. Our website has a copy 
of the CGFAA and we will provide a copy upon request.


Sec. 295.4  Organization of this part 295.

    This part contains six subparts. Subpart A provides an overview of 
the CGFAA process. Subpart B describes the procedures for bringing a 
claim. Subpart C explains what compensation is available. Subpart D 
discusses the claims evaluation process. Subpart E explains the dispute 
resolution process. Subpart F contains a glossary in which various 
terms used in the rule are defined.


Sec. 295.5  Overview of the claims process.

    (a) The CGFAA is intended to provide persons who suffered losses 
from the Cerro Grande Fire with a simple, expedited process to seek 
redress from the United States. This section provides a brief 
explanation of the claims process for claims other than subrogation 
claims. It is not intended to supersede the more specific regulations 
that follow and explain the claims process in greater detail. In order 
to obtain benefits under this legislation, a person must submit all 
Cerro Grande Fire related claims against the United States to FEMA. A 
person who elects to proceed under the CGFAA is barred from bringing a 
claim under the Federal Tort Claims Act or filing a civil action 
against the United States for damages resulting from the Cerro Grande 
Fire. Judicial review of our decisions under the CGFAA is available.
    (b) The first step in the process is to file a Notice of Loss with 
OCGFC. OCGFC will provide the Claimant with a written acknowledgement 
that the claim has been filed and the claim number.
    (c) Shortly thereafter, a Claims Reviewer will contact the Claimant 
to review the claim. The Claims Reviewer will help the Claimant 
formulate a strategy for obtaining any necessary documentation or other 
support. This assistance does not relieve the Claimant of his or her 
responsibility for establishing all elements of the Loss and the 
compensatory damages that are sought, including that the Cerro Grande 
Fire caused the Loss. After the Claimant has had an opportunity to 
discuss the claim with the Claims Reviewer, a Proof of Loss will be 
presented to the Claimant for signature. After any necessary 
documentation has been obtained and the claim has been fully evaluated, 
the Claims Reviewer will submit a report to the Authorized Official. 
The Claims Reviewer is responsible for providing an objective 
evaluation of the claim to the Authorized Official.
    (d) The Authorized Official will review the report and determine 
whether compensation is due to the Claimant. The Claimant will be 
notified in writing of the Authorized Official's Determination. If the 
Claimant is satisfied with the decision payment will be made after the 
Claimant returns a completed Release and Certification Form. If the 
Claimant is dissatisfied with the Authorized Official's Determination 
an Administrative Appeal may be filed with the Director of OCGFC. If 
the Claimant remains dissatisfied after the appeal is decided, the 
dispute may be resolved through binding arbitration or heard in the 
United States District Court for the District of New Mexico.


Sec. 295.6  Partial payments.

    OCGFC, on its own initiative, or in response to a request by a 
Claimant, may make one or more partial payments on the claim. A partial 
payment can be made if OCGFC has a reasonable basis to estimate the 
Claimant's damages. Acceptance of a partial payment in no way affects a 
Claimant's ability to pursue an Administrative Appeal of the Authorized 
Official's Determination or to pursue other rights afforded by the 
CGFAA. Partial payment decisions cannot be appealed.


Sec. 295.7  Authority to settle or compromise claims.

    Notwithstanding any other provision of these regulations, the 
Director of OCGFC may extend an offer to settle or compromise a claim 
or any portion of a claim, which if accepted by the Claimant will be 
binding on the Claimant and on the United States, except that the 
United States may recover funds improperly paid to a Claimant due to 
fraud or misrepresentation on the part of the Claimant or the 
Claimant's representative, a material mistake on our part or the 
Claimant's failure to cooperate in an audit as required by Sec. 295.35.

Subpart B--Bringing a Claim Under the CGFAA


Sec. 295.10  Bringing a claim under the CGFAA.

    (a) Any Injured Person may bring a claim under the CGFAA by filing 
a Notice of Loss. A claim submitted on any form other than a Notice of 
Loss will not be accepted. The Claimant must provide a brief 
description of each Loss on the Notice of Loss.
    (b) A single Notice of Loss may be submitted on behalf of a 
Household containing Injured Persons provided that all Injured Persons 
on whose behalf the claim is presented are identified.
    (c) The Notice of Loss must be signed by each Claimant, if the 
Claimant is an individual or by a duly authorized legal representative 
of each Claimant, if the Claimant is an entity or an individual who 
lacks the legal capacity to sign the Notice of Loss. If one is signing 
a Notice of Loss as the legal representative of a Claimant, the signer 
must disclose his or her relationship to the Claimant. FEMA may require 
a legal representative to submit evidence of authority.
    (d) Notice of Loss forms are available from OCGFC by request. They 
may be obtained through the mail, in person at the OCGFC office or by 
telephone request. The Notice of Loss form can also be downloaded from 
the Internet at http://www.fema.gov/ cerrogrande.
    (e) Notices of Loss may be filed with OCGFC by mail to P.O. Box 
1480, Los Alamos, NM 87544-1480. OCGFC is unable to accept Notices of 
Loss submitted by facsimile or e-mail.
    (f) A Notice of Loss that is completely filled out and properly 
signed is deemed to be filed on the date it is received by OCGFC.


