Document ID: FEMA-2022-0037-0205
Agency: fema
Document Type: Rule
Title: Hermit’s Peak/Calf Canyon Fire Assistance
Posted Date: 2023-08-29T04:00Z

[Federal Register Volume 88, Number 166 (Tuesday, August 29, 2023)]
[Rules and Regulations]
[Pages 59730-59783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-18457]

[[Page 59729]]

Vol. 88

Tuesday,

No. 166

August 29, 2023

Part V

 Department of Homeland Security

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Federal Emergency Management Agency

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44 CFR Part 296

Hermit's Peak/Calf Canyon Fire Assistance; Final Rule

  Federal Register / Vol. 88 , No. 166 / Tuesday, August 29, 2023 / 
Rules and Regulations  

[[Page 59730]]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

44 CFR Part 296

[Docket ID FEMA-2022-0037]
RIN 1660-AB14

Hermit's Peak/Calf Canyon Fire Assistance

AGENCY: Federal Emergency Management Agency, Department of Homeland 
Security.

ACTION: Final rule.

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SUMMARY: This final rule sets out the procedures for claimants to seek 
compensation for injury or loss of property resulting from the Hermit's 
Peak/Calf Canyon Fire.

DATES: This rule is effective August 29, 2023.

FOR FURTHER INFORMATION CONTACT: Angela Gladwell, Office of Response 
and Recovery, 202-646-2500, [email protected]. Persons 
with hearing or speech challenges may access this number through TTY by 
calling the toll-free Federal Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Summary of Legal Authority

    Congress enacted the Hermit's Peak/Calf Canyon Fire Assistance Act 
(``Act'') as part of the Continuing Appropriations and Ukraine 
Supplemental Appropriations Act, 2023, Public Law 117-180, 136 Stat. 
2114 (2022), and directed FEMA to issue an Interim Final Rule (``IFR'') 
within 45 days of enactment. Congress passed the Act to compensate 
those parties who suffered injury and loss of property from the 
Hermit's Peak/Calf Canyon Fire (``Fire''). The Act requires FEMA to 
design and administer a claims program to compensate victims of the 
Fire for injuries resulting from the Fire and to provide for the 
expeditious consideration and settlement for those claims and injuries. 
The Act further directs FEMA to establish an arbitration process for 
disputes regarding claims. On December 29, 2022, the Consolidated 
Appropriations Act, 2023, Public Law 117-328, 136 Stat. 4459 provided 
additional funding for the Act's implementation.

B. Summary of the IFR

    On November 14, 2022, FEMA published the IFR that established the 
procedures for processing and paying claims for property, business, 
and/or financial losses to those sustaining losses from the Fire. 
FEMA's procedures in the IFR were generally consistent with those 
established for claims associated with the Cerro Grande Fire Assistance 
Act.\1\ Under the IFR procedures, a claimant initiates a claim by 
filing a Notice of Loss with the Office of Hermit's Peak/Calf Canyon 
Fire Claims (``Claims Office''). After receipt and acknowledgement by 
the Claims Office, the Claims Office contacts the claimant to review 
the claim and helps the claimant formulate a strategy for obtaining any 
necessary supporting documentation to complete the Proof of Loss. After 
coordinating with the Claims Reviewer, the claimant reviews and signs a 
Proof of Loss and submits it to the Claims Office. The Claims Reviewer 
reviews and evaluates the Proof of Loss and submits a report to the 
Authorized Official for review to determine whether compensation is due 
to the claimant. The Authorized Official's written decision is provided 
to the claimant. If satisfied with the decision, the claimant receives 
payment after returning a completed Release and Certification Form. If 
the claimant is not satisfied with the decision, an Administrative 
Appeal could be filed with the Director of the Claims Office. If the 
claimant is not satisfied after appeal, the dispute could be resolved 
through binding arbitration or heard in the United States District 
Court for the District of New Mexico.
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    \1\ The Cerro Grande Fire Assistance Act (Pub. L. 106-246 
(2001)) required FEMA to design and administer a program to fully 
compensate those who suffered injuries resulting from the Cerro 
Grande Fire. The Cerro Grande Fire resulted from a prescribed fire 
ignited on May 4, 2000, by National Park Service fire personnel at 
the Bandelier National Monument, New Mexico under an approved 
prescribed fire plan. That fire burned approximately 47,750 acres 
and destroyed over 200 residential structures. The Cerro Grande Fire 
Assistance Act process is detailed in an Interim Final Rule (65 FR 
52259 (Aug. 27, 2000) and a Final Rule (66 FR 15847 (Mar. 21, 2001) 
that is now codified at 44 CFR part 295.
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C. Summary of Changes From the IFR to the Final Rule

    FEMA is making changes from the IFR to the Final Rule to reflect 
the concerns raised by commenters and better adhere to the intent of 
the Act by addressing the needs of the communities impacted by the 
Fire. Given the geographic, economic, and cultural distinctions between 
the impacted communities of the Cerro Grande and the Hermit's Peak/Calf 
Canyon Fires, FEMA is revising some sections of the regulatory text to 
ensure the claims process is more tailored to claimants impacted by the 
Fire. FEMA is revising the regulatory text in the Final Rule to 
eliminate the 25 percent formulas associated with reforestation and 
revegetation in Sec.  296.21(c)(2) and with heightened risk reduction 
in Sec.  296.21(e)(5) that were based on the Cerro Grande Fire 
Assistance process. FEMA recognizes the distinct geographic, economic, 
and cultural differences between these impacted communities and that 
these formulas, while an efficient way to process claims in the Cerro 
Grande Fire Assistance process, are not easily adapted to meet the 
needs of claimants injured by the Fire. FEMA agrees with the majority 
of commenters that removal of these formulas is essential to ensuring 
claimants in the Hermit's Peak/Calf Canyon Fire Assistance process are 
compensated for their actual compensatory damages resulting from the 
Fire. FEMA is modifying Sec.  296.21(c)(3)(ii) regarding claims for a 
decrease in the value of real property. Distinct from Cerro Grande, the 
claimants impacted by this Fire have commented that they are more 
likely to have significant acreage damaged that has the potential for 
long-term natural restoration. Requiring that the property value be 
permanently diminished for a decrease in property value claim, as 
provided in the IFR, is inconsistent with the geography, economy, and 
real estate valuations of the impacted communities.\2\ Based on 
comments received and to ensure the Final Rule accommodates the needs 
of claimants and impacted communities, FEMA is revising the language in 
296.21(c)(3)(ii) to allow a claimant to establish that the value of the 
real property was ``significantly'' diminished ``long-term'' as a 
result of the Fire. FEMA is adding paragraph (c)(5) to incorporate 
language from the Act regarding physical infrastructure to ensure that 
claimants understand compensatory damages may be awarded for damage or 
destruction of physical infrastructure, including damage to irrigation 
infrastructure such as acequia systems. Acequia systems are unique to 
the communities impacted by

[[Page 59731]]

the Fire and, just as the Act recognizes this distinction, FEMA is also 
recognizing it and incorporating it into the Final Rule.
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    \2\ ``On the flip side, economic strategies traditionally 
employed in the Santa Fe National Forest assessment area, typically 
combining ranching, acequia agriculture, wood collection and other 
communal land uses, appear to be less viable in the context of 
rising land values and declining prices for primary commodities. 
Consequently, many of these traditional uses are party to the 
transformation of land use patterns, as ranches and agricultural 
lands are sold for residential and second home development.'' 
University of New Mexico Bureau of Business and Economic Research, 
``Socioeconomic Assessment of the Santa Fe National Forest,'' August 
2007 at pg. 99, found at https://www.fs.usda.gov/internet/FSE_DOCUMENTS/fsbdev3_021243.pdf (last accessed July 5, 2023).
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    In the IFR, FEMA requested additional feedback on some of the dates 
set relating to claims for financial losses. Based on comments 
received, FEMA is making changes to those dates. FEMA currently 
requires claimants seeking compensation for out-of-pocket expenses for 
treatment of mental health conditions to submit claims for treatment 
rendered on or before April 6, 2024. FEMA is revising this paragraph to 
allow claims for treatment identified on or before November 14, 2024, 
consistent with the timeframe for submitting a claim under the Act. 
FEMA recognizes that mental health treatment may extend beyond the 
deadline for filing a claim and claimants may reopen claims under Sec.  
296.35 for good cause. FEMA is also making a clarifying edit in the 
Final Rule by specifying that the treatment can be for a condition that 
resulted from the Fire or for conditions worsened by the Fire. Based on 
comments received, this edit helps clarify that treatment for 
conditions worsened by the Fire will also be compensated. In the IFR, 
FEMA allows compensation for donations provided no later than September 
20, 2022. FEMA is revising Sec.  296.21(c)(4) to allow claimants to 
seek actual compensatory damages for donations provided to survivors no 
later than November 14, 2022. FEMA is setting the date of the IFR 
publication as the timeframe by which donations will be considered 
compensable.
    FEMA is modifying the language in Sec.  296.31(a) regarding 
reimbursement for expert opinions. FEMA understands that claimants 
impacted by this Fire are more likely to need the services of experts 
to help better value their claims than the claimants in the Cerro 
Grande Fire Assistance process given the scope of the Fire and the 
geographic, economic, and cultural distinctions between the impacted 
communities. FEMA is revising the regulatory text to allow for 
reimbursement for expert opinions that the Claims Office deems 
necessary to determine the amount of the claim. This additional 
flexibility will help claimants and FEMA better understand and process 
claims.
    FEMA is also revising Sec.  296.35 of the regulatory text in the 
Final Rule regarding reopening a claim. The IFR provides that claimants 
can seek to reopen their claim to consider issues raised when the 
claimant closes on the sale of a home and wishes to present a claim for 
a decrease in the value of their real property under Sec.  
296.21(c)(3). FEMA is revising this language in the Final Rule to allow 
claimants to reopen their claim when the claimant closes on the sale of 
real property, expanding the ability to reopen a claim beyond just a 
home. This change reflects the unique geographic area impacted by the 
Fire and the reality that claimants may sell a portion of their land 
without necessarily selling their home and experience a loss for which 
compensation should be made available. FEMA is also revising the 
timeline by which a request to reopen must be submitted for claims 
related to additional losses as part of a reconstruction in excess of 
those previously awarded or for good cause. Recognizing the challenges 
claimants face with reconstruction and other potential issues that can 
arise that require a claim to be reopened, FEMA is revising Sec.  
296.35 to set the deadline by which requests to reopen these types of 
claims must be submitted as a date in the future that the Director of 
the Claims Office will set and publish in the Federal Register and at 
https://www.fema.gov/hermits-peak.
    FEMA is making some clarifying revisions in the Final Rule. 
Currently in Sec.  296.1, FEMA states the purpose of the rule is to pay 
for actual compensatory damages for injuries suffered from the Fire 
(emphasis added). FEMA is revising this language, consistent with the 
language from the Act, to pay for actual compensatory damages for 
injuries resulting from the Fire (emphasis added). FEMA is making this 
edit to better communicate to claimants that all injuries resulting 
from the Fire, including injuries resulting from flooding, mudflow, 
mold, and debris flow in the aftermath of the Fire, are compensable. 
However, a claimant may not be eligible for compensation if their 
injuries resulted from flooding, mudflow, mold, or debris unrelated to 
the Fire. FEMA is also updating the definition of ``subsistence 
resources'' to include ``other natural resource'' gathering, consistent 
with how the impacted communities are engaged in subsistence 
activities. FEMA is updating Sec.  296.12 regarding election of 
remedies. The IFR discusses how claimants waive their right to pursue 
claims if they accept an award. FEMA is revising this section to 
clarify that the claimant waives their right to pursue other claims 
only after acceptance of a final award, consistent with commenters' 
request for additional clarity on this point and for consistency with 
the Act. Consistent with the Act, FEMA is incorporating language in 
Sec.  296.13 to reiterate the prioritization of claims for injured 
persons over subrogees. In Sec.  296.21(a), FEMA is resolving a 
grammatical error by changing ``Injury'' to ``injury'' and another 
grammatical error by adding ``that'' to Sec.  296.21(f) to read that 
the Act allows FEMA to compensate Injured Persons only for damages not 
paid, or that will not be paid, by insurance or other third-party 
payments or settlements.

II. Background and Legal Authority

    On September 30, 2022, President Biden signed the Act into law as 
part of the Continuing Appropriations and Ukraine Supplemental 
Appropriations Act, 2023, Public Law 117-180, 136 Stat. 2114 (2022).\3\ 
Congress passed the Act to compensate those parties who suffered injury 
and loss of property from the Hermit's Peak/Calf Canyon Fire. On April 
6, 2022, the U.S. Forest Service initiated the Las Dispensas-Gallinas 
prescribed burn on Federal land in the Santa Fe National Forest in San 
Miguel County, New Mexico. That same day the prescribed burn, which 
became known as the ``Hermit's Peak Fire,'' escaped the burn unit's 
boundaries and was declared a wildfire, spreading to other Federal and 
non-Federal lands.\4\ On April 19, 2022, the Calf Canyon Fire, also in 
San Miguel County, New Mexico, began burning on Federal land and was 
later identified as the result of a pile burn in January 2022 that 
remained dormant under the surface before reemerging.\5\ The Hermit's 
Peak and Calf Canyon Fires merged on April 27, 2022, and both fires 
were reported as the Hermit's Peak Fire or the Hermit's Peak/Calf 
Canyon Fire. By May 2, 2022, the fire had grown, causing evacuations in 
multiple villages and communities in San Miguel County and Mora County, 
including the San Miguel County jail, the State's psychiatric hospital, 
the United World College, and New Mexico

[[Page 59732]]

Highlands University.\6\ At the request of New Mexico Governor Lujan 
Grisham, President Biden issued a major disaster declaration on May 4, 
2022.\7\ The Hermit's Peak/Calf Canyon Fire was not 100 percent 
contained until August 21, 2022.\8\
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    \3\ As mentioned above, Division N, Title VI of the Consolidated 
Appropriations Act, 2023, Public Law 117-328, 136 Stat. 4459 
authorized additional funding to implement the Act.
    \4\ Section 102(a)(1) and (2), Hermit's Peak/Calf Canyon Fire 
Assistance Act, Public Law 117-180, 136 Stat. 2114 (2002). See also 
``Las Dispensas Prescribed Burn Declared Wildfire,'' Apr. 6, 2022 
found at https://inciweb.nwcg.gov/incident/article/8049/68044/ (last 
accessed July 5, 2023 Sept. 15, 2022) and Theresa Davis, ``How `good 
fires' can turn into wildfires,'' Albuquerque Journal, Apr. 30, 2022 
found at https://www.alqjournal.com/2494692/how-good-fires-can-turn-into-wildfires.html (last accessed Sept. 15, 2022).
    \5\ See Bill Gabbert, ``Investigators determine Calf Canyon Fire 
caused by holdover from prescribed fire,'' Wildfire Today, May 27, 
2022 found at https://wildfiretoday.com/?s=calf+canyon+holdover&apbct__email_id__search_form_34270= (last 
accessed Oct. 6, 2022).
    \6\ See Bill Gabbert, ``Calf Canyon/Hermits Peak Fire grows to 
more than 120,000 acres,'' Wildfire Today, May 2, 2022 found at 
https://wildfiretoday.com/2002/05/02/calf-canyon-hermits-peak-fire-grows-to-more-than-120000-acres/ (last accessed Sept. 15, 2022). See 
also Bryan Pietsch and Jason Samenow, ``New Mexico blaze is now 
largest wildfire in state history,'' The Washington Post, May 17, 
2022, found at https://www.washingtonpost.com/nation/2022/05/17/calf-canyon-hermits-peak-fire-new-mexico/ (last accessed July 27, 
2023).
    \7\ 87 FR 33808 (June 3, 2022).
    \8\ ``Hermits Peak/Calf Canyon Fire 100 percent contained, fire 
officials say,'' The New Mexican, Aug. 21, 2022 found at https://www.santafenewmexican.com/news/local_news/hermits-peak-calf-canyon-fire-100-percent-contained-fire-officials-say/articles_5ac054fc-21a1-11ed-9401-134e852ee0a8.html (last accessed July 5, 2023).
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    The Act provides compensation to injured persons impacted by the 
Fire. It requires FEMA to design and administer a claims program to 
compensate injured parties for injuries resulting from the Fire and to 
provide for the expeditious consideration and settlement for those 
claims and injuries. The Act further directs FEMA to establish an 
arbitration process for disputes regarding claims.
    On November 14, 2022, FEMA published an IFR with a 60-day comment 
period that established the procedures for the processing and payment 
of claims to those injured by the Fire sustaining property, business, 
and/or financial losses. FEMA held public meetings during the comment 
period to further gather public feedback on the rule. Based on public 
comment, FEMA is making changes to the Final Rule to better reflect the 
differences between the Cerro Grande Fire and the Hermit's Peak/Calf 
Canyon Fire, as the Hermit's Peak/Calf Canyon Fire destroyed a 
significant amount of forested private lands, communities, acequias, 
ranches, and farms, and to further reflect the specific cultural, 
economic, and geographic distinctions between the areas impacted by the 
Hermit's Peak/Calf Canyon Fire. This rule finalizes the IFR, with 
changes in response to public comments received on the IFR.

III. Discussion of Public Comments and FEMA's Responses

A. Summary of Public Comments

    The public comment period on the IFR closed on January 13, 2023, 
and FEMA received 190 germane written comments.\9\ FEMA hosted six 
public meetings on the IFR and received 103 germane comments from those 
public meetings.\10\ FEMA also hosted a meeting with the State of New 
Mexico's Department of Homeland Security and Emergency Management and 
supporting contract staff, and received comments during that 
meeting.\11\ Commenters included individuals, State and local 
government entities, congressional representatives, associations, law 
firms, and non-profit organizations. Some commenters appreciated FEMA's 
effort to publish the IFR in a timely manner, arrange public meetings 
to listen to concerns in-person, and launch the claims process. Most 
commenters offered recommendations for changes to the IFR. FEMA 
describes the specific revisions to the Final Rule and addresses the 
specific concerns of commenters below.
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    \9\ FEMA received three comments that did not address the 
Interim Final Rule or the claims process: One commenter asked where 
the regulation could be read, and FEMA contacted the commenter to 
provide this information; another commenter shared a poem to reflect 
their feelings during the holiday season after the Fire; one comment 
from a law firm was incomplete without attachments referenced.
    \10\ FEMA also received an inquiry on the status of another FEMA 
application at a public meeting. A commenter offered their services 
to assist with claims, filling out applications for Federal 
agencies, internet use, mental health assistance, etc. at two public 
meetings. Another commenter from the same organization also offered 
services during a public meeting.
    \11\ Transcripts of that meeting have been posted to the public 
docket at https://www.regulations.gov/docket/FEMA-2022-0037.
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B. Differences Between the Hermit's Peak/Calf Canyon Fire and the Cerro 
Grande Fire

    Some commenters recommended changes to the IFR based on the 
distinctions between the Cerro Grande and Hermit's Peak/Calf Canyon 
Fires.
    Comment: Several commenters stated distinctions between the two 
areas where the fires were located. As one commenter stated, the 
Hermit's Peak/Calf Canyon Fire ``destroyed significant forested private 
lands, communities, acequias, ranches, and farms.'' Another commenter 
stated that the Cerro Grande Fire ``burned a mostly urban environment 
of high-value homes on mostly small tracts of land'' while the Hermit's 
Peak/Calf Canyon Fire burned ``mostly rural land with relatively fewer 
and lower value structures.''
    FEMA Response: FEMA agrees that the challenges facing the 
communities and claimants impacted by the Hermit's Peak/Calf Canyon 
Fire are distinct and that the IFR should be revised to better reflect 
those distinctions. The Cerro Grande Fire burned approximately 47,000 
forested acres, causing $1 billion in property damage with over 280 
homes destroyed or damaged and 40 laboratory structures burned.\12\ In 
contrast, the Hermit's Peak/Calf Canyon Fire burned more than 340,000 
acres, just under 200,000 of which were privately owned, and destroyed 
at least 160 homes and over 900 structures.\13\ According to the 2020 
Census, Los Alamos County's population density is 178 people per square 
mile compared to 5.8 people per square mile in San Miguel County and 
2.2 people per square mile in Mora County.\14\ In the Socioeconomic 
Assessment of the Santa Fe National Forest, provided to the U.S. Forest 
Service by the University of New Mexico, Bureau of Business and 
Economic Research, approximately one third of privately held land 
within the Santa Fe National Forest is located in San Miguel 
County.\15\ Given the Hermit's Peak/Calf Canyon Fire's scope and the 
type of land impacted by that fire, FEMA is proposing changes to 
sections 296.4, 296.21(c)(2), 296.21(c)(3)(ii), 296.21(e)(5), 
296.31(a), and 296.31(c)(3) while adding Sec.  296.21(c)(5) to address 
the concerns raised that are unique to those communities. Changes to 
each of these sections is further described below.
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    \12\ Bill Gabbert, ``Cerro Grande fire, 10 years ago today,'' 
May 10, 2010 found at https://wildfiretoday.com/2010/05/10/cerro-grande-fire-10-years-ago-today/ (last accessed July 5,, 2023).
    \13\ See New Mexico Forest and Watershed Restoration Institute, 
``Hermit's Peak and Calf Canyon Fire: The largest wildfire in New 
Mexico's recorded history and its lasting impacts'' Aug. 24, 2022, 
found at https://storymaps.arcgis.com/stories/d48e2171175f4aa4b5613c2d11875653 (last accessed Mar. 3, 2023).
    \14\ See https://www.census.gov/library/stories/state-by-state/new-mexico-population-change-between-census-decade.html (last 
accessed July 5, 2023).
    \15\ University of New Mexico Bureau of Business and Economic 
Research, ``Socioeconomic Assessment of the Santa Fe National 
Forest,'' August 2007 at pg. 5, found at https://www.fs.usda.gov/internet/FSE_DOCUMENTS/fsbdev3_021243.pdf (last accessed Mar. 3, 
2023).
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    Comment: Commenters reiterated the communities impacted by the 
Hermit's Peak/Calf Canyon Fire also had different economic and cultural 
practices. One commenter stated that ``FEMA is totally unfamiliar with 
how land management, including use of resources is conducted in an area 
where descendants of an individual land grant have access to and use of 
resources within that grant.'' The commenter went on to note that the 
Cerro Grande Fire impacted a part of the State that ``has little in 
common with the cultural and economic practices in this area.'' As one 
commenter stated, ``Individuals and businesses relied on

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the forests not just for subsistence, but also for their annual income 
for themselves and others in the community.'' Another commenter stated, 
``The use of the land's timber in small (family) enterprises is one of 
the keys to the livelihoods of this area. Another is the small farming 
enterprises consisting of small orchards, raising hay, cattle, and 
horses. This is not a region of city life and landscaping, but is 
rural, with a deep heritage of independent living and family 
business.''
    FEMA Response: FEMA agrees that the losses facing the communities 
and claimants impacted by the Hermit's Peak/Calf Canyon Fire are 
distinct and that the IFR should be revised to better reflect those 
distinctions. The Act requires FEMA to compensate claimants for 
injuries resulting from the Fire and the injuries suffered by claimants 
in this community are distinct from those suffered in Cerro Grande. 
Specifically, FEMA notes the economic differences between the two 
impacted communities resulted in different losses within each 
community. Los Alamos County has an economy ``almost entirely composed 
of government, retail, and service sector jobs. These three sectors 
combined make up more than 90 percent of the county's employment . . . 
Los Alamos is somewhat unique in its lack of farming and other `core' 
industry sectors such as construction and manufacturing . . . Mora 
County is by far the smallest county in the region, in terms of size as 
well as economy . . . San Miguel County is fairly small, and farm 
employment makes up a larger portion of overall employment there than 
in any other county in the region except Rio Arriba. San Miguel and 
Mora County contain minor, though substantial, sections of the Santa Fe 
N[ational] F[orest]. These two counties, as the smaller and poorer 
economies of the region, likely rely more heavily on the benefits of 
the forest as a provider of primary products such as fuel wood and 
food, as well as land for ranching and logging.'' \16\ The communities 
impacted by the Hermit's Peak/Calf Canyon Fire rely much more on the 
land for their economic viability than the Los Alamos County community 
that was impacted by the Cerro Grande Fire. Additionally, the 
population per square mile in the impacted communities demonstrates a 
much higher density in Los Alamos County compared to Mora and San 
Miguel Counties and requiring FEMA to consider the differences in the 
residential areas impacted by the two fires.\17\ To fully implement the 
intent of the Act, FEMA must consider these differences between the 
impacted communities and address the specific injuries suffered by the 
Hermit's Peak/Calf Canyon Fire communities around the use of the land 
in those communities. FEMA is proposing changes to Sec. Sec.  296.4, 
296.21(c)(2), 296.21(c)(3)(ii), 296.21(e)(5), 296.31(a), and 296.35 
while adding Sec.  296.21(c)(5) to address the concerns raised that are 
unique to these communities. Changes to each of these sections are 
further described below.
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    \16\ University of New Mexico Bureau of Business and Economic 
Research, ``Socioeconomic Assessment of the Santa Fe National 
Forest,'' August 2007 at pgs. 78-79 and 89, found at https://www.fs.usda.gov/internet/FSE_DOCUMENTS/fsbdev3_021243.pdf (last 
accessed Mar. 3, 2023).
    \17\ The population per square mile in 2020 was 178 in Los 
Alamos County, 5.8 in San Miguel County, and 2.2 in Mora County. See 
U.S. Census Quick Facts--Los Alamos County, New Mexico found at 
https://www.census.gov/quickfacts/losalamoscountynewmexico, https://www.census.gov/quickfacts/sanmiguelcountynewmexico, and https://www.census.gov/quickfacts/moracountynewmexico (last accessed July 5, 
2023).
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    Comment: Commenters stated another distinction between those 
impacted by the Hermit's Peak/Calf Canyon Fire and those impacted by 
the Cerro Grande Fire included the number of claimants that are 
insured, stating more claimants in the Cerro Grande Fire were insured 
than in the Hermit's Peak/Calf Canyon Fire.
    FEMA Response: FEMA agrees that the challenges facing the claimants 
impacted by the Hermit's Peak/Calf Canyon Fire are distinct and that 
the IFR should be revised to better reflect those distinctions. 
Specifically, FEMA is proposing changes to sections 296.21(c)(2), 
296.21(e)(5), 296.31(a), and 296.35 while adding Sec.  296.21(c)(5) to 
address the concerns raised regarding the number of uninsured claimants 
impacted by the fire.
    Comment: A commenter suggested FEMA look at other wildfires beyond 
Cerro Grande, including the recent California wildfire involving a 
utility company.
    FEMA Response: FEMA appreciates the suggestion and has reviewed 
some of the best practices associated with the California compensation 
process referenced by the commenter. That process, however, involved a 
bankruptcy settlement of a private corporation under California law. 
FEMA is required to follow the statutory framework provided in the Act. 
While the Claims Office is reviewing some of the best practices from 
the California incident, that incident and the compensation process 
implemented to compensate those injured thereby are factually and 
legally too distinct from the Act's requirements to be considered a 
full template for implementation in regulation.

C. Comments on Sec. Sec.  296.1 and 296.3, the Rule's Purpose and 
Information

    Comment: FEMA received comments stating the IFR's purpose should be 
revised to reflect the Act's purpose language. Specifically, a 
commenter wrote ``The Hermit's Peak/Calf Canyon Fire Assistance Act 
provides one of the purposes of the Act is `to compensate victims of 
the Hermit's Peak/Calf Canyon Fire, for injuries resulting from the 
fire.' . . . FEMA's [I]nterim [F]inal [R]ule's current phrase `suffered 
from the Hermit's Peak/Calf Canyon Fire' (emphasis added) could result 
in limiting allowable losses to solely fire damages, in violation of 
the Act.''
    FEMA's Response: FEMA agrees that the Act's purpose as stated in 
section 102(b)(1) is to compensate victims for ``injuries resulting 
from the Fire'' (emphasis added) and is amending Sec.  296.1 to state 
that the Claims Office will receive, evaluate, process, and pay actual 
compensatory damages for injuries resulting from the Hermit's Peak/Calf 
Canyon Fire. This technical edit provides consistency with the language 
of the Act.
    Comment: Some commenters requested FEMA change the purpose of the 
rule in Sec.  296.1 to include flood damages, as well as throughout the 
rest of the rule.
    FEMA Response: The Final Rule language as revised in Sec.  296.1 as 
explained above is sufficiently broad to encompass a range of damages 
claimants may have suffered, including flood and flood-related damages. 
Further, the definition of ``injured person'' includes injuries 
``resulting from the Hermit's Peak/Calf Canyon Fire'' and is 
sufficiently broad to encompass flooding, mudflow, mold, and debris 
flow, as well as other types of injuries that may result from the Fire.
    Comment: One commenter suggested that FEMA include specific 
reference to mitigation efforts in the rule's purpose.
    FEMA Response: Section 296.1 does not require any edits to 
incorporate mitigation efforts into the rule. The purposes of the Act 
are to compensate Fire victims for injuries resulting from the Fire and 
the expeditious consideration and settlement of claims for those 
injuries. Further, the Act requires FEMA to promulgate a regulation 
``for the processing and payment of claims under the Act.'' Consistent 
with the Act, FEMA's Final Rule states the purpose of the regulation is 
to ``establish the Office of Hermit's Peak/Calf Canyon Fire Claims 
(`Claims Office') to receive, evaluate, process,

[[Page 59734]]

and pay actual compensatory damages for injuries resulting from the 
Hermit's Peak/Calf Canyon Fire.'' The Act authorizes FEMA to compensate 
claimants for the ``costs of reasonable efforts, as determined by the 
Administrator, to reduce the risk of wildfire, flood, or other natural 
disaster in the counties impacted by the Hermit's Peak/Calf Canyon Fire 
to risk levels prevailing in those counties before the Hermit's Peak/
Calf Canyon Fire,'' and FEMA details this compensation in Sec.  
296.21(e)(5). Section 296.1 does not require revision to allow for 
compensation for eligible risk reduction measures.
    Comment: Some commenters suggested FEMA amend the information and 
assistance section to incorporate details regarding the Claims Office 
addresses and phone number. One commenter suggested FEMA allow for 
applications, correspondence, and supporting documentation to be 
exchanged by postal mail. This commenter also recommended FEMA create 
centralized locations where northern New Mexicans can physically go to 
access the electronic application and receive assistance in filling out 
the applications in multiple languages so that the application and 
supporting documentation can be timely submitted.
    FEMA Response: FEMA appreciates these suggestions and plans to 
provide further details regarding the Claims Office operation and 
opportunities for claimants to obtain assistance online at https://www.fema/gov/hermits-peak as explained in the regulation. Because FEMA 
wants to continue adapting to claimants' needs in this process, it is 
best to direct claimants to the website in the regulations for the 
latest information available on the process. FEMA will continue to 
provide outreach efforts to the community in addition to posting at 
https://www.fema.gov/hermits-peak.

