Disaster Assistance: Issues Related to the Development of FEMA's
Insurance Requirements (Letter Report, 02/25/2000, GAO/GGD/OGC-00-62).

Pursuant to a congressional request, GAO evaluated the Federal Emergency
Management Agency's (FEMA) efforts to develop its draft insurance
regulations, focusing on: (1) the extent that FEMA obtained and
incorporated input from state and local agencies and public entities
likely to be affected by the draft regulation; (2) FEMA's compliance
with Executive Order 12866, the Regulatory Flexibility Act, and
applicable guidance governing the rulemaking process; and (3) FEMA's
internal rulemaking processes and procedures.

GAO noted that: (1) during the process of drafting its insurance
regulations, FEMA took a number of steps to obtain and incorporate input
on the content of its draft regulation from representatives of state and
local government entities; (2) from January through October 1999, FEMA
met with various groups, including public risk managers, emergency
management service agencies, state insurance commissioners, and
insurance companies and organizations; (3) based on input received from
these meeting, FEMA appeared to have made a number of changes to its
draft regulation; (4) as required by Executive Order 12866 for
significant regulatory actions, FEMA submitted its draft notice of
proposed rulemaking to the Office of Management and Budget (OMB) on July
2, 1999, for its review and clearance; (5) however, FEMA had not
addressed two of three key requirements contained in the executive order
and related OMB guidance for economically significant regulatory
actions; (6) specifically, FEMA had not performed an analysis of the
expected costs and benefits of the draft regulation, and had not
prepared a comprehensive analysis of other alternatives; (7) in response
to GAO's preliminary discussions with FEMA about these issues, FEMA
entered into a contract with a management consulting firm to conduct a
cost-benefit analysis and to examine and assess alternative approaches;
(8) in addition, FEMA began additional analysis of the impact of its
draft regulation on small entities, such as local government agencies
and nonprofit organizations, in response to OMB's concerns about FEMA's
compliance with the Regulatory Flexibility Act; (9) FEMA decided in
January 2000 to issue an advance notice of proposed rulemaking before
issuing a notice of proposed rulemaking, which will provide affected
parties an additional opportunity to provide input and provide
additional time for FEMA to complete the various required analysis; (10)
many of the problems GAO observed with the processes FEMA followed in
developing the draft regulation appeared to be the result of weaknesses
in FEMA's internal rulemaking processes and procedures; and (11) FEMA's
internal guidance and procedures governing the formulation of proposed
rulemaking have not been updated in more than 10 years.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD/OGC-00-62
     TITLE:  Disaster Assistance: Issues Related to the Development of
	     FEMA's Insurance Requirements
      DATE:  02/25/2000
   SUBJECT:  Relief agencies
	     Proposed legislation
	     Agency proceedings
	     Noncompliance
	     Insurance regulation
	     Cost effectiveness analysis
	     Federal regulations
	     Economic analysis
	     Emergency preparedness
IDENTIFIER:  FEMA Public Assistance Program