Sec. 295.11  Deadline for notifying FEMA of losses.

    The deadline for filing a Notice of Loss is August 28, 2002. Except 
as provided in Sec. 295.21(d) with respect to mitigation and in 
Sec. 295.31(b) with respect to the lump sum payment described therein, 
a Loss that has not been described: on a Notice of Loss, on a 
supplement to a Notice of Loss or a request to supplement a Notice of 
Loss under Sec. 295.33, or a request to reopen a claim under 
Sec. 295.34, received by OCGFC on or before August 28, 2002 cannot be 
compensated under the CGFAA. The CGFAA establishes this deadline and 
does not provide any extensions of the filing deadline.

[[Page 15961]]

Sec. 295.12  Election of remedies.

    (a) By filing a Notice of Loss, an Injured Person waives the right 
to seek redress for Cerro Grande Fire related claims against the United 
States through the Federal Tort Claims Act or by filing a civil action 
authorized by any other provision of law.
    (b) An Injured Person who files a Federal Tort Claims Act claim or 
who initiates a civil action against the United States or any officer, 
employee or agent of the United States relating to the Cerro Grande 
Fire on or after August 28, 2000 is not eligible under the CGFAA to 
file a Notice of Loss.
    (c) An Injured Person who filed before August 28, 2000 a Federal 
Tort Claims Act claim or a civil action against the United States for 
injuries, losses or damages relating to the Cerro Grande Fire may file 
a Notice of Loss provided that the Federal Tort Claims Act claim is 
withdrawn or the Injured Person is dismissed as a party to the civil 
action with prejudice not later than October 27, 2000. The withdrawal 
of a Federal Tort Claims Act claim must be in the form of a signed, 
written statement on a form provided by OCGFC that is filed with OCGFC 
not later than October 27, 2000. OCGFC will promptly forward the 
original notice of withdrawal to the applicable federal agency and 
retain a copy in the Claimant's file.


Sec. 295.13  Subrogation.

    An insurer or other third party with the rights of a subrogee, who 
has compensated an Injured Person for Cerro Grande Fire related losses, 
may file a Subrogation Notice of Loss under the CGFAA for the 
subrogated claim. An insurer or other third party with the rights of a 
subrogee may file a Subrogation Notice of Loss without regard to 
whether the Injured Party who received payment from the insurer or 
third party filed a Notice of Loss. A Subrogation Notice of Loss may 
not be filed until the insurer or other party with the rights of a 
subrogee has made all payments that it believes the Injured Person is 
entitled to receive for Cerro Grande Fire related losses under the 
terms of the insurance policy or other agreement between the insurer or 
other party with the rights of a subrogee and the Injured Person. By 
filing a Subrogation Notice of Loss for any subrogated claim, the 
insurer or third party elects the CGFAA as its exclusive remedy against 
the United States for all subrogated claims arising out of the Cerro 
Grande Fire. Subrogation claims must be made on a Subrogation Notice of 
Loss form furnished by OCGFC. FEMA will evaluate subrogation claims on 
their merits. FEMA may reimburse insurers and other third parties with 
the rights of a subrogee for reasonable payments made to an Injured 
Party on or before October 25, 2000, which exceeded or were not 
required by the terms of the insurance policy or other agreement 
creating a right of subrogation. FEMA will not reimburse insurers and 
other third parties with the rights of a subrogee for payments made to 
an Injured Party after October 25, 2000 that exceeded or are not 
required by the terms of the insurance policy or other agreement 
creating a right of subrogation.


Sec. 295.14  Assignments.

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

Subpart C--Compensation Available Under the CGFAA


Sec. 295.20  Prerequisite to compensation.

    In order to receive compensation under the CGFAA a Claimant must be 
an Injured Person who suffered a Loss as a result of the Cerro Grande 
Fire and sustained damages.


Sec. 295.21  Allowable compensation.