D. Comments on Sec.  296.4 Definitions

    Some commenters suggested FEMA modify the definitions provided in 
the IFR to better reflect the unique challenges presented by the 
Hermit's Peak/Calf Canyon Fire.
    Comment: One commenter recommended FEMA amend the definition of 
``Authorized Official's Determination'' to include determinations by 
mail and electronically.
    FEMA Response: FEMA does not believe edits to the regulatory text 
are required as ``mailed'' can incorporate both physical and electronic 
mailing. FEMA anticipates that, where applicants have provided contact 
information to allow for electronic mailing of this determination, the 
Agency will provide the Authorized Official's determination both by 
mail and electronically. However, there may be instances where the 
claimant has not provided contact information to allow for electronic 
mailing and thus FEMA could only provide the determination by physical 
mail. To ensure flexibility in these instances, FEMA is not amending 
the regulatory language.
    Comment: One commenter also recommended adding a definition of a 
``Claims Navigator'' to the regulation, providing suggestions on how 
these Navigators would work with claimants in the process.
    FEMA Response: FEMA does not believe this change is needed. The 
Agency is not referencing this term in the regulatory text. Terms not 
used in the regulatory text do not need to be defined in the 
definitions section of the regulation.\18\
---------------------------------------------------------------------------

    \18\ See ``Writing Resources for Federal Agencies, Regulatory 
Drafting Guide, Definitions'' found at https://www.archives.gov/federal-register/write/legal-docs/definitions.html (last accessed 
Feb. 16, 2023).
---------------------------------------------------------------------------

    Comment: A commenter suggested revision to the definition of ``good 
cause'' to include ``or any circumstance where the Administrator 
determines that good cause would further the mission of the Claims 
Office to pay compensatory damages for injuries suffered from the 
Hermit's Peak/Calf Canyon Fire.''
    FEMA Response: FEMA disagrees with the comments that the additional 
language in the definition of ``good cause'' is required. The Act 
authorizes the Director of the Claims Office to assume the duties of 
the Administrator.\19\ Adding language to the definition of ``good 
cause'' to allow the Administrator to make a good cause determination 
would result in a redundancy as the IFR language provides the Director 
discretion to make good cause determinations. As written, the IFR 
provides for the use of good cause in circumstances regarding deadlines 
or supplementing and reopening claims.
---------------------------------------------------------------------------

    \19\ Section 103, Definition of ``Administrator'' (1)(B).
---------------------------------------------------------------------------

    Comment: Some commenters also requested the definition of ``good 
cause'' be amended to include ``or where damage from post-fire flooding 
is suffered by the claimant after filing a claim.''
    FEMA Response: FEMA disagrees that the ``good cause'' definition 
must be revised to consider flooding damage after filing a claim. As 
explained above, the definition of ``injured person'' includes injuries 
``resulting from the Hermit's Peak/Calf Canyon Fire'' and is broad 
enough to encompass flooding, mudflow, mold, and debris flow, as well 
as other types of injuries that may be considered as a result of the 
Fire. The current language allows for good cause ``where damage is 
found after a claim has been submitted'' and this language, read in 
conjunction with the definition of ``injured person'' addresses 
concerns regarding whether such damage could constitute good cause to 
supplement or reopen a claim.
    Comment: One commenter raised concerns that ``good cause'' was too 
subjective.
    FEMA Response: The application of a good cause definition requires 
use of discretion that by nature contains some subjectivity that cannot 
be fully eliminated from the determination.
    Comment: A commenter recommended FEMA change the definition of the 
``Hermit's Peak/Calf Canyon Fire'' to add ``flooding, mudflow, mold, 
and debris flow resulting from the two fires.'' The commenter requested 
FEMA specifically reference flooding, mudflow, mold, and debris flow as 
a cause of injury and as a damage that can be compensated.
    FEMA Response: FEMA disagrees that this change is needed to the 
definition of ``Hermit's Peak/Calf Canyon Fire'' to compensate 
claimants for these types of injuries resulting from the Fire. The 
definition of ``injured person'' includes injuries ``resulting from the 
Hermit's Peak/Calf Canyon Fire'' and is broad enough to encompass 
flooding, mudflow, mold, and debris flow, as well as other types of 
injuries that may be considered as a result of the Fire. Adding this 
language may narrow the scope of damages an injured person may seek to 
claim, and FEMA prefers to retain the current definition of the Fire 
while allowing claimants suffering injuries resulting from the Fire be 
allowed to present their claims.
    Comment: Three commenters recommended that FEMA modify the 
definition of household ``to clarify that it does not exclude the 
claims of owners that did not live at the property on a continuous 
basis'' and that rather, these individuals should be included. While 
including them in the definition of household, the commenters 
recommended that these individuals ``not be compensated for financial 
damages already paid to the primary resident.'' Rather, the individuals 
should be ``eligible for compensation based on their individual loss.''
    FEMA Response: FEMA is not amending the definition of ``household'' 
as requested by these comments. Claimants can file a claim as a

[[Page 59735]]

household or individually in these circumstances and the Claims Office 
will accept the claim for review. Nothing in the current definition 
prohibits claims filing either as a household or individually.
    Comment: A commenter suggested the definition of ``injured person'' 
be modified to include ``acequia, land grant'' immediately after 
``school district'' in the definition.
    FEMA Response: FEMA does not believe this amendment is required to 
cover the entities referenced. Rather, these entities are covered under 
the current definition as an ``other non-Federal entity that suffered 
injury resulting from the Hermit's Peak/Calf Canyon Fire.''
    Comment: Another commenter stated FEMA should amend the definition 
of ``injured person'' to include flooding, mudflow, mold, and debris 
flow as a cause of injury and damage that can be compensated.
    FEMA Response: FEMA disagrees that this edit is required to the 
regulatory text. The current definition provides for these types of 
injuries, as well as other types of injuries that may be considered an 
injury resulting from the Fire. Adding this language may narrow the 
scope of damages an injured person may seek to claim. The proposed 
language also conflates injuries from flooding, mudflow, mold, and 
debris irrespective of their connection with the Fire with injuries 
from flooding, mudflow, mold, and debris that are connected to the 
Fire. Only the latter are compensable under the Act. Therefore, FEMA 
prefers to retain the current definition of the Fire, which will allow 
claimants suffering injuries resulting from the Fire to present their 
claims.
    Comment: Commenters wrote that nonprofit organizations should be 
considered ``injured person.''
    FEMA Response: The current definition of ``injured person'' 
includes an ``other non-Federal entity that suffered injury resulting 
from the Hermit's Peak/Calf Canyon Fire'' and that terminology 
encompasses non-profit organizations. FEMA understands non-profit 
organizations may have suffered injuries resulting from the Fire, and 
FEMA believes the current definition sufficiently encompasses all types 
of for-profit and non-profit entities. FEMA's website at https://www.fema.gov/hermits-peak provides more information explaining the 
regulatory text to help claimants better understand who is considered 
an injured person under the Act.
    Comment: Some commenters suggested that FEMA amend the definition 
of ``subsistence resources'' to include ``and other natural resource'' 
to reflect the types of resources gathered and the broad range of 
subsistence use practices of both acequia-served communities, as well 
as Tribal and Pueblo sovereigns.
    FEMA Response: Consistent with these suggestions, FEMA is adding 
``or other natural resource'' to the definition of ``subsistence 
resources'' to reflect the specific needs of the impacted communities. 
As explained above, the Hermit's Peak/Calf Canyon Fire impacted an area 
that is economically and culturally distinct from the communities 
impacted by the Cerro Grande Fire. This change reflects FEMA's 
understanding that other natural resources beyond firewood may be 
gathered for subsistence purposes.

E. Comments on the Claims Process Generally

    Commenters offered comments and suggestions on a wide range of 
issues on the claims process. Commenters offered suggestions on ways to 
streamline the process and to make the process more accessible to the 
impacted communities. Commenters wrote of experiences with FEMA and 
other Federal agencies, stating how FEMA and other agencies handled 
their cases under other programs.
    Comment: One commenter stated, ``Nothing in my experience with 
F[EMA] so far gives me faith that you are on my side or have my best 
interests at heart.'' The comment continued ``So far communication 
between government entities and organizations has been nonexistent or 
completely dysfunctional . . . I need to have more confidence in your 
ability to work with other entities, or even communicate within 
F[EMA].'' Commenters provided suggestions on hiring personnel for the 
Claims Office, including the Claims Office Director, Claims Navigators, 
Claims Reviewers, and other staff, and how the agency should train the 
staff. Commenters also stated their anger, frustration, and mistrust of 
the process and requested to be treated with respect and compassion. 
One commenter wrote ``Cataloging every single thing we lost in the 
fire, correlating it with a receipt, and looking up how much it will 
currently cost to replace it has been a full-time job for a while now, 
and extremely difficult emotionally.'' Another commenter wrote about a 
recent experience with FEMA stating ``it did nothing to build trust or 
confidence in FEMA. The end effect has been the exact opposite. And in 
turn, I have since prepared myself to expect more of this inappropriate 
treatment from FEMA in all future interactions.'' A different commenter 
wrote ``HPFAA administrators and claims reviewers must handle all 
injured victim cases as though this injury to their lives and 
livelihoods is a direct result of a felony act of arson deliberately 
committed against them all. Government employees and contractors 
responsible for this conflagration will never truly be held accountable 
to receive due punishment for actions which will never even 
`officially' be considered gross incompetence, but that doesn't make 
the end result any less destructive than an act of intentional criminal 
arson would be.'' One commenter stated ``I want you to remember that 
this is a fire caused by the [F]ederal government and that we are the 
victims of this. Please treat us with respect.''
    FEMA Response: FEMA acknowledges the unique challenges faced by the 
communities impacted by the Fire and how challenging it has been for 
claimants to recover. FEMA and the Federal government provided a range 
of existing programs to those impacted by the Fire, many of which were 
not designed to meet the needs of the impacted communities, given the 
extent of the injuries suffered as a result of the Fire. Those programs 
were not designed to provide full financial compensation to those 
injured by the Fire. For example, the Individuals and Households 
Program (IHP) provides financial and direct services to eligible 
individuals and households affected by a disaster, who have uninsured 
or under-insured necessary expenses and serious needs. IHP is not a 
substitute for insurance and cannot fully compensate for all losses 
caused by a disaster; rather, that assistance is intended to meet basic 
needs and supplement disaster recovery efforts.\20\ As disaster 
assistance programs are not designed to fully compensate those impacted 
by disasters, some applicants in these communities are frustrated with 
and uncertain about, the Federal government's ability to assist them. 
The Act's commitment to compensate victims through the Claims Office 
process allows FEMA to directly provide claimants with compensation to 
better assist claimants and communities in more fully recovering from 
this devastating Fire. The Agency is committed to working with 
claimants and communities to ensure the Claims Office meets their needs 
and compensates claimants for the damages resulting from the Fire. The 
Claims Office hired Claims Navigators from the community to guide 
claimants through

[[Page 59736]]

the application process, focusing on ensuring that claimants understand 
the process of applying for compensation, what compensation is 
available for their losses, and what documentation is needed to obtain 
this compensation.
---------------------------------------------------------------------------

    \20\ https://www.fema.gov/assistance/individual/program (last 
accessed Mar. 3, 2023).
---------------------------------------------------------------------------

    The Claims Office operates independently of FEMA's other programs, 
and it provides a great deal more flexibility in the process of 
applying for and receiving compensation than these more traditional 
grant programs. Unlike FEMA's Individual Assistance and Public 
Assistance, which provide disaster assistance to individuals and 
households impacted by declared disasters, the Claims Office is not 
subject to any caps on the amount of assistance it can provide. Unlike 
FEMA's Public Assistance Program, which provides grants to States, 
Federally recognized Tribal governments, U.S. territories, local 
governments, and certain private non-profit (PNP) organizations, the 
Claims Office does not have any cost share requirements, and there are 
no conditions placed on receipt of the compensation.
1. Comments on the Claims Office Administrator
    Comment: Commenters made specific requests regarding the 
appointment of the Claims Office Administrator. Commenters requested 
that an Independent Claims Administrator be appointed. One commenter 
stated that the broad ``make whole'' compensation approach of the Act 
was different from FEMA's normal disaster relief operation and Congress 
recognized this by providing for the appointment of an Independent 
Claims Administrator in the Act. This commenter stated the number of 
potential claimants and broad scope of the harm they have suffered 
required the appointment of an Independent Claims Administrator with 
experience in `make whole' compensation processes. A different 
commenter wrote that these claims processes are extremely complex, with 
many moving parts and unique issues, and would be best overseen by a 
claims manager familiar with fire-related claims processes. Another 
commenter suggested an independent trustee or claim administrator be 
appointed to manage and stated FEMA should not be in charge of 
administration.
    FEMA Response: Section 104(a)(3) gives the Administrator the option 
to appoint an Independent Claims Manager to head the Claims Office. In 
her discretion, the Administrator selected a Claims Office Director 
with over 15 years of experience building and managing Federal programs 
to start up the Claims Office and did not opt to appoint an Independent 
Claims Manager. FEMA understands the commenters' desire to have an 
Independent Claims Manager appointed. Given the short timelines that 
the Agency had to publish the IFR and begin processing claims, FEMA 
determined it was both efficient and effective to select a candidate 
with extensive experience in government assistance programs to lead the 
Claims Office. FEMA also understands concerns that other FEMA programs 
do not operate in the same way in which the Act requires the Claims 
Office to operate. However, FEMA was tasked with the implementation of 
the Act, including operation of the Claims Office for this Fire, and 
further has prior experience in operating a Claims Office in New Mexico 
for the Cerro Grande Fire in 2000. FEMA recognizes the distinctions 
between the two fires, but also believes the Agency can build on best 
practices and incorporate principles of equity, as well as lessons 
learned from the Cerro Grande Claims Office, to implement a Claims 
Office for the Hermit's Peak/Calf Canyon Fire Assistance Act that will 
acknowledge the differences between the two fires and best serve the 
claimants and communities impacted by the Hermit's Peak/Calf Canyon 
Fire.
    Comment: In addition to requesting an independent claims 
administrator, several commenters requested the claims administrator be 
a New Mexico attorney and/or retired judge.
    FEMA Response: As explained above, the Administrator has exercised 
her discretion and selected the Director of the Claims Office. The 
Director has extensive experience building and managing Federal 
assistance programs and will lead the Claims Office in these nascent 
stages. FEMA appreciates commenters' concerns that the Claims Office be 
led by someone with familiarity with New Mexico law, as well as the 
unique political, economic, and cultural institutions of the impacted 
communities. FEMA has engaged in an extensive effort to recruit locally 
for positions to support the processing of claims and provision of 
compensation to claimants impacted by the Fire to ensure these specific 
concerns are addressed. FEMA believes that local hiring at all other 
levels of the Claims Office will better serve to meet the needs of 
claimants and communities rather than a single hire at the Director 
level. Additionally, FEMA is making changes in the Final Rule to better 
reflect the needs of the impacted communities.
    Comment: One commenter suggested another commenter be appointed as 
the Independent Claims Office Administrator.
    FEMA Response: As explained above, the Administrator has exercised 
her discretion to hire the Director of the Claims Office with extensive 
experience building and managing Federal programs to lead the Claims 
Office.
2. Comments on the Claims Office
    Commenters offered suggestions on how to staff and manage the 
Claims Office.
    Comment: Commenters suggested that FEMA hire members of the local 
community to increase trust in the claims process. Some commenters 
stated the importance of hiring New Mexicans familiar with acequias.
    FEMA Response: FEMA agrees with these comments. As explained above, 
FEMA has engaged in an extensive effort to recruit locally for 
positions to support the processing of claims and provision of 
compensation to claimants impacted by the Fire to ensure these specific 
concerns are addressed.\21\ FEMA believes that hiring local applicants 
at all other levels of the Claims Office will better serve to meet the 
needs of claimants and communities by helping to ensure the Claims 
Office is staffed with individuals familiar with the specific needs of 
the communities impacted by the Fire. As of April 10, 2023, almost 70 
percent of the permanent Claims Office team are local staff.\22\ Local 
staff work out of Claims Offices in Santa Fe, Las Vegas, and Mora, New 
Mexico, and serve in multiple capacities ranging from the Deputy 
Director, Advocate and Claims Navigators, to external affairs and 
facility support. Additionally, FEMA is making changes in the Final 
Rule to better reflect the needs of the impacted communities.
---------------------------------------------------------------------------

    \21\ FEMA hosted a Hiring Fair on January 10, 2023, in Mora, NM 
and provided Federal Resume Writing webinars on December 29, 2022, 
and January 3, 2023. Details regarding the available positions were 
also posted to https://www.fema.gov/fact-sheet/hermits-peakcalf-canyon-claims-office-now-hiring (last accessed Feb. 16, 2023).
    \22\ FEMA notes that given the permanent positions in the Claims 
Office are located in Mora, Las Vegas, and Santa Fe, New Mexico, 
most applicants seeking these positions were local.
---------------------------------------------------------------------------

    Comment: A commenter suggested FEMA stay alert to favoritism 
``infiltrating the ranks of claims reviewers hired from the local 
population.''
    FEMA Response: FEMA appreciates the commenter's concerns regarding 
favoritism. Federal employees are held to certain basic obligations of 
public

[[Page 59737]]

service that require employees to ``act impartially and not give 
preferential treatment to any private organization or individual.'' 
\23\ As part of the hiring and onboarding process, these obligations 
are explained, and training is provided to ensure employees understand 
the obligations of public service. FEMA also is coordinating with the 
Department of Homeland Security Office of Inspector General and the 
FEMA Fraud unit to ensure vigilant oversight.
---------------------------------------------------------------------------

    \23\ 5 CFR 2635.101(b)(8).
---------------------------------------------------------------------------

    Comment: Some commenters suggested FEMA hire a specific contractor 
to assist the manager and FEMA to process claims.
    FEMA Response: Consistent with the Federal Acquisition 
Regulation,\24\ FEMA awarded multiple competitive contracts to provide 
support services to the Claims Office. Services include consulting, 
claims processing, systems analysis, operation, and data analysis 
support. Each contractor shall, to the maximum extent possible, create 
opportunities for the utilization of local small businesses, including 
the utilizing of businesses from underserved communities and develop a 
plan to utilize local firms and/or hire local residents.
---------------------------------------------------------------------------

    \24\ See https://www.acquisition.gov/browse/index/far.
---------------------------------------------------------------------------

    Comment: One commenter suggested FEMA hire an experienced claims 
processor that can start handling claims immediately stating FEMA would 
need to figure out how to handle claims first.
    FEMA Response: The Claims Office engaged in a competitive hiring 
action to hire an experienced Claims Chief. This position oversees the 
claims process from the completion of the Notice of Loss to the final 
payout on the claim. The Claims Office also hired a number of 
experienced contract claims examiners with insurance adjusting 
experience to review and make recommendations on claims. The Claims 
Chief oversees Claims Reviewers at the main Claims Office, as well as 
at least three public-facing claims offices in Mora, San Miguel, and 
Las Vegas, New Mexico.
    Comment: A commenter suggested FEMA take the time that is required 
to provide substantial training for newly hired staff.
    FEMA Response: FEMA agrees that training will be critical for all 
newly hired staff for the Claims Office. FEMA intends to provide 
standard onboarding training for all new employees, as well as 
specialized training for all Claims Office employees to fully 
understand the claims process and the Act's requirements. Training 
includes roles and responsibilities, claims processes and operations, 
cultural awareness, statutes and regulations, customer service and 
customer experience, risk reduction practices, coordination with State 
agencies, and other related trainings.
    Comment: One commenter provided a recent experience with a field 
inspector that inspected their homestead for potential disaster relief 
and stated that ``the person you chose to do this inspection is an 
incompetent at such work as this.'' The commenter suggested FEMA be 
very careful in their hiring practices and contracting of third parties 
for claims office operations to prevent ``such outrageous incidents'' 
as described in their experience.
    FEMA Response: FEMA appreciates the commenter's honesty and 
willingness to share their experience. FEMA intends to staff the Claims 
Office with local hires that can better understand the unique 
political, economic, and cultural institutions of the communities 
impacted by the Fire, as well as claimants seeking compensation under 
the Act, in addition to experienced contract employees. As explained 
above, FEMA plans to provide training for all Claims Office employees 
to fully understand the claims process and the Act's requirements.
    Comment: One commenter provided a memorandum with a seven-step 
process on how the Claims Office can develop a mindset to get to yes 
and serve clients effectively. This individual also submitted comments 
on the culture of the Claims Office. The comment ``focus[ed] on a 
seven-step plan to help this program transform its approach as it 
processes the regulation comments, from a denial-based approach to a 
positive, effective process for those it is meant to serve.''
    FEMA Response: FEMA appreciates the commenter's detailed 
suggestions. As pointed out by the commenter, the Claims Office process 
will be different from FEMA's disaster relief programs, and it will be 
important for employees of the Claims Office to acknowledge and embrace 
those differences in process and implementation efforts. Based on the 
comments received, FEMA established a set of guiding principles for the 
Claims Office culture needed to deliver this mission.\25\ FEMA will 
work to ensure a full understanding by the entire Claims Office staff 
of the claims process and the Act's requirements and the importance of 
focusing on the needs of claimants and communities impacted by the 
Fire. With that in mind, the Claims Office provides each claimant with 
an assigned Navigator. The Claims Navigator works directly with the 
claimant and Claims Reviewers, asking questions, helping claimants 
obtain documentation, helping claimants complete the Notice of Loss and 
Proof of Loss, and shepherding the claimant through the process to 
better ensure that the claimant is fully compensated for their loss.
---------------------------------------------------------------------------

    \25\ See https://www.fema.gov/hermits-peak.
---------------------------------------------------------------------------

    The Claims Office has also established an independent Claims Office 
Advocate. The Claims Office Advocate responds to, manages, and 
recommends solutions to issues with the process itself, whether those 
issues be with the Claims Navigators and Claims Reviewers, the claims 
process itself, or how the process is being implemented. The Claims 
Office Advocate is responsible for identifying issues with the claims 
process and addressing those issues on the claimant's behalf. The 
Claims Office Advocate serves as an additional resource to claimants by 
helping to improve their understanding of the claims process and 
providing guidance about the steps in that process and the associated 
requirements.
    The Claims Office Advocate also identifies issues, risks, and 
opportunities for improvement and develops recommendations for claims 
process enhancements that will address these and deliver a better, 
fairer claims process that is accessible to all claimants. While the 
Claims Navigators and Claims Reviewers report to a Team Lead, the 
Advocate reports directly to the Director of the Claims Office. As 
such, the Claims Office Advocate has a direct line of communication 
with the Director of the Claims Office, and the Advocate is positioned 
to advocate on behalf of claimants and to make recommendations for 
enhancements to the claims process.
    Comment: One commenter suggested that State Case Managers be 
integrated into the program and trained as Navigators.
    FEMA Response: FEMA anticipates that Claims Navigators will provide 
the assistance envisioned by the commenter and additional staffing 
outside of the Claims Office will not be required. However, the Claims 
Office is implementing procedures to coordinate with the State of New 
Mexico as appropriate.
    Comment: One commenter asked how many claims would be covered by 
each Claims Reviewer.
    FEMA Response: FEMA does not have an estimate on the volume of 
claims per Claims Reviewer at this time. FEMA anticipates Claims 
Reviewers will have a workload balance reflective of both

[[Page 59738]]

claim volume and claim complexity to ensure claimants' needs are 
effectively met by the Claims Office.
3. Comments on the Use of Funds
    Comment: Commenters sought clarification on how FEMA would use the 
funds provided by the Act between administrative costs and claims 
payments to claimants. Some commenters wrote about experiences with 
administrative costs with one commenter stating that ``to provide a 
trailer for a family it can cost 300k with much of this money going to 
pay FEMA workers and for admin costs.'' Commenters asked what the 
administrative costs would be and how much of the available 
appropriated funding would go to administrative costs and how much 
funding would go to claimants. One commenter wrote ``how much of the 
available funds will go to administration and how much will go to 
victims?''. Another commenter stated, ``I wonder what the 
administrative costs are if they are going to come out of this $2.5 
billion of it is gone before any money goes to anybody in this room and 
maybe that's necessary.''
    FEMA Response: Section 104(a)(2)(C)(i) of the Act states that ``The 
Office shall be funded from funds made available to the Administrator 
for carrying out this section.'' FEMA is required to use the funding 
provided under the Act for the administrative costs to run the Claims 
Office. FEMA has a general obligation to spend Federal funds wisely and 
Congress required FEMA to provide quarterly reports to the Committee on 
Appropriations of the Senate and House of Representatives on the 
obligations and expenditures of the funds made available under the 
Act.\26\ Congress also directed a portion of the funding to the 
Department of Homeland Security Inspector General to fund program 
oversight. FEMA intends to comply with this Congressional reporting 
requirement regarding the use of funding under the Act. This 
transparency will help allay the commenters' concerns about the total 
administrative costs for the Claims Office.
---------------------------------------------------------------------------

    \26\ Public Law 117-180, Division A, Section 136 (2022).
---------------------------------------------------------------------------

    Comment: Commenters suggested FEMA provide transparency in how the 
funds appropriated under the Act were spent. One commenter suggested 
that information about how the funds were being spent be shared 
publicly in real time via an online dashboard. Such a tool would help 
prevent internal fraud and help FEMA identify external fraud and 
program favoritism while also allowing everyone the ability to be 
alerted to something suspicious happening with funds. Another commenter 
agreed, recommending that FEMA allow the public to review the overall 
project budget and other transparency related to fiscal accountability. 
One commenter wrote that ``FEMA should provide full transparency of 
cost, budget, expenditures, etc. including administrative costs, 
operational costs, total payouts, total denials, etc. to not only to 
the [Department of Homeland Security's Office of the Inspector General] 
but also to the State--without violation of the Privacy Act.''
    FEMA Response: As explained above, Congress required FEMA to 
provide quarterly reports to the Committee on Appropriations of the 
Senate and House of Representatives on the obligations and expenditures 
of the funds made available under the Act.\27\ FEMA intends to comply 
with this Congressional reporting requirement regarding the use of 
funding under the Act. This transparency will help allay the 
commenters' concerns about the total administrative costs for the 
Claims Office. In addition, the Claims Office Advocate will be creating 
easily understandable reports with program metrics to be shared on 
https://www.fema.gov/hermits-peak and through other communications 
channels.
---------------------------------------------------------------------------

    \27\ Public Law 117-180, Division A, Section 136 (2022).
---------------------------------------------------------------------------

    Comment: Commenters also provided recommendations on ways to use 
and/or distribute the funding appropriated. One commenter suggested 
funding be dedicated to the reintroduction of beavers to the region to 
help repair the land.
    FEMA Response: FEMA does not have the authority under the Act to 
dedicate funding as recommended by the commenter as claimants must 
submit claims demonstrating their injuries resulting from the Fire to 
obtain compensation. Funding for activities like reintroduction of 
beavers may be eligible as a nature-based solution to reduce the 
heightened risk of wildfire, flood, or other natural disaster and 
claimants seeking compensation must demonstrate that this claim is 
clearly tied to an increased risk that resulted from the Fires.
    Comment: A commenter wrote suggesting that FEMA ``create a grid 
system on a map with a baseline payment scale using at least 1.5 
billion dollars to be distributed equally where the [F]ire/flooding/
damaged areas are the epicenter with the highest baseline ($250,000) 
payment and the areas with lesser damage (such as minimal property 
damage, i.e., smoke damage or food loss) still receive baseline funding 
at a lesser significant (over $2,500) amount.'' The commenter wrote 
that none of the funding provided should be taxable income. The 
commenter stated this proposal is to ``ensure that all landowners in 
the affected areas get a baseline of funding.'' The commenter also 
suggested ``[$]2 billion in funding go to the public entities to 
prevent future disasters such as monies allocated to public safety.'' 
The commenter suggested ``another [$]1 billion to public utility 
infrastructure and public communications.'' The commenter wrote that 
the rest of the funding could be used for ``paying out and making 
individuals with losses whole and covering gaps missed in my proposed 
comments above.''
    FEMA Response: FEMA is authorized under the Act to pay claimants 
for actual compensatory damages for injuries resulting from the 
Fire.\28\ FEMA does not have the authority under the Act to establish 
the type of funding system recommended by the commenter as claimants 
must submit claims demonstrating their injuries resulting from the Fire 
to obtain compensation. FEMA further did not receive sufficient funding 
under the Act to implement the payment plan proposed by the commenter. 
FEMA notes that the Act at section 104((h)(4) provides that the value 
of compensation provided under the Act ``shall not be considered income 
or resources for any purpose under any Federal, State, or local laws, 
including laws relating to taxation . . .'' FEMA cannot advise 
individual claimants on their individual tax obligations, however, and 
encourages claimants to consult with their tax advisers if they have 
questions related to tax obligations.
---------------------------------------------------------------------------

    \28\ See Sections 102(b) and 104(c) of the Act.
---------------------------------------------------------------------------

    Comment: A commenter asked whether the funding provided under the 
Act covered the costs for the matching funds requirement waiver in 
section 104(k) of the Act or if the funding under the Act was 
exclusively reserved for claims.
    FEMA Response: The Act does not authorize FEMA to utilize the funds 
appropriated to cover the matching funds requirement waiver in section 
104(k). These additional matching funds to meet the 100 percent cost 
share will have to be provided from the funding provided for those 
programs generally, not the funding provided by the Act.

