Document ID: FEMA-2006-0035-0111
Agency: fema
Document Type: Rule
Title: Management Costs
Posted Date: 2008-11-24T05:00Z

[Federal Register: November 24, 2008 (Volume 73, Number 227)]
[Rules and Regulations]               
[Page 70894-70897]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24no08-11]                         

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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: Notice of meeting and reopening of comment period.

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SUMMARY: The Federal Emergency Management Agency (FEMA) is announcing 
the date, time, and location for a meeting regarding the Management 
Costs Interim Rule (1660-AA21). This meeting will be open to the 
public. FEMA also announces the reopening of the comment period for the 
Management Costs Interim Rule.

DATES: Meeting Date: Wednesday, December 10, 2008, from 1 to 4 p.m. 
e.s.t. Comment Date: The comment period for the interim final rule 
published at 72 FR 57869, October 11, 2008, is reopened. Written 
comments must be received by December 11, 2008.

ADDRESSES: The meeting will be held at 800 K Street, NW., 1st Floor, 
North Tower, Washington, DC 20001. Individuals will be required to 
present photo identification to enter the building in which the meeting 
will be held. All written submissions must include the Docket ID FEMA-
2006-0035 and may be submitted by any one of the following methods:
    Federal Rulemaking Portal: http://www.regulations.gov. Follow 
instructions for submitting comments on the Web site.
    E-mail: FEMA-RULES@dhs.gov. Include Docket ID FEMA-2006-0035 in the 
subject line of the message.
    Facsimile: (703) 483-2999.
    Mail: Office of Chief Counsel, Federal Emergency Management Agency, 
Room 835, 500 C Street, SW., Washington, DC 20472.
    Hand Delivery/Courier: Office of the Chief Counsel, Federal 
Emergency Management Agency, Room 835, 500 C Street, SW., Washington, 
DC 20472.

FOR FURTHER INFORMATION CONTACT: Jennifer Cramer, Federal Emergency 
Management Agency, 800 K Street, NW, Washington, DC 20472, telephone 
202-786-9841.

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. Section 324 of the Stafford Act, 
42 U.S.C. 5165b, required FEMA to establish management cost rates to be 
used in determining contributions for management costs. Management 
costs include any indirect cost, any administrative expense and any 
other expense not directly chargeable to a specific project under a 
major disaster, emergency, or disaster preparedness or mitigation 
activity or measure.
    On October 11, 2007, FEMA published an Interim Rule that proposed a 
methodology for calculating the management cost rates, as well as 
guidance for the implementation of section 324 of the Stafford Act (72 
FR 57869). As established by the Interim Rule, management costs that 
are reasonably incurred by a grantee or subgrantee in administering and 
managing the Public Assistance (PA) program and the Hazard Mitigation 
Grant Program (HMGP) grant award will be reimbursed up to a fixed rate. 
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. FEMA determined the rate for 
management costs using a historical average of the Federal share of 
actual administrative and management costs paid to grantees and 
subgrantees. To calculate 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 did not 
establish a percentage of management costs that grantees must pass 
through to subgrantees.
    FEMA initially held a 30-day comment period on the Interim Rule. 
FEMA received 34 public comments, (all of which are available in the 
docket for public inspection). On August 29, 2008 (73 FR 50881), 
seeking specific data on unreimbursed eligible management costs, FEMA 
reopened the Interim Rule for an additional 30-day comment period and 
received an additional 37 comments, (which are also available in the 
docket for public inspection). Some individuals who submitted comments 
during the second

[[Page 70895]]

comment period, including a specific request from the Governors of 
California, Florida, New York and Texas, asked to meet with FEMA to 
discuss their concerns about the Interim Rule. In response to those 
requests, FEMA has agreed to hold this public listening session in 
which those affected by the rule may present their concerns orally. 
FEMA has also opened the public comment period to the regulatory docket 
to allow for the submission of additional written comments or data. 
FEMA continues to review the written comments received during the first 
two comment periods and will address those as well as any comments 
received at the public meeting in the next rulemaking document 
published for this project.