    (a) Allowable compensation. The CGFAA provides for the payment of 
compensatory damages. Compensatory damages are ``real, substantial and 
just money damages established by the Claimant in compensation for 
actual or real injury or loss.'' In general, an Injured Person will be 
compensated for Losses to the same extent that the plaintiff in a 
successful tort action brought against a private party under the laws 
of the State of New Mexico would be compensated. In addition the CGFAA 
permits FEMA to compensate Injured Parties for certain categories of 
``loss of property,'' ``business loss,'' and ``financial loss,'' which 
are enumerated in the CGFAA. Damages must be reasonable in amount. 
Claimants must take reasonable steps to mitigate (reduce) their 
damages, if possible, as required by New Mexico tort law.
    (b) Exclusions. Except as otherwise provided in the CGFAA, a 
Claimant will not receive compensation for any injury or damage that is 
not compensable under the Federal Tort Claims Act and New Mexico law. 
Punitive damages, statutory damages under Sec. 30-32-4 of the New 
Mexico Statutes Annotated (1978), interest on claims, attorney's fees 
and agents' fees incurred in prosecuting a claim under the CGFAA or an 
insurance policy, adjusting costs incurred by an insurer or other third 
party with the rights of a subrogee, and taxes that may be owed by a 
Claimant as a consequence of receiving an award are not recoverable 
from FEMA. The cost to a Claimant of prosecuting a claim under the 
CGFAA does not constitute compensatory damages and is not recoverable 
from FEMA, except as provided in Sec. 295.31(b).
    (c) Damages arising in the future. In the event that a lump sum 
payment is awarded to a Claimant for future damages the amount of the 
payment will be Discounted to Present Value.
    (d) Destruction of home--
    (1) Home and contents. Compensatory damages for the Destruction of 
a Home may include the reasonable cost of reconstructing a home 
comparable in design, construction materials, size and improvements to 
the home that was lost taking into account post-fire construction costs 
in the community in which the home existed before the fire and current 
building codes and standards. Compensatory damages may also include the 
cost of removing debris and burned trees, stabilizing the land, 
replacing household contents, and compensation for any decrease in the 
value of land on which the structure sat pursuant to paragraph (e) of 
this section. (2) Trees and landscaping. Compensation for the 
Replacement Cost of destroyed trees and landscaping will be limited to 
25% of the pre-fire value of the structure and lot.
    (3) Mitigation. If requested by a Claimant, FEMA may compensate a 
Claimant for the reasonable cost of mitigation measures that will 
reduce the property's vulnerability to the future risk of wildfire, 
flood or other natural hazards related to the Cerro Grande Fire. 
Mitigation compensation made available under this section may not 
exceed fifteen percent of payments from all sources (i.e., CGFAA, 
insurance proceeds, FEMA assistance under the Stafford Act) for damage 
to the structure and lot. The Claimant must obtain all government 
permits, approvals and clearances required by applicable law, ordinance 
or regulation before constructing the mitigation measures. The 
mitigation measures must be reviewed by FEMA under applicable 
environmental and historic preservation laws. Claimants must construct 
the mitigation measures for which they have received compensation.
    (e) Reduction in the value of real property. Compensatory damages 
may be awarded for reduction in the value of real property that a 
Claimant owned before the fire if:
    (1) The Claimant sells the real property in a good faith arm's 
length transaction that is closed no later than

[[Page 15962]]