[[Page 59739]]

    Comment: Commenters suggested ways in which the funding 
appropriated under the Act should not be used. Commenters suggested 
administrative costs be paid out of a separate budget rather than the 
appropriated funding. One commenter suggested administrative costs 
should be paid for out of a separate FEMA budget.
    FEMA Response: As explained above, section 104(a)(2)(C)(i) requires 
FEMA to use the funding made available under the Act to fund the Claims 
Office. FEMA is required to follow the Act's requirement to fund the 
Claims Office from the Act's funding.
    Comment: One commenter requested FEMA Claims Reviewers tour the 
entire burn scar area and not to use the funding appropriated for that 
tour.
    FEMA Response: FEMA appreciates the request, the value placed in 
seeing the devastation resulting from the Fire first-hand, and the need 
for Claims Office staff to fully comprehend the extent of injuries 
suffered. FEMA plans to provide training to all Claims Office staff 
that will include extensive background information on the Fire and its 
impacts. FEMA believes that Claims Reviewers should be aware of the 
devastation to help comprehend the losses and spend their time focused 
on assisting claimants with their claims, not taking tours of the 
entire burn scar area.
    Comment: Commenters stated the funding appropriated was not 
sufficient to fully compensate claimants. One commenter suggested the 
total $3.9 billion appropriated will not cover the cost of recovery 
from the level of destruction caused by the Fire. This commenter stated 
more destruction was guaranteed from the Fire and argued it would be 
worse if people rebuilt in the wrong places before the land stability 
is restored. Other commenters agreed that the amount appropriated was 
not sufficient to cover the damages and one of those commenters stated 
that the lack of sufficient funding would result in denying people 
compensation.
    FEMA Response: The Act and subsequent legislation appropriated 
$3.95 billion in funding. FEMA is obligated to provide quarterly 
reports to Congress on the use of funds under the Act and these reports 
ensure transparency of the use of funds and the sufficiency of funding 
under the Act.
    Comment: To combat fraud, one commenter recommended FEMA review 
fire-affected county audits performed by the New Mexico State Attorney 
General's Office to anticipate where and how acts of fraud will occur. 
Another commenter stated in their comment the New Mexico State Auditor 
performs these audits, providing links to recent reports.
    FEMA Response: FEMA appreciates the concerns regarding potential 
fraud and is incorporating fraud awareness and detection training into 
the comprehensive training provided to all Claims Office staff. FEMA 
notes that Congress provided appropriations for the Department of 
Homeland Security's Office of the Inspector General for oversight of 
activities authorized by the Act.\29\
---------------------------------------------------------------------------

    \29\ See Public Law 117-180, Division A, Section 136 (2022).
---------------------------------------------------------------------------

    Comment: A commenter stated that insurance companies would demand 
compensation for the amounts they have paid or will pay to insured 
claimants.
    FEMA Response: Insurance companies are eligible for compensation as 
injured persons under the Act. Section 104(d)(1)(A)(ii) of the Act 
requires FEMA to place priority on claims submitted by injured parties 
that are not insurance companies seeking payment as subrogees. Section 
296.13 of the IFR requires subrogees to file their Notice of Loss after 
they have made all payments entitled to the injured person for Fire-
related injuries under the terms of the insurance policy. As explained 
below, FEMA is amending Sec.  296.13 in the Final Rule to add language 
from the Act specifically to clarify the claims prioritization 
required. Further, Sec.  296.21(f) of the regulation requires FEMA to 
compensate injured persons only for damages not paid and that will not 
be paid by insurance companies. As explained above, these provisions, 
in addition to the changes made to Sec.  296.13 in this Final Rule, 
will help ensure that the compensation is first made available to 
injured persons that are not insurance companies.
    Comment: Finally, commenters suggested other funds outside of those 
appropriated be used to pay for compensation under the Act. One 
commenter stated that FEMA ``not use taxpayer dollars to compensate 
victims, but instead seize the assets of the oil and gas companies 
whose industry has created global warming and red flag conditions all 
over the country and use those assets to compensate victims.'' One 
commenter suggested those responsible for causing the Fire should 
donate their retirement funds to those impacted by the Fire.
    FEMA Response: Congress appropriated $3.95 billion for 
implementation of the Act and FEMA is required to use that appropriated 
funding to implement the Act and pay claimants actual compensatory 
damages for injuries resulting from the Fire.
4. Comments on Sec.  296.5 Overview of the Claims Process
    Comment: One commenter suggested FEMA set up remote assistance 
given COVID, RSV, and influenza infection concerns. Another commenter 
stated that claimants should be allowed to meet remotely with claims 
reviewers as it was unreasonable for FEMA to expect victims to travel 
long distances. One commenter suggested FEMA set up mobile claim 
offices in southwest Colfax County and south Taos County. One commenter 
stated that ``60 to 70 percent of the people up in Mora [County] are 
Hispanic and a lot of people don't even have access to computers.'' The 
commenter suggested FEMA ``try to get somebody who can speak Spanish to 
go with these people because that's what we need.'' Commenters also 
suggested FEMA get out into the community as part of the claims process 
and outreach to the community.
    FEMA Response: FEMA plans to offer opportunities for one-on-one 
engagement through Claims Reviewers who will work to engage claimants 
in ways to meet their needs whether in person or via remote technology. 
Claims Office Navigators are trained to accommodate the needs of 
claimants and are prepared to meet them in the satellite Claims Offices 
in Las Vegas, Mora, and Santa Fe, New Mexico at claimants' homes or 
offices, or any place convenient to claimants, taking into account 
health and safety concerns. Note that FEMA will provide services both 
at set office locations for the Claims Office, as well as pop-up 
offices that will rotate through communities and locations in the 
affected area, to reduce travel burdens on claimants. The pop-up 
offices will be staffed by Claims Navigators, who can assist claimants 
in completing and submitting Notices of Loss, providing claims updates, 
and answering general questions. FEMA recognizes the importance of 
having claims staff, who interact with claimants and help facilitate 
the claims process, that are able to speak both Spanish and English. 
FEMA locally hired bilingual speakers to ensure that claims staff can 
communicate with claimants in their preferred language.
    Comment: Several commenters wrote that attorneys should be notified 
during the process when claimants are represented by counsel.
    FEMA Response: With an appropriate Privacy Act waiver, FEMA will 
ensure contact is made with both claimants and their attorneys. The 
Claims Office has included consent language necessary to comply with 
the Privacy Act in the standard Notice of Loss form. The

[[Page 59740]]

consent is needed for an attorney or other third-party representative 
to have access to a claimant's privacy information maintained in the 
Claims Office system of records. In addition to providing basic 
information about the claimant and representative, the claimant must 
sign the consent section if they choose to be represented by a third 
party.
    Comment: One commenter wrote that information on claim status and 
timeline to receive payment should also be easily accessible at the 
claimant level. Two commenters suggested FEMA provide an online method 
of checking the status of their claim and hard copies of documents for 
those claimants without internet access.
    FEMA Response: FEMA is currently developing an online claims system 
that will provide claimants with real time access to claim status in 
addition to providing status information by phone or mail (electronic 
and/or physical). FEMA anticipates this system will be rolled out in 
the near future and will provide outreach to the community when the 
system is available for use to help claimants understand and utilize 
the system.
    Comment: One commenter asked that State Case Managers be integrated 
into the program and trained as Navigators to serve as a single point 
of contact to help claimants throughout the process.
    FEMA Response: As explained above, FEMA anticipates that Claims 
Navigators will provide the assistance envisioned by the commenter and 
additional staffing outside of the Claims Office will not be required. 
In the event a claimant has unmet needs or otherwise requests a 
Disaster Case Manager, the standard Notice of Loss form includes a 
section for the claimant to consent to sharing claim data maintained in 
the system of record with Disaster Case Managers.
    Comment: Several commenters suggested that FEMA streamline the 
claims process. One method for streamlining the process suggested by 
commenters related to access to available Federal programs. Commenters 
suggested that FEMA streamline access to available Federal programs 
and, in addition to funds appropriated under the Act, to utilize other 
Federal funding opportunities when and where available.
    FEMA Response: FEMA agrees with this suggestion and is coordinating 
with other Federal agencies to ensure data sharing and better 
communication between programs. FEMA has engaged with and continues to 
engage with the Small Business Administration, the Department of 
Agriculture, and other Federal agencies to help facilitate coordination 
of the assistance available to claimants and the impacted communities. 
Consistent with the Act's requirements in section 104(g), FEMA is 
consulting with other Federal agencies, and State, local, and Tribal 
authorities to ensure the efficient administration of the claims 
process and provide for local concerns. To preserve funding from the 
Hermit's Peak/Calf Canyon appropriations to pay eligible claims, FEMA 
requires applicants eligible for FEMA's Public Assistance program to 
exhaust available public assistance funds before seeking compensation 
from the Claims Office.
    Comment: Another suggestion involved preparing formulas for 
compensation. One commenter asked how FEMA would compensate claimants 
for a variety of damages and requested transparency and a formula that 
should be shared with claimants. Another commenter suggested that FEMA 
move forward with developing estimates to help reduce the wait for 
compensation. One commenter asked how claims would be made equitable 
and if there would be standard reimbursement rates for similar claims. 
Two commenters suggested monetary thresholds be established to ensure 
time and effort are proportionate to the claim values being made. As 
one of the commenters explained, there are thresholds throughout many 
other Federal programs where the burden of proof is significantly less 
based on the overall claim value. Another commenter, however, stated 
that ``no two claims will be alike, and the process cannot be developed 
or allowed to become an assembly line approach.''
    FEMA Response: FEMA recognizes the need for an efficient, 
streamlined process through the use of a damage calculation formula, 
while also balancing the unique types of claims being presented under 
the Act and ensuring claimants are paid actual compensatory damage as 
required by the Act. FEMA anticipates developing some damage 
calculation formulas, such as providing for a certain dollar amount of 
compensation per acre of land damaged, so that claimants have the 
option to leverage one of those formulas or present their individual 
claim and request for specific damage amounts. FEMA believes this 
optionality will best balance the need for an efficient process with 
the individual needs of claimants, as claimants will be able to make 
the choice in presenting their claim for compensation.
5. Comments on Sec.  296.10 Filing a Claim Under the Act
    Comment: One commenter suggested FEMA allow claimants to file a 
Notice of Loss in person consistent with the IFR. Another commenter 
stated that FEMA should allow claimants to file claims in person, as 
well as via mail, email, and a web-based portal system to ensure 
accessibility. A commenter suggested FEMA allow for applications, 
correspondence, and supporting documentation to be exchanged by postal 
mail. This commenter also recommended FEMA create centralized locations 
where northern New Mexicans can physically go to access the electronic 
application and receive assistance in filling out the applications in 
multiple languages so that the application and supporting documentation 
can be submitted in a timely manner.
    FEMA Response: FEMA appreciates these suggestions. FEMA does not 
believe changes to the Final Rule are necessary to implement these 
suggestions, but rather that as the Claims Office continues to expand 
operations, the information would be made available to the public via 
https://www.fema.gov/hermits-peak and other resources including direct 
community outreach. FEMA is currently accepting Notice of Loss forms in 
person at the claim's office locations in Santa Fe, Mora, and Las 
Vegas, New Mexico and those office addresses can be found at https://www.fema.gov/hermits-peak. FEMA will provide services both at set 
office locations for the Claims Offices, as well as pop-up offices that 
will rotate through communities and locations in the affected area, to 
reduce travel burdens on claimants. The pop-up offices will be staffed 
by Claims Navigators, who can assist claimants in completing and 
submitting Notices of Loss, providing claims updates, and answering 
general questions.
6. Comments on Sec.  296.11 Deadlines
    Comment: Several comments were received regarding the two-year 
deadline for filing a claim detailed in Sec.  296.11 of the IFR, with 
most commenters stating that a two-year period to file a claim was 
insufficient. Commenters suggested extending the deadline based on an 
inability to determine damages because of the current inability to 
access their property, the potential for future impacts from flooding, 
and/or the long-term health and environmental effects given the size 
and scope of the Fire. A commenter suggested extending the deadline to 
three years for mitigation

[[Page 59741]]

efforts. Some commenters asked FEMA to be flexible in granting 
extensions. One commenter asked that extensions be granted in cases 
where knowledge of damages, recovery efforts, etc. are hindered by 
cooperation with government agencies.
    FEMA Response: Some deadlines in the rule are beyond FEMA's 
control. Section 104(b) of the Act requires claimants submit their 
Notice of Loss no later than November 14, 2024, two years from the date 
the IFR was promulgated. FEMA was required by the Act to publish the 
IFR within 45 days of the Act's passage and the IFR was published 45 
days after the Act's passage.\30\ FEMA has built in extensions of the 
claim processing timeline after receipt of the Notice of Loss for good 
cause, recognizing the realities of the Fire's impact. Sections 296.34 
and 296.35 establish a process for notifying FEMA of injuries that are 
not referenced in the initial Notice of Loss. Whether a claimant tells 
FEMA about an injury in the initial Notice of Loss or an amendment 
under Sec.  296.34, FEMA must know about the injury by November 14, 
2024. For heightened risk reduction efforts, a claimant must include 
the claim in their Notice of Loss by November 14, 2024, or an amended 
Notice of Loss filed no later than November 14, 2025. See Sec.  
296.21(e)(5).
---------------------------------------------------------------------------

    \30\ 87 FR 68085 (Nov. 14, 2023).
---------------------------------------------------------------------------

    Comment: One commenter indicated the two-year period did not end on 
November 14, 2024, because the Final Rule had not been promulgated and 
it would not be promulgated until 60 days after filing in the Federal 
Register.
    FEMA Response: FEMA disagrees with this characterization of the 
two-year period and rule promulgation. Specifically, Section 104(f)(1) 
of the Act requires FEMA to ``promulgate and publish in the Federal 
Register interim final regulations for the processing and payment of 
claims under this Act.'' Publication of an IFR constitutes promulgation 
of a rule, as the rule was effective upon publication, and comments 
were requested post-promulgation. This sequence of events, publication 
of the interim final rule, followed by a public comment period, 
occurred here. Consistent with the Act's purpose at section 102(b), the 
immediate effective date of the rule ensures FEMA was able to begin 
accepting and processing claims on the date of publication.
7. Comments on Sec.  296.12 Election of Remedies
    Comment: Commenters sought clarifications about how the election of 
remedies worked. One commenter asked what would happen if the claimant 
did not accept the final determination by the Claims Office. Another 
commenter asked if people did not want to go through FEMA, whether they 
could sue and if there were multiple owners of a single property 
whether some could go through FEMA and also sue.
    FEMA Response: As explained in the IFR's preamble, the Act provides 
that an injured person who accepts an award under the Act waives the 
right to pursue any claims arising out of or relating to the same 
subject matter under the Federal Tort Claims Act (FTCA) or a civil 
lawsuit. Similarly, those claimants who accept an award under the FTCA 
or a civil lawsuit waive the right to pursue claims under the Act. 
Until the final award payment is accepted, the claimant may pursue any 
and/or all of the options available. This flexibility allows injured 
persons to pursue different avenues of compensation until a final award 
is accepted. The IFR language states that an injured person who accepts 
an award under the Act or through a FTCA or civil action waives their 
right to pursue all claims for injuries arising out of or related to 
the same subject matter. To ensure this is clear in the Final Rule, 
FEMA is revising paragraphs Sec.  296.12(a) and (b) to clarify that the 
injured person only waives the right to pursue all claims upon 
acceptance of a final award through the Act, the FTCA, or through a 
civil action.
    Comment: A commenter stated that a claimant's right to civil action 
or other redress should not be waived or limited until a final payment 
has been agreed upon with FEMA, and that it must be clear to claimants 
at what point(s) in the process they are waiving their rights to 
further legal action, as well as how they can retain their right to 
further legal action for different types of subject matter. Another 
commenter agreed and recommended FEMA clarify that the waiver of the 
right to pursue claims under the FTCA or a civil action only applies to 
final awards, and when the claimant has signed a Release and 
Certification Form.
    FEMA Response: FEMA agrees and as explained above, is revising 
Sec.  296.12(a) and (b) in the Final Rule to clarify that the injured 
person only waives the right to pursue all claims upon acceptance of a 
final award.
    Comment: One commenter wrote on the feasibility of waiving future 
claims given the extent of damages, losses, and expenses may not be 
fully known at the time of the award. The commenter suggested a lump 
sum payment of 15 percent of all injury, damages, losses, and expenses 
be added to each claim to cover these future unknown items.
    FEMA Response: FEMA understands the concerns with waiving rights to 
pursue further claims after accepting a final award. The Act at section 
104(b) requires claims to be submitted within two years and requires a 
waiver of rights to pursue further claims upon acceptance of a final 
award. Claims related to future losses as a result of the Fire would 
need to be made through other remedies as the Act sets a two-year 
limitation for claims under the Act. FEMA is unable to pay lump sum 
payments to cover future unknown injuries, as unknown injuries are 
speculative in nature and the Act requires FEMA to pay for actual 
compensatory damages.
    Comment: Commenters stated the Federal government committed crimes 
and that the Act did not preclude criminal charges. These commenters 
recommended allowing claimants the ability to apply for crime victim 
compensation.
    FEMA Response: As explained above, the Act sets forth means for 
claimants to seek compensation for injuries suffered as a result of the 
Fire. Section 104(h) of the Act offers claimants three options to seek 
compensation from the Federal government for injuries resulting from 
the Fire: (1) a claim under the Act; (2) a FTCA claim or civil action; 
or (3) an authorized civil action under any other provision of law. The 
Act does not expand the scope of the FTCA or other civil actions under 
any other provision of law. The Act does not provide for criminal 
prosecution or other remedies. The Act also does not provide for crime 
victim compensation. Rather, section 104(c)(3) of the Act provides for 
payment of actual compensatory damages. FEMA is not authorized under 
the Act to pay additional compensation beyond actual compensatory 
damages.
    Comment: One commenter stated the Federal government ``should not 
be allowed to dictate limits on compensation to victims they violated. 
The victims should be allowed to state what will make them individually 
whole and what will be required for their healing for the next several 
years, or however long it takes, to recover from the offending actions 
as only the victim will know what that is and what it will take for 
them to heal.'' The commenter further stated that claimants should not 
be required to use other Federal programs.
    FEMA Response: As explained above, Section 104(h) of the Act offers 
claimants three options to seek compensation from the Federal 
government for injuries resulting from

[[Page 59742]]

the Fire: (1) a claim under the Act; (2) a FTCA claim or civil action; 
or (3) an authorized civil action under any other provision of law. 
Claimants may choose among these remedies to address their personal 
circumstances and needs, taking into account timely resolution and 
costs of each option. Only upon acceptance of a final compensation 
award under one of these options will claimants release the Federal 
government from further claims arising out of or relating to the same 
subject matter. The Act further requires in section 104(d)(1)(B) that 
FEMA make determinations as to whether the claimant is an injured 
person under the Act; the injury resulted from the Fire, whether the 
claimant is otherwise eligible to receive payment, whether sufficient 
funds are available for payment, and the amount to be allowed and paid 
under the Act. The Act only authorizes FEMA to make these 
determinations and sets the framework for how FEMA must make them. The 
Act does not authorize FEMA to honor and accept all requests for 
compensation.
8. Comments on Sec.  296.13 Subrogation
    Comment: Three commenters suggested FEMA delete references to 
insurance companies in the regulation. One commenter stated that 
insurance companies will demand compensation for the amounts they have 
paid or will pay to insured claimants and found that to be fair. 
However, the commenter stated that greed may influence the insurers' 
claims and those claims would then negatively affect claimant 
compensation. Two other commenters stated that this section should be 
revised to reflect the Act's prioritization of injured persons over 
subrogees.
    FEMA Response: As explained above, insurance companies are injured 
persons under the Act. FEMA does not believe it is appropriate to 
delete references to insurance companies in the regulation, as the 
Act's references to them requires FEMA to discuss them in the 
regulation. Section 104(d)(1)(A)(ii) requires FEMA to place priority on 
claims submitted by injured parties that are not insurance companies 
seeking payment as subrogees. Section 296.13 of the IFR requires 
subrogees to file their Notice of Loss after they have made all 
payments entitled to the injured person for Fire-related injuries under 
the terms of the insurance policy. The IFR does not, however, include 
the prioritization language from the Act. Given the confusion and 
concerns with this section, FEMA is amending Sec.  296.13 to 
specifically clarify the prioritization required under the Act in the 
Final Rule by requiring that subrogation claims from insurance 
companies will be paid only after paying claims submitted by injured 
persons that are not insurance companies seeking payment as subrogees.
9. Comments on Sec.  296.14 Assignments
    Comment: Several commenters stated that assignment of rights could 
not be prohibited. Commenters stated that New Mexico law allowed for 
assignment of rights. A commenter stated that ``New Mexico law allows 
lawyers to recover their fees by way of liens, and FEMA regulations 
should not seek to interfere with the lawyer and client relationship 
nor with the ability of the claimant's lawyer to recover their fee.'' 
The commenter also wrote that the FTCA has no prohibition on 
assignments.
    FEMA Response: FEMA disagrees that the assignment of rights cannot 
be prohibited. Federal law generally prohibits assignment of claims 
against the Federal government. The Assignment of Claims Act prohibits 
the assignment of a claim against the Federal government unless the 
claim is allowed, the amount of the claim is decided, and a warrant for 
payment of the claim has been issued.\31\ The Assignment of Claims Act 
requires that the assignment must specify the warrant and the 
assignment must be made freely and attested to by two witnesses.\32\ 
The person making the assignment must acknowledge it before an official 
who may acknowledge a deed, that official must certify the assignment, 
and the certificate issued by the official must state that the official 
explained the assignment when it was acknowledged.\33\ Thus, FEMA can 
only allow for an assignment of a claim after the Authorized Official's 
Determination has been issued and accepted by the claimant and the 
claimant has completed the other steps in the process required under 
the Federal law to have the assignment reference FEMA's award 
determination. The process includes being attested to by two witnesses 
and acknowledged by an official who will certify the assignment and 
their explanation of the assignment to the claimant. This extensive 
process is contrary to the authorizing Act's purpose and the 
requirements placed on FEMA by the Act to compensate victims of the 
Fire and expeditiously settle claims for those injured. Prohibiting 
assignment of claims under the Act is consistent with the purpose of 
the Act and other Federal law. The Final Rule will not include 
amendments to the assignment of rights. FEMA notes that assignments are 
generally not allowed under the Federal Tort Claims Act.\34\ Also, to 
the extent that a lien does not involve an assignment, it is a question 
of State law to be resolved between the lien holder and the claimant.
---------------------------------------------------------------------------

    \31\ 31 U.S.C. 3727(b).
    \32\ Id.
    \33\ Id.
    \34\ See United States v. Shannon, 342 U.S. 288 (1952).
---------------------------------------------------------------------------

    Comment: Three commenters suggested that assignment be allowed in 
instances of death, with one other commenter also requesting a process 
by which compensation can be provided to surviving heirs if a claimant 
passes away. These commenters stated that if the claim is legitimate, 
the owner's right to assign for a variety of reasons should not be 
limited. Another commenter suggested provisions be made for dependent 
family members and property co-owners to receive full compensation in 
situations where a claimant dies.
    FEMA Response: Claimants who pass away during the claims process 
can continue to pursue claims through their surviving heirs under 
applicable New Mexico estate law.\35\ An assignment of rights is not 
required for surviving heirs to pursue a claim under the Act. FEMA 
notes that some claimants may wish to have family members pursue the 
claim on their behalf and some commenters during public meetings stated 
they were pursuing claims on behalf of relatives. The current 
regulatory text allows a claimant to authorize a relative or other 
third party to have access to claims information and to represent them 
on the claim by executing the appropriate section in the Notice of 
Loss. The authority to represent a claimant does not require an 
assignment of benefits.
---------------------------------------------------------------------------

    \35\ See Uniform Probate Code, Chapter 45, New Mexico Statutes 
Annotated (2021).
---------------------------------------------------------------------------

    Comment: A commenter stated FEMA did not have the authority under 
the Act or New Mexico law to restrict assignment of property, stating 
claimants should have the right to sell their property and the new 
property owner should be able to recover damages to the property as 
well as family assignment in case of death. Another commenter requested 
that they be able to assign their claim if they want to sell their 
property or have someone inherit their claim.
    FEMA Response: FEMA disagrees that the assignment of rights cannot 
be prohibited. As explained above, Federal law generally prohibits 
assignment of claims against the Federal government.\36\ The extensive 
process required to assign claims against the

[[Page 59743]]

Federal government is contrary to the authorizing Act's purpose and the 
requirements placed on FEMA by the Act to compensate victims of the 
Fire and expeditiously settle claims for those injured. Prohibiting 
assignment of claims under the Act is consistent with the purpose of 
the Act and other Federal law and is not amending the Final Rule. The 
Final Rule will not include amendments to the assignment of rights.
---------------------------------------------------------------------------

    \36\ 31 U.S.C. 3727(b).
---------------------------------------------------------------------------

    Comment: One commenter said that claimants should have the ability 
to assign rights to family members or friends but stated ``assignment 
of rights cannot be to the detriment of the individual signing it away 
or to the benefit of the person who is trying to get it.'' This 
commenter further stated that they ``want to see representation for 
people who need it but not necessarily assign the rights over.''
    FEMA Response: FEMA appreciates the commenter's concerns and 
believes that assigning rights in the context of a claim under the Act 
could result in unscrupulous activity. The extensive process required 
by the Assignment of Claims Act to assign a claim against the Federal 
government was put in place for several reasons, one of which was to 
reduce concerns about predatory assignments.\37\ FEMA seeks to avoid 
situations where predatory assignments could occur. Consistent with 
Federal law and the reasons stated above, FEMA is not amending the 
Final Rule.
---------------------------------------------------------------------------

    \37\ See generally Spofford v. Kirk, 97 U.S. 484, 489 (1878) 
``the question remains, whether the act of Congress was not intended 
to render all claims against the government inalienable alike in law 
and in equity, for every purpose, and between all parties. The 
intention of Congress must be discovered in the act itself. It was 
entitled `An Act to prevent frauds upon the treasury of the United 
States.' It may be assumed, therefore, that such was its purpose. 
What the frauds were against which it was intended to set up a 
guard, and how they might be perpetrated, nothing in the statute 
informs us. We can only infer from its provisions what the frauds 
and mischiefs had been, or were apprehended, which led to its 
enactment.''
---------------------------------------------------------------------------

    Comment: A commenter wrote that FEMA should modify this section to 
allow the State of New Mexico to file a claim on behalf of residents 
solely for private property debris removal work not eligible for 
Category A/B reimbursements under the Public Assistance Program. 
Another commenter wrote of a shortage of available contract resources 
impacting the cost and timing of rebuilding efforts and recommending 
FEMA allow individuals to permit State agencies to act on their behalf 
to address debris removal and damage through a opt in assignment. Other 
commenters stated concerns with the effective use of funds for debris 
removal generally.
    FEMA Response: FEMA recognizes the challenges presented with debris 
removal on private property and the concerns with ensuring funding is 
effectively utilized under the Act. Under the Act, the Claims Office is 
authorized to compensate injured persons for their injuries resulting 
from the Fire. The Office recognizes that due to the timing of debris 
removal, as well as other elements of a claim, a claimant may require 
funds quickly and is prepared to make partial payments to claimants for 
severable elements of a claim, including debris removal, allowing 
claimants to choose who clears the debris.

F. Comments on Sec.  296.21(a) Allowable Damages

1. Comments on Allowable Damages Generally
    Comment: Several commenters suggested FEMA cover specific types of 
damages and detail them further in the regulation. Commenters 
frequently requested that the claims process ``make them whole.'' One 
commenter often recited specific types of damages for which FEMA should 
be prepared to compensate (to make whole) to include those damages they 
considered to be ``immeasurable'' or ``unseen.'' One commenter stated 
that ``FEMA must compensate injured victims for immediately measurable 
losses (i.e. destroyed homes, buildings and their contents, property 
infrastructures, forestland resources, croplands and crops, and 
domestic water conveyances and storage facilities, etc.) and for 
intangible losses as well (i.e. destroyed sentimental items which can 
never be replaced, mental and emotional tolls regardless of the extent 
of professional treatment received, and future potential value of 
everything damaged and lost).'' One commenter stated that, in addition 
to damage caused as a result of the Fire, ``there is more damage 
continuing to happen to injured victims each day on a level which 
cannot be seen, measured, or described by any metric'' and further that 
the Act's ``reconciliations should go far beyond mere recovery to day-
before-the-fire life conditions for every injured victim because the 
damage runs far deeper and much wider than what actually burned in the 
fire. It has severely, irreversibly damaged injured victims' souls, and 
they deserve to be compensated for that too.''
    FEMA Response: FEMA recognizes the significant injuries suffered by 
claimants and the long-term recovery needed for the communities 
impacted by the Fire. The Act at section 104(c)(3)(A) limits payment to 
``actual compensatory damages measured by injuries suffered.'' Section 
104(d)(4) of the Act limits allowable damages to uncompensated damages 
for loss of property, business loss, and financial loss; and therefore, 
limits the actual compensatory damages FEMA may provide to economic 
damages. This limitation of the Act with respect to allowable damages 
excludes non-economic damages such as pain and suffering. FEMA 
recognizes that making people whole for the full scope of loss after a 
devastating fire may not be possible. The Act authorizes payment of 
damages, and money cannot restore the full array of the human 
experience. Section 296.21(e)(3) does authorize payment for out-of-
pocket mental health treatment expenses, which can help alleviate the 
emotional suffering and enable affected individuals to recover. Where 
New Mexico law allows pain and suffering and non-economic damages in 
limited circumstances primarily involving personal injuries, a claimant 
that suffered personal injury may choose to pursue a judicial remedy 
against the United States Forest Service under the Federal Tort Claims 
Act or other civil law. The Act provides the claimant with considerable 
flexibility and allows the claimant to opt out of the Claims Office 
option and into litigation at any time up until acceptance of a final 
offer.
2. Comments on Non-Economic Damages
    Several commenters wrote that non-economic damages must be 
considered allowable damages.
    Comment: One commenter wrote that claimants were entitled to claims 
for nuisance and trespass for fire damage to their property under New 
Mexico law. Another commenter expanded on the nuisance theory stating 
``A wildfire likely qualifies [as] a private or mixed public/private 
nuisance, and therefore is actionable either way, at least for those 
who suffered damage to their real or personal property. Noneconomic 
damages are recoverable for a nuisance claim for `annoyance, 
discomfort, and inconvenience.' Notably, a plaintiff need not prove 
economic damages (e.g., a diminution in property value) to recover 
damages for `annoyance, discomfort, and inconvenience.' ''
    FEMA Response: The Act does not authorize FEMA to provide non-
economic damages for nuisance and trespass.
    Comment: A different commenter also noted the potential trespass 
claim, writing ``A defendant commits common-law trespass in New Mexico 
by redirecting a foreign substance onto the plaintiff's property. . . . 
Under this

[[Page 59744]]

reasoning a wildfire that spreads onto a plaintiff's property would 
also constitute a trespass. Although a plaintiff may recover damages 
for `annoyance, discomfort, and inconvenience' caused by a private 
nuisance, there is no New Mexico authority expressly allowing similar 
damages on trespass claims. That said, many jurisdictions allow damages 
for annoyance, discomfort, and distress proximately caused by a 
trespass. Some of these distinguish between those damages and emotional 
distress, while others appear to conflate the two. New Mexico would 
likely strictly limit recovery to `annoyance, discomfort, and distress' 
and not allow true emotional-distress damages.''
    FEMA Response: The Act does not provide for non-economic damages 
for nuisance and trespass.
    Comment: Several commenters stated emotional distress, disturbance, 
annoyance, and other non-economic losses for those with real and/or 
personal property losses from the Fire regardless of whether or not the 
claimant suffered a physical injury as well as those same losses for 
those claimants who suffered a reasonable fear of death or serious 
bodily injury as a result of their proximity to the zone of fire 
danger, regardless of whether the claimant suffered a physical injury 
should be compensated.
    FEMA Response: The Act does not provide for non-economic damages 
for emotional distress, disturbance, and annoyance.
    Comment: Three commenters supported the expansion of allowable 
damages to include non-economic damages, including loss of enjoyment, 
loss of lifestyle, as well as mental and emotional distress, 
sentimental losses, and disturbance and annoyance damages. These 
commenters stated that these losses may be greater and more important 
than the financial loss.
    FEMA Response: The Act does not authorize FEMA to provide non-
economic damages for loss of enjoyment, loss of lifestyle, mental and 
emotional distress, sentimental losses, or disturbance and enjoyment.,
3. Comments on Emotional Distress/Mental Health Damages
    Some commenters stated the specific non-economic damages for which 
they suggested compensation should be available under the Act.
    Comment: One commenter wrote suggesting claimants could assert a 
claim for intentional infliction of emotional distress, stating ``those 
individuals who were within the fire's zone of danger and had a 
reasonable, objective fear of death or serious bodily injury should be 
able to recover non-economic, emotional distress damages as well . . . 
Emotional distress is available under New Mexico law when there is a 
physical injury . . . These victims suffered smoke inhalation, which is 
a physical injury, and thereby makes them eligible for emotional 
distress damages under New Mexico law.''
    FEMA Response: The Act does not authorize FEMA to provide non-
economic damages for intentional infliction of emotional distress.
    Comment: A commenter wrote that New Mexico law recognizes claims 
for both negligent and intentional infliction of emotional distress. 
The commenter discussed negligent infliction of emotional distress and 
intentional infliction of emotional distress, stating that claimants 
may be able to allege an intentional infliction of emotional distress 
claim by ``showing the defendant's conduct was reckless and outrageous 
enough to warrant liability.'' The commenter further noted that 
claimants prevailing on either claim for infliction of emotional 
distress would be entitled to damages for ``physical pain, nervousness, 
grief, anxiety, worry, and shock.'' The commenter added that the 
Federal government had a special relationship with claimants given 
their responsibility for the control of the forests and had neglected 
that special relationship, ignored its own regulations, and caused much 
emotional distress.
    FEMA Response: The Act does not authorize FEMA to provide non-
economic damages for negligent and intentional infliction of emotional 
distress.
    Comment: One commenter stated that the FTCA includes damages for 
emotional distress and that New Mexico law also provided the authority 
to award emotional distress damages. The commenter also stated that 
disturbance and annoyance damages for the interference of real 
property, which are non-economic damages, are recoverable. The 
commenter also cited to Castillo v. City of Las Vegas \38\ as another 
source for recoverable non-economic damages including emotional or 
sentimental damages.
---------------------------------------------------------------------------

    \38\ 145 N.M. 205 (2008).
---------------------------------------------------------------------------

    FEMA Response: The Act does not authorize FEMA to provide non-
economic damages for emotional distress If a claimant believes they are 
eligible for non-economic damages under New Mexico law and the Federal 
Tort Claims Act, they may choose to file a civil claim against the 
United States Forest Service in Federal court. They may file suit at 
any time prior to acceptance of a final determination.
    Comment: One commenter stated that FEMA should provide 
reimbursement for the physical, the mental, and the emotional stress 
caused by the Fire and referenced the Camp Fire in California as an 
example of where these types of damages were paid.
    FEMA Response: The Act does not authorize FEMA to provide non-
economic damages for physical, mental, and emotional distress. The Camp 
Fire claims were adjudicated applying California law, which differs 
significantly from the Hermit's Peak/Calf Canyon Fire Assistance Act. 
The Camp Fire claims also involved claims asserted in a bankruptcy 
proceeding against a private company, not the Federal government.
4. Comments on Other Damages
    Commenters also raised compensation for future work and loss of 
opportunity, future potential land use plans, sentimental value, and 
loss of wildlife.
    Comment: One commenter asked how claimants would be compensated for 
the conservation practices of the area, including grazing and thinning 
out dense forest lands and making habitat for wildlife. The commenter 
also asked how claimants would be compensated for future work and loss 
of opportunity for those conservation practices.
    FEMA Response: Congress established the Claims Office to provide 
actual compensatory damages to injured persons that suffered injury 
resulting from the Fire. To the extent that individual claimants 
establish injury from the Fire, the Claims Office will work with them 
to identify appropriate measures of damage. The Claims Office is 
prepared to work with claimants to identify and hire experts to assist 
in valuing complex or unusual claims. Under the Act, other Federal 
agencies with particular expertise also can be engaged to assist.
    Comment: Another commenter wrote suggesting FEMA consider future 
land use plans to properly compensate claimants, detailing their own 
plans for development of their property impacted by the Fire.
    FEMA Response: Under the Act, the Claims Office provides provide 
actual compensatory damages to injured persons that suffered injury 
resulting from the Fire. Some claims may be too speculative to be 
eligible for tort compensation under applicable law, but all potential 
claimants are encouraged to submit a Notice of Loss to enable the 
Claims Office to evaluate individual claims.