Additional Information

    The data provided below is for informational purposes only. The 
management cost rates published in the Interim Rule have not changed. 
FEMA continues to evaluate data and the public comments received to 
date as well as those that it expects to receive during the public 
meeting. Any change to the management cost rates would occur through a 
Second Interim Rule or a Final Rule that would be published in the 
Federal Register.
    In response to comments received on the Interim Rule, FEMA has been 
recalculating the management cost rates using NEMIS data for all 
declarations made before the date the Interim Rule went into effect 
(November 13, 2007). FEMA chose to include only those declarations for 
two reasons. First, after that date, grantees only received up to the 
percentages established in the rule, which FEMA found could 
artificially deflate the percentage, as they are capped at the 3.34/
3.90/4.89 percent rate (as appropriate). Second, under the Interim 
Rule, final management cost amounts for disasters or emergencies do not 
``lock in'' until 12 months after the disaster, so data compiled 
earlier than 12 months would not represent final management cost 
amounts. Further, because the first declaration under the Interim Rule 
was declared November 30, 2007, none of those disasters has received 
the full amount of management costs; obligations in NEMIS will only 
reflect the initial 25 percent of eligible management costs provided to 
grantees. Because management cost rates are calculated by using actual 
obligations, including declarations affected by the Interim Rule at 
this time would artificially decrease the average.
    The data below represents the recalculated average rates. FEMA is 
also conducting distributional analyses, however, that data is not yet 
available for publication. The average rate data provided below 
includes Hurricane Katrina (DR-1603-LA) data as a separate entry to 
highlight how the percentage of management costs is affected in 
extremely large disasters. Contrary to some of the comments received, 
FEMA found that due to economies of scale or other factors, funds 
obligated for management costs as a percentage of project dollars may 
actually decrease for extremely large disasters. The data below 
excludes the 9/11 World Trade Center attack (DR-1391-NY), because the 
funds provided by FEMA for that particular disaster were specifically 
mandated, accounted for separately, and obligated under different 
eligibility criteria.
    Although the Interim Rule did not establish a percentage of 
management costs that must be passed through to subgrantees, FEMA 
received several comments requesting that such a rate be set. The rates 
below break out the average amount of management costs paid to 
subgrantees. Again, this data is provided for informational purposes 
only. These figures should not be used as mandatory or even suggested 
pass through amounts.
    Finally, the rate of management costs for HMGP funds associated 
with Hurricane Katrina (DR-1603-LA) may appear inflated. This is 
because the calculated rate as shown below is based on management costs 
as a percentage of project funds obligated to date, not as a percentage 
of the total amount of HMGP funds available to the State 
($1,333,208,000). As of the date of this analysis, only approximately 
15 percent of the estimated available project funds have been 
obligated, while the management costs obligated to date are reflective 
of the level of effort necessary to manage the entire program. 
Management costs are often obligated faster than project dollars in the 
HMGP.

                    Management and Administrative Funds Paid as a Percentage of Project Funds
----------------------------------------------------------------------------------------------------------------
                                                    NEMIS state                        NEMIS
                                                    management     NEMIS grantee    subgrantee       Total MC
                                  NEMIS project     obligations     obligations     obligations   grantee & subg
                                   obligations      (``category     (``sliding      (``sliding        (Cat Z +
                                                       Z'')          scale'')        scale'')     sliding scale)
----------------------------------------------------------------------------------------------------------------
                                       Public Assistance--Major Disasters
----------------------------------------------------------------------------------------------------------------
All NEMIS Pre Sec 324 \2\ Less  22,870,296,549..     328,235,854     129,056,414     264,930,091     720,316,814
 1391 \1\.
                                 3.15% Total MC.
                                 2.00% Grantee..
                                 1.16%
                                 Subgrantee.
DR 1603 LA....................  6,610,259,454...      70,390,092      33,283,020      39,144,562     142,817,674
                                 2.16% Total MC.
                                 1.57% Grantee..
                                 0.59%
                                 Subgrantee.
All NEMIS Pre Sec 324 Less      16,260,037,094..     257,845,763      95,773,394     225,785,529     577,499,140
 1391, 1603.
                                 3.55% Total MC.
                                 2.17% Grantee..
                                 1.39%
                                 Subgrantee.
----------------------------------------------------------------------------------------------------------------
                                       Hazard Mitigation--Major Disasters

----------------------------------------------------------------------------------------------------------------
                                                                                       NEMIS
                                                    NEMIS state    NEMIS grantee    subgrantee       Total MC
                                  NEMIS project     management      obligations     obligations   grantee & subg
                                   obligations      obligations     (``sliding      (``sliding         (SMC +
                                                       (SMC)         scale'')        scale'')     sliding scale)
----------------------------------------------------------------------------------------------------------------
All NEMIS Pre Sec 324 Less      2,080,757,726...      65,786,946      16,335,829      37,275,104     119,154,832
 1391.