August 28, 2002 and realizes a loss in the pre-fire value; or
    (2) The Claimant can establish that the value of the real property 
was permanently diminished as a result of the Cerro Grande Fire.
    (f) Destruction of unique items of personal property. Compensatory 
damages may be awarded for unique items of personal property that were 
destroyed as a result of the Cerro Grande Fire. If the item can be 
replaced in the current market, the cost to replace the item will be 
awarded. If the item cannot be replaced in the current market, its fair 
market value on the date it was destroyed will be awarded.
    (g) Disaster recovery loans. FEMA will reimburse Claimants awarded 
compensation under the CGFAA for interest paid on Small Business 
Administration disaster loans and similar loans obtained after May 4, 
2000. Interest will be reimbursed for the period beginning on the date 
that the loan was taken out and ending on the date when the Claimant 
receives a compensation award (other than a partial payment). Claimants 
are required to use the proceeds of their compensation awards to repay 
Small Business Administration disaster loans. FEMA will cooperate with 
the Small Business Administration to formulate procedures for assuring 
that Claimants repay Small Business Administration disaster loans 
contemporaneously with the receipt of CGFAA compensation awards.
    (h) Mitigation. FEMA may compensate Claimants for the cost of 
reasonable and cost-effective efforts incurred on or before August 28, 
2003 to mitigate the heightened risks of wildfire, flood or other 
natural disaster resulting from the Cerro Grande Fire that are 
consistent with a OCGFC-approved Mitigation Compensation Plan. No more 
than 15% of the total amount appropriated by Congress for the payment 
of Cerro Grande fire related claims may be allocated for mitigation 
compensation under this subsection. Claimants seeking compensation 
under this provision must file a Notice of Loss under Sec. 295.10 or 
amend a Notice of Loss previously filed under Sec. 295.33 or 
Sec. 295.34. The Notice of Loss or amendment must specify that 
compensation for mitigation is sought. The Notice of Loss must be filed 
or a proposed amendment under Sec. 295.33 or Sec. 295.34 submitted no 
later than August 28, 2002. A separate request for mitigation 
assistance must be filed with OCGFC no later than August 28, 2003. 
Claimants must construct the mitigation measures for which they have 
received compensation.
    (i) Subsistence--(1) Allowable damages. FEMA may reimburse an 
Indian tribe, a Tribal Member or a Household Including Tribal Members 
for the reasonable cost of replacing Subsistence Resources customarily 
and traditionally used by the Claimant on or before May 4, 2000, but no 
longer available to the Claimant as a result of the Cerro Grande Fire. 
For each category of Subsistence Resources, the Claimant must elect to 
receive compensatory damages either for the increased cost of obtaining 
Subsistence Resources from lands not damaged by the Cerro Grande Fire 
or for the cost of procuring substitute resources in the cash economy. 
Long-term damage awards will be made in the form of lump sum cash 
payments to eligible Claimants.
    (2) Proof of subsistence use. FEMA may consider evidence submitted 
by Claimants, Indian Tribes and other knowledgeable sources in 
determining the nature and extent of a Claimant's subsistence uses.
    (3) Duration of damages. Compensatory damages for subsistence 
losses will be paid for the period between May 4, 2000 and the date 
when Subsistence Resources can reasonably be expected to return to the 
level of availability that existed before the Cerro Grande Fire. FEMA 
may rely upon the advice of experts in making this determination.
    (j) Flood Insurance. A Claimant that owned or leased real property 
in the counties of Los Alamos, Rio Arriba, Sandoval or Santa Fe at the 
time of the Cerro Grande Fire who was not required by law to maintain 
flood insurance before the fire and who did not maintain flood 
insurance before the fire may be reimbursed by FEMA for reasonable 
flood insurance premiums incurred during the period beginning May 12, 
2000 and ending May 12, 2002 on the owned or leased real property. 
Alternatively, FEMA may provide flood insurance to such Claimants 
directly through a group or blanket policy.
    (k) Out of Pocket Expenses for Treatment of Mental Health 
Conditions. FEMA may reimburse an individual Claimant for reasonable 
out of pocket expenses incurred for treatment of a mental health 
condition rendered by a licensed mental health professional, which 
condition resulted from the Cerro Grande Fire and which could not be 
effectively addressed through no-cost crisis counseling services 
available in the community. FEMA will not reimburse for treatment 
rendered after December 31, 2001.
    (l) Donations. FEMA will compensate individual or business 
Claimants in the counties of Los Alamos, Rio Arriba, Sandoval and Santa 
Fe (including those located on pueblos and Indian reservations) for the 
cost of merchandise, use of equipment or other non-personal services, 
directly or indirectly donated to survivors of the Cerro Grande Fire 
not later than June 19, 2000. Donations will be valued at cost. FEMA 
will also compensate businesses located in the counties of Los Alamos, 
Rio Arriba, Sandoval and Santa Fe (including those located on pueblos 
and Indian reservations) for discounts offered to fire survivors on 
goods and services not later than June 19, 2000 provided that actual 
revenues earned by the business during the period May 1-June 30, 2000 
did not exceed reasonable projections for the period and the shortfall 
between actual revenues and reasonable projections resulted from the 
Cerro Grande Fire. Compensation will be the difference between the 
Claimant's established post-fire price for the good or service actually 
charged to the general public and the post-fire discounted price 
charged to fire survivors.
    (m) Duplication of benefits. The CGFAA allows FEMA to compensate 
Injured Parties only if their damages have not been paid or will not be 
paid by insurance or a third party.
    (1) Insurance. Claimants who carry insurance will be required to 
disclose the name of the insurer(s) and the nature of the insurance and 
provide OCGFC with such insurance documentation as OCGFC reasonably 
requests.
    (2) Coordination with our Public Assistance program. Injured 
Parties eligible for disaster assistance under our Public Assistance 
Program are expected to apply for all available assistance. 
Compensation will not be awarded under the CGFAA for:
    (i) Emergency costs that are eligible for reimbursement under the 
Public Assistance Program; or
    (ii) Losses that are eligible for repair, restoration or 
replacement under the Public Assistance Program; or
    (iii) Costs or charges determined excessive under the Public 
Assistance Program.
    (3) Benefits provided by non-governmental organizations and 
individuals. Unless otherwise provided by these regulations, disaster 
relief payments made to a Claimant by a non-governmental organization 
or an individual, other than wages paid by the Claimant's employer or 
insurance payments, will be disregarded in evaluating claims and need 
not be disclosed to OCGFC by Claimants.
    (4) Benefits provided by our Individual Assistance program.

[[Page 15963]]

Compensation under the CGFAA will not be awarded for losses or costs 
that have been reimbursed under the Individual and Family Grant Program 
or any other FEMA Individual Assistance Program.
    (5) Worker's compensation claims. Individuals who have suffered 
injuries that are compensable under State or Federal worker's 
compensation laws must apply for all benefits available under such 
laws.

Subpart D--Claims Evaluation


Sec. 295.30  Establishing Losses and damages.