[[Page 59745]]

    Comment: One commenter wrote that New Mexico law allows recovery of 
sentimental value for personal and real property and stated that 
victims are not made whole unless they recover both the economic value 
of contents, structures, and trees, plus their sentimental value.
    FEMA Response: Under the Act, the Claims Office provides provide 
actual compensatory damages to injured persons that suffered injury 
resulting from the Fire, but not for non-economic damages. All 
potential claimants are encouraged to submit a Notice of Loss to enable 
the Claims Office to evaluate individual claims. The Office will work 
with claimants to identify eligible economic losses and to properly 
value claims. FEMA does not believe changes to the regulatory text are 
required in the Final Rule for claimants to seek this type of 
compensation if they can demonstrate the loss and that the loss 
resulted from the Fire.
    In addition to specific damages, commenters suggested FEMA provide 
compensation for specific reimbursements associated with damages.
    Comment: Two commenters suggested FEMA compensate for property 
taxes, either to the local government or individual property owners. 
One of these commenters suggested property taxes be addressed by the 
New Mexico legislature, as it was for the Cerro Grande Fire, and that 
Federal funds should pay State and local governments the difference in 
property tax funds.
    FEMA Response: Under the Act, the Claims Office provides actual 
compensatory damages to injured persons that suffered injury resulting 
from the fire. All potential claimants are encouraged to submit a 
Notice of Loss to enable the Claims Office to evaluate individual 
claims. The Office will work with claimants to identify eligible 
economic losses and to properly value claims. FEMA does not believe 
changes to the regulatory text are required in the Final Rule for 
claimants to seek this type of compensation if they can demonstrate the 
loss and that the loss resulted from the Fire.
    Comment: One commenter suggested FEMA pay for indirect damage, 
including damages resulting from mandatory evacuation, burn scar 
flooding, and contractor damages.
    FEMA Response: To the extent that damage resulted from the Fire, 
damages are compensable under the regulation as written. Specifically 
mandatory evacuation expenses and burn scar flooding can be compensable 
if resulting from the Fire. Contractor damages may not be compensable, 
but the Claims Office encourages claimants to submit all possible 
losses to be evaluated. As previously explained, the regulation 
provides types of actual compensatory damages that are compensable 
under the Act, but that list is not all-inclusive. Claimants seeking 
compensation for actual compensatory damages not specifically listed in 
the regulation can still submit a claim for compensation under the Act.
    Comment: Other commenters suggested that FEMA provide air and water 
quality testing/monitoring.
    FEMA Response: FEMA understands the concerns regarding water and 
air quality and the need for testing and monitoring. These types of 
expenses might be compensable as expert opinion expenses under Sec.  
296.31(a) or as part of the lump sum incidental expenses for claims 
expenses reimbursement under Sec.  296.31(b).
    Comment: Two commenters suggested funding to address economic 
development as the population (per capita) had decreased since the 
Fire, as either business and/or financial loss under the Act.
    FEMA Response: Economic development can be speculative and a 
claimant seeking compensatory damages for loss of economic development 
would need to be able to demonstrate such loss and that such loss was a 
result of the Fire. As explained above, the regulation provides types 
of actual compensatory damages that are compensable under the Act, but 
that list is not all-inclusive. Claimants seeking compensation for 
actual compensatory damages not specifically listed in the regulation 
should still submit a claim for compensation under the Act. For this 
type of claim, claimants can work with their Claims Navigator and 
Claims Reviewer to demonstrate that such damages would be considered 
actual compensatory damages for injuries resulting from the Fire 
consistent with the Act. FEMA does not believe changes to the 
regulatory text are required in the Final Rule for claimants to seek 
this type of compensation if they can demonstrate the loss and that the 
loss resulted from the Fire.
    Comment: One commenter suggested an additional amount be awarded 
where the claimant dies to compensate for the further injury inflicted 
as a result of delays in compensation.
    FEMA Response: FEMA disagrees with this commenter. This proposed 
claim would not be for actual compensatory damages for injuries 
resulting from the Fire and is not authorized.
5. Comments on Flood Damages
    Comment: One commenter suggested FEMA add flood damage to Sec.  
296.21(a) writing that it was ``illogical to provide compensation for 
flood insurance as a financial loss in Sec.  296.21(e)(2) but not for 
flood damage.'' A different commenter stated that claimants face risks 
of further injury from flooding, landslide/mudslide, and debris flow 
and that full cooperation from owners of all affected property parcels 
located upstream and upslope was essential to recovery. The commenter 
requested FEMA acknowledge, address, and compensate for those long-term 
risks.
    FEMA Response: FEMA is revising the purpose of the regulation in 
Sec.  296.1 to incorporate language to address this issue. By changing 
the current regulatory text addressing the compensable injuries from 
``suffered from'' to ``resulting from'' the Fire, this change addresses 
the commenters' concerns with whether flood damage is an allowable 
damage. Further, the definition of ``injured person'' includes injuries 
``resulting from the Hermit's Peak/Calf Canyon Fire'' and is broad 
enough to encompass flooding as well as other types of injuries that 
may be considered to be resulting from the Fire.
6. Comments on Personal Injury Damages
    Comment: Commenters suggested that FEMA clarify that personal 
injury is an allowable damage.
    FEMA Response: Section 296.21(a) allows for payment of actual 
compensatory damages for injury and ``injury'' is defined in Sec.  
296.4 to include personal injury. All potential claimants are 
encouraged to submit a Notice of Loss to enable the Claims Office to 
evaluate individual claims. The Claims Office will work with claimants 
to identify eligible economic losses, which could include compensation 
for economic losses associated with personal injury such as medical 
bills, on-going therapy, and the like and to properly value claims.
    Comment: One commenter suggested that FEMA provide compensation for 
health issues for residents and animals affected by compromised water 
and air quality issues.
    FEMA Response: FEMA agrees these types of damages are generally 
compensable under the Act as personal injury damages and damage to 
property. These health issues, if resulting from the Fire, could be 
considered injuries under the Act's definition and compensable as such.

[[Page 59746]]

7. Comments on Calculation of Damages
    Comment: One commenter noted that the legal precedent in New Mexico 
does not require claimants to adhere to a strict formula to calculate 
damages. Another commenter agreed, citing to Maestas v. Medina.\39\ A 
different commenter asked which New Mexico laws were being used to 
calculate damages.
---------------------------------------------------------------------------

    \39\ 2011 N.M. App. Unpub. LEXIS 276 (2011).
---------------------------------------------------------------------------

    FEMA Response: In paragraph 296.21(a) FEMA states, consistent with 
the Act, that the agency will apply New Mexico law to the calculation 
of damages. The Claims Office will work with claimants to identify an 
appropriate measure of damages consistent with applicable law.
8. Comments on Reasonable Damages
    Comment: Finally, commenters discussed the requirement that damages 
must be reasonable in amount in the IFR. Some commenters suggested that 
FEMA delete the requirement that damages must be reasonable in amount 
while others recommended it be changed to actual damages supported. One 
commenter stated that FEMA should give claimants the autonomy to define 
reasonableness for themselves.
    FEMA Response: The Act limits compensation to actual damages 
incurred by the claimant. To better ensure that the claimant is only 
being compensated for the actual damages incurred and that claimant is 
not being compensated in amounts that exceed the actual damages 
incurred, FEMA requires that the damages be reasonable in amount.

G. Comments on Sec.  296.21(b) Exclusions

1. Comments on Punitive Damages
    Comment: Two commenters suggested claimants be allowed to seek 
punitive damages.
    FEMA Response: Section 104(c)(3)(B)(ii) of the Act specifically 
excludes punitive damages from the compensation available under the 
Act. It is thus beyond FEMA's statutory authority to compensate for 
these damages.
2. Comments on Criminality
    Comment: One commenter wrote ``Essentially, the USFS committed a 
crime when--against all experience-informed protests from local 
citizens--its agents (the district ranger, burn boss and all commanding 
managers above them) made the decision to begin the Dispensas 
Prescribed Burn which rapidly and irreversibly exploded into the 
catastrophe now known as the Hermit's Peak Fire. They also committed a 
crime of negligence when they failed to properly monitor burn piles 
which reignited and caused the Calf Canyon Fire which merged with the 
Hermit's Peak Fire to cause widespread devastation now wreaking havoc 
for victims of the fire.''
    FEMA Response: FEMA is not authorized under the Act to pursue these 
types of claims. In the Act, the United States accepted responsibility 
for damage resulting from the Fire and waived sovereign immunity to 
compensate victims in tort. By excluding punitive damages, the Act 
makes clear that damages for intentional and other behavior otherwise 
giving rise to heightened liability are not compensable. FEMA is not 
revising the Final Rule.
3. Comments on Attorneys' and Agents' Fees
    While one commenter specifically expressed support for this 
provision,\40\ a large number of commenters wrote that FEMA should pay 
attorneys' and agents' fees associated with the claims process.
---------------------------------------------------------------------------

    \40\ The commenter wrote ``Subpart C Section 296.21(b) Excludes 
reimbursement for attorney's fees and agents' fees, plus claimant's 
cost of prosecuting a claim. This should stay. We want all of the 
money to go to the people injured in any way by the Hermit's Peak/
Calf Canyon Fire.''
---------------------------------------------------------------------------

    Comment: One commenter wrote that the Administrator had the 
discretion to pay legal fees under the Act because the Act allows the 
award of financial losses of ``any other loss that the Administrator 
determines to be appropriate for inclusion as financial loss.'' The 
commenter stated that claimants using lawyers are likely to have more 
complete and better documented claims and that FEMA should want and 
encourage claimants to have complete and well documented claims. The 
commenter also noted that if claimants pay the financial expense of a 
lawyer the victims will not be made 100 percent whole unless they 
recover both 100 percent of losses and 20 percent for legal fees. A 
different commenter also stated that FEMA should encourage the 
efficiency and assistance that will result from allowing claimants to 
obtain attorney assistance and be made whole by allowing claimants to 
recover their attorney's fees.
    FEMA Response: The Act is silent regarding FEMA's authority to pay 
attorney or agent fees. Generally, if Congress knows how to say 
something but chooses not to, its silence is controlling.\41\ While the 
Act places limits on the amount an attorney or agent may charge in 
section 104(j)(1), the Act does not provide for attorney or agent fees 
as allowable damages. Further, the ``American Rule,'' generally 
applicable in civil litigation and accepted by the United States 
Supreme Court initially in the case of Arcambel v. Wiseman,\42\ 
provides that in the absence of a statute indicating otherwise, each 
party is responsible for paying their own attorney fees. FEMA designed 
the claims process so that claimants will receive all eligible 
compensation without the need to engage the services of an attorney, 
and the Claims Office hired Claims Navigators to assist claimants 
compiling necessary documentation and with the Proof of Loss. Although 
claimants have the right to hire an attorney, one is not required.
---------------------------------------------------------------------------

    \41\ Animal Legal Defense Fund v. USDA, 789 F.3d 1206 (11th Cir. 
2015), citing In re Haas, 48 F.3d 1153, 1156 (11th Cir. 1995), 
abrogated on other grounds by In re Griffith, 206 F.3d 1389 (11th 
Cir. 2000). See also United States v. Roof, 10 F.4th 314 (4th Cir. 
2021), citing Discover Bank v. Vaden, 396 F.3d 366, 370 (4th Cir. 
2005).
    \42\ 3 U.S. (3 Dall.) 306 (1796). See also Peter v. NantKwest, 
Inc., 140 S.Ct. 365 (2019), Hardt v. Reliance Standard Life 
Insurance Co., 560 U.S. 242 (2010), Ruckelshaus v. Sierra Club, 463 
U.S. 680 (1983), and Summit Valley Industries, Inc. v. Carpenters, 
456 U.S. 717 (1982).
---------------------------------------------------------------------------

    Comment: A commenter wrote ``The Fire Victim Trust in California 
added legal fees to gross economic awards, and it has been a tremendous 
benefit as around 90 [percent] of claimants hired lawyers.''
    FEMA Response: As noted, the Act is silent regarding FEMA's 
authority to pay attorney or agent fees. Generally, if Congress knows 
how to say something but chooses not to, its silence is 
controlling.\43\ While the Act places limits on the amount an attorney 
or agent may charge in section 104(j)(1), the Act does not provide for 
attorney or agent fees as allowable damages. FEMA is applying the 
generally accepted American Rule for attorney fees. FEMA designed the 
claims process so that claimants will receive all eligible compensation 
without the need to engage the services of an attorney, and the Claims 
Office hired Claims Navigators to assist claimants compiling necessary 
documentation and with the Proof of Loss. Although claimants have the 
right to hire an attorney, one is not required. Also as noted, the Fire 
Victim Trust in California involved a private party defendant under the 
oversight of a bankruptcy court applying California law and does not 
present a useful

[[Page 59747]]

paradigm for the Hermit's Peak/Calf Canyon Fire.
---------------------------------------------------------------------------

    \43\ Animal Legal Defense Fund v. USDA, 789 F.3d 1206 (11th Cir. 
2015), citing In re Haas, 48 F.3d 1153, 1156 (11th Cir. 1995), 
abrogated on other grounds by In re Griffith, 206 F.3d 1389 (11th 
Cir. 2000). See also United States v. Roof, 10 F.4th 314 (4th Cir. 
2021), citing Discover Bank v. Vaden, 396 F.3d 366, 370 (4th Cir. 
2005).
---------------------------------------------------------------------------

    Comment: A commenter wrote that Congress only prevented the award 
of punitive damages and interest in the Act, not the award of legal 
fees.
    FEMA Response: As noted, the Act is silent regarding FEMA's 
authority to pay attorney or agent fees. Generally, if Congress knows 
how to say something but chooses not to, its silence is 
controlling.\44\ While the Act places limits on the amount an attorney 
or agent may charge in section 104(j)(1), the Act does not provide for 
attorney or agent fees as allowable damages. FEMA is applying the 
generally accepted American Rule for attorney fees. FEMA designed the 
claims process so that claimants will receive all eligible compensation 
without the need to engage the services of an attorney, and the Claims 
Office hired Claims Navigators to assist claimants compiling necessary 
documentation and with the Proof of Loss. Also as noted, the Act is a 
limited waiver of sovereign immunity, and similar to cases decided 
under the Federal Tort Claims Act,\45\ the Act does not waive sovereign 
immunity to allow payment of attorney fees.
---------------------------------------------------------------------------

    \44\ Animal Legal Defense Fund v. USDA, 789 F.3d 1206 (11th Cir. 
2015), citing In re Haas, 48 F.3d 1153, 1156 (11th Cir. 1995), 
abrogated on other grounds by In re Griffith, 206 F.3d 1389 (11th 
Cir. 2000). See also United States v. Roof, 10 F.4th 314 (4th Cir. 
2021), citing Discover Bank v. Vaden, 396 F.3d 366, 370 (4th Cir. 
2005).
    \45\ E.g., Anderson v. United States, 127 F.3d 1190, 1191 (9th 
Cir. 1997) (``The FTCA does not contain an express waiver of 
sovereign immunity for attorneys' fees and expenses.''); Joe v. 
United States, 772 F.2d 1535 (11th Cir. 1985).
---------------------------------------------------------------------------

    Comment: Several commenters stated the process was too complicated 
and required professional and/or legal assistance to navigate and that 
payment of these fees would help to make them whole.
    FEMA Response: One purpose of the Act is to provide for expeditious 
consideration and settlement of claims from the Fire. The Claims Office 
interprets this to require an approach to settling claims that 
claimants can complete without engaging the services of attorneys or 
other professionals. To achieve this goal, FEMA hired a number of 
Claims Navigators from the local community, trained these Claims 
Navigators to identify compensable losses and to understand what is 
needed to complete a Proof of Loss, and developed a Claims Office ethos 
that emphasizes the needs of the claimant. The Claims Navigators work 
with claimants to ensure that they develop the information needed to 
receive compensation for all eligible losses. The Claims Office 
recognizes that some claims will require special expertise and will pay 
for experts that are needed to value particular claims. FEMA also notes 
that at the time the comment was submitted, the Claims Office had not 
yet fully developed the claims procedures, so it is understandable that 
the commenters did not recognize that the process is designed so that 
claimants do not need legal assistance.
    Comment: One commenter wrote that the Act recognized that claimants 
may seek legal assistance and capped those fees at 20 percent. The 
commenter stated that a FEMA representative, ``protected by sovereign 
immunity, with no legal, ethical, or fiduciary obligation to the 
claimant, will be advising the claimant on the strategy to meet their 
burden of proof to obtain make-whole damages allowed by the language of 
the HPFAA and New Mexico State law. This approach puts claimants in the 
hands of FEMA representatives who have a conflict of interest. That is 
simply improper, unfair, unduly harmful to claimants, and places an 
administrative burden on FEMA and its representatives that otherwise 
would be borne by the claimant's attorneys.'' This commenter also 
stated that the claims process required claimants to make decisions 
with legal implications and that FEMA employees and contractors would 
be able to obtain legal advice and assistance from their counsel in the 
process. The commenter stated that FEMA's legal team would be paid from 
Act's funds as an administrative expense and that claimants' attorneys' 
fees should be as well. The commenter also added that if represented by 
attorneys, FEMA should pay those funds directly to the attorneys for 
proper handling and lien resolution through authorized IOLTA trust 
accounts stating that claimants would have lien obligations that must 
be satisfied out of the compensation received, whether to satisfy fees, 
mortgages, medical liens, or other liens.
    FEMA Response: As with the Cerro Grande Act, in this Act, Congress 
limits attorney fees that an attorney is able to charge given it has 
established a claims process statutorily mandating the expeditious 
provision of compensation to all injured persons. FEMA designed the 
program to help claimants navigate the process. The Claims Office is 
implementing measures to eliminate potential conflicts of interest, and 
otherwise the Claims Office has no incentive not to pay claimants for 
all eligible losses. The Act creates the Claims Office and instructs 
the Director of the Claims Office, other officials, and staff to fully 
compensate claimants applying the authorizations and limitations in the 
law. The Director, other officials, and staff have a legal duty to pay 
eligible claimants the full amount of proven claims. Third, the 
assignment of benefits prohibition in the regulations.
    Comment: One commenter stated that attorneys' fees should be 
covered to help with the claims process for those especially that are 
elderly, handicapped, or those with basic literacy skills that don't 
have the ability to file the claims process themselves, that ``the 
attorneys' fees should not come out of the final claim; that should be 
added on top of it.''
    FEMA Response: As discussed above, the Act is silent regarding 
FEMA's authority to pay attorney or agent fees. Generally, if Congress 
knows how to say something but chooses not to, its silence is 
controlling.\46\ While the Act places limits on the amount an attorney 
or agent may charge in section 104(j)(1), the Act does not provide for 
attorney or agent fees as allowable damages. Further, the ``American 
Rule,'' generally applicable in civil litigation and initially accepted 
by the United States Supreme Court in the case of Arcambel v. 
Wiseman,\47\ provides that in the absence of a statute indicating 
otherwise, each party is responsible for paying their own attorney 
fees. FEMA designed the claims process so that claimants will receive 
all eligible compensation without the need to engage the services of an 
attorney, and the Claims Office hired Claims Navigators to assist 
claimants compiling necessary documentation and with the Proof of Loss. 
Although claimants have the right to hire an attorney, one is not 
required. Also, the State of New Mexico has identified several programs 
providing free legal representation for individuals affected by the 
Fire.
---------------------------------------------------------------------------

    \46\ Animal Legal Defense Fund v. USDA, 789 F.3d 1206 (11th Cir. 
2015), citing In re Haas, 48 F.3d 1153, 1156 (11th Cir. 1995), 
abrogated on other grounds by In re Griffith, 206 F.3d 1389 (11th 
Cir. 2000). See also United States v. Roof, 10 F.4th 314 (4th Cir. 
2021), citing Discover Bank v. Vaden, 396 F.3d 366, 370 (4th Cir. 
2005).
    \47\ 3 U.S. (3 Dall.) 306 (1796). See also Peter v. NantKwest, 
Inc., 140 S.Ct. 365 (2019), Hardt v. Reliance Standard Life 
Insurance Co., 560 U.S. 242 (2010), Ruckelshaus v. Sierra Club, 463 
U.S. 680 (1983), and Summit Valley Industries, Inc. v. Carpenters, 
456 U.S. 717 (1982).
---------------------------------------------------------------------------

    Comment: One commenter stated that attorneys' fees and consultant 
fees need to be paid out of the Act's funding if the fees to administer 
the program would be paid out of the Act's funding.
    FEMA Response: As explained above, section 104(a)(2)(C)(i) requires 
FEMA to use the funding made available under the Act to fund the Claims 
Office. FEMA is required to follow the Act's

[[Page 59748]]

requirement to fund the Claims Office from the Act's funding. 
Additionally, as discussed above, the Act is silent regarding FEMA's 
authority to pay attorney or agent fees. Generally, if Congress knows 
how to say something but chooses not to, its silence is 
controlling.\48\ While the Act places limits on the amount an attorney 
or agent may charge in section 104(j)(1), the Act does not provide for 
attorney or agent fees as allowable damages. Further, the ``American 
Rule,'' generally applicable in civil litigation and initially accepted 
by the United States Supreme Court in the case of Arcambel v. 
Wiseman,\49\ provides that in the absence of a statute indicating 
otherwise, each party is responsible for paying their own attorney 
fees. FEMA designed the claims process so that claimants will receive 
all eligible compensation without the need to engage the services of an 
attorney, and the Claims Office hired Claims Navigators to assist 
claimants compiling necessary documentation and with the Proof of Loss. 
Although claimants have the right to hire an attorney, one is not 
required.
---------------------------------------------------------------------------

    \48\ Animal Legal Defense Fund v. USDA, 789 F.3d 1206 (11th Cir. 
2015), citing In re Haas, 48 F.3d 1153, 1156 (11th Cir. 1995), 
abrogated on other grounds by In re Griffith, 206 F.3d 1389 (11th 
Cir. 2000). See also United States v. Roof, 10 F.4th 314 (4th Cir. 
2021), citing Discover Bank v. Vaden, 396 F.3d 366, 370 (4th Cir. 
2005).
    \49\ 3 U.S. (3 Dall.) 306 (1796). See also Peter v. NantKwest, 
Inc., 140 S.Ct. 365 (2019), Hardt v. Reliance Standard Life 
Insurance Co., 560 U.S. 242 (2010), Ruckelshaus v. Sierra Club, 463 
U.S. 680 (1983), and Summit Valley Industries, Inc. v. Carpenters, 
456 U.S. 717 (1982).
---------------------------------------------------------------------------

    Comment: Some commenters stated that the funding provided under the 
Act was not sufficient to pay the claims and attorneys' and agents' 
fees.
    FEMA Response: FEMA is also concerned about the use of funds under 
the Act to pay attorneys' fees. As explained above, FEMA is committed 
to hiring staff and providing resources to assist all claimants with 
their claims. While claimants can seek counsel on their own, the claims 
process, as structured, will provide claimants with the assistance 
needed to prepare and submit their claims effectively.
    Comment: A commenter requested consistency in awards for damage, 
asking if FEMA would treat all claimants equitably whether the claimant 
chose to represent themselves and hired an attorney to handle their 
claim.
    FEMA Response: FEMA understands the commenter's concern but 
reiterates that the agency is bound to act in a fair manner with all 
claimants, regardless of representation. FEMA is committed to hiring 
staff and providing resources to assist all claimants with their 
claims. While claimants can seek counsel on their own, the claims 
process, as structured, will provide claimants with the assistance 
needed to prepare and submit their claims effectively.
4. Comments on the Cost of Prosecuting a Claim
    Comment: Several commenters sought to remove this exclusion from 
damages. One commenter wrote ``Absolutely every second of time spent on 
every action required of victims for them to receive compensations from 
the Hermit's Peak Fire Assistance Act must be covered as recoverable 
expense since this situation has been foisted upon victims against 
their will and through no fault of their own. This must be the case no 
matter the severity level of injury suffered by victims because this 
entire ordeal is both time consuming and stressful as it drags on to 
full conclusion.'' A different commenter wrote ``Time spent in claims 
preparation is not considered a damage. The time required for 
processing this claim is extensive. Loss of my time is a loss of that 
part of my life, and it should be considered valuable.''
    FEMA Response: FEMA provides claimants with the ability to recover 
the reasonable costs incurred in providing documentation requested by 
the Claims Office pursuant to Sec.  296.31(a) and incidental expenses 
pursuant to Sec.  296.31(b). However, time spent in the prosecution of 
a claim is not considered an actual compensatory damage. Section 
104(c)(3)(A) of the Act requires FEMA to reimburse claimants only for 
actual compensatory damages. FEMA cannot reimburse claimants for time 
spent working on their claims as such reimbursement is beyond the 
agency's statutory authority.
    Comment: One commenter wrote that because the Act authorizes 
compensation for `any other loss that the Administrator determines to 
be appropriate for inclusion,' FEMA can allow the cost of prosecuting a 
claim to be recoverable.
    FEMA Response: As explained in the IFR, compensatory damages for 
time spent in claims preparation or prosecuting a claim are not 
available under New Mexico law or the Federal Tort Claims Act. 
Moreover, there is no evidence Congress intended that claimants be 
compensated for the value of their time in preparing a claim. As 
explained in the IFR, FEMA is choosing to exercise discretion to 
provide a lump sum payment to claimants for miscellaneous and 
incidental expenses incurred in the claims process. FEMA will provide a 
lump sum payment of five percent of the insured and uninsured loss 
(excluding flood insurance premiums), not to exceed $25,000. The 
minimum lump sum payment is $150. Section 296.31(b) of the IFR 
represents a fair and reasonable accommodation between the agency's 
responsibility to spend Federal funds wisely and the desire to 
compensate claimants as fully as possible.
    Providing compensation for a claimant's time would be difficult to 
administer, as FEMA would have to determine equitably the value of a 
claimant's time and to verify that claimants have expended the number 
of hours that are claimed. FEMA's payments under the Act are subject to 
independent audit by the GAO and the DHS OIG and claimants would likely 
find attempts by auditors to verify the payment for hours spent in the 
claims process highly intrusive. Additionally, the type of compensation 
requested by commenters here would require production of receipts and 
other documentation, resulting in an overly burdensome process for this 
payment to claimants contrary to other comments requesting the agency 
streamline and simplify the claims process.

