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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

# AGENCY:

Federal Emergency Management Agency, DHS.

# ACTION:

Reopening of comment period.

# 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: FEMA-RULES@dhs.gov.*                         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)                         *jonna.long@dhs.gov.*      ( print 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                           ( print 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]

BILLING CODE 9110-49-P