[Federal Register Volume 73, Number 169 (Friday, August 29, 2008)]
[Rules and Regulations]
[Pages 50881-50883]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-19983]


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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

44 CFR Parts 206 and 207

[Docket ID FEMA-2006-0035]
RIN 1660-AA21


Management Costs

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Reopening of comment period.

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SUMMARY: The Management Cost Interim Rule implemented the management 
cost provisions in section 324 of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act, as amended. The Federal Emergency 
Management Agency (FEMA) is reopening the public comment period on its 
Management Cost Interim Rule. FEMA is taking this action to solicit 
data from grantees and subgrantees to use in reevaluating the fixed 
management cost rates established in the rule.

DATES: Comments are due on or before September 29, 2008.

ADDRESSES: You may submit comments, identified by Docket ID FEMA-2006-
0035, by one of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.
    E-mail: [email protected]. Include Docket ID FEMA-2006-0035 in the 
subject line of the message.
    Fax: 866-466-5370.
    Mail/Hand Delivery/Courier: Rules Docket Clerk, Office of Chief 
Counsel, Federal Emergency Management Agency, Room 835, 500 C Street, 
SW., Washington, DC 20472.

FOR FURTHER INFORMATION CONTACT: Jonna M. Long, Office of the Chief 
Financial Officer, Federal Emergency Management Agency, 500 C Street, 
SW., Washington, DC 20472, 202-646-7057, (facsimile) (202) 646-4268 
(phone), or (e-mail) [email protected].

[[Page 50882]]


SUPPLEMENTARY INFORMATION:

Background

    Under the provisions of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (Stafford Act), 42 U.S.C. 5121-5207, and its 
implementing regulations, the Federal Emergency Management Agency 
(FEMA) has the authority to assist State and local governments in 
carrying out their responsibilities pursuant to a Presidentially-
declared major disaster or emergency. Two of the major programs 
authorized by the Stafford Act that provide assistance to State and 
local governments are the Public Assistance (PA) program (grants for 
emergency protective measures, debris removal, and repair, replacement, 
or restoration of facilities not met by insurance) and the Hazard 
Mitigation Grant Program (HMGP) (grants for sustained mitigation 
measures such as acquisition for open space, elevations of flood prone 
properties, and wind or seismic retrofitting of structures that will 
reduce or permanently eliminate the long-term risk to people and 
property from natural hazards and their effects).
    Section 324 of the Stafford Act, 42 U.S.C. 5165b, required FEMA to 
establish management cost rates for PA and HMGP grantees and 
subgrantees to be used in determining contributions for management 
costs. On August 30, 2002, FEMA published a Notice of Proposed 
Rulemaking that proposed a methodology for calculating the management 
cost rates, as well as guidance for the implementation of section 324 
of the Stafford Act (67 FR 56130). FEMA provided a 30 day comment 
period for the Notice of Proposed Rulemaking and considered the 
comments received in drafting the Interim Rule that was published on 
October 11, 2007 (72 FR 57869). For the Interim Rule, FEMA again 
provided a 30 day comment period. FEMA received 34 public comments on 
the Interim Rule (all of which are available in the docket for public 
inspection). Although FEMA continues to review those comments and will 
address them in the final rule, FEMA realized that it would be useful 
to solicit more specific information to properly address issues that 
were raised in those comments.
    ``Management costs,'' for purposes of the implementing regulation, 
include any indirect costs, any administrative expenses and any other 
expenses not directly chargeable to a specific project that are 
reasonably incurred by a grantee or subgrantee in administering and 
managing a PA program or HMGP grant award. As established by the 
Interim Rule, FEMA determines the amount of management costs based on a 
flat percentage rate of the Federal share of projected eligible program 
costs for financial assistance. The flat percentage rate for PA is 3.34 
percent for major disaster declarations, and 3.90 percent for 
emergencies. The HMGP rate is 4.89 percent for major disaster 
declarations. The management cost funds provided are in addition to the 
grantee's PA and HMGP funds and do not require a non-Federal cost 
share.
    The management cost rates set forth in the Interim Rule replaced 
what FEMA previously paid State and local governments for associated 
costs through the ``sliding scale,'' State management costs, and 
grantee indirect costs. The percentages for reimbursement are based on 
historical average obligations. To create the figures in the Interim 
Rule, FEMA used data collected in the National Emergency Management 
Information System (NEMIS) for declarations from August 1998 to July 
2004. FEMA added together actual obligations representing the Federal 
share of all PA projects for major disasters declared during that 
period. Obligations for sliding scale, State management costs, and 
grantee indirect costs were excluded from project obligations and were 
added together separately. Those totals were used to calculate the 
percentage of ``pure'' project dollars that historically has been 
required for administration and management.
    The same calculations were performed for HMGP projects under major 
disaster declarations and PA projects under emergency declarations.