H. Comments on Sec.  296.21(c) Loss of Property

    Comment: One comment stated flood damage should be specifically 
added to this section. Several other commenters suggested an addition 
to this paragraph to allow for other losses including anticipated 
future damages from flooding through November 14, 2032. These 
commenters noted that it could be up to ten years before conditions 
stabilize in the impacted forests and watersheds and that the Act's 
language indicates that post-fire flooding injuries should be 
considered as actual compensatory damages.
    FEMA Response: As explained above, FEMA is revising Sec.  296.1 of 
the Final Rule to clarify that claimants may seek compensatory damages 
for injuries resulting from the Fire. This language is broad enough to 
encompass a range of injuries resulting from the Fire, including flood 
damages. Additionally, the definition of ``injured person'' includes 
injuries ``resulting from the Hermit's Peak/Calf Canyon Fire'' and is 
broad enough to encompass flooding, mudflow, mold, and debris flow as 
well as other types of injuries that may be considered to be resulting 
from the Fire. FEMA does not believe additional edits to this section 
of the regulation are required as a result. Further, FEMA is unable to 
extend the deadline for claims submission requested by the

[[Page 59749]]

commenters. As previously explained, some deadlines in the rule are 
beyond FEMA's control and authority to change. Section 104(b) of the 
Act requires claimants submit their Notice of Loss no later than 
November 14, 2024, two years from the date the IFR is promulgated. FEMA 
has built in extensions of this timeline for good cause, recognizing 
the realities of the Fire's impact. Sections 296.34 and 296.35 below 
establish a process for notifying FEMA of injuries that are not 
referenced in the initial Notice of Loss. Whether a claimant tells FEMA 
about an injury in the initial Notice of Loss or an amendment under 
Sec.  296.34, FEMA must know about the injury by November 14, 2024. For 
heightened risk reduction efforts, a claimant must include the claim in 
their Notice of Loss by November 14, 2024, or an amended Notice of Loss 
filed no later than November 14, 2025. See Sec.  296.21(c)(5). 
Additionally, FEMA recognizes the potential long-term impacts of 
flooding after fire and will encourage claimants to consider risk 
reduction measures to address those risks.
1. Comments on Sec.  296.21(c)(1) Real Property and Contents
    Comment: Several commenters wrote about how FEMA would value real 
property and contents when analyzing claims under the Act. Most of 
these commenters suggested FEMA consider the actual costs to rebuild 
and construct in the future, acknowledging increasing market values of 
land, construction, and other costs such as inflation. with some 
commenters stating that it may not be safe to immediately rebuild.
    FEMA Response: The language in the IFR addresses these concerns as 
it explains the costs of reconstruction must factor in post-Fire 
construction costs as well as current building codes at the time of 
construction. FEMA will work with claimants to ensure that compensation 
effectively addresses future construction cost concerns and 
compensation for any decrease in the value of the land on which the 
structure sat as detailed in Sec.  296.21(c)(1). FEMA is not making any 
changes to this section of the Final Rule.
    Comment: Some commenters stated that it may not be safe to 
immediately rebuild. One commenter wrote claimants face decades of 
uncertainty regarding terrain stability and that ``such areas are now 
extremely high-risk hazard zones.''
    FEMA Response: FEMA understands concerns about rebuilding 
immediately after the Fire and will work with claimants to ensure that 
compensation effectively addresses concerns regarding stabilizing the 
land and for any decrease in the value of the land on which the 
structure sat as detailed in Sec.  296.21(c)(1). The current text in 
the IFR is sufficient to address this concern and is not making any 
changes to this section of the Final Rule.
    Comment: Commenters raised questions regarding compensation for 
other damages beyond home reconstruction. Some commenters suggested 
FEMA consider the intrinsic value of the property lost, as well as loss 
of use damages and compensation for future potential land use. 
Commenters suggested that damages be calculated based on replacement 
and/or intrinsic value--not fair market value. Other commenters wrote 
requesting compensation for lost sentimental value for damaged real and 
personal property and the loss of use of personal or real property.
    FEMA Response: Generally, FEMA's calculation of damages, including 
how damaged property is valued, will be governed by the Act and Federal 
law. To the extent that this valuation is not pre-empted by Federal 
law, New Mexico law will govern.
    Comment: Some commenters suggested payment of double compensatory 
damages for trespass under New Mexico Statutes Annotated section 30-14-
1.1.
    FEMA Response: As noted, the Act does not provide for punitive or 
non-economic damages, including non-economic damages for nuisance and 
trespass. Economic damages associated with nuisance and trespass are 
available upon proper proof. However, because the Act limits recovery 
to actual damages, double compensation would not be available.
    Comment: Two commenters suggested FEMA compensate for property 
taxes, either to the local government or individual property owners.
    FEMA Response: The Claims Office compensates claimants for actual 
damages resulting from the Fire. Any increases in property tax or any 
decreases in property tax revenue income, if resulting from the Fire, 
would be compensable under the IFR.
    Comment: One commenter asked how losses for wells, water, and 
erosion would be compensated.
    FEMA Response: While the IFR addresses erosion, FEMA is adding 
paragraph (c)(5) to Sec.  296.21 of the Final Rule specifically address 
damages for physical infrastructure including irrigation infrastructure 
such as acequia systems. This change in the Final Rule can also 
encompass concerns raised regarding well and water losses to the extent 
those losses are of physical infrastructure. Those losses may also be 
considered part of real property and contents losses in Sec.  
296.21(c)(1).
    Comment: One commenter suggested FEMA find ways to compensate 
people that work a land grant, as those claimants would not have deeds 
to the property and figure out ways to get them documentation to 
support their claims.
    FEMA Response: The IFR language sufficiently addresses these 
commenters' concerns. Specifically, FEMA defines ``injured person'' in 
Sec.  296.4 to include individuals, businesses, Indian Tribes, State 
and local government entities, and ``other non-Federal entit(ies).'' 
This broad definition currently encompasses all potential claims 
associated with land grants as a result. As explained above, the Claims 
Office locally hired Navigators to assist claimants compiling necessary 
documentation and completing the Proof of Loss in support of the claim. 
Claims Navigators and Claims Reviewers will work with each claimant to 
ensure that they are able to get the proper documentation to complete 
their claim and will use alternative methods to prove ownership when 
the deed is not available, such as affidavits, utility bills, and tax 
records.
    Comment: One commenter inquired as to whether or not their vehicle 
and newly published book would be covered under the regulation.
    FEMA Response: Section 296.21(c)(1) of the IFR explains that 
claimants can seek compensation for the contents of real property 
damaged by the Fire. The commenter's personal property mentioned is 
covered by the current language and no changes to the regulatory text 
is required for the Final Rule.
    Comment: Several commenters focused on the issue of compensation 
for debris removal under this paragraph. Commenters generally sought 
clarification on what compensation was available. Commenters sought 
wages as compensation for debris removal efforts they complete because 
of the lack of available contractors in the area. One commenter stated 
``there is so much devastation, the cleanup part of the reimbursement 
is going to fall mainly on the landowner because there [are] not enough 
contractors or help out there to do this much clean up. And so, in 
order to do that, the landowners are going to need to pay themselves 
for their time and equipment that they use and need to cleanup a 
massive amount of trees. And so, I would hope that part of the 
compensation for the debris removal and reforestation is, would include 
wages for the landowners or their

[[Page 59750]]

friends or whoever to pay to get it done.''
    FEMA Response: Claimants seeking compensation for their own work or 
the work of those they hire to remove debris can claim this expense 
under Sec.  296.21(c)(1). FEMA does not believe further edits to the 
regulatory text are required for claimants to seek this compensation.
    Comment: Commenters questioned the extent to which adjacent 
property owners could be held responsible for debris flow traced to 
their property.
    FEMA Response: FEMA recognizes that not every property owner will 
file a claim or seek to restore their property and FEMA cannot require 
property owners to do so. Claimants seeking to promote recovery of 
their properties can file a claim under this paragraph. Also, the Act 
does not authorize FEMA to pursue liability against third parties who 
may be responsible for damage.
    Comment: Other commenters raised concerns about current debris 
removal efforts. A commenter stated that trees being removed for right 
of way created stumps that were too high and dangerous and a lack of 
inspections on the work performed. The commenter stated a general lack 
of progress on debris removal and how a lack of fencing resulted in 
animals in the road, presenting a danger to commuters in the area.
    FEMA Response: FEMA understands the challenges associated with 
debris removal after a wildfire and subsequent flooding. This paragraph 
of the IFR provides claimants the ability to receive compensation for 
removing debris and burned trees. As noted, FEMA and other Federal and 
State agencies have a number of programs that provided assistance after 
the Fire and had responsibilities for debris removal. The Claims Office 
provides compensation for damages resulting from the Fire, including 
debris removal, and is not responsible for debris removal and other 
post-disaster activities undertaken by other Federal and State 
agencies.
    Comment: Finally, some commenters sought clarification on 
prioritization of claimants with respect to this paragraph. Commenters 
generally suggested that FEMA focus first on those who lost their 
homes, including mobile homes, and do everything possible to make them 
whole.
    FEMA Response: FEMA intends to prioritize individual claimants over 
subrogees consistent with the Act's mandate at section 
104(d)(1)(A)(ii). FEMA understands the unique challenges presented for 
those that lost their homes in the Fire and agrees that those claims 
require immediate attention. FEMA will work to ensure that all claims 
are reviewed in an expeditious and fair manner.
    Comment: A commenter raised concerns about FEMA assistance through 
the Individual Assistance Program related to SBA loans, stating that an 
SBA loan would not make claimants whole.
    FEMA Response: Under the Act, this commenter has the option of 
filing a claim to be compensated for these damages if the assistance 
provided under the Individual Assistance Program was insufficient to 
fully compensate them.\50\ FEMA notes that the Individual Assistance 
Program has specific criteria for assistance,\51\ including 
requirements regarding pursuing a loan with the Small Business 
Administration, that are not found in the Act. FEMA encourages 
claimants to seek compensation for actual compensatory damages for 
injuries resulting from the Fire and as explained above, the Act can 
provide compensation if the assistance provided under the Individual 
Assistance Program was insufficient to fully compensate claimants. 
Notably, Small Business Administration loans, and the interest accrued 
on these loans, is compensable under the Act.
---------------------------------------------------------------------------

    \50\ Section 296.21(e)(1) provides for compensation under the 
Act for interest paid on loans for damages resulting from the Fire 
as well as proceeds from the compensation award to repay any SBA 
loans obtained.
    \51\ For information on the criteria for participation in the 
Individual Assistance Program please see the Individual Assistance 
Program and Policy Guide, Version 1.1 found at https://www.fema.gov/sites/default/files/documents/fema_iappg-1.1.pdf (last accessed Feb. 
24, 2023).
---------------------------------------------------------------------------

    Comment: One commenter asked if the Act would compensate for 
looting that occurred on their property after the Fire, stating they 
were denied assistance under the Individual Assistance Program.
    FEMA Response: Under the Act, this commenter has the option of 
filing a claim to be compensated for these damages if the assistance 
provided under the Individual Assistance Program was insufficient to 
fully compensate them.\52\ FEMA notes that the Individual Assistance 
Program has specific criteria for assistance.\53\ FEMA encourages 
claimants to seek compensation for actual compensatory damages for 
injuries resulting from the Fire and as explained above, the Act can 
provide compensation for damage from the Fire if the assistance 
provided under the Individual Assistance Program was insufficient to 
fully compensate them.
---------------------------------------------------------------------------

    \52\ Section 296.21(e)(1) provides for compensation under the 
Act for interest paid on loans for damages resulting from the Fire 
as well as proceeds from the compensation award to repay any SBA 
loans obtained.
    \53\ For information on the criteria for participation in the 
Individual Assistance Program please see the Individual Assistance 
Program and Policy Guide, Version 1.1 found at https://www.fema.gov/sites/default/files/documents/fema_iappg-1.1.pdf (last accessed Feb. 
24, 2023).
---------------------------------------------------------------------------

2. Comments on Sec.  296.21(c)(2) Reforestation and Revegetation
    Comment: Most commenters opposed the formula to pay 25 percent of 
the pre-Fire value of the lot and structures as compensation for 
reforestation and revegetation. Commenters stated 75 percent less value 
was unacceptable when there were large parcels of land previously 
forested before the Fire and recommended FEMA delete the 25 percent cap 
on reforestation damages, with several commenters stating the 25 
percent limit violated New Mexico law. One commenter wrote ``For 
landowners that have more than 100 acres, this is a tremendous 
financial burden when they need to come up with 75 [percent]. The 
compensation needs to be changed from 25 [percent] to a greater extent 
to cover losses from fire, erosion, creeks and water ways, meadows, 
deep canyons, pine trees, oak brush, and trees.'' A different commenter 
wrote ``Generations of stakeholders have provided a free ecological 
service maintaining the lands that make up the watersheds that provide 
clean water for millions downstream. This includes best practices for 
farming and forestry. Restoring the forests and planting new trees is 
essential for regenerating a healthy ecosystem, and repairing the harm 
done by the US government. Providing 100 [percent] of costs for loss 
will ensure that future generations have a better chance to develop 
this unique rural/mountain economy.''
    FEMA Response: In the IFR, FEMA limited compensation for trees and 
other landscaping to 25 percent of the pre-Fire value of the structure 
and lot. This approach was generally consistent with the approach taken 
in the Cerro Grande Fire Assistance process. As explained in the IFR, 
the 25 percent limitation does not apply to business losses for timber, 
crops, and other natural resources under Sec.  296.21(d). In response 
to commenter concerns and confusion regarding the application of this 
formula, FEMA is revising this paragraph in the Final Rule to eliminate 
references to the 25 percent formula. FEMA understands that the land 
impacted by this Fire was more heavily forested than the Cerro Grande 
Fire and that those resources were relied on for personal, subsistence, 
and business needs, making the formula in this section of the IFR 
particularly confusing. The Final Rule allows for

[[Page 59751]]

compensatory damages for the cost of replacement of destroyed trees and 
other landscaping and removes references to the 25 percent formula.
    Comment: Several commenters opposed to this paragraph stated the 
distinctions between the Cerro Grande Fire and Hermit's Peak/Calf 
Canyon Fire communities necessitated a different valuation analysis for 
the claims process. One commenter wrote ``Landowners of Mora and San 
Miguel are usually on many acres of land (some have been passed down 
through generations), whereas Cerro Grande were on smaller lots. 75 
[percent] less value is unacceptable when you have a large parcel of 
land that was previously forested.'' Another commenter wrote ``This 
approach was used in the Cerro Grande Fire Assistance Process in Los 
Alamos, New Mexico of which is one of the wealthiest counties per 
capita in the nation. I suspect the structures and land parcels are of 
higher value in Los Alamos versus Mora, New Mexico based on property 
assessments. It is suggested to reconsider the formula because 
properties in Mora would receive less compensation for similar damage 
from the wildfire versus Los Alamos.'' A commenter wrote ``Unlike 
properties in Los Alamos that were damaged by the Cerro Grande Fire and 
upon which this interim rule is based, many of the properties damaged 
by the Hermit's Peak and Calf Canyon Fires consist of hundreds of tree-
covered acres, not small, landscaped lots. New Mexico has a long 
history of subsistence use of forests and trees that should be 
recognized by this rule.''
    FEMA Response: As explained above, FEMA appreciates the insights 
provided by commenters on the distinctions between the areas impacted 
by the Cerro Grande Fire and the Hermit's Peak/Calf Canyon Fire. These 
differences are important to recognize, and FEMA agrees that these 
differences require revision to the IFR where the process implemented 
for the Cerro Grande Fire will no longer meet the needs of claimants 
for the Hermit's Peak/Calf Canyon Fire. In response to commenters' 
concerns, FEMA is revising this paragraph in the Final Rule to 
eliminate references to the 25 percent formula. As explained above, 
FEMA understands the communities impacted by this Fire were less 
densely populated and contained larger areas of privately held land. 
This land was also more heavily forested, making the loss of trees and 
vegetation a particularly devastating loss for claimants. The Final 
Rule allows for compensatory damages for the cost of replacement of 
destroyed trees and other landscaping and removes references to the 25 
percent formula.
    Comment: A commenter wrote that the Act did not impose caps on tree 
or mitigation damages and that New Mexico law did not have a cap on 
damages to trees or for mitigation, but rather that New Mexico law 
allows plaintiffs to recover the full value of any trees destroyed on 
their property. This commenter further stated that ``New Mexico law 
allows as compensatory damages double the value of tree damages. While 
the Act prohibits `punitive damages' it does not prohibit statutory 
compensatory damages but requires application of New Mexico law which 
includes section 30-14-1.1.''
    FEMA Response: In the IFR, FEMA limited compensation for trees and 
other landscaping to 25 percent of the pre-Fire value of the structure 
and lot. This approach was generally consistent with the approach taken 
in the Cerro Grande Fire Assistance process. As explained in the IFR, 
the 25 percent limitation does not apply to business losses for timber, 
crops, and other natural resources under Sec.  296.21(d). In response 
to commenter concerns and confusion regarding the application of this 
formula, FEMA is revising this paragraph in the Final Rule to eliminate 
references to the 25 percent formula. FEMA understands that the land 
impacted by this Fire was more heavily forested than the Cerro Grande 
Fire and that those resources were relied on for personal, subsistence, 
and business needs, making the formula in this section of the IFR 
particularly confusing. The Final Rule allows for compensatory damages 
for the cost of replacement of destroyed trees and other landscaping 
and removes references to the 25 percent formula.
    Comment: Commenters asked how the valuation used in the formula 
would be made under the formula, with one commenter requesting the 
inclusion of intrinsic value to be part of the damage's calculation for 
real property loss. A commenter asked how the 25 percent would be 
quantified and qualified. A different commenter requested that losses 
be calculated using replacement and/or intrinsic value, not fair market 
value and that these values should account for the generational 
investment in the land and forest that was destroyed, as well as the 
loss that will be incurred while regrowth takes place.
    FEMA Response: In response to commenter concerns and confusion 
regarding the application of this formula as explained above, FEMA is 
revising this paragraph in the Final Rule to eliminate references to 
the 25 percent formula. The Final Rule allows for compensatory damages 
for the cost of replacement of destroyed trees and other landscaping. 
Valuation of losses under this revised language will be at 100 percent 
of the damage. Generally, FEMA's calculation of damages, including how 
damaged property is valued, will be governed by the Act, Federal law, 
and New Mexico law, but only to the extent that New Mexico law is not 
pre-empted by Federal law.
    Comment: In lieu of the proposed formula, one commenter suggested 
FEMA pay per acre ($10,000 per acre) to be used to replant and rebuild 
loss.
    FEMA Response: FEMA appreciates the suggestion for a payment 
formula based on acreage. FEMA attempted to streamline the process by 
offering the formula presented in the IFR and understands there can be 
advantages to formulas to better assist claimants in receiving prompt 
payment. Given the challenges with the specific formula in the IFR and 
the unique concerns of the impacted communities because of the heavily 
forested areas and personal, subsistence, and business uses of the 
forest and vegetation, FEMA is removing the 25 percent formula from 
this section of the regulation. However, FEMA is looking at ways to 
better streamline the claims process in response to other comments and 
is considering offering payment formulas based on acreage such as the 
one suggested by one of the commenters to claimants. Any such type of 
formula would provide claimants with the option to either leverage that 
formula with their claim or submit documentation detailing their 
specific damages.
    Comment: Another commenter stated that landowners should be allowed 
to request wages as compensation for reforestation efforts on their 
land because of the lack of contractors to assist in the area.
    FEMA Response: Claimants seeking compensation for their own work or 
the work of those they hire for reforestation efforts can claim this 
expense under this paragraph. FEMA does not believe further edits to 
the regulatory text are required for claimants to seek this 
compensation.
    Comment: Commenters also commented on limiting compensation where 
the costs may be covered by another Federal program. Most commenters 
suggested FEMA remove this limitation, stating claimants should not be 
required to use other Federal programs, with some raising concerns 
those Federal programs may not have sufficient funding to cover the 
losses associated with the Fire. One commenter stated that FEMA must be

[[Page 59752]]

responsible for identifying other Federal programs and help claimants 
receive other identified funding in a timely manner to ensure they do 
not lose out on the Act's funding based on available funding that they 
may otherwise never receive.
    FEMA Response: Section 296.21(c) of the IFR states that 
compensatory damages may be awarded for the ``cost of reforestation or 
revegetation not covered by any other Federal program.'' This language 
has caused confusion with commenters as interpreting it to require 
claimants to first apply with other Federal programs. FEMA does not 
require claimants to apply to other Federal programs associated with 
reforestation and/or revegetation. Rather, the language was intended to 
clarify that, where the claimant has received payment from another 
Federal program, FEMA will only be able to compensate for reforestation 
and/or revegetation under the Act for those costs not covered already 
in the payment received from the other Federal program. This avoids a 
duplication of payment for the same damage. Claimants have the option 
of seeking assistance from other Federal programs for reforestation and 
revegetation, filing for compensation under the Act, or pursuing both 
other Federal program and compensation under the Act. The language in 
Sec.  296.21(c) is simply to clarify that FEMA cannot duplicate payment 
but can provide additional payment to cover actual compensatory damages 
for reforestation and revegetation. As explained above, FEMA is 
coordinating with other Federal agencies to ensure data sharing and 
better communication between programs. FEMA has engaged with and 
continues to engage with the Small Business Administration, the 
Department of Agriculture, and other Federal agencies to help 
facilitate coordination of the assistance available to claimants and 
the impacted communities. Consistent with the Act's requirements in 
section 104(g), FEMA is in consultation with other Federal agencies, 
and State, local, and Tribal authorities to ensure the efficient 
administration of the claims process to include ways to ensure 
claimants have the information they need regarding Federal programs 
available to them.
    Comment: Commenters also sought clarification on the distinctions 
between claims for reforestation and revegetation and subsistence or 
business loss. A commenter wrote that many claimants used trees for 
subsistence resources and asked for clarification regarding whether 
trees could be considered subsistence resources based on the language 
of the IFR.
    FEMA Response: As explained in the IFR, FEMA limited compensation 
for trees and other landscaping to 25 percent of the pre-Fire value of 
the structure and lot. This approach was generally consistent with the 
approach taken in the Cerro Grande Fire Assistance process. As 
explained in the IFR, the 25 percent limitation did not apply to 
business losses for timber, crops, and other natural resources under 
Sec.  296.21(d). In response to commenter concerns and confusion 
regarding the application of this formula, FEMA is revising this 
paragraph in the Final Rule to eliminate references to the 25 percent 
formula as the Cerro Grande formula is not appropriate given the 
geographic, economic, and cultural distinctions between that area and 
the areas impacted by this Fire. The Final Rule allows for compensatory 
damages for the cost of replacement of destroyed trees and other 
landscaping. Compensation for business loss and subsistence resources 
continue to be compensated at 100 percent. FEMA further notes that the 
definition of ``subsistence resources'' in Sec.  296.4 of the Final 
Rule includes firewood or other natural resource gathering, timbering, 
or agricultural activities undertaken by the claimant without financial 
renumeration. This definition should encompass the loss of trees as 
subsistence resources. The edits made to Sec.  296.21(c)(2) of the 
Final Rule are sufficient to address the commenters' concerns and 
modify the claims process to more appropriately address the needs of 
the claimants and communities impacted by this Fire.
3. Comments on Sec.  296.21(c)(3) Decrease in Value of Real Property
    Comment: Several commenters recommended FEMA delete the requirement 
that claimants demonstrate the value of the real property was 
permanently diminished as a result of the Fire. Two commenters 
recommended FEMA revise the language to ``significantly'' or ``long-
term.''
    FEMA Response: FEMA agrees that it will be difficult to demonstrate 
the real property value is permanently diminished given the size and 
scope of the Fire as well as the types of damages caused to real 
property in this area. As discussed above, the Hermit's Peak/Calf 
Canyon Fire impacted communities that are less densely populated and 
more heavily forested than the Cerro Grande Fire. These undeveloped 
areas may not be able to easily establish a permanent diminution in 
value as a result of the Fire. FEMA is removing the term 
``permanently'' from Sec.  296.21(c)(3) in the Final Rule and is 
rewriting this paragraph to read that the claimant can establish that 
the value of the real property was significantly diminished long-term 
as a result of the Hermit's Peak/Calf Canyon Fire. This change 
addresses the commenters' concerns regarding their ability to prove 
property values were permanently diminished while also still requiring 
some demonstration of a significant diminution in property value that 
is long-term in nature. The change in the Final Rule balances the need 
to compensate claimants for actual compensatory damages with the 
challenges of demonstrating a loss of property value where the claimant 
does not sell the property.
    Comment: Commenters raised specific concerns in documenting the 
diminution of property value, noting real estate sale amounts are not 
available in public records in New Mexico and recommending FEMA develop 
a method to compensate for real property claims using local appraisers, 
insurance records, and tax assessments.
    FEMA Response: FEMA understands these concerns and will be 
developing tools to assist claimants with this process. The regulatory 
text does not require revision as the process for demonstrating this 
injury can be better addressed in tools developed for claimants to 
accompany Claims Office policy and procedures.
    Comment: Some commenters sought the inclusion of intrinsic value in 
this loss calculation.
    FEMA Response: Generally, FEMA's calculation of damages, including 
how damaged property is valued, will be governed by the Act and Federal 
law and, to the extent it is not pre-empted by Federal law, New Mexico 
law.
    Comment: One commenter stated the loss calculation would increase 
if neighboring homes were not also rebuilt.
    FEMA Response: FEMA recognizes that not every property owner will 
file a claim or seek to rebuild on their property. Claimants receiving 
payment for their real property are not required to rebuild and FEMA 
cannot require property owners to do so. Claimants may provide 
information on how the lack of rebuilding in their area is impacting 
their property value when filing a claim under this paragraph.
    Comment: Another commenter suggested FEMA provide more than two 
years to be able to claim the loss of property value. The commenter 
stated ``for those of us who are not going to sell our property in the 
next two years, how

[[Page 59753]]

are we going to claim the loss in value of our property due to the fire 
and flood? I believe that the regulation should contemplate more than 
[two] years to be able to claim this loss.''
    FEMA Response: As explained above, some deadlines in the rule are 
beyond FEMA's control. The Act requires claimants submit their Notice 
of Loss no later than November 14, 2024, two years from the date the 
IFR is published. FEMA has built in extensions of this timeline for 
good cause, recognizing the realities of the Fire's impact. Sections 
296.34 and 296.35 below establish a process for notifying FEMA of 
injuries that are not referenced in the initial Notice of Loss. In 
Sec.  296.35, the IFR allows claimants to reopen a claim no later than 
November 14, 2025 if they sold their real estate and wished to present 
a claim for decrease in the value of real property. Additionally, 
claimants may request compensation for a decrease in the value of real 
property if they can demonstrate the value of the real property was 
significantly diminished long-term as a result of the Fire pursuant to 
changes made to this section in the Final Rule.
    Comment: Several commenters suggested FEMA incorporate language 
regarding water rights into this paragraph because water rights are 
treated as property rights in New Mexico and a claimant should be 
permitted to submit a claim for the decrease in value of a water right.
    FEMA Response: Claimants can file a claim for damages regarding 
water rights under the current language of this section and no changes 
are required in the Final Rule. Specifically, the current regulatory 
language regarding real property can be read to include water rights 
attached to that real property.
4. Comments on Sec.  296.21(c)(4) Subsistence
    Comment: Commenters raised questions about how damages would be 
defined and calculated under this paragraph. One commenter stated 
claimants in the area tend to practice self-sustainability in addition 
to using the land for business purposes and asked that FEMA further 
define on how losses under this would be calculated. Another commenter 
wrote ``FEMA needs to build in as much flexibility as possible for 
compensating future claims related to lost subsistence. The restoration 
of certain subsistence resources is difficult to predict, and the 
services may be permanently lost in certain cases.'' Comments were also 
received on the appropriate timeline for when these resources can 
reasonably be expected to return to the level of availability that 
existed prior to the Fire. Some commenters suggested that FEMA 
determine a date of five years as the timeline by which subsistence 
resources can be expected to return to the level of availability that 
existed before the Fire while at least one commenter felt that five 
years was not a sufficient period of time.
    FEMA Response: FEMA recognizes the challenges associated with 
calculating damages for subsistence. FEMA anticipates consulting 
experts with respect to subsistence resource claims to ensure the 
damages calculations address the reasonable cost of replacing these 
resources and the timeline for when these resources can reasonably be 
expected to return to the level of availability that existed prior to 
the Fire. FEMA is looking at ways to better streamline the claims 
process in response to other comments and is considering offering 
payment formulas for subsistence. Any such type of formula would 
provide claimants with the option to either leverage that formula with 
their claim or submit documentation detailing their specific damages.
    Comment: Some commenters suggested that income losses be considered 
part of subsistence losses. A commenter suggested that the regulations 
acknowledge that subsistence resources can also be the primary source 
of revenue and income for impacted individuals and businesses.
    FEMA Response: FEMA disagrees with the commenter. As defined at 
Sec.  296.4, ``subsistence resources'' include ``activities undertaken 
by the claimant without financial renumeration'' and losses involving 
revenue and income are better addressed as business loss.
    Comment: Other commenters sought compensation for ongoing costs for 
rent, food, energy, and other resources needed to maintain a 
subsistence lifestyle both in the immediate and long-term. One 
commenter suggested FEMA fully cover the recovery costs necessary to 
restore agricultural systems and damages and mitigation costs related 
to water quality, water rights, and soil health impairments for 
household and subsistence uses.
    FEMA Response: FEMA recognizes that the loss of subsistence 
resources can result in the need to obtain substitute resources in the 
cash economy. The current IFR allows for the costs of obtaining 
substitute resources in the cash economy to be considered compensatory 
damages. Other Federal and/or State programs may also address some of 
the immediate costs such as rent raised by commenters. To the extent 
the agricultural system and related costs constitute a subsistence 
resource (i.e., one for which the claimant receives no financial 
renumeration), it can be considered under a subsistence resource claim. 
To the extent such a system and related costs are for financial 
renumeration, a claim can be filed for damages as a business loss. As 
explained above, claimants can file a claim for damages regarding water 
rights under the current language of the regulation and no changes are 
required in the Final Rule. Specifically, the current regulatory 
language regarding real property can be read to include water rights 
attached to that real property.
    Comment: Several commenters on this paragraph focused on the need 
for firewood and other subsistence resources, with one commenter 
requesting vouchers for firewood for the next five to ten years or 
until the forests have regrown to support subsistence firewood 
requirements.
    FEMA Response: The IFR includes firewood gathering as a subsistence 
resource that can be compensable. Claimants can seek compensation for 
firewood under the subsistence resources paragraphs of the regulation 
and, where firewood may have been sold by the claimant, under the 
business loss paragraph of the regulation.
5. Comments on Physical Infrastructure (New Sec.  296.21(c)(5))
    Comment: Several commenters suggested FEMA incorporate language 
into the regulation clarifying the availability of compensation for 
damages to physical infrastructure. Two commenters recommended FEMA 
specifically incorporate guidance on acequias in the Final Rule to help 
alleviate challenges for claimants. Another commenter suggested 
language be added to this paragraph to include physical infrastructure 
such as irrigation infrastructure, acequias, and the loss of use of 
irrigation water rights appurtenant to the land with which other 
commenters agreed.
    FEMA Response: Consistent with the Act at section 
104(d)(4)(A)(iii), FEMA is adding paragraph (c)(5) to Sec.  296.21 to 
address physical infrastructure damage. This paragraph clarifies that 
claimants may seek compensation for the damage or destruction of 
physical infrastructure that may include damage to irrigation 
infrastructure such as acequia systems. This addition is consistent 
with the Act and incorporating this language better reflects the unique 
challenges faced by the communities impacted by the Fire. As explained 
above, claimants can file a claim for damages regarding water

[[Page 59754]]

rights under the current language of the regulation and no changes are 
required in the Final Rule.

I. Comments on Sec.  296.21(d) Business Loss

    Comment: Some commenters raised questions about the types of 
damages that would be considered as business losses, from opportunities 
to seek other business ventures to compensating for lost opportunity, 
agricultural loss, future business loss, lost income from landowner tag 
use or national forest permits, and future lost income.
    FEMA Response: In paragraph (d), FEMA details the types of damages 
generally considered eligible for compensation. This list, however, is 
not all inclusive and FEMA will review each claim on a case-by-case 
basis to determine whether the loss is eligible for compensation under 
the Act. Claimants should submit all claims associated with loss or 
damages resulting from the fire for review and consideration.
    Comment: Two commenters suggested compensation for economic 
development for the areas impacted by the Fire.
    FEMA Response: As explained above, economic development can be 
speculative and a claimant seeking compensatory damages for loss of 
economic development would need to be able to demonstrate such loss was 
a result of the Fire. The IFR currently provides the types of actual 
compensatory damages that are compensable under the Act, but that list 
is not all-inclusive. Claimants seeking compensation for actual 
compensatory damages not specifically listed in the regulation can 
still submit a claim for compensation under the Act. For this type of 
claim, claimants should consider how these damages would be considered 
actual compensatory damages for injuries resulting from the Fire 
consistent with the Act. FEMA does not believe changes to the 
regulatory text are required in the Final Rule for claimants to seek 
this type of compensation if they can demonstrate the loss and that the 
loss resulted from the Fire.
    Comment: One commenter suggested FEMA cover damages and mitigation 
costs related to water quality and water rights impacts to businesses, 
including agricultural producers.
    FEMA Response: Businesses may file claims for damages associated 
with water rights as part of claims associated with damages to real 
property under that paragraph and/or under business loss.
    Comment: Some commenters asked how FEMA would calculate business 
losses and specifically loss of business income given the economic 
challenges presented by the COVID-19 pandemic. Commenters generally 
stated that FEMA consider the time period prior to the pandemic, but 
also to consider other factors such as prior fires impacting the area.
    FEMA Response: FEMA understands the challenges regarding the 
appropriate timeline for consideration of business loss calculations 
given the COVID-19 pandemic and prior disasters. FEMA must also 
consider the programs available to businesses during those periods and 
the financial resources those programs may have provided to businesses. 
Claimants seeking compensation should present what they believe is a 
reasonable period of time to demonstrate their income and business 
losses resulting from the Fire. FEMA anticipates future policy and 
procedure documents will provide examples to help claimants with this 
type of compensation request.
    Comment: Commenters also asked about the types of businesses that 
are covered under the Act. One comment stated the statutory 
construction of the Act allows for reimbursement of business loss for 
nonprofit organizations.
    FEMA Response: The current definition of ``injured person'' 
includes ``other non-Federal entity'' and that terminology encompasses 
non-profit organizations. While FEMA understands the importance of non-
profit organizations in the relief process, the agency believes the 
current definition sufficiently encompasses all types of for-profit and 
non-profit entities and those entities can seek damages for business 
loss.
    Comment: Two commenters asked about the eligibility for business 
losses for those communities that were not in the direct area of the 
Fire but suffered losses as a result of the Fire. In prioritizing these 
claims, a commenter asked FEMA to first consider claims from claimants 
with actual fire and flood damage, but then consider business loss for 
claimants where the State closed off areas during the Fire.
    FEMA Response: Unlike disaster declarations that cover a specific 
geographic area, the Act covers all injured parties that suffered 
injuries as a result of the Fire. Claimants seeking compensation for 
their business losses should file a claim demonstrating their loss was 
a result of the Fire for consideration. Regarding prioritization, FEMA 
is amending Sec.  296.13 to specifically clarify the prioritization 
required under section 104(d)(1)(A)(ii) of the Act that requires FEMA 
to place priority on claims submitted by injured parties that are not 
insurance companies seeking payment as subrogees. FEMA will work to 
ensure that all claims are reviewed in an expeditious and fair manner.
    Comment: Finally, a commenter asked questions about the 
reforestation damages formula and its application to business losses 
for revenue received from cutting Christmas trees on their property.
    FEMA Response: As explained in the IFR, business losses are 
distinct from reforestation losses and a formula developed for 
reforestation would not be applied to those losses. Timber, crops, and 
other natural resources were listed under business losses in paragraph 
(d). With the updates made to paragraph (c)(2) above, FEMA has removed 
the 25 percent reforestation formula from the regulation. Business 
losses are not subject to a specific formula as part of compensation 
under the regulation.