    (a) Burden of Proof. The burden of proving Losses and damages rests 
with the Claimant. A Claimant may submit for the Administrative Record 
a statement explaining why the Claimant believes that the Losses and 
damages are compensable and any documentary evidence supporting the 
claim. Claimants will provide documentation, which is reasonably 
available, to corroborate the nature, extent and value of their losses 
and/or to execute affidavits in a form established by OCGFC. FEMA may 
compensate a Claimant for a Loss in the absence of supporting 
documentation, in its discretion, on the strength of an affidavit or 
Proof of Loss executed by the Claimant, if documentary evidence 
substantiating the loss is not reasonably available. FEMA may request 
that a business Claimant execute an affidavit, which states that the 
Claimant will provide documentary evidence, including but not limited 
to income tax returns, if requested by our Office of the Inspector 
General or the General Accounting Office during an audit of the claim.
    (b) Proof of Loss. All Claimants are required to attest to the 
nature and extent of each Loss for which compensation is sought in the 
Proof of Loss. The Proof of Loss, which will be in a form specified by 
OCGFC, must be signed by the Claimant or the Claimant's legal 
representative if the Claimant is a not an individual or is an 
individual who lacks the legal capacity to execute the Proof of Loss. 
The Proof of Loss must be signed under penalty of perjury and subject 
to the provisions of 18 U.S.C.1001, which establishes penalties for 
false statements. Non-subrogation Claimants who filed a Notice of Loss 
before January 1, 2001 should submit a signed Proof of Loss to OCGFC 
not later than June 19, 2001. Non-subrogation Claimants who file a 
Notice of Loss on or after January 1, 2001 should submit a signed Proof 
of Loss to OCGFC not later than 150 days after the date when the Notice 
of Loss was submitted. These deadlines may be extended at the 
discretion of the Director of OCGFC for good cause. If a non-
subrogation Claimant fails to submit a signed Proof of Loss within the 
timeframes set forth in this section and does not obtain an extension 
from the Director of OCGFC, OCGFC may administratively close the claim 
and require the Claimant to repay any partial payments made on the 
claim. Subrogation Claimants will submit the Proof of Loss 
contemporaneously with filing the Notice of Loss.
    (c) Release and Certification Form. All Claimants who receive 
compensation under the CGFAA are required to sign a Release and 
Certification Form. The Release and Certification Form must be executed 
by the Claimant or the Claimant's legal representative if the Claimant 
is an entity or lacks the legal capacity to execute the Release and 
Certification Form. The Release and Certification Form must be received 
by OCGFC within 120 days of the date when the Authorized Official's 
Determination is rendered under Sec. 295.32, or if subsequent 
proceedings occur under Subpart E of these regulations, not later than 
60 days after the date when further review of the decision (if 
available) is precluded. The United States will not attempt to recover 
compensatory damages paid to a Claimant who has executed and returned a 
Release and Certification Form within the periods provided above, 
except in the case of fraud or misrepresentation by the Claimant or the 
Claimant's representative, failure of the Claimant to cooperate with an 
audit as required by Sec. 295.35 or a material mistake by FEMA.


Sec. 295.31  Reimbursement of claim expenses.

    (a) FEMA will reimburse Claimants for the reasonable costs they 
incur in copying documentation requested by OCGFC. FEMA will also 
reimburse Claimants for the reasonable costs they incur in providing 
appraisals, or other third-party opinions, requested by OCGFC. FEMA 
will not reimburse Claimant for the cost of appraisals, or other third 
party opinions, not requested by OCGFC.
    (b) FEMA will provide a lump sum payment for incidental expenses 
incurred in claims preparation to individual and business Claimants 
that are awarded compensatory damages under the CGFAA after a properly 
executed Release and Certification Form has been returned to OCGFC. The 
amount of the lump sum payment will be the greater of $100 or 5% of 
CGFAA compensatory damages and insurance proceeds recovered by the 
Claimant for Cerro Grande Fire related losses (not including the lump 
sum payment or monies reimbursed under the CGFAA for the purchase of 
flood insurance), but will not exceed $15,000. No more than one lump 
sum payment will be made to all Claimants in a Household, regardless of 
whether the Household filed separate or combined Notices of Loss. The 
following Claimants will not be eligible to receive the lump sum 
payment: subrogation Claimants and Claimants whose only Cerro Grande 
Fire related loss is for flood insurance premiums.


Sec. 295.32  Determination of compensation due to claimant.

    (a) Authorized Official's report. After OCGFC has evaluated all 
elements of a claim as stated in the Proof of Loss, the Authorized 
Official will issue, and provide the Claimant with a copy of, the 
Authorized Official's Determination.
    (b) Claimant's options upon issuance of the Authorized Official's 
determination. Not later than 120 days after the date that appears on 
the Authorized Official's Determination, the Claimant must either 
accept the findings by submitting a Release and Certification Form to 
FEMA or initiate an Administrative Appeal in accordance with 
Sec. 295.41. The CGFAA requires that Claimants sign the Release and 
Certification Form to receive payment on their claims (except for 
partial payments). The Claimant will receive payment of compensation 
awarded by the Authorized Official after FEMA receives the completed 
Release and Certification Form. If the Claimant does not either submit 
a Release and Certification Form to FEMA or initiate an Administrative 
Appeal no later than 120 Days after the date that appears on the 
Authorized Official's Determination, he or she will be conclusively 
presumed to have accepted the Authorized Official's Determination. The 
Director of OCGFC may modify the deadlines set forth in this subsection 
at the request of a Claimant for good cause shown.


Sec. 295.33  Supplementing claims.