Request for Comments

    Instructions: All Submissions received must include the agency name 
and Docket ID. Regardless of the method used for submitting comments or 
supporting material, all submissions will be posted, without change, to 
the Federal eRulemaking Portal at http://www.regulations.gov, and will 
include any personal information you provide. Therefore, submitting 
this information makes it public. You may wish to read the Privacy Act 
notice that is available on the Privacy and Use Notice link on the 
Administration Navigation Bar of http://www.regulations.gov.
    Although comments on other aspects of the interim rule will not be 
rejected, FEMA solicits data in response to the specific requests set 
out below:

Request 1

    Prior to November 13, 2007, FEMA used three mechanisms to reimburse 
grantees and subgrantees for management and administration costs:
    a. ``Sliding Scale''--per section 406(f) of the Stafford Act, FEMA 
reimbursed States for extraordinary costs incurred for preparation of 
damage survey reports, final inspection reports, project applications, 
final audits, and related field inspections by State employees, 
including overtime pay and per diem and travel expense of such 
employees but not including pay for regular time of such employees, 
based on the total amount of assistance provided under section 403, 
404, 406, 407, 502, and 503. Such funds were cost shared at the 
prevailing cost share rate for the declaration.
    FEMA reimbursed subgrantees for associated expenses including 
necessary costs of requesting, obtaining, and administering Federal 
assistance. Such funds were 100 percent federally-funded.
    b. Category Z State Management Administrative Costs--FEMA 
reimbursed State costs consistent with OMB Circular No. A-87 guidance, 
including such items as straight time salaries of State employees; 
straight time and overtime salaries, per diem and travel of contractors 
administering PA or HMGP grants; Emergency Management Assistance 
Compact (EMAC) costs for PA grants management; materials; equipment; 
etc. Such funds were cost shared at the prevailing cost share rate for 
the declaration.
    c. Indirect Costs--FEMA reimbursed States for costs incurred for a 
common or joint purpose benefiting more than one cost objective that 
were not readily assignable to projects, if such costs were part of an 
approved Indirect Cost Rate Plan. Such funds were cost shared at the 
prevailing cost share rate for the declaration.
    FEMA requests that grantees and subgrantees submit data on 
unreimbursed management costs incurred in the management and 
administration of Public Assistance (PA) and/or the Hazard Mitigation 
Grant Program (HMGP) prior to implementation of the Interim Rule on 
November 13, 2007. Specific costs and descriptions are needed and all 
costs must be attributable to and identified by a specific FEMA 
declaration number (DR-XXXX-ST or EM-XXXX-ST).
    To assist grantees and subgrantees in answering this request, 
unreimbursed costs might include items eligible for sliding scale funds 
when such funds were insufficient, or subgrantee costs not eligible for 
sliding scale funds and therefore not eligible for FEMA reimbursement. 
Unreimbursed costs must have been incurred in support of the management 
and administration of

[[Page 50883]]

PA or HMGP under a specific Presidential declaration (major disaster or 
emergency for PA or major disaster for HMGP), and not in support of 
other programs such as community relations or Disaster Recovery Center 
staff, or staff supporting Individual Assistance programs. Unreimbursed 
costs do not include State cost shares required for sliding scale, 
Category Z, or indirect cost funding, nor do they include costs that 
were not reimbursed because they were inconsistent with applicable 
Federal rules and cost principles, such as OMB Circular No. A-87.

Request 2

    FEMA requests that grantees and subgrantees submit available data 
on unreimbursed management costs incurred in the management and 
administration of Public Assistance (PA) and/or the Hazard Mitigation 
Grant Program (HMGP) under a specific Presidential declaration (major 
disaster or emergency for PA or major disaster for HMGP) since November 
13, 2007. Specific costs and descriptions are needed and must be 
identified by FEMA declaration number.

Viewing the Docket

    For access to the docket to submit comments, read the Notice of 
Proposed Rulemaking, Interim Rule, background documents and all 
comments received, go to the Federal eRulemaking Portal at http://www.regulations.gov. To the far right is a section titled ``More Search 
Options.'' Below that title, click on ``Advanced Docket Search.'' On 
the next screen, in the box provided for Docket ID, type ``FEMA-2006-
0035''. The next screen will provide a link to the docket. Once viewing 
the docket, all documents are provided in chronological order, 
beginning with the 2002 Notice of Proposed Rulemaking. Submitted 
comments may also be inspected at Office of Chief Counsel, Federal 
Emergency Management Agency, Room 835, 500 C Street, SW., Washington, 
DC 20472.

    Dated: August 22, 2008.
R. David Paulison
Administrator, Federal Emergency Management Agency.
[FR Doc. E8-19983 Filed 8-28-08; 8:45 am]
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