J. Comments on Sec.  296.21(e) Financial Loss Generally

    Comment: Commenters raised questions about the types of financial 
losses to be covered under the Act and the eligible claimants for 
financial losses. One commenter suggested FEMA clarify how claimants 
can be compensated for the increased cost of homeowner and business 
insurance, stating these additional expenses will be ongoing for 
decades. Another commenter suggested FEMA cover unforeseen financial 
costs associated with evacuations.
    FEMA Response: In paragraph (e), FEMA details the types of damages 
generally considered eligible for compensation under financial loss. 
This list, however, is not all inclusive and FEMA will review each 
claim on a case-by-case basis to determine whether or not the loss is 
eligible for compensation under the Act. Claimants should submit all 
claims associated with financial loss for review and consideration.
    Comment: One comment stated the statutory construction of the Act 
allows for reimbursement of financial loss for nonprofit organizations.
    FEMA Response: The current definition of ``injured person'' 
includes ``other non-Federal entity'' and that terminology encompasses 
non-profit organizations. While FEMA understands the importance of non-
profit organizations in the relief process, the agency believes the 
current definition sufficiently encompasses all types of for-profit and 
non-profit entities and

[[Page 59755]]

those entities can seek damages for financial loss.
    Comment: One commenter made several specific suggestions in their 
comment seeking funding for public transportation and increased county 
staff salaries and fringe benefits.
    FEMA Response: As explained above, FEMA details the types of 
damages generally considered eligible for compensation under financial 
loss in this paragraph in the IFR. This list, however, is not all 
inclusive and FEMA will review each claim on a case-by-case basis to 
determine whether or not the loss is eligible for compensation under 
the Act. Claimants should submit all claims associated with business 
loss for review and consideration. FEMA reminds claimants that they 
must demonstrate that the financial loss was a result of the Fire. FEMA 
does not believe changes to the regulatory text are required in the 
Final Rule for claimants to seek financial losses if they can 
demonstrate these losses were a result of the Fire.
    Comment: Two commenters wrote that FEMA should provide funding to 
allow for economic redevelopment and stimulus activities under business 
and/or financial loss.
    FEMA Response: As explained above, economic development can be 
speculative and a claimant seeking compensatory damages for loss of 
economic development would need to be able to demonstrate such loss was 
a result of the Fire. The IFR currently provides the types of actual 
compensatory damages that are compensable under the Act, but that list 
is not all-inclusive. Claimants seeking compensation for actual 
compensatory damages not specifically listed in the regulation can 
still submit a claim for compensation under the Act. For this type of 
claim, claimants should consider how these damages would be considered 
actual compensatory damages to compensate claimants for injuries 
resulting from the Fire consistent with the Act. FEMA does not believe 
changes to the regulatory text are required in the Final Rule for 
claimants to seek this type of compensation if they can demonstrate the 
loss and that the loss resulted from the Fire.
1. Comments on Sec.  296.21(e)(1) Recovery Loans
    Comment: One commenter wrote that claimants are carrying the cost 
burden of paying interest on loans provided by the SBA and suggested 
that FEMA define a process in coordination with the SBA such that when 
an individual signs a Notice of Loss, any further payment of SBA 
interest will be deferred.
    FEMA Response: Section 296.21(e)(1) of the IFR provides 
compensation for interest paid on recovery loans, including SBA loans, 
and FEMA will cooperate with the SBA for procedures on the repayment of 
those loans. While FEMA intends to compensate claimants for interest 
paid on their SBA or other recovery loan, FEMA does not have the 
statutory authority to defer payment of interest on SBA loans in the 
interim.
2. Comments on Sec.  296.21(e)(2) Flood Insurance
    Comment: Commenters suggested specific changes to this section of 
the IFR. Specifically, commenters suggested the agency delete the two-
year limitation on flood insurance. Some commenters requested a five-
year period for flood insurance coverage while suggested a 10- or 15-
year period of coverage. Commenters also requested that these premium 
payments be available as compensation for claimants that are not 
required to purchase flood insurance.
    FEMA Response: Section 104(d)(4)(C)(viii) of the Act provides for 
payment of flood insurance premiums required to be paid on or before 
May 31, 2024. FEMA expanded upon this section of the Act to provide 
claimants with payment for flood insurance premiums even if the 
claimant is not required to purchase flood insurance, as the agency 
understands some claimants may have legitimate reasons for concern 
around flooding even if they are not currently required to maintain 
flood insurance. FEMA exercised the discretion in section 
104(d)(4)(C)(x) to allow compensation for flood insurance premiums if 
the claimant purchased flood insurance after the Fire due to the fear 
of heightened flood risk. FEMA does not believe, however, that the 
agency has the statutory authority to extend these payments beyond the 
period set by Congress in the Act. The current regulatory text 
sufficiently addresses the timeline and explains that both claimants 
currently required to purchase flood insurance and those claimants that 
purchase flood insurance based on their fear of heightened flood risk 
will be compensated for their flood insurance premiums due on or before 
May 31, 2024. As explained in the IFR, FEMA may provide flood insurance 
to such claimants directly through a group or blanket policy. The terms 
of that policy may allow for a longer period of coverage than the 
annual renewals under the regular National Flood Insurance Program 
Standard Flood Insurance Policy so long as the premium for that policy 
is paid on or before May 31, 2024. Additionally, FEMA notes that the 
Act provides for funding for heightened risk reduction to help 
alleviate the long-term impacts of flooding. This funding under Sec.  
296.21(e)(5) is available for claimants to file a claim until November 
14, 2025.
    Comment: One commenter wrote asking FEMA to clarify that an 
increase in flood insurance premiums is allowable as an allowable 
financial loss.
    FEMA Response: As explained above, section 104(d)(4)(C)(viii) of 
the Act provides compensation for payment of flood insurance premiums 
paid on or before May 31, 2024. The current regulatory text 
sufficiently addresses the timeline and explains that both claimants 
currently required to purchase flood insurance and those claimants that 
purchase flood insurance based on their fear of heightened flood risk 
will be compensated for their flood insurance premiums paid on or 
before May 31, 2024 even if those premiums increase. FEMA does not 
believe changes to the regulatory text are required in the Final Rule 
for this clarification.
3. Comments on Sec.  296.21(e)(3) Out-of-Pocket Expenses for Mental 
Health Treatment
    Comment: Commenters were generally supportive of this paragraph but 
sought clarifications and an extension of the time for which expenses 
would be compensated. Most commenters asked FEMA to consider the long-
term impacts of the Fire and extend the coverage of expenses beyond 
2024. A commenter stated that negative mental and emotional impacts 
would continue for decades, if not through the remainder of their 
lives. Another commenter wrote that not all mental health impacts of 
this major disaster were known to us now and would take additional time 
to be identified and treated, recommending FEMA extend this 
reimbursement deadline to treatments rendered by the end of 2025.
    FEMA Response: FEMA appreciates the concerns raised by commenters 
on the timeline associated with out-of-pocket mental health expenses. 
In the IFR, FEMA limited this timeline to April 6, 2024, two years 
after the date the Fire began. FEMA agrees that this timeline should be 
extended and recognizes that mental health treatment may extend beyond 
the deadline to file a claim. The Final Rule extends the deadline 
allowing claimants to seek reimbursement for out-of-pocket mental 
health treatment expenses for treatment identified on or before 
November 14, 2024. FEMA is extending the deadline

[[Page 59756]]

until November 14, 2024 for consistency with the timeline to file a 
claim under the Act to ensure that all treatment identified during that 
period may be claimed. FEMA recognizes that mental health treatment may 
extend beyond the deadline for filing a claim and claimants may also 
reopen claims under Sec.  296.35 for good cause.
    Comment: One commenter expressed confusion about whether or not 
mental health treatment would be compensated. Other commenters 
requested clarification that the mental health treatment expenses apply 
to conditions that the Fire worsened.
    FEMA Response: FEMA is revising Sec.  296.21(e)(3) in the Final 
Rule to clarify that compensation will be available for out-of-pocket 
mental health treatment expenses for conditions resulting from and 
conditions that were worsened by the Fire. This change in the Final 
Rule will ensure those victims whose conditions worsened as a result of 
the Fire will be able to receive compensation for out-of-pocket mental 
health treatment expenses.
    Comment: Commenters also raised questions about personal injuries 
and physical health conditions, raising questions about long-term 
health effects because of exposure to contaminant and carcinogens and 
other air and water pollutants as a result of the Fire and how FEMA 
would cover those damages.
    FEMA Response: As one commenter noted, FEMA defines injury in Sec.  
296.4 to include personal injury consistent with the Federal Tort 
Claims Act and personal injury damages are compensable under the Act. 
FEMA lists the types of damages for which compensation may be awarded 
for financial loss. This list, however, is not all inclusive and FEMA 
will review each claim on a case-by-case basis to determine whether or 
not the loss is eligible for compensation under the Act. Claimants 
should submit all claims associated with personal injury for review and 
consideration. FEMA does not believe changes to the regulatory text 
from the IFR are required in the Final Rule given the definition of 
injury clearly encompasses personal injury.
4. Comments on Sec.  296.21(e)(4) Donations
    Comment: Most commenters generally supported extending the 
timeframe provided for donations beyond the September 20, 2022 
timeframe provided in the IFR. Three commenters supported changing the 
timeframe for donations to one year after the Fire was contained. Two 
of the three commenters disagreed on the appropriate date to reflect 
one year after the Fire's containment with one commenter recommending 
August 30, 2023 and another recommending FEMA change the date to August 
21, 2023.
    FEMA Response: FEMA agrees that the timeframe should be extended 
and given the confusion regarding the timeline for the Fire's 
containment, FEMA is changing the deadline in the Final Rule from 
September 20, 2022 to November 14, 2022 to reflect the date the IFR was 
published. FEMA seeks to balance the need to extend this deadline with 
concerns raised by other commenters regarding the inclusion of 
donations as allowable financial loss damages in the IFR. Setting the 
timeframe for these donations to the IFR's publication date ensures 
that those donations made to support those suffering from the Fire will 
be compensated up until the date at which claimants had a better 
understanding of how FEMA would provide for compensation for their 
losses and the date when claimants could begin to pursue a claim under 
the Act thus reducing the need to rely on these donations.
    Comment: Two individual commenters opposed the inclusion of 
donations in the regulation. A commenter wrote ``Voluntary and charity 
is just that, given freely and without expectation of gain or 
reimbursement. If that was the actual intent of the presence of these 
organization in the area, then they should not be reimbursed for their 
acts of charity and volunteering.'' Another commenter asked if there 
were other programs that could compensate these organizations for the 
donations provided to the people of impacted by the Fire. A different 
commenter recommended FEMA prioritize payment of claims for property 
loss, financial loss, and business loss before reimbursing claims for 
voluntary donations.
    FEMA Response: FEMA incorporated the ability to seek compensation 
for financial loss for donations consistent with the Cerro Grande Fire 
Assistance process. FEMA heard from the public that this Fire is 
distinct in many ways from the Cerro Grande Fire and requires 
differences in the process but believes the ability to compensate those 
that provided donations should remain in the Final Rule given the 
Hermit's Peak/Calf Canyon Fire's impact. FEMA understands that these 
donations may have come from individuals, businesses, and other 
entities not just charitable organizations whose sole purpose is 
providing such services and wants to ensure those claimants are able to 
seek compensation for their donation efforts to support the community. 
Recognizing the concerns raised by these commenters as well as those 
commenters that felt this was an important component of the IFR, FEMA 
is extending but still limiting the timeframe available for those 
seeking compensation for financial losses associated with donations to 
the date the IFR was published. Setting the timeframe for these 
donations to the IFR's publication date ensures that those donations 
made to support those suffering from the Fire will be compensated up 
until the date at which claimants had a better understanding of how 
FEMA would provide for compensation for their losses and the date when 
claimants could begin to pursue a claim under the Act thus reducing the 
need to rely on these donations. FEMA also recognizes that donations to 
injured parties are not considered a duplication of benefits and that 
extension of the time frame would create the anomalous situation where 
FEMA would be duplicating compensation. FEMA agrees with the commenter 
that prioritization of claims should be focused first on claims for 
property loss, financial loss, and business loss before reimbursing 
claims for voluntary donations and will implement a process to ensure 
this prioritization to the greatest extent possible.
5. Comments on Sec.  296.21(e)(5) Heightened Risk Reduction
    Comment: Commenters generally opposed the formula for compensation 
provided for heightened risk reduction efforts. Several commenters 
recommended deleting the 25 percent formula for heightened risk 
reduction efforts. A commenter wrote that the Act did not impose caps 
on tree or mitigation damages. A different commenter wrote that the Act 
addressed limits on damages, limiting them to `actual compensatory 
damages measured by injuries suffered' and that the Act further placed 
New Mexico law in a position subordinate to the terms of the Act itself 
by allowing for New Mexico law to govern the calculation of damages. 
Another commenter stated that ``these arbitrary Urban Centric caps do 
not make victims whole as required by the Act but rather shorts the 
landowners.''
    FEMA Response: FEMA recognizes that this Fire is distinct from the 
Cerro Grande Fire and that the formula for compensation utilized for 
the Cerro Grande Fire Assistance process will not sufficiently address 
the risk reduction needs for claimants in this Fire and is eliminating 
the 25 percent formula from

[[Page 59757]]

the Final Rule. Specifically, FEMA is removing the language 
``Compensation under this section may not exceed 25 percent of the 
higher of payments from all sources (i.e., the Act, insurance proceeds, 
FEMA assistance under the Stafford Act) for damages to the structure 
and lot, or the pre-fire value of the structure and lot'' from the 
Final Rule. FEMA also recognizes that compensation for risk reduction 
is not generally compensable under New Mexico law.
    Comment: Commenters also questioned the language in the IFR 
requiring that claimants must complete the risk reduction project for 
which they receive compensation. One commenter wrote that the 
requirement that the risk reduction project must be completed before 
compensation can be awarded was an incorrect reading of the Act. ``The 
word `incurred' in Section 104(d)(4)(C)(vii) of the Act does not mean 
`completed' or `paid.' Rather, the word `incur' means ``to become 
through one's own action liable or subject to.' (Oxford English 
Dictionary.) If a claimant has contracted for risk reduction work or 
started but not completed the work for which he/she will be financially 
responsible, the claimant has ``incurred'' the cost within the meaning 
of the statute. Requiring the work to be completed before compensation 
is awarded defeats the purpose of the Act to compensate fire victims 
for their losses. Requiring work to be completed prior to compensation 
defeats the intent of the Act and is patently unreasonable. To require 
a wildfire victim to advance money to remediate the damage caused by 
the Forest Service, but not be recompensed until the work is complete, 
is not within the express language or intent of the Act.'' Another 
commenter wrote that requiring completion of the risk reduction work 
before compensation would be provided defeated the purpose of the Act 
as many claimants would not be able to afford to do the work without 
the compensation funds. This commenter stated that once a claimant 
secured a contract for the risk reduction work, they would have 
technically incurred the costs and the Act allows for advance or 
partial payments before final settlement.
    FEMA Response: FEMA disagrees with the commenters' reading of the 
IFR that there is a requirement to complete the work before 
compensation can be received. Rather, the IFR states that claimants 
``must complete the risk reduction project for which they receive 
compensation.'' FEMA does not require that the work be completed prior 
to payment. Rather, the language requires applicants to complete the 
work for which they receive compensation related to the risk reduction 
project. FEMA understands that claimants may not have completed the 
project at the time the claim for this compensation is filed and 
anticipates these claims may include estimates for the work to be done 
specifically by allowing claimants to amend their Notice of Loss by 
November 14, 2025. Claimants must ultimately complete the risk 
reduction project for which they receive compensation as failing to do 
so would be contrary to the Act's purpose in providing compensation to 
reduce these risks, and because the compensation provided would not 
generally be otherwise available in litigation under New Mexico law. 
FEMA retains the right to inspect real property. See Sec.  296.30.
    Comment: One commenter suggested removing all language related to 
the 25 percent formula as well as language regarding the deadlines 
associated with filings and that claimants should consider current 
building codes and complete the project for which they receive 
compensation.
    FEMA Response: FEMA agrees with the commenter regarding the formula 
and is removing the sentence associated with it as explained above. 
However, FEMA disagrees that the agency can and should remove the 
remaining language in the IFR. The IFR provides a deadline by which 
claimants must submit the claim for compensation for heightened risk 
reduction efforts. This language is consistent with other sections of 
the regulation where deadlines are provided, and the deadline provided 
here is consistent with the Act. FEMA generally does not have the 
statutory authority to extend this deadline. FEMA further believes 
claimants should be encouraged to consider current building codes and 
standards when completing heightened risk reduction projects as these 
codes and standards should generally result in more resilient 
rebuilding and likely will be mandatory under local building 
ordinances. Finally, as explained above, claimants must complete the 
risk reduction project for which they receive compensation as failing 
to do so would be contrary to the Act's purpose in providing 
compensation to reduce these risks. FEMA retains the right to inspect 
real property. See Sec.  296.30.
    Comment: One commenter requested that FEMA not attempt to reassure 
claimants of the safety of rebuilding homes where they once stood as 
the Fire impacts now made those areas extremely high-risk hazard zones.
    FEMA Response: FEMA understands concerns about rebuilding 
immediately after the Fire and will work with claimants to discuss how 
these concerns can be addressed as part of the heightened risk 
reduction process. The Act allows for these damages and FEMA is 
required to provide actual compensatory damages to claimants seeking 
them under the Act. FEMA does not believe any changes to this section 
of the Final Rule are required to address this concern.
    Comment: One commenter asked how heightened risk reduction loss 
would be calculated and whether payment would be made for processes 
completed and for those anticipated to be completed.
    FEMA Response: Claimants seeking compensation for this loss should 
submit the documentation they have showing costs incurred or expected 
to be incurred as part of the heightened risk reduction project. As 
explained above, the IFR states that claimants ``must complete the risk 
reduction project for which they receive compensation.'' FEMA does not 
require that the work be completed prior to payment. Rather, the 
language requires applicants to complete the work for which they 
receive compensation related to the risk reduction project. FEMA 
understands that claimants may not have completed the project at the 
time the claim for this compensation is filed and anticipates these 
claims may include estimates for the work to be done specifically by 
allowing claimants to amend their Notice of Loss by November 14, 2025. 
Claimants must ultimately complete the risk reduction project for which 
they receive compensation as failing to do so would be contrary to the 
Act's purpose in providing compensation to reduce these risks. FEMA 
retains the right to inspect real property. See Sec.  296.30.
    Comment: Several commenters recommended FEMA add language to this 
section to state that ``compensation under this section will not be 
awarded for costs that have been reimbursed under FEMA's Public 
Assistance Programs or by insurance.'' The commenters requested that 
FEMA interpret this limitation liberally and in alignment with FEMA's 
mission.
    FEMA Response: FEMA appreciates the commenters' desire for clarity, 
but the agency believes Sec.  296.21(e) resolves these concerns. 
Specifically, the IFR at Sec.  296.21(e) states that FEMA is not 
authorized to compensate claimants for damages paid by insurance. 
Further, Sec.  296.21(f)(2) states that ``compensation will not be 
awarded under the Act for injuries or costs that are eligible under the 
Public Assistance Program.'' FEMA

[[Page 59758]]

does not believe revising the Final Rule as requested by the commenters 
is necessary to meet the intent of the statute. FEMA notes the 
commenters' desire for the agency to consider additional risk reduction 
efforts to make individuals and communities more resilient than the 
pre-Fire condition, but the Act limits FEMA's authority to compensate 
claimants to the costs of reasonable efforts to reduce risks to levels 
prevailing prior to the Fire. If a claimant seeks to implement a 
heightened risk reduction project that will result in reduced risks 
beyond the level prevailing at the time of the Fire, FEMA will consider 
such a request on a case-by-case basis consistent with the agency's 
discretion under the Act.
    Comment: A commenter wrote regarding nature-based solutions, 
stating that the science was well established, and that these solutions 
were actively applied by the U.S. Forest Service to burned areas. The 
commenter mentioned mulching, seeding, and replanting burned forest 
ground as accepted means of reduction the risk of flood waters running 
downslope.
    FEMA Response: FEMA appreciates the commenter's response to the 
agency's request for feedback regarding nature-based solutions. FEMA 
continues to support implementation of these solutions where 
appropriate and encourages claimants to consider nature-based solutions 
as part of their claim for compensation under this provision.
    Comment: One commenter recommended that FEMA develop some pre-
approved mitigation opportunities for homeowners, businesses, and other 
entities to allow claimants to better determine the appropriate 
projects for them. The commenter stated that this would allow the 
Claims Office to automatically approve those projects with the present 
dollar amount and thus not require every single specific claim go 
through some arduous mitigation process.
    FEMA Response: FEMA appreciates the suggestion for a pre-approved 
project plan and associated cost formula. FEMA attempted to streamline 
the process by offering the formula presented in the IFR and 
understands there can be advantages to these types of schemes to better 
assist claimants in receiving prompt payment. As explained above, FEMA 
is revising the language in this paragraph to eliminate the 25 percent 
formula that raised so many concerns with commenters. However, FEMA is 
looking at ways to better streamline the claims process in response to 
other comments and is considering offering payment formulas based on 
specific project types as the commenter suggested. For example, FEMA is 
considering a menu of potential actions claimants may take for 
heightened risk reduction claims that would reduce claim review time 
and streamline payment for those claims. Any such type of formula would 
provide claimants with the option to either leverage that formula with 
their claim or submit documentation detailing their specific damages 
and costs.

K. Comments on Sec.  296.21(f) Insurance and Other Benefits Generally

    Comment: As mentioned above, some commenters requested FEMA 
eliminate references to other Federal government programs and their use 
in the claims process. Commenters raised general concerns about the 
burden placed on claimants to engage in other Federal programs and 
expressed concerns about a lack of interagency cooperation.
    FEMA Response: FEMA does not intend to require claimants to apply 
to other Federal programs, except for FEMA's Public Assistance program. 
Rather, the language was intended to clarify that, where the claimant 
has received payment from another Federal program, FEMA will only be 
able to compensate claimants under the Act for those costs not covered 
already in the payment received from the other Federal program. This 
avoids a duplication of payment for the same damage. Claimants have the 
option of seeking assistance from other Federal programs, filing for 
compensation under the Act, or pursuing both other Federal program and 
compensation under the Act. The language in this section of the IFR 
simply clarifies that FEMA cannot duplicate payment but can provide 
additional payment to cover actual compensatory damages that were not 
covered by other Federal programs. FEMA notes that the IFR only 
prohibits payment under the Act for injuries or costs that are eligible 
under the Public Assistance Program. The Act provides in section 104(k) 
to waive the matching funds required for Federal programs and require 
that those programs pay the cost share directly. This ensures that 
those funds are taken from those Federal programs rather than the Act's 
funding and thus helps further extend the ability of the Act to fund 
compensation for claimants. Section 296.21(f)(2) of the IFR confirms 
that FEMA will not pay claimants for injuries or costs that are 
eligible under the Public Assistance Program but rather that these 
injuries and costs need to be paid through the Public Assistance 
Program and given the Act's provisions, FEMA is required to pay those 
eligible costs at 100 percent without a cost share requirement for 
State and local projects.
    As explained above, FEMA is coordinating with other Federal 
agencies to ensure data sharing and better communication between 
programs. FEMA has engaged with and continues to engage with the Small 
Business Administration, the Department of Agriculture, and other 
Federal agencies to help facilitate coordination of the assistance 
available to claimants and the impacted communities. Consistent with 
the Act's requirements in section 104(g), FEMA is consulting with other 
Federal agencies, and State, local, and Tribal authorities to ensure 
the efficient administration of the claims process to include ways to 
ensure claimants have the information they need regarding Federal 
programs available to them.
    Comment: One commenter requested FEMA streamline access to 
available Federal programs and, in addition to funds appropriated under 
the Act, to utilize other Federal funding opportunities when and where 
available. The commenter asked that State Case Managers be integrated 
into the program and trained as Navigators to serve as a single point 
of contact to help claimants throughout the process. The commenter also 
requested FEMA reopen Federal programs where deadlines may have passed 
to submit applications to allow claimants the opportunity to take 
advantage of those programs.
    FEMA Response: FEMA anticipates that Claims Navigators will provide 
the assistance envisioned by the commenter and additional staffing 
outside of the Claims Office will not be required. FEMA is unable to 
reopen non-FEMA Federal programs for claimants but can work with 
claimants regarding Federal program availability generally and the 
deadlines associated with FEMA-specific programs.
1. Comments on Sec.  296.21(f)(1) Insurance
    Comment: Three commenters recommended FEMA delete all references to 
insurance companies in the regulation.
    FEMA Response: Section 104(d)(1)(C) of the Act requires FEMA to 
reduce the amount paid for the claim by the amount that is equal to the 
total of insurance benefits and other payments or settlements with 
respect to the claim. FEMA does not have the statutory authority to 
delete this requirement.
    Comment: One commenter requested FEMA note that if an insurance 
company has not paid all that FEMA anticipated, FEMA should commit to 
awarding the difference at the time the

[[Page 59759]]

authorized official's determination is made.
    FEMA Response: In the preamble to the IFR, FEMA stated that the 
agency can award the difference at the time the Authorized Official's 
determination is made. FEMA also noted in the preamble that the State 
of New Mexico generally requires insurance companies to settle 
catastrophic claims within 90 days of the date the claim was reported, 
and the agency expects that most, if not all, insurance claims will be 
paid before the determination is issued. FEMA further explained in the 
IFR preamble that if the insurance claim is resolved after the 
determination and the claimant is due additional compensation as a 
result, the claim can be reconsidered under sections 296.34 or 296.35 
of the IFR. FEMA believe this process is sufficient to resolve the 
commenter's concerns and no changes to the regulatory text of the Final 
Rule are required.
    Comment: Another commenter stated that insurance companies will 
demand compensation for the amounts they have paid or will pay to 
insured claimants and found that to be fair. However, the commenter 
stated that greed may influence the insurers claims and those claims 
would then negatively affect claimant compensation.
    FEMA Response: Section 104(d)(1)(A)(ii) of the Act requires FEMA to 
place priority on claims submitted by injured parties that are not 
insurance companies seeking payment as subrogees. Section 296.13 of the 
IFR requires subrogees to file their Notice of Loss after they have 
made all payments entitled to the injured person for Fire-related 
injuries under the terms of the insurance policy. FEMA is amending 
Sec.  296.13 to specifically clarify the prioritization required under 
the Act. Further, Sec.  296.21(f) of the regulation requires FEMA to 
compensate injured persons only for damages not paid or not to be paid 
by insurance companies. As explained above, these provisions, in 
addition to the changes made to Sec.  296.13 of the Final Rule, will 
help ensure that the compensation available to injured persons is not 
negatively affected.
    Comment: One individual commenter expressed concerns that insurance 
benefits would be impacted by claims under the Act and that claims 
under the Act will impact insurance benefits.
    FEMA Response: As explained above, Section 104(d)(1)(A)(ii) of the 
Act requires FEMA to place priority on claims submitted by injured 
parties that are not insurance companies seeking payment as subrogees. 
Section 296.13 of the IFR requires subrogees to file their Notice of 
Loss after they have made all payments entitled to the injured person 
for Fire-related injuries under the terms of the insurance policy. FEMA 
is amending Sec.  296.13 to specifically clarify the prioritization 
required under the Act. Further, Sec.  296.21(f) of the regulation 
requires FEMA to compensate injured persons only for damages not paid 
or not to be paid by insurance companies. As explained above, these 
provisions, in addition to the changes made to Sec.  296.13 of the 
Final Rule, will help ensure that the compensation available to injured 
persons is not negatively affected.
2. Comments on Sec.  296.21(f)(2) Coordination With FEMA's Public 
Assistance Program
    Comment: Some commenters requested FEMA remove references to the 
Public Assistance Program as the deadlines have passed for that 
program. Other commenters suggested the paragraph be reworded from 
expecting claimants to apply for the program to encouraging them to do 
so and to state that compensation under the Act will not be awarded for 
damages already compensated by FEMA's Public Assistance Program instead 
of all eligible costs.
    FEMA Response: FEMA disagrees with the commenters seeking to delete 
this provision of the IFR. FEMA is retaining this language in the Final 
Rule as the agency believes it is important to clarify that those 
injuries and costs eligible under the Public Assistance Program must be 
paid from that program to ensure the funds are used consistently with 
the Act's provision in section 104(k). FEMA understands that the Public 
Assistance application period has closed but will continue to accept 
these applications given the Act's requirements. Those entities 
eligible for Public Assistance should continue to apply for and seek 
assistance through that program.
    Comment: One commenter requested that FEMA, in coordination with 
the New Mexico Department of Homeland Security and Emergency 
Management, assist claimants in applying for and receiving assistance 
under the Public Assistance Program.
    FEMA Response: As explained above, FEMA is coordinating with other 
Federal agencies to ensure data sharing and better communication 
between programs. FEMA has engaged with and continues to engage with 
the Small Business Administration, the Department of Agriculture, and 
other Federal agencies to help facilitate coordination of the 
assistance available to claimants and the impacted communities. 
Consistent with the Act's requirements in section 104(g), FEMA is in 
consultation with other Federal agencies, and State, local, and Tribal 
authorities to ensure the efficient administration of the claims 
process to include ways to ensure claimants have the information they 
need regarding Federal programs available to them.
    Comment: A commenter requested compensation in several areas that 
may qualify for the Public Assistance Program.
    FEMA Response: Any claimant with an injury or costs that may be 
eligible for Public Assistance should apply for Public Assistance. FEMA 
understands that the Public Assistance application period has closed 
but will continue to accept these applications given the Act's 
requirements.
3. Comments on Sec.  296.21(f)(3) Benefits Provided by FEMA's 
Individual Assistance Program
    Comment: One commenter requested that FEMA amend this section to 
make clear that if FEMA only partially compensated a claimant for 
injuries or costs under the Individual Assistance Program that the 
Claims Office will compensate the remainder of costs and injuries under 
the Act.
    FEMA Response: FEMA does not believe the language in the IFR 
requires revision on this point. The current language provides that 
FEMA will not award compensation under the Act for those injuries or 
costs that have been reimbursed under the Individual Assistance 
program. This language necessitates that those injuries or costs that 
have not been fully reimbursed are eligible under the Act for 
compensation. FEMA is not making any changes to the Final Rule in this 
paragraph given the current language is sufficiently clear.
    Comment: Two commenters requested FEMA clarify that temporary 
emergency support and sheltering, as well as temporary housing costs 
provided by FEMA should be considered in addition to the Act's funding 
and should not impact an individual claim.
    FEMA Response: FEMA disagrees with these commenters. FEMA cannot 
pay for temporary housing costs under the Act if the individual has 
already received payment for these expenses under the Individual 
Assistance program as this would result in a duplication of payment. 
These costs, however, would not be deducted from a real property claim. 
Thus, if a claimant obtained a temporary housing unit through FEMA's 
Individual Assistance program but sought compensation to rebuild their 
home after the Fire, FEMA would fully compensate the claimant for the 
costs associated with rebuilding

[[Page 59760]]

their home and would not deduct the costs associated with the 
claimant's time in the temporary housing unit from the claim as these 
are distinct costs.