[[Page 70896]]

                                 5.73% MC.......
                                 3.95% Grantee..
                                 1.79%
                                 Subgrantee.
DR 1603 LA....................  200,003,640.....      10,795,418       1,051,543       3,104,886      14,951,847
                                 7.48% Total MC.
                                 5.92% Grantee..
                                 1.55%
                                 Subgrantee.
All NEMIS Pre Sec 324 Less      1,880,754,086...      54,991,528      15,284,286      34,170,218     104,202,985
 1391, 1603.
                                 5.54% Total MC.
                                 3.74% Grantee..
                                 1.82%
                                 Subgrantee.
----------------------------------------------------------------------------------------------------------------
                                         Public Assistance--Emergencies

----------------------------------------------------------------------------------------------------------------
                                                    NEMIS state                        NEMIS
                                                    management     NEMIS grantee    subgrantee       Total MC
                                  NEMIS project     obligations     obligations     obligations   grantee & subg
                                   obligations      (``category     (``sliding      (``sliding        (Cat Z +
                                                       Z'')          scale'')        scale'')     sliding scale)
----------------------------------------------------------------------------------------------------------------
All NEMIS Pre Sec 324.........  1,458,597,114...       6,187,426      10,690,782      25,095,074      41,973,281
                                 2.88% MC.......
                                 1.16% Grantee..
                                 1.72%
                                 Subgrantee .
----------------------------------------------------------------------------------------------------------------
\1\ DR-1391-NY (World Trade Center) excluded because eligibility and source and accounting of funds were treated
  differently than Stafford Act/Disaster Relief Fund declarations.
\2\ All declarations declared between 8/26/1998 and 11/12/2007; obligations as of 10/1/2008.

    As stated above, NEMIS was used to generate the data in the table 
which reflects the Federal share of actual administrative and 
management costs paid to grantees and subgrantees. If grantees or 
subgrantees have incurred management costs (as defined by section 324 
of the Stafford Act (42 U.S.C. 5165b)) that were not reimbursed, please 
submit those costs to the docket during this open comment period. FEMA 
needs actual cost data to support a rate, and encourages grantees and 
subgrantees to submit actual unreimbursed cost data. FEMA requested 
this data during the second Interim Rule comment period, but in some 
cases received percentage rates for management costs incurred for 
disasters rather than actual cost data. FEMA has data showing the 
amount of management costs that were actually paid to grantees and 
subgrantees. FEMA requests that grantees and subgrantees submit to the 
docket any actual costs incurred that were not reimbursed, but would 
have been eligible; for example, sliding scale limitations in section 
406 of the Stafford Act. For example:

------------------------------------------------------------------------
           Disaster No.               Explanation of cost       Amount
------------------------------------------------------------------------
DR-9999-XX.......................  Travel costs incurred       $5,127.00
                                    for field inspections
                                    that exceeded available
                                    sliding scale.
------------------------------------------------------------------------

    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 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.

Public Meeting

    The December 10, 2008 meeting is open to the public and will begin 
at 1 p.m. e.s.t. To enter the 800 K Street, NW., 1st Floor, North 
Tower, Washington, DC 20001 facility in which the meeting will be held, 
members of the public will be required to present photo identification. 
The meeting will be held in the 1st Floor Conference Center. Please 
note that the meeting may close early if all persons who wish to 
comment have done so. Persons with disabilities who require special 
assistance should advise Jennifer Cramer (contact information provided 
above in the ADDRESSES section) of their anticipated special needs as 
early as possible. Members of the public who wish to make comments must 
be present and seated by 1 p.m. e.s.t.
    Those who are unable to attend or speak at the meeting may submit 
written comments. Written comments must be received by December 11, 
2008. All submissions received must include the Docket ID FEMA-2006-
0035 and may be submitted by any one of the methods listed in the 
ADDRESSES section above. A summary of the comments received at the 
public meeting will be posted to the docket at www.regulations.gov.

Instructions for Submitting Information to the Docket

    For access to the docket to submit comments, read the Notice of 
Proposed Rulemaking, Interim Rule, background

[[Page 70897]]

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.
    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.

    Dated: November 18, 2008.
R. David Paulison,
Administrator, Federal Emergency Management Agency.
 [FR Doc. E8-27839 Filed 11-21-08; 8:45 am]

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