    A Claimant may amend the Notice of Loss to include additional 
claims at any time before signing a Proof of Loss. After the Claimant 
has submitted a Proof of Loss and before submission of the Release and 
Certification Form, a Claimant may request that the Director of OCGFC 
consider one or more Losses not addressed in the Proof of Loss. The 
request must be submitted in writing to the Director of OCGFC and 
received not later than the deadline for filing an Administrative 
Appeal under Sec. 295.32

[[Page 15964]]

or August 28, 2002, whichever is earlier. It must be supported by the 
Claimant's explanation of why the Loss was not previously reported. If 
good cause is found to consider the additional loss, the Director will 
determine whether compensation is due to the Claimant for the Loss 
under the Administrative Appeal procedures described in Sec. 295.41.


Sec. 295.34  Reopening a claim.

    (a) The Director of OCGFC may reopen a claim if requested to do so 
by the Claimant, notwithstanding the submission of the Release and 
Certification Form, for the limited purpose of considering issues 
raised by the request to reopen if:
    (1) The Claimant desires mitigation compensation and the request to 
reopen is filed not later than August 28, 2003 in accordance with 
Sec. 295.21(d) or (h); or
    (2) The Claimant closed the sale of real property not later than 
August 28, 2002 and wishes to present a claim for reduction in the 
value of the real property under Sec. 295.21(e) and the request to 
reopen is filed not later than August 28, 2002; or
    (3) The Claimant has incurred Replacement Costs under 
Sec. 295.21(d) in excess of those previously awarded and is not 
prohibited by the terms of an agreement pertaining to home replacement 
with OCGFC from requesting that the case be reopened; or
    (4) The Director of OCGFC otherwise determines that Claimant has 
demonstrated good cause.
    (b) The Director of OCGFC may establish a deadline by which 
requests to reopen under paragraphs (a)(3) or (4) of this section must 
be submitted. The deadline will be published as a notice in the Federal 
Register and broadly disseminated throughout the communities, pueblos 
and Indian reservations in Los Alamos, Rio Arriba, Sandoval, and Santa 
Fe Counties.


Sec. 295.35  Access to records.

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


Sec. 295.36  Confidentiality of information.

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

Subpart E--Dispute Resolution


Sec. 295.40  Scope.

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


Sec. 295.41  Administrative appeal.

    (a) Notice of appeal. A Claimant may request that the Director of 
OCGFC review the Authorized Official's Determination by written request 
to the Appeals Docket, Office of Cerro Grande Claims, P.O. Box 1480, 
Los Alamos, NM 87544-1480, postmarked or delivered within 120 Days 
after the date that appears on the Authorized Official's Determination. 
The Claimant will submit along with the notice of appeal a statement 
explaining why the Authorized Official's Determination was incorrect.
    (b) Acknowledgement of appeal. OCGFC will acknowledge the receipt 
of appeals that are timely filed. Following the receipt of a timely 
filed appeal, the Director of OCGFC will obtain the Administrative 
Record from the Authorized Official and transmit a copy to the 
Claimant.
    (c) Supplemental filings. The Claimant may supplement the statement 
of reasons and provide any additional documentary evidence supporting 
the appeal within 60 Days after the date when the appeal is filed. The 
Director of OCGFC may extend these timeframes or authorize additional 
filings either on his or her own initiative or in response to a request 
by the Claimant for good cause shown.
    (d) Admissible evidence. The Claimant may rely upon any relevant 
evidence to support the appeal, regardless of whether the evidence was 
previously submitted to the Claims Reviewer for consideration by the 
Authorized Official.
    (e) Obtaining evidence. The Director of OCGFC may request from the 
Claimant or from the Authorized Official any additional information 
that is relevant to the issues posed by the appeal in his or her 
discretion.
    (f) Conferences. The Director of OCGFC may schedule a conference to 
gain a better understanding of the issues or to explore settlement 
possibilities.
    (g) Hearings. The Director of OCGFC may exercise the discretion to 
convene an informal hearing to receive oral testimony from witnesses or 
experts. The rules under which hearings will be conducted will be 
established by the Director of OCGFC. Formal rules of evidence 
applicable to court proceedings will not be used in hearings under this 
subsection. Hearings will be transcribed and the transcript will be 
entered in the Administrative Record.
    (h) Decision on appeal. After the allotted time for submission of 
evidence has passed, the Director of OCGFC will close the 
Administrative Record and render a written decision on the 
Administrative Appeal. The Director of OCGFC's decision on the 
Administrative Appeal will constitute the final decision of the 
Director of FEMA under Secs. 104(d)(2)(B) and 104(i)(1) of the CGFAA.
    (i) Claimant's options following appeal. The Claimant's concurrence 
with the decision in the Administrative Appeal will be conclusively 
presumed unless the Claimant initiates arbitration in accordance with 
Sec. 295.42 or seeks judicial review in accordance with Sec. 295.43. If 
the Claimant concurs with the Director's determination, payment of any 
additional damages awarded by the Director will be made to the Claimant 
upon receipt of a properly executed Release and Certification Form.


Sec. 295.42  Arbitration.