L. Comments on Claims Evaluation

1. Comments on Sec.  296.30(a) Burden of Proof
    Comment: Commenters raised a range of concerns about this 
paragraph. Several commenters requested that FEMA consider alternative 
ways of demonstrating ownership, particularly given the 
multigenerational landowners in the region and lack of availability of 
real estate sale amounts in the public record in New Mexico. A 
commenter suggested FEMA pay attention to uninsured claimants and those 
without ``proper'' paperwork, particularly those multigenerational 
landowners. A different commenter stated that sale prices, appraisals, 
and mortgage amounts were not public information in New Mexico, asking 
how claimants seeking to prove the value of their land would get that 
information.
    FEMA Response: The burden of proof remains with the claimant to 
demonstrate injuries resulting from the Fire, but, as explained above, 
the Claims Office locally hired Navigators to assist claimants 
compiling necessary documentation and completing the proof of loss in 
support of the claim. When necessary, the Claims Office can fund 
appraisals, surveys, or other data collections efforts to aid the 
claimant in proving value or ownership of property. Further, as 
explained in Sec.  296.30(a), FEMA may compensate a claimant for an 
injury in the absence of supporting documentation on the strength of 
other documentary evidence and an affidavit executed by the claimant. 
Claims Office staff are aware of issues surrounding proof of ownership 
for land and will work with each claimant to determine alternate 
methods in determining ownership when deeds are not available. FEMA 
will work with claimants on this issue and allow claimants the 
flexibility to extend the deadline for submission of the Proof of Loss 
where good cause to do so is found.
    Comment: A commenter requested claims be assumed to be reasonable 
and true with the burden of proof on the Federal government to disprove 
the claim, stating that claimants should be allowed to ``self-certify'' 
their claims. One commenter wrote that claims should be assumed 
reasonable and true, and that the burden of proof should be on the 
Federal government to disprove the claim. This commenter also suggested 
that claimants should be allowed to self-certify their claims under the 
penalty of law.
    FEMA Response: The burden of proof remains with the claimant to 
demonstrate injuries resulting from the Fire. FEMA has a legal 
responsibility to ensure that funds appropriated for claims under the 
Act are used to pay valid claims. The agency cannot assume that all 
claims are reasonable and true without appropriate supporting 
documentation, as such a process would open the Act's funding to 
significant fraud and abuse. To ensure the Act's funds are properly 
paid to claimants that suffered injuries as a result of the Fire, FEMA 
must review supporting documentation associated with each claim. As 
explained in Sec.  296.30(a), FEMA may compensate a claimant for an 
injury in the absence of supporting documentation on the strength of 
other evidence and affidavits executed by the claimant and others.
    Comment: Other commenters also requested the burden be placed on 
FEMA to research their claims and if the burden was not shifted to 
FEMA, that claimants should be able to utilize their own experts to 
assist with their claim and should be reimbursed for the expert's 
costs.
    FEMA Response: As stated above, the burden of proof remains with 
the claimant to demonstrate injuries resulting from the Fire. As 
explained in Sec.  296.30(a), FEMA may compensate a claimant for an 
injury in the absence of supporting documentation on the strength of 
other evidence and affidavits executed by the claimant and others. 
Additionally, Sec.  296.31(a) provides for the use of experts in the 
process. FEMA is revising the IFR language regarding expenses for 
experts as detailed below to help address this and other commenters' 
concerns about the use of experts and the costs associated with doing 
so. FEMA will work with claimants on this issue and allow claimants the 
flexibility to extend the deadline for submission of the Proof of Loss 
where good cause to do so is found pursuant to Sec.  296.30(b). FEMA 
also provides flexibility in supplementing and reopening claims as 
detailed in sections 296.34 and 296.35.
    Comment: One commenter stated that while they understood that 
providing proof of ownership was necessary and important for good 
governance of the funds provided in the Act, they had concerns that the 
burden of proof would be overly burdensome and difficult for some 
claimants. The commenter recommended FEMA be flexible in determining 
what documentation is required.
    FEMA Response: As explained above, the burden of proof remains with 
the claimant to demonstrate injuries resulting from the Fire. As 
discussed above, the Claims Office locally hired Navigators to assist 
claimants compiling necessary documentation and completing the proof of 
loss in support of the claim. Further, as explained in Sec.  296.30(a), 
FEMA may compensate a claimant for an injury in the absence of 
supporting documentation on the strength of other evidence and 
affidavits. Claims Office staff are aware of issues surrounding proof 
of ownership for land and will work with each claimant to determine 
alternate methods in determining ownership when deeds are not available 
such as affidavits, utility bills and tax records. FEMA will work with 
claimants on this issue and allow claimants the flexibility to extend 
the deadline for submission of the Proof of Loss where good cause to do 
so is found. The goal of the claims process is to reduce complexity and 
provide assistance with the claims process to the extent possible.
2. Comments on Sec.  296.30(b) Proof of Loss
    Comment: One commenter requested that claimants be able to ``self-
certify'' their claims under penalty of perjury.
    FEMA Response: The burden of proof remains with the claimant to 
demonstrate injuries resulting from the Fire. As explained above, FEMA 
has a legal responsibility to ensure that funds appropriated for claims 
under the Act are used to pay valid claims. The agency cannot assume 
that all claims are reasonable and true without appropriate supporting 
documentation, as such a process would open the Act's funding to 
significant fraud and abuse. To ensure the Act's funds are properly 
paid to claimants that suffered injuries as a result of the Fire, FEMA 
must review supporting documentation associated with each claim. FEMA 
does currently require that claimants submit claims under penalty of 
perjury to help reduce the potential for fraud, but the agency is 
unable to allow for self-certification of claims to ensure the good 
governance of the Act's funds. As explained in Sec.  296.30(a), FEMA 
may compensate a claimant for an injury in the absence of supporting 
documentation on the strength of other evidence and affidavits executed 
by the claimant and others.
    Comment: Commenters raised questions about the deadline for 
submitting a Proof of Loss. Commenters felt the 150-day period was too 
short with some commenters stating they may not have information on 
what damages would be covered by insurance or other

[[Page 59761]]

Federal and State government programs within that timeframe. Some 
commenters suggested the time frame to provide proof of loss be 
extended to no less than 270 days, especially in cases where expert 
opinions/reports were needed for the claim.
    FEMA Response: As the preamble to the IFR explained, claimants are 
required to submit their Proof of Loss within 150 days of submission of 
their Notice of Loss. Section 104(d)(1)(A)(i) of the Act 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. To ensure FEMA 
meets this mandate, claimants need to provide specific details about 
their injuries by signing the Proof of Loss. FEMA recognizes the 
challenges with these deadlines and intends to allow extensions where 
such extensions are for the claimants' benefit. Claimants who submit 
their Notice of Loss should submit a signed Proof of Loss to the Claims 
Office not later than 150 days after the initial Notice of Loss was 
submitted. Adherence to this deadline will leave FEMA with 30 days to 
determine the compensation due to the claimant and enable the agency to 
meet the 180-day timeframe required by Congress. FEMA also provides 
that this deadline may be extended for good cause at the discretion of 
the Director of the Claims Office.
    Comment: Some commenters wrote they would be required to submit a 
Proof of Loss Form with extensive supporting documentation by April 14, 
2023 if the Notice of Loss was submitted as early as November 15, 2022 
under the timeline provided in the IFR. These commenters stated this 
was unfair as FEMA had not made available a Proof of Loss Form. These 
commenters recommended a 250-day timeline to submit a Proof of Loss.
    FEMA Response: As explained above, claimants are required to submit 
their Proof of Loss within 150 days of submission of their Notice of 
Loss. Section 104(d)(1)(A)(i) of the Act 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, which is the date the 
Notice of Loss is acknowledged by the Claims Office. FEMA would be 
unable to fulfill this mandate if claimants do not provide specific 
details about their injuries by signing the Proof of Loss. FEMA 
recognizes the challenges with these deadlines and intends to allow 
extensions where such an extension is for the claimant's benefit. 
Claimants who submit their Notice of Loss should submit a signed Proof 
of Loss to the Claims Office not later than 150 days after the initial 
Notice of Loss was acknowledged. Adherence to this deadline will leave 
FEMA with 30 days to determine the compensation due to the claimant and 
enable the agency to meet the 180-day timeframe required by Congress. 
FEMA also provides that this deadline may be extended for good cause at 
the discretion of the Director of the Claims Office. FEMA notes that 
the agency completed an emergency information collection associated 
with the IFR for the Notice of Loss and Proof of Loss forms in November 
2022.\54\ Those forms were revised in February 2023.\55\
---------------------------------------------------------------------------

    \54\ See OMB Control No. 1660-0155 found at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202211-1660-001 (last 
accessed Mar. 1, 2023).
    \55\ See OMB Control No. 1660-0155 revision found at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202302-1660-001 (last 
accessed Mar. 1, 2023).
---------------------------------------------------------------------------

    Comment: Two commenters raised concerns about the 150-day deadline 
for claimants to submit their Proof of Loss, stating FEMA had an 
additional 180 days to respond to claims. One of the commenters wrote 
``Also interesting is how 120-day response time limits are placed on 
Hermit's Peak Fire victims while HPFAA Administrators and Reviewers and 
such have 180-day limits to respond to victims submitted claims/
amendments and such while they are all drawing cushy government pay 
checks the entire time they spend on claims assessment, judgement and 
payment.''
    FEMA Response: FEMA disagrees with the commenters' interpretation 
of the timeline provided in the IFR. Claimants are required to submit 
their Proof of Loss within 150 days of submission of their Notice of 
Loss. Section 104(d)(1)(A)(i) of the Act 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. This timeline gives FEMA 
30 days to process the Proof of Loss to issue a determination on the 
claim. Claimants who submit their Notice of Loss should submit a signed 
Proof of Loss to the Claims Office not later than 150 days after the 
initial Notice of Loss was submitted to ensure the Congressional 
mandate for FEMA to process claims within 180 days can be met.
    Comment: A commenter requested the deadline for the Proof of Loss 
submittal be relative to the Notice of Loss Acknowledgement date, not 
relative to the Notice of Loss submittal date. The commenter requested 
that the deadline for Proof of Loss submittal should be made relative 
to the Notice of Loss acknowledgement date, not relative to the Notice 
of Loss submittal date like it says in the handouts. Another commenter, 
however, commented that FEMA must pay claims within 180 days and that 
the 180-day clock must begin when the claim is filed, not based on a 
FEMA-determined milestone after the claim.
    FEMA Response: The IFR in Sec.  296.30(b) currently provides that 
the requirement to submit the Proof of Loss is 150 days from the date 
the Notice of Loss was submitted. This language is sufficiently clear 
without change, as FEMA has explained in additional guidance that 
``submitted'' under the regulation is the date FEMA acknowledges 
receipt of the Notice of Loss. Further, Sec.  296.10(f) explains that a 
Notice of Loss is deemed to be filed on the date it is received and 
acknowledged by the Claims Office. FEMA is thus not changing the Final 
Rule language. The language in the IFR is consistent with the Act's 
requirement to pay claimants within 180 days of the claim's submittal. 
FEMA does not believe a Notice of Loss can be submitted until it has 
been reviewed for sufficiency and receipt has been acknowledged by 
FEMA. This review and acknowledgement of receipt benefits the claimant. 
FEMA heard commenters above expressing concerns with the timeline to 
submit a Proof of Loss and while the agency is limited in its ability 
to extend that timeframe, allowing FEMA the time to review the Notice 
of Loss and issuing an acknowledgement before starting the 150-day 
timeline by which claimants must submit their Proof of Loss allows FEMA 
to identify any initial challenges with the claim and provide the 
claimant with initial guidance to update the Notice as required in 
advance of starting to work on the Proof of Loss resulting in a better 
overall claim and a more efficient review of that claim.
    Comment: One commenter asked that the Proof of Loss be an iterative 
process between FEMA and the claimant, allowing claimants to supplement 
the Proof of Loss as appropriate.
    FEMA Response: FEMA agrees. In Sec.  296.5, FEMA explains the 
process will involve Claims Reviewers working with claimants to assist 
in developing a strategy to obtain the documentation required for their 
claim. FEMA anticipates Claims Reviewers will engage with claimants to 
ensure the Proof of Loss is as comprehensive as possible at the time of 
submission. Further, Section 296.34 explains the process to supplement 
claims after submission of a Proof of Loss.

[[Page 59762]]

3. Comments on Sec.  296.30(c) Release and Certification Form
    Comment: One commenter wrote about the feasibility of waiving 
future claims given the extent of damages, losses, and expenses may not 
be fully known at the time of the award. The commenter wrote that the 
full extent of damages, losses, and expenses may not be known at the 
time of award, and it was beyond anyone's ability to foretell those 
future damages to claim them on their Notice of Loss. The commenter 
suggested FEMA allow a lump sum payment of 15 percent of all injury, 
damages, losses, and expenses to be added on to each claim to cover for 
these future unknown items to resolve this concern.
    FEMA Response: FEMA understands the concerns with waiving rights to 
pursue further claims after accepting a final award, but section 104(e) 
of the Act requires that payment made be final and conclusive with 
respect to all claims on the same subject matter and that such payment 
constitute a full release of all claims against the United States on 
the same subject matter. FEMA is bound by this statutory language to 
require a release for all final payments. As explained in Sec.  
296.30(b), the deadline to submit a Proof of Loss may be extended for 
good cause. Additionally, sections 296.34 and 296.35 allow claimants to 
supplement and/or reopen claims. FEMA recognizes the latest deadline 
for these actions is November 14, 2025; however, this deadline is 
consistent with the Agency's statutory authority and FEMA does not have 
the authority to further extend this deadline. Claims related to future 
damages as a result of the Fire would need to be made through other 
remedies as the Act sets a two-year limitation for claims under the 
Act. FEMA is unable to pay lump sum payments to cover future unknown 
injuries, as unknown injuries are speculative in nature and the Act 
requires FEMA to pay for actual compensatory damages.
    Comment: A commenter stated that a claimant's right to civil action 
or other redress should not be waived or limited until a final payment 
has been agreed to with FEMA and that it must be clear to claimants at 
what point(s) in the process they are waiving their rights to further 
legal action as well as how they can retain their right to further 
legal action for different types of subject matter.
    FEMA Response: An injured person who accepts an award under the Act 
waives the right to pursue any claims arising out of or relating to the 
same subject matter under the Federal Tort Claims Act or a civil 
lawsuit. Similarly, those claimants who accept an award under the 
Federal Tort Claims Act or a civil lawsuit waive the right to pursue 
claims under the Act. Until the final award payment is accepted, the 
claimant may pursue any and/or all of the options available. This 
flexibility would allow for injured persons to pursue different avenues 
of compensation until a final award is accepted. To ensure this is 
clear in the Final Rule, FEMA is revising paragraphs (a) and (b) of 
Sec.  296.12 to clarify that the injured person only waives the right 
to pursue these options upon acceptance of a final award.
    Comment: A commenter requested FEMA not seek to recover possible 
overpayments where FEMA has made a material mistake, or to establish a 
specific, short window of time after the Release is signed and denote a 
value for which it would recover. The commenter wrote that allowing 
FEMA to recover overpayments when a material mistake was made could 
lead to a culture of distrust in which claimants were reluctant to seek 
damages due to a fear that if the agency made a mistake, the claimant 
could be held liable for repayment. The commenter recommended FEMA 
either not recover possible overpayments, or to establish a specific, 
short window of time after the Public Release is signed and denote a 
value for which it would recover. Another commenter agreed, stating 
FEMA's reclamation of costs due to an administrative mistake could 
jeopardize local trust in the program and should be disallowed or 
limited to extremely rare and clearly defined circumstances. One 
commenter stated that once FEMA has made a payment to the claimant, any 
errors made by FEMA should not be recoverable.
    FEMA Response: FEMA appreciates the concerns raised by these 
commenters, but the agency is legally obligated to recover funding 
issued in error. The Act limits compensation to actual damages incurred 
as a result of the Fire. If the claimant was not injured or did not 
suffer damages as a result of the Fire and payment is made, such 
payment is not compensation for actual compensatory damages. FEMA is 
legally obligated to recover funds paid in situations of civil or 
criminal fraud, misrepresentation, presentation of a false claim, and 
where the claimant was not eligible for partial payment under the Act. 
FEMA considers partial payments made where the claimant was not 
eligible for the compensation to be a material mistake in Sec.  
296.30(d). FEMA also notes that Congress provided appropriations for 
the Department of Homeland Security's Office of the Inspector General 
for oversight of activities authorized by the Act, including oversight 
of payments made in error.\56\
---------------------------------------------------------------------------

    \56\ See Public Law 117-180, Division A, Section 136 (2022).
---------------------------------------------------------------------------

M. Comments on Reimbursement of Claims Expenses

1. Comments on Sec.  296.31(a) Expert Opinions
    Comment: Commenters generally opposed the requirement that FEMA 
request an appraisal or other third-party opinion before such an 
expense could be reimbursed under the Act. Most commenters requested 
FEMA delete the requirement that FEMA request the appraisal or opinion. 
Commenters stated they would not be made whole if they were not 
reimbursed for expert opinions.
    FEMA Response: FEMA heard commenters' concerns regarding this 
provision in the IFR and is making changes to the Final Rule. 
Specifically, the IFR language only allows for reimbursement if 
requested by the Claims Office. FEMA is revising this paragraph in the 
Final Rule to allow for reimbursement for reasonable costs incurred in 
providing appraisals or other third-party opinions that the Claims 
Office deems necessary to determine the amount of the claim. FEMA 
recognizes the size and scope of this Fire, along with the geographic, 
economic, and cultural distinctions between this Fire and the Cerro 
Grande Fire, may result in claimants having to rely more frequently on 
expert opinions in their claims process and is updating the Final Rule 
to reflect this need. This revision will allow claimants to seek 
reimbursement for reasonable costs incurred in obtaining expert 
opinions that the Claims office reviews and agrees are necessary to 
determine the amount of the claim. This revision in the Final Rule 
provides more flexibility to claimants to seek expert opinions as part 
of the claims process while also retaining good governance of the use 
of the Act's funds to those opinions that are necessary to effectively 
determine the claim amount.
    Comment: Commenters stated that New Mexico law allowed for 
compensation for expert opinions and that given the complexity of the 
claims process, claimants needed experts to help value their claims.
    FEMA Response: As explained above, FEMA is revising this paragraph 
in the Final Rule to allow for reimbursement for reasonable costs 
incurred in providing appraisals or other third-party opinions that the 
Claims Office deems

[[Page 59763]]

necessary to determine the amount of the claim. This revision will 
allow claimants to seek reimbursement for reasonable costs incurred in 
obtaining expert opinions that the Claims office reviews and agrees are 
necessary to determine the amount of the claim.
    Comment: One commenter noted that there are very few appraisers or 
title companies in the area.
    FEMA Response: FEMA acknowledges the lack of experts in the area 
and anticipates working with claimants to obtain appropriate resources 
for these needed opinions.
    Comment: Another commenter stated that many claimants had already 
incurred costs for obtaining expert opinions and stated reimbursement 
for those expenses would acknowledge that the recovery process did not 
start when the Claims Office launched, but well in advance. Several 
commenters agreed that FEMA should exercise discretion to pay the 
reasonable costs of expert services obtained prior to the IFR's 
publication.
    FEMA Response: FEMA considered this approach when making the 
decision to revise the language to this paragraph of the Final Rule. 
However, FEMA felt this deadline would not fully address most 
commenters' concerns with the ability to effectively value their claim 
on their own and the need for experts to assist. The revision to the 
Final Rule to allow reasonable costs for these opinions that the Claims 
Office agrees are necessary regardless of when the opinion was 
requested will provide more flexibility to claimants to seek expert 
opinions as part of the claims process while also retaining good 
governance of the use of the Act's funds to those opinions that are 
necessary to effectively determine the claim amount.
    Comment: A commenter requested that FEMA make available technical 
assistance and expert services to claimants, including arborists, 
surveyors, appraisers/adjusters, and engineers to help with the most 
common losses.
    FEMA Response: FEMA agrees and will work with claimants to identify 
appropriate resources to assist with valuing claims as explained above.
    Comment: One commenter requested compensation for a Habitat 
Equivalency Analysis and GIS mapping as necessary to prove loss in the 
most accurate way. One commenter suggested FEMA provide claimants with 
access to all after-wildfire high-resolution aerial imagery of the Fire 
area to determine the extent of the damage more accurately to private 
forestlands as well as surrounding forestlands, stating the most recent 
imagery is insufficient.
    FEMA Response: FEMA recommends claimants seeking compensation for 
expert opinions or resources submit their claim for reimbursement 
explaining why the opinion and/or resource was required to effectively 
value their claim. As explained above, if claimants are having 
difficulty obtaining these opinions and/or resources, FEMA will work 
with the claimant to assist in locating the resources needed to 
effectively value their claim.
2. Comments on Sec.  296.31(b) Lump Sum Payments for Incidental 
Expenses
    Comment: Several commenters requested that FEMA pay for all 
expenses associated with the claims process, removing the exclusion for 
damages for time spent prosecuting a claim in Sec.  296.21(b) and 
changing the lump sum payment in paragraph (b) to allow for full 
recoupment of all expenses, including time. Some commenters focused in 
on specific incidental expenses, requesting reimbursement for expenses 
such as travel expenses and replacement of documents.
    FEMA Response: As explained in the IFR, compensatory damages for 
time spent in claims preparation are not considered actual compensatory 
damages. There is no evidence Congress intended that claimants be 
compensated for the value of their time in preparing a claim. Providing 
compensation for a claimant's time would be difficult to administer, as 
FEMA would have to determine equitably the value of a claimant's time 
and to verify that claimants have expended the number of hours that are 
claimed. FEMA's payments under the Act are subject to independent audit 
by the GAO and the DHS OIG and claimants would likely find attempts by 
auditors to verify the payment for hours spent in the claims process 
highly intrusive. Additionally, the type of compensation requested by 
commenters here would require production of receipts and other 
documentation, resulting in an overly burdensome process for this 
payment to claimants contrary to other comments requesting the agency 
streamline and simplify the claims process. As explained in the IFR, 
FEMA is choosing to exercise discretion to provide a lump sum payment 
to claimants for miscellaneous and incidental expenses incurred in the 
claims process. FEMA will provide a lump sum payment of five percent of 
the insured and uninsured loss (excluding flood insurance premiums), 
not to exceed $25,000. The minimum lump sum payment is $150. Section 
296.31(b) of the IFR represents a fair and reasonable accommodation 
between the agency's responsibility to spend Federal funds wisely and 
the desire to compensate claimants as fully as possible.
    Comment: One commenter suggested FEMA partner with a trusted local 
financial institution to carry out payment of approved claims expense 
reimbursements to help ensure prompt, complete, and correct payments to 
approved claimants.
    FEMA Response: The current claims process requires claimants to 
provide FEMA with information on how they want to be paid, either by 
electronic funds transfer or check. No third-party financial 
institution is required for these transactions.
    Comment: Two commenters recommended that subrogation claimants and 
those claimants whose only Fire-related loss is for flood insurance 
premiums should be eligible if their property was not previously 
designated in a flood zone but is now considered to be in one as a 
result of the Fire.
    FEMA Response: FEMA disagrees that these claimants should be 
eligible for a lump sum payment for incidental expenses incurred in 
their claims preparation. Subrogees are generally insurance companies, 
and their industry involves claims review and preparation. These 
entities have no legal right to pursue expenses for claims preparation. 
The burden placed on those claimants only seeking flood insurance 
premiums is minimal, as the only claim made is for flood insurance 
premiums and the documentation needed to support such a claim would be 
very limited compared to other claims. To ensure the funding provided 
under the Act is utilized to compensate claimants as fully as possible 
while also ensuring Federal funds are wisely spent, these claimants 
should not be eligible for a lump sum payment for incidental expenses. 
FEMA is retaining the language in paragraph (b) in the Final Rule 
making these types of claimants ineligible for the lump sum payment.

N. Comments on Sec. Sec.  296.34 and 296.35 Supplementing Claims and 
Reopening a Claim

1. Comments on Sec.  296.34 Supplementing Claims
    Comment: A few commenters sought clarification and/or revision to 
this section of the IFR. One commenter asked if claimants made an error 
whether they were allowed to file again.
    FEMA Response: As explained in the IFR, there is flexibility built 
into the process for claimants to tell FEMA

[[Page 59764]]

about injuries and damages that they could not have discovered or did 
not remember when they signed the Notice of Loss or Proof of Loss. This 
may also include situations where a claimant makes an inadvertent 
error. Sections 296.34 and 296.35 explain this flexibility. Section 
296.34 allows claimants to supplement their claim by working directly 
with a Claims Reviewer prior to submitting their Proof of Loss. If a 
claimant is not prepared to sign a Proof of Loss within the timeframe 
required, an extension may be requested from the Director of the Claims 
Office. Alternatively, the claimant may withdraw the claim and re-file 
the claim before November 14, 2024. Once the Proof of Loss is filed, a 
claimant can request to supplement their claim by writing to the 
Director of the Claims Office providing the reasons why the claim needs 
to be supplemented. The claimant should consult with the Claims 
Reviewer about the procedure for obtaining permission from the Director 
of the Claims Office.
    Comment: Several commenters requested FEMA update the supplementing 
claims section of the regulation to simplify the process for 
supplementing claims and eliminate references to the Administrative 
Appeals process. These commenters wrote that requiring claimants to 
supplement a claim pursuant to comparatively complex adjudicatory-like 
procedures undermined FEMA's intent to create a simple claims process 
that is sensitive to the burdens already placed upon claimants by the 
Fire.
    FEMA Response: FEMA disagrees with the commenters' suggestion that 
incorporating language on the Administrative Appeals process in this 
section of the regulation complicates the process. Section 296.34 
allows claimants to supplement their claim by working directly with a 
Claims Reviewer prior to submitting their Proof of Loss. If a claimant 
is not prepared to sign a Proof of Loss within the timeframe required, 
an extension may be requested from the Director of the Claims Office. 
Once the Proof of Loss is filed, a claimant can request to supplement 
their claim by writing to the Director of the Claims Office providing 
the reasons why the claim needs to be supplemented. The claimant should 
consult with the Claims Reviewer about the procedure for obtaining 
permission from the Director of the Claims Office. The Director of the 
Claims Office will then directly review the additional claim consistent 
with how the Director reviews claims in the Administrative Appeal 
process. By providing for the procedures used in the Administrative 
Appeal process, FEMA ensures that the supplemental claims information 
is reviewed directly by the Director after the Authorized Official's 
determination is issued on the remainder of the claim. If the claimant 
decides to appeal the Authorized Official's determination on other 
injuries, the Director of the Claims Office will decide both matters in 
a single appeal proceeding to expedite processing. Alternatively, the 
claimant may withdraw the claim and re-file the claim once before 
November 14, 2024, when the injuries are better defined. The process 
provided for in Sec.  296.34 is sufficient and not overly burdensome on 
the claimant.
    Comment: A commenter requested that FEMA allow claims to be 
reopened and supplemented in response to future flooding events.
    FEMA Response: As explained above, there is flexibility built into 
the process for claimants to tell FEMA about injuries and damages that 
they could not have discovered or did not remember when they signed the 
Proof of Loss, including future flooding events. Sections 296.34 and 
296.35 allow claimants to supplement and/or reopen claims respectively.
2. Comments on Sec.  296.35 Reopening a Claim
    Comment: A few commenters sought clarification and/or revision to 
the reopening claims section of the IFR. Most of these commenters were 
concerned about the deadline to reopen a claim, stating additional 
damages may be experienced. One commenter asked how to proceed where 
their claim is paid, and they then suffer additional damages from 
flooding seeking clarification on whether they should file another 
Notice of Loss.
    FEMA Response: FEMA recognizes that damages may continue beyond the 
deadline for submitting a claim. The agency is generally bound by the 
Act's requirements for claims to be submitted within two years of the 
IFR's publication. In the IFR, FEMA allows for claimants to reopen 
their claims for up to an additional year after submitting their 
initial claim.
    Comment: One commenter requested that FEMA allow a lump sum payment 
of 15 percent of all injuries, damages, losses, and expenses to be 
added on to each claim to cover for future unknown items.
    FEMA Response: As explained above, FEMA recognizes that damages may 
continue beyond the deadline for submitting a claim. The agency is 
generally bound by the Act's requirements for claims to be submitted 
within two years of the IFR's publication. In the IFR, FEMA allows for 
claimants to reopen their claims for up to an additional year after 
submitting their initial claim. Claims related to future damages as a 
result of the Fire would need to be made through other remedies as the 
Act sets a two-year limitation for claims under the Act. FEMA is unable 
to pay lump sum payments to cover future unknown injuries, as unknown 
injuries are speculative in nature and the Act requires FEMA to pay for 
actual compensatory damages. To the extent that a claimant is able to 
reasonably quantify expected future losses, future losses are 
compensable.
    Comment: Two commenters recommended FEMA insert ``real property'' 
in place of ``home'' in this section to ensure that this clause is not 
limited to homes but includes all real property.
    FEMA Response: FEMA concurs with this recommendation and is 
amending the IFR language that limits the close of the sale to a home. 
FEMA agrees with commenters that changing the language to address the 
sale of real property instead of a home is more appropriate and is 
revising Sec.  296.35 to reflect that those claimants could reopen a 
claim if they closed on the sale of real property and wish to present a 
claim for a decrease in the value of the real property under Sec.  
296.21(c)(3). This change is consistent with concerns raised by 
commenters that the Cerro Grande Fire Assistance process was not 
necessarily appropriate to this Fire given the distinct geographic, 
economic, and cultural considerations of the impacted communities. As 
explained above, this Fire impacted significant forested areas and more 
rural areas than the Cerro Grande Fire. This change in the Final Rule 
more appropriately reflects the Hermit's Peak/Calf Canyon Fire 
claimants' needs by including all real property.
    Comment: Several commenters requested FEMA update this section of 
the regulation, providing specific suggestions to revise the section on 
reopening claims to separate out claims for heightened risk reduction, 
the sale of real property, reconstruction, and good cause, as well as 
providing an open-ended deadline for submission of reopened claims 
allowing a deadline to be set in the future via a Federal Register 
notice.
    FEMA Response: Section 296.35 provides for reopening a claim after 
the claimant has submitted a Release and Certification Form again with 
the goal to allow claimants an opportunity to request damages in excess 
of those previously awarded. Claimants can use

[[Page 59765]]

the reopening provision of this section to seek compensation for an 
injury not previously reported to FEMA in circumstances where claimants 
seek heightened risk reduction compensation under Sec.  296.21(e)(5); 
the claimant closed the sale of a home and wishes to present a claim 
for a decrease in the value of the real property under Sec.  
296.21(c)(3); the claimant has incurred additional losses under Sec.  
296.21(c)(1) as part of a reconstruction in excess of those previously 
awarded; or where the Director of the Claims Office determines good 
cause exists to reopen the claim. While FEMA does not believe the 
current language in the IFR needs to be restructured as these 
commenters suggested in the Final Rule, FEMA recognizes that damages 
may continue beyond the deadline for submitting a claim. FEMA plans to 
consider and incorporate future losses into the claims valuation 
methodology, where appropriate. In the IFR, FEMA allows for claimants 
to reopen their claims for up to an additional year after submitting 
their initial claim. FEMA is revising Sec.  296.35 consistent with the 
commenter's request to use the Cerro Grande process to extend the 
deadline where reconstruction costs under Sec.  296.21(c)(3) exceed the 
previously paid claim or for good cause. FEMA will issue notice in the 
Federal Register and at https://www.fema.gov/hermits-peak of this 
future deadline. FEMA believes this change is consistent with the prior 
Cerro Grande process and will help ensure claimants are compensated for 
their actual damages as a result of the Fire.
3. Comments on Sec.  296.37 Confidentiality of Information
    Comment: One commenter stated the Federal government is responsible 
for providing the right to privacy to claimants. One commenter raised 
concerns about privacy violations with local hires.
    FEMA Response: FEMA agrees that the Federal government is 
responsible for ensuring confidentiality for private information 
submitted by claimants. Section 296.37 provides that confidential 
information submitted by individual claimants is protected from 
disclosure to the extent permitted by the Privacy Act. The Privacy Act 
protects the confidentiality of information provided by individual 
claimants. This information may only be disclosed with the consent of 
the claimant or pursuant to a routine use, which has been disclosed to 
the public. Confidential, proprietary, and trade secret information 
provided by entities, such as business, Indian Tribes, Tribal entities, 
and government agencies, are not eligible for Privacy Act protection, 
but may be exempt from disclosure under the Freedom of Information Act. 
All FEMA employees are obligated to follow the Privacy Act 
requirements, whether they are local hires or not and FEMA will ensure 
that all employees receive appropriate training on the Privacy Act.