    (a) Initiating arbitration. A Claimant who is dissatisfied with the 
outcome of the Administrative Appeal may initiate binding arbitration 
by submitting a written request for arbitration to the Arbitration 
Administrator for Cerro Grande Claims, Alternate Dispute Resolution 
Office, Federal Emergency Management Agency, 500 C Street, SW., room 
214, Washington, DC 20472 on a form provided by OCGFC. The written 
request for arbitration must be received not later than 60 days after 
the date that appears on the Administrative Appeal decision.
    (b) Permissible claims. A Claimant may not arbitrate an issue 
unless it was raised and decided in the Administrative Appeal. 
Arbitration will be conducted on the evidence in the Administrative 
Record. Evidence not previously entered into the Administrative Record 
will not be considered.
    (c) Settlement and mediation alternatives. At any time after a 
request for arbitration is filed and before the time a decision is 
rendered, either party may request in writing that the

[[Page 15965]]

Alternate Dispute Resolution Office stay further proceedings in the 
arbitration to facilitate settlement discussions. A mediator may be 
appointed (if requested by the parties) to facilitate settlement 
discussions. If both parties concur in the request, the Alternate 
Dispute Resolution Office will stay the arbitration and appoint a 
mediator at our expense. The stay may be terminated and the arbitration 
resumed upon written request of either party to the Alternate Dispute 
Resolution Office. If the dispute is settled, the Alternate Dispute 
Resolution Office will issue an order terminating the arbitration and 
provide the Claimant with a Release and Certification Form.
    (d) Selection of arbitrator. Arbitrators will be selected from a 
list of qualified arbitrators who have agreed to serve provided by the 
Alternate Dispute Resolution Office. If the amount in dispute is 
$300,000 or less, the arbitration will be decided by one arbitrator 
selected by the Claimant from the list. If the amount in dispute 
exceeds $300,000, a panel of three arbitrators selected at random by 
the Alternate Dispute Resolution Office will decide the arbitration.
    (e) Conduct of arbitration. The arbitration will be conducted in a 
manner determined by the arbitrator consistent with guidelines 
established by the Alternate Dispute Resolution Office. The Alternate 
Dispute Resolution Office will provide these guidelines upon request.
    (f) Hearings. The arbitrator may convene a hearing at a location 
designated by the Alternate Dispute Resolution Office. Whenever 
possible hearings will be held in Los Alamos, New Mexico unless the 
parties jointly agree to a different location.
    (g) Decision. After reviewing the evidence, the arbitrator(s) will 
render a decision in writing to the Alternate Dispute Resolution 
Office. The Alternate Dispute Resolution Office will transmit the 
decision to the Claimant and the Director of OCGFC. If a panel of three 
arbitrators conducts the arbitration, at least two of the three 
arbitrators must sign the decision. The decision will be rendered no 
later than 10 Days after a hearing is concluded or 60 Days after the 
arbitration is initiated, whichever is earlier. The Alternate Dispute 
Resolution Office may extend the time for a decision. The decision will 
establish the compensation due to the Claimant, if any, and the reasons 
therefore.
    (h) Action on arbitration decision. The Alternate Dispute 
Resolution Office will forward the arbitration decision and a Release 
and Certification Form to the Claimant. A Claimant who has received or 
who has been awarded any compensation under the CGFAA must sign and 
return the Release and Certification Form, regardless of whether any 
additional compensation is awarded by the arbitration. Additional 
compensation awarded in the arbitration will be paid to the Claimant 
after the signed Release and Certification Form is received.
    (i) Final decision. The decision of the arbitrator will be final 
and binding on all parties and will not be subject to any 
administrative or judicial review. The arbitrator may correct clerical, 
typographical or computational errors as requested by the Alternate 
Dispute Resolution Office.
    (j) Administration of arbitration. The Alternate Dispute Resolution 
Office will serve as arbitration administrator and will conclusively 
resolve any procedural disputes arising in the course of the 
arbitration. The Alternate Dispute Resolution Office will pay the fees 
of the arbitrator and reimburse the arbitrator for arbitration related 
expenses unless the parties jointly agree otherwise.


Sec. 295.43  Judicial review.

    As an alternative to arbitration, a Claimant dissatisfied with the 
outcome of an Administrative Appeal may seek judicial review of the 
decision by bringing a civil lawsuit against FEMA in the United States 
District Court for the District of New Mexico. This lawsuit must be 
brought within 60 Days of the date that appears on the Administrative 
Appeal decision. The court may only consider evidence in the 
Administrative Record. The court will uphold our decision if it is 
supported by substantial evidence on the record considered as a whole. 
If the judge has awarded damages over and above those previously paid, 
FEMA will cause the damages to be paid to the Claimant upon receipt of 
the Release and Certification Form or as otherwise specified by order 
of the court. Claimants who have received any compensation under the 
CGFAA must return a Release and Certification Form as provided in 
Sec. 295.30(c), regardless of whether the court awards additional 
compensation.