O. Comments on Sec.  296.41 Administrative Appeal

    Comment: Commenters raised concerns and questions about the appeals 
process provided in Sec.  296.41. Some commenters asked for more detail 
in the regulation regarding the appeals process. A commenter wrote that 
the regulations were unclear as they did not outline under which 
circumstances a victim could appeal FEMA's decision, nor a timeline of 
the appeals process. The commenter asked that if a claimant wished to 
appeal, must the claimant appeal the entire award, or could the appeal 
be limited to the portion of the award to which the claimant objects. 
The commenter also asked if a claimant wished to have their case heard 
in the United States District Court, did that mean that the claimant 
had to file a Federal Tort Claim and begin the process from square one, 
or would the District Court review the award given by FEMA for legal 
error and the standard of review if heard by the District Court. The 
commenter further asked if there would there be an opportunity for 
appellate review thereafter.
    FEMA Response: The current regulatory text is sufficient to provide 
claimants with a general understanding of the process and that details 
of the process are more appropriate for additional guidance or 
procedural documents, not the regulation. The regulation states that in 
their appeal, a claimant should identify the portion of the Authorized 
Official's determination they believe is incorrect, whether that be the 
entire claim or just certain portions of the claim. The regulation also 
enables the claimant to supplement the record with additional 
documentary evidence supporting the appeal. After the appeal is 
decided, if the claimant continues to be dissatisfied with the 
determination, the claimant can pursue arbitration pursuant to Section 
104(h)(3) of the Act or elect to seek record review of the decision in 
the Federal District Court for the District of New Mexico pursuant to 
Section 104(i) of the Act. Alternatively, the claimant can elect not to 
pursue compensation through the Hermit's Peak/Calf Canyon Claims Office 
and elect to pursue their other legal remedies against the United 
States as explained in the Act.\57\
---------------------------------------------------------------------------

    \57\ See Sections 104(h)(1)(B) and 104(h)(1)(C) of the Act.
---------------------------------------------------------------------------

    Comment: Two commenters raised questions about how the appeals 
process would work, asking what happened if claimants did not accept 
the Authorized Official's final determination but chose not to appeal 
while another commenter asked if claimants would be allowed to choose 
their own attorney if they file an appeal.
    FEMA Response: If a claimant opts not to appeal and does not accept 
the final determination, the claimant remains free to pursue other 
remedies as detailed in the regulation at Sec.  296.12. Claimants that 
wish to have legal representation may select their own counsel at any 
point in the claims process.
    Comment: FEMA received one comment in support of the IFR's 
allowance for either the Claims Office Director or the claimant to 
request a conference. The commenter, however, requested additional 
changes to the IFR. The commenter wrote ``I support this Interim Rule, 
with two caveats. First, to be fair and effective, attorneys 
representing claimants must be involved with their clients in either 
conferences or mediations. Second, mediators must be qualified and 
independent. In other words, they cannot be employees or 
representatives of FEMA or any other branch or agency of the United 
States Government. Th[e]s[e] changes would make the proposed conference 
and mediation process comport with ordinary and fair claims processing 
practice.''
    FEMA Response: As explained above, claimants that wish to have 
legal representation may select their own counsel at any point in the 
claims process. With an appropriate Privacy Act waiver, which is 
included in the Notice of Loss form, FEMA will ensure attorneys are 
allowed to participate with claimants in any and all parts of the 
Claims Process, up to and including any appeal-related conferences and 
arbitration of the claim. The Arbitration Administrator will maintain a 
list of qualified arbitrators who have agreed to serve. The Claims 
Office is using a contracting vehicle to engage independent arbitrators 
to serve as Claims Office arbitrators. Where possible, the Claims 
Office will use arbitrators that are local to New Mexico. The 
arbitrations will be decided by one arbitrator if the amount in dispute 
is $500,000 or less and a panel of three arbitrators if the amount in 
dispute exceeds $500,000. Arbitrators will be

[[Page 59766]]

assigned by the Arbitration Administrator through a random drawing.
    Comment: One commenter requested FEMA allow claimant's attorney to 
be notified and included throughout the entire hearing process. The 
commenter also requested that the rule be changed to allow the claimant 
to discover the evidence and opinions of those considered or proffered 
by the Claims Office against the claimant.
    FEMA Response: As explained above, claimants that wish to have 
legal representation may select their own counsel at any point in the 
claims process. With an appropriate Privacy Act waiver, which is 
included in the Notice of Loss form, FEMA will ensure attorneys are 
allowed to participate with claimants in any and all parts of the 
Claims Process, up to and including arbitration of the claim if the 
claimant elects to proceed to arbitration. As required by the Privacy 
Act, 5 U.S.C. 552a, and implemented through Claims Office procedure, 
claimants always have access to their entire claims files. Moreover, 
FEMA is working to establish the System of Record, Claim and Loss 
Information Portal (CLIP), that will have a public facing portal where 
claimants can choose to create a secure account to review the status of 
their claim and upload documentation related to their Proof of Loss.
    Comment: Another commenter suggested FEMA allow for in-person 
conferences and hearings as often as possible.
    FEMA Response: Section 296.41(g) of the IFR states that hearings 
will generally be conducted virtually, but also allows the Director of 
the Claims Office to convene an in-person hearing at a location in New 
Mexico designated by the Director. The IFR language allows for in-
person hearings and claimants can request in-person hearings if they 
prefer. FEMA does not believe the IFR requires amendment to allow for 
in-person hearings and is not revising the Final Rule.

P. Comments on Sec.  296.42 Arbitration

    Comment: Three commenters stated that expenses incurred for 
arbitration should be covered as compensatory damages.
    FEMA Response: It is unclear what the specific arbitration expenses 
are that are referenced in this comment. Generally, the Claims Office 
will pay all the fees and expenses of the arbitrator(s), as well as any 
associated fees and expenses for securing a location to hold the 
arbitration. The claimant is responsible for any expenses they incur, 
including travel costs. As explained in the IFR, 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 
Congress intended that claimants be compensated for the value of their 
time in preparing a claim. Providing compensation for a claimant's time 
would be difficult to administer, as FEMA would have to determine 
equitably the value of a claimant's time and to verify that claimants 
have expended the number of hours that are claimed. FEMA's payments 
under the Act are subject to independent audit by the GAO and the DHS 
OIG and claimants would likely find attempts by auditors to verify the 
payment for hours spent in the claims process highly intrusive. 
Additionally, the type of compensation requested by commenters here 
would require production of receipts and other documentation, resulting 
in an overly burdensome process for this payment to claimants contrary 
to other comments requesting the agency streamline and simplify the 
claims process. As explained in the IFR, FEMA is choosing to exercise 
discretion to provide a lump sum payment to claimants for miscellaneous 
and incidental expenses incurred in the claims process. FEMA will 
provide a lump sum payment of five percent of the insured and uninsured 
loss (excluding flood insurance premiums), not to exceed $25,000. The 
minimum lump sum payment is $150. Section 296.31(b) of the IFR 
represents a fair and reasonable accommodation between the agency's 
responsibility to spend Federal funds wisely and the desire to 
compensate claimants as fully as possible.
    To the extent the commenter is requesting that attorney's fees be 
compensated by the Claims Office, the Act is silent regarding FEMA's 
authority to pay attorney or agent fees. Generally, if Congress knows 
how to say something but chooses not to, its silence is 
controlling.\58\ While the Act places limits on the amount an attorney 
or agent may charge in section 104(j)(1), the Act does not provide for 
attorney or agent fees as allowable damages. Further, the ``American 
Rule,'' generally applicable in civil litigation and initially accepted 
by the United States Supreme Court in the case of Arcambel v. 
Wiseman,\59\ provides that in the absence of a statute indicating 
otherwise, each party is responsible for paying their own attorney 
fees. FEMA designed the claims process so that claimants will receive 
all eligible compensation without the need to engage the services of an 
attorney, and the Claims Office hired Claims Navigators to assist 
claimants compiling necessary documentation and with the Proof of Loss. 
Although claimants have the right to hire an attorney, one is not 
required.
---------------------------------------------------------------------------

    \58\ Animal Legal Defense Fund v. USDA, 789 F.3d 1206 (11th Cir. 
2015), citing In re Haas, 48 F.3d 1153, 1156 (11th Cir. 1995), 
abrogated on other grounds by In re Griffith, 206 F.3d 1389 (11th 
Cir. 2000). See also United States v. Roof, 10 F.4th 314 (4th Cir. 
2021), citing Discover Bank v. Vaden, 396 F.3d 366, 370 (4th Cir. 
2005).
    \59\ 3 U.S. (3 Dall.) 306 (1796). See also Peter v. NantKwest, 
Inc., 140 S.Ct. 365 (2019), Hardt v. Reliance Standard Life 
Insurance Co., 560 U.S. 242 (2010), Ruckelshaus v. Sierra Club, 463 
U.S. 680 (1983), and Summit Valley Industries, Inc. v. Carpenters, 
456 U.S. 717 (1982).
---------------------------------------------------------------------------

    Comment: A commenter requested FEMA allow for in-person conferences 
and hearings as often as possible. Another commenter also suggested 
that these hearings take place in person and in the county of loss as 
virtual hearings are challenging because of limited or no broadband 
service in many areas impacted by the Fire.
    FEMA Response: Section 296.42(d) of the IFR states that hearings 
will generally be conducted virtually, but also allows the arbitrator 
to convene an in-person hearing at a location in New Mexico designated 
by the Arbitration Administrator. The IFR language allows for in-person 
hearings and claimants can request in-person hearings if they prefer. 
FEMA does not believe the IFR requires amendment to allow for in-person 
hearings and is not revising the Final Rule.
    Comment: Comments were also received on the independence, 
selection, and qualifications of arbitrators. One commenter requested 
the list of qualified arbitrators be provided by an independent source 
outside of FEMA. Commenters asked about the independence of arbitrators 
hired by FEMA. One commenter stated ``I seriously question the 
independence of an arbitrator who is both hired by and paid by FEMA . . 
. The one time in the past when I had to go to binding arbitration, the 
arbitrators were chosen from a board of independent arbitrators, not 
someone who was hired by the plaintiff or the defendant I should say in 
this case.'' Another commenter stated, ``I have never seen where the 
arbitrators brought in and both sides don't get to eliminate based on 
how that arbitrator rules his rulings.'' A different commenter 
requested that arbitrators be from New Mexico as they needed to be 
aware of the culture, the livelihood, the history, the importance of 
the people in the impacted communities. Another

[[Page 59767]]

commenter suggested that the arbitrators should be people who know New 
Mexico law.
    FEMA Response: FEMA understands the concerns raised by commenters 
regarding the selection of arbitrators for the claims process. These 
concerns are best addressed in policy and procedure documents 
associated with the claims process and not the regulations. FEMA is 
thus not making changes to the Final Rule regarding this issue.

Q. Comments on the Rulemaking

    Comment: One commenter wrote on the lack of public comments posted 
with over half of the comment period completed and asked what FEMA was 
doing to publicize how to comment on the rulemaking. The commenter also 
asked questions about the availability of a local library for people to 
use the internet for public comment submission and suggested local FEMA 
offices accept verbal comments that could be posted online.
    FEMA Response: FEMA received over 190 written comments on this rule 
in addition to over 100 comments during six public meetings held during 
the comment period across the area impacted by the Fire. FEMA provided 
public outreach to include News Releases, Media Advisories, and 
targeted communications to Federal, State, and local officials and 
their staff in New Mexico to help promote the process for submitting 
comments to https://www.regulations.gov. As explained above, 
transcripts of the public meetings were posted to the docket at https://www.regulations.gov to allow the public the opportunity to review 
comments made during these meetings if unable to attend.
    Comment: A commenter asked how out-of-state property owners would 
be notified of the Act and suggested FEMA obtain a list from the 
assessor's office to mail those individuals information.
    FEMA Response: The IFR was published in the Federal Register at 
https://www.federalregister.gov/documents/2022/11/14/2022-24728/hermits-peakcalf-canyon-fire-assistance and also via print publication 
at 87 FR 68085 on November 14, 2022. The Federal Register is national 
in scope and this notice in addition to the information provided at 
https://www.fema.gov/hermits-peak constitute sufficient notice to out-
of-state property owners.
    Comment: One commenter requested that FEMA provide access to the 
Federal Register to claimants.
    FEMA Response: FEMA provided access to the IFR by providing the 
link to the Federal Register containing the IFR at https://www.fema.gov/hermits-peak. Additionally, as explained above, the IFR 
was published in the Federal Register at https://www.federalregister.gov/documents/2022/11/14/2022-24728/hermits-peakcalf-canyon-fire-assistance and also via print publication at 87 FR 
68085 on November 14, 2022.
    Comment: Two commenters sought virtual means of attending the 
public meetings on the IFR.
    FEMA Response: FEMA was unable to provide video conferencing or 
virtual attendance options during these meetings as they were not held 
in FEMA facilities. FEMA provided an explanation of this challenge in 
the Notice of Additional Public Meetings published on December 9, 2022. 
Transcripts of all public meetings are available on the docket at 
https://www.regulations.gov.
    Comment: A commenter stated that that they were unable to hear a 
comment during a public meeting. Another commenter stated that the 
transcripts from the public meetings had not been posted to the public 
docket as of January 6, 2023 and suggested that all public meeting 
transcripts be posted preferably 72 but not less than 48 hours before 
the comment period closed.
    FEMA Response: Transcripts of all public meetings are available on 
the docket at https://www.regulations.gov. FEMA understands the 
commenters' concerns about the timing of posting these transcripts and 
the agency worked diligently to have all of the transcripts posted 
prior to the end of the public comment period. Two transcripts were 
posted on January 9, 2023. Three transcripts were posted on January 12, 
2023, and the remaining transcript from the last public meeting was 
posted on January 13, 2023 in advance of the close of the public 
comment period. Given the volume of public meetings made available and 
the availability of the transcripts in advance of the close of the 
comment period provided sufficient opportunity for the public to either 
attend and/or review the meeting transcripts in advance of submitting 
any comments on the rule. FEMA notes that over 100 comments were 
received during the six public meetings held and over 50 comments were 
received on the last day of the comment period.
    Comment: Another commenter stated that FEMA may be having too many 
meetings as the meetings were taking a toll on the community and 
another commenter at that meeting also agreed, stating the meetings 
just felt like lip service and asked for progress on the Final Rule and 
changes to issues raised during meetings such as reforestation.
    FEMA Response: FEMA has worked diligently to the review and 
adjudicate all of the comments received on the IFR. FEMA is publishing 
this Final Rule in less than 8 months after the public comment period 
closed. This timeframe demonstrates the agency's commitment to 
expeditiously process claims under the Act and resolve outstanding 
concerns of the community regarding the Act's implementation by FEMA.
    Comment: One commenter suggested FEMA post responses to comments 
while a commenter at a public meeting suggested that FEMA publish a 
table that lists the comments and FEMA's responses.
    FEMA Response: FEMA is providing responses to comments received as 
a result of the rulemaking process in this Final Rule.
    Comment: One commenter suggested that when fee or reimbursement 
schedules were developed, to allow for notice and comment and another 
commenter at a public meeting agreed.
    FEMA Response: FEMA appreciates this suggestion and if FEMA decides 
to proceed with payment formulas as discussed above, FEMA will consider 
whether notice and comment would be appropriate for such formulas at 
that time.
    Comment: One commenter requested the opportunity to comment on the 
Final Rule.
    FEMA Response: The rulemaking process as set forth in the 
Administrative Procedure Act does not require an agency to accept 
comment on a Final Rule.\60\ Further information on the rulemaking 
process can be found at https://www.federalregister.gov/uploads/2011/01/the_rulemaking_process.pdf.\61\
---------------------------------------------------------------------------

    \60\ 5 U.S.C. 553.
    \61\ Last accessed Mar. 1, 2023.
---------------------------------------------------------------------------

R. Other General Comments

1. Comments on the Fire Footprint and Loss
    Commenters sought clarification and offered suggestions regarding 
claimants' eligibility outside of the Fire's immediate footprint.
    Comment: One commenter indicated that people and businesses outside 
the Fire's direct footprint were impacted and should be compensated. 
This commenter wrote that many people and businesses outside of the 
Fires' direct footprint were impacted due to things like the forest 
closures during fire response as well as the months following. A 
different commenter suggested relief be provided to New Mexico 
residents that do not live in the

[[Page 59768]]

direct area of the fire as their business experienced a significant 
loss due to the Fire and damage to property in the impacted area. A 
commenter asked whether there was a geographic boundary for who is 
eligible to file a claim, explaining how the Fire impacted several 
counties with evacuations. Another commenter stated that the flooding 
impacted communities downstream from San Miguel and Mora counties and 
that there were several businesses impacted as well in those areas. 
However, another commenter requested claims be limited to residents of 
a specific geographic area. The commenter requested that FEMA limit 
claims to only residents and property owners in Mora and San Miguel 
Counties and bordering areas of neighboring counties stating that the 
funding that had been allocated to these victims was far from 
sufficient to cover the immediate, obvious loss that the people 
experienced with the Fire.
    FEMA Response: The Act recognizes that injured persons can seek 
compensation for actual compensatory damages for injuries incurred as a 
result of the Fire. There are no geographic limitations on this 
compensation beyond the claimant demonstrating they were injured as a 
result of the Fire. While the disaster declarations were limited to 
specific counties and further narrowed by the FEMA program,\62\ the Act 
has no such limitations. FEMA thus anticipates receiving and processing 
claims for any claimant suffering injury as a result of the Fire and 
seeking actual compensatory damages.
---------------------------------------------------------------------------

    \62\ See DR-4652-NM found at https://www.fema.gov/disaster/4652 
(last accessed Mar. 1, 2023).
---------------------------------------------------------------------------

2. Other General Comments
    Comment: A commenter expressed concern that FEMA was not seeking 
input from local leadership knowledgeable in the local culture and 
business and regulatory processes while a commenter at a public meeting 
requested accountability to local groups who are responsible for long-
range recovery planning.
    FEMA Response: Consistent with the Act's requirements in section 
104(g), FEMA is in consultation with other Federal agencies, and State, 
local, and Tribal authorities to ensure the efficient administration of 
the claims process and provide for local concerns.
    Comment: One commenter suggested FEMA involve the United States 
Attorney for the District of New Mexico or the New Mexico State 
Attorney General to ensure the regulations follow New Mexico law.
    FEMA Response: As explained above, section 104(g) of the Act 
requires FEMA to consult with other Federal agencies, and State, local, 
and Tribal authorities to ensure the efficient administration of the 
claims process. FEMA has consulted and continues to consult with 
Federal, State, local, and Tribal authorities consistent with the Act's 
requirements. FEMA consulted with a range of relevant Federal, State, 
and local agencies and governments. FEMA also completed a Tribal 
consultation as part of the regulatory process.
    Comment: One commenter suggested that FEMA review the minutes of 
the meeting held by Representative Fernandez' in Mora after the Act's 
passage to understand the intent of the Act.
    FEMA Response: FEMA appreciates the commenter's input on 
Representative Fernandez' public meeting. FEMA has met with the New 
Mexico Congressional Delegation regarding the Act's implementation and 
received a comment on the IFR from the Delegation. FEMA has adjudicated 
that comment in this Final Rule and continues to engage with 
Congressional Representatives regarding the implementation of the Act.
    Comment: One commenter suggested FEMA provide education and 
awareness to county residents on preparedness for future manmade and 
natural disasters.
    FEMA Response: While this suggestion is outside the scope of the 
Act, the suggestion does fall within FEMA's overall mission. The agency 
is coordinating with the State on the integration of long-term recovery 
efforts and resilience resources under the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (``Stafford Act'') and other 
applicable statutory authorities.\63\
---------------------------------------------------------------------------

    \63\ 42 U.S.C. 5121 et seq.
---------------------------------------------------------------------------

    Comment: One commenter asked FEMA to do outreach to the community 
and assist people, as the experience with seeking benefits from FEMA 
during the disaster had been one of being turned away.
    FEMA Response: Unlike the FEMA programs operated under the Stafford 
Act, the Hermit's Peak/Calf Canyon Fire Assistance Act offers a 
distinct claims process for claimants to seek actual compensatory 
damages for injuries suffered as a result of the Fire. The Act's 
provisions do not have the same eligibility requirements associated 
with the Public Assistance and Individual Assistance Programs under the 
Stafford Act. Claimants that were denied assistance under those 
programs should not assume their claim will be rejected under the Act. 
The regulation provides the general framework for compensation under 
the Act and claimants that have been injured as a result of the Fire 
should pursue claims for compensatory damages under the Act even if 
they were denied assistance under the Stafford Act programs.
    FEMA is currently accepting Notice of Loss forms in person at the 
Claims Office locations in Santa Fe, Mora, and Las Vegas, New Mexico 
and those office addresses can be found at https://www.fema.gov/hermits-peak. FEMA will provide services both at set office locations 
for the Claims Offices, as well as pop-up offices that will rotate 
through communities and locations in the affected area, to reduce 
travel burdens on claimants. The pop-up offices will be staffed by 
Claims Navigators, who can assist claimants in completing and 
submitting Notices of Loss, providing claims updates, and answering 
general questions. FEMA plans to offer opportunities for one-on-one 
engagement with Navigators and Claims Reviewers who will work to engage 
claimants in ways to meet their needs whether in person or via remote 
technology. Claims Office Navigators are trained to accommodate the 
needs of claimants. FEMA recognizes the importance of having claims 
staff, who interact with claimants and help facilitate the claims 
process, that are able to speak both Spanish and English. FEMA locally 
hired bilingual speakers to ensure that claims staff can communicate 
with claimants in their preferred language.
    Comment: Another commenter asked that FEMA listen to the community 
on what they value, as it is different from how FEMA appeared to be 
valuing buildings, the land, the trees, or the water.
    FEMA Response: FEMA heard the comments regarding the need to 
reassess the formulas placed in the IFR and is making changes in the 
Final Rule to address those concerns. The Final Rule's changes better 
reflect the impacted communities' needs and values while maintaining 
consistency with the Act's authorities.
    Comment: A commenter stated ``Every time there is a flood, every 
time there is a massive weather event, FEMA is to come out now. So, 
they are understaffed, but here there is a big difference because the 
appropriations that our legislators have fought to get something in 
place. So, if you got something, you got something to work with, and I 
am saying that like our flood was in 2017, and I still haven't 
recovered . . . So, your comments, and you're coming to these meetings 
are

[[Page 59769]]

demonstrations that you care about yourselves, you know they are not 
going to chase you off.''
    FEMA Response: FEMA agrees with the commenter that the Act's 
provisions are different from Stafford Act programs and that claimants 
should engage with FEMA on their claims. As the commenter stated, FEMA 
received appropriations for the Act and is required to staff the Claims 
Office to meet the needs of the community to process their claims in an 
expeditious manner.
    Comment: One commenter stated that the communities needed to 
leverage the Act's funding in conjunction with the overall rollout of 
infrastructure funding to protect food security and food systems.
    FEMA Response: FEMA recognizes that other funding may be available 
to further support the long-term recovery of the impacted communities 
beyond the funding appropriated by the Act. FEMA appreciates the 
commenter's suggestion that the impacted communities also consider that 
funding and how all available funding can work to improve the 
community. FEMA has consulted and continues to consult with Federal, 
State, local, and Tribal authorities consistent with the Act's 
requirements.
    Comment: One commenter stated that they were concerned that money 
from the Act would go to contractors that are coming in from the 
outside area.
    FEMA Response: FEMA understands the need for local hiring for the 
Claims Office and FEMA has engaged in an extensive effort to recruit 
locally for positions to support the processing of claims and provision 
of compensation to claimants impacted by the Fire to ensure these 
specific concerns are addressed. FEMA is not responsible for hiring 
contractors to handle local projects under the Act. FEMA recognizes 
that other Federal programs, including FEMA Stafford Act programs, may 
leverage contract support for local projects. The process associated 
with those contracts varies by program. General information on 
contracting for FEMA programs can be found at https://www.fema.gov/grants/procurement.\64\
---------------------------------------------------------------------------

    \64\ Last accessed Mar. 1, 2023.
---------------------------------------------------------------------------

    Comment: Another commenter provided a suggestion on how to spend 
the funding allocated under the Act by requiring it to cycle through 
the community several times before it leaves the impacted communities.
    FEMA Response: FEMA is authorized under the Act to pay claimants 
for actual compensatory damages for injuries resulting from the 
Fire.\65\ FEMA does not have the authority under the Act to require 
claimants to spend the compensation awarded in the local community.
---------------------------------------------------------------------------

    \65\ See Sections 102(b) and 104(c) of the Act.
---------------------------------------------------------------------------

    Comment: Another commenter recommended FEMA hire local contractors 
for FEMA projects. The commenter stated ``The other piece is the issue 
with contracts. So, we have a lot of local contractors working here. We 
have local contractors working. We have the majority of them not 
working and that is another FEMA issue. Massive contracts went out, the 
Mora people, or Mora contractors are being subcontracted; they are not 
even given the opportunity--that is wages lost. If you are working for 
a contractor as a subcontractor, you've lost wages. You've lost 
revenue, and that's another part that FEMA's failed to do and failed to 
represent the people.''
    FEMA Response: As explained above, FEMA is not responsible for 
hiring contractors to handle local projects under the Act. FEMA 
recognizes that other Federal programs, including FEMA Stafford Act 
programs, may leverage contract support for local projects. The process 
associated with those contracts varies by program. General information 
on contracting for FEMA programs can be found at https://www.fema.gov/grants/procurement.\66\ The Claims Office encourages its contractors to 
hire locally.
---------------------------------------------------------------------------

    \66\ Last accessed Mar. 1, 2023.
---------------------------------------------------------------------------

    Comment: A commenter stated the Claims Office was responsible for 
clarifying and ensuring that claimants are not taxed for the claims 
payments they receive through the program.
    FEMA Response: FEMA appreciates claimants' concerns with taxes. 
Section 104(h)(f) of the Act states that ``the value of compensation 
that may be provided under this Act shall not be considered income or 
resources for any purpose under any Federal, State, or local laws, 
including laws related to taxation, welfare, and public assistance 
programs . . .'' FEMA is providing this information to claimants as 
part of the payment process. FEMA is not responsible for taxation and 
encourages claimants to obtain specific assistance if a Federal, State, 
or local entity seeks to consider compensation under the Act as taxable 
income or income for welfare or public assistance purposes. The agency 
does not believe changes to the IFR regulatory text are needed in the 
Final Rule to effect the commenter's request.

S. Change Chart

    The below table summarizes the changes FEMA has made in this final 
rule. The economic impacts of these changes are discussed further in 
Section IV.B, ``Executive Order 12866, Regulatory Planning and Review 
and Executive Order 13563, Improving Regulation and Regulatory 
Review.''

----------------------------------------------------------------------------------------------------------------
         44 CFR                 IFR text           Final rule text      Reason for change      Economic impact
----------------------------------------------------------------------------------------------------------------
296.1...................  This part implements  This part implements  Consistency with      None.
                           the Hermit's Peak/    the Hermit's Peak/    authorizing
                           Calf Canyon Fire      Calf Canyon Fire      statute's language
                           Assistance Act        Assistance Act        and clarity that
                           (Act), Division G     (Act), Division G     injuries resulting
                           of Public Law 117-    of Public Law 117-    from the Fire are
                           180, 136 Stat.        180, 136 Stat.        compensable.
                           2114, 2168, which     2114, 2168, which
                           requires the          requires the
                           Federal Emergency     Federal Emergency
                           Management Agency     Management Agency
                           (FEMA) to establish   (FEMA) to establish
                           the Office of         the Office of
                           Hermit's Peak/Calf    Hermit's Peak/Calf
                           Canyon Fire Claims    Canyon Fire Claims
                           (``Claims Office'')   (``Claims Office'')
                           to receive,           to receive,
                           evaluate, process,    evaluate, process,
                           and pay actual        and pay actual
                           compensatory          compensatory
                           damages for           damages for
                           injuries suffered     injuries resulting
                           from the Hermit's     from the Hermit's
                           Peak/Calf Canyon      Peak/Calf Canyon
                           Fire.                 Fire.

[[Page 59770]]

 
296.4...................  Subsistence           Subsistence           Consistency with the  Higher claims values
                           Resources means       Resources means       distinctions          for those claiming
                           food and other        food and other        between the           assistance for
                           items obtained        items obtained        communities           ``other natural
                           through hunting,      through hunting,      impacted by the       resource''
                           fishing, firewood     fishing, firewood     Cerro Grande and      gathering.
                           gathering,            or other natural      Hermit's Peak/Calf   Potential increase
                           timbering, grazing    resource gathering,   Canyon Fires and      in transfer
                           or agricultural       timbering, grazing    need to accommodate   payments from FEMA
                           activities            or agricultural       geographic,           to claimants.
                           undertaken by the     activities            economic, and
                           claimant without      undertaken by the     cultural
                           financial             claimant without      distinctions into
                           remuneration, on      financial             the Hermit's Peak/
                           land damaged by the   remuneration, on      Calf Canyon Fire
                           Hermit's Peak/Calf    land damaged by the   Assistance process.
                           Canyon Fire.          Hermit's Peak/Calf
                                                 Canyon Fire.
296.12(a)...............  An Injured Person     An Injured Person     Clarity that          None.
                           who accepts an        who accepts a final   claimants only
                           award under the Act   award under the Act   waive their rights
                           waives the right to   waives the right to   upon acceptance of
                           pursue all claims     pursue all claims     a final award.
                           for injuries          for injuries
                           arising out of or     arising out of or
                           relating to the       relating to the
                           same subject matter   same subject matter
                           against the United    against the United
                           States or any         States or any
                           employee, officer,    employee, officer,
                           or agency of the      or agency of the
                           United States         United States
                           through the Federal   through the Federal
                           Tort Claims Act or    Tort Claims Act or
                           a civil action        a civil action
                           authorized by any     authorized by any
                           other provision of    other provision of
                           law.                  law.
296.12(b)...............  An Injured Person     An Injured Person     Clarity that          None.
                           who accepts an        who accepts a final   claimants only
                           award through a       award through a       waive their rights
                           Federal Tort Claims   Federal Tort Claims   upon acceptance of
                           Act claim or a        Act claim or a        a final award.
                           civil action          civil action
                           against the United    against the United
                           States or any         States or any
                           employee, officer,    employee, officer,
                           or agency of the      or agency of the
                           United States         United States
                           relating to the       relating to the
                           Hermit's Peak/Calf    Hermit's Peak/Calf
                           Canyon Fire waives    Canyon Fire waives
                           the right to pursue   the right to pursue
                           any claim arising     any claim arising
                           out of or relating    out of or relating
                           to the same subject   to the same subject
                           matter under the      matter under the
                           Act.                  Act.
296.13..................  An insurer or other   An insurer or other   Consistency with