Subpart F--Glossary


Sec. 295.50  Definitions

    Administrative Appeal means an appeal of the Authorized Official's 
Determination to the Director of OCGFC in accordance with the 
provisions of Subpart E of these regulations.
    Administrative Record means all information submitted by the 
Claimant and all information collected by FEMA concerning the claim, 
which is used to evaluate the claim and to formulate the Authorized 
Official's Determination. It also means all information that is 
submitted by the Claimant or FEMA in an Administrative Appeal and the 
decision of the Administrative Appeal. It excludes the opinions, 
memoranda and work papers of our attorneys and drafts of documents 
prepared by OCGFC personnel and contractors.
    Alternate Dispute Resolution Office means the Office established by 
FEMA to promote use of Alternative Dispute Resolution as a means of 
resolving disputes. The address of the Alternate Dispute Resolution 
Office is Federal Emergency Management Agency, 500 C Street, SW., 
Washington, DC 20472.
    Authorized Official means an employee of the United States who is 
delegated with authority by the Director of OCGFC to render binding 
determinations on claims and to determine compensation due to Claimants 
under the CGFAA.
    Authorized Official's Determination means a report signed by an 
Authorized Official and mailed to the Claimant evaluating each element 
of the claim as stated in the Proof of Loss and determining the 
compensation, if any, due to the Claimant.
    Claimant means a person who has filed a Notice of Loss under the 
CGFAA.
    Claims Reviewer means an employee of the United States or an OCGFC 
contractor or subcontractor who is authorized by the Director of OCGFC 
to review and evaluate claims submitted under the CGFAA.
    Days means calendar days, including weekends and holidays.
    Destruction of a Home means destruction or physical damage to a 
residence or the land upon which it sat, resulting from the Cerro 
Grande Fire.
    Discount to Net Present Value means a reduction of an award for 
damages arising in the future by making allowance for the fact that 
such award, if properly invested would earn interest.
    Household means a group of people, related or unrelated, who live 
together on a continuous basis and does not include members of an 
extended family who do not regularly and continuously cohabit.
    Household Including Tribal Members means a Household that existed 
on May 4, 2000, which included one or more Tribal Members as continuous 
residents.
    Indian tribe means an entity listed on the most recent list of 
federally recognized tribes published in the Federal Register by the 
Secretary of the

[[Page 15966]]

Interior pursuant to the Federally Recognized Indian Tribe List Act, 25 
U.S.C. 479a, or successor legislation.
    Injured Person means an individual, regardless of citizenship or 
alien status, an Indian tribe, corporation, tribal corporation, 
partnership, company, association, cooperative, joint venture, limited 
liability company, estate, trust, county, city, State, school district, 
special district or other non-Federal entity that suffered Loss 
resulting from the Cerro Grande Fire and any entity that provided 
insurance to an Injured Person. The term Injured Person includes an 
Indian tribe with respect to any claim relating to property or natural 
resources held in trust for the Indian tribe by the United States. 
Lenders holding mortgages or security interests on property affected by 
the Cerro Grande fire and lien holders are not ``Injured Persons'' for 
purposes of the CGFAA.
    Loss means ``injury or loss of property, or personal injury or 
death,'' as that phrase appears in the Federal Tort Claims Act, 28 
U.S.C. 1346(b)(1), and the several categories of ``property loss,'' 
``business loss'' or ``financial loss'' set out in the Sec. 104(d) of 
the CGFAA.
    Mitigation Compensation Plan means a written mitigation plan 
submitted by a local government with land use regulatory authority or 
by an Indian tribe that recommends specific mitigation measures to 
reduce the heightened risks of wildfire, flood or other natural hazards 
resulting from the Cerro Grande Fire or seeks compensation for the cost 
of such measures expended before August 28, 2000, or both. The 
Mitigation Compensation Plan may address property specific mitigation 
measures and community level mitigation measures.
    Notice of Loss means a form supplied by OCGFC through which an 
Injured Person makes a binding, conclusive and irrevocable election to 
have all Losses resulting from the Cerro Grande Fire reviewed by FEMA 
for possible compensation under the CGFAA.
    Proof of Loss means a statement, signed by a Claimant under penalty 
of perjury and subject to the provisions of 18 U.S.C.1001 that the 
claim is true and correct, attesting to the nature and extent of the 
Claimant's injuries.
    Public Assistance Program means the FEMA program establish under 
Subchapter IV of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, as amended, 42 U.S.C. 5121, et seq., which provides 
grants to States, local governments, Indian tribes and private 
nonprofit organizations for emergency measures and repair, restoration 
and replacement of damaged facilities.
    Replacement Cost means the cost of replacing an item that is 
damaged or destroyed with an item that is comparable in quality and 
utility.
    Release and Certification Form means a document in the manner 
prescribed by Sec. 104(e) of the CGFAA that all Claimants who have 
received or are awarded compensatory damages under the CGFAA must 
execute and return to OCGFC as required by Sec. 295.30(c).
    Subsistence Resources means food and other items obtained through 
hunting, fishing, firewood and other resource gathering, timbering, 
grazing or agricultural activities undertaken by the Claimant without 
financial remuneration.
    Tribal Member means an enrolled member of an Indian Tribe.

    Dated: March 15, 2001.
Joe M. Allbaugh,
Director.
[FR Doc. 01-6917 Filed 3-20-01; 8:45 am]
BILLING CODE 6718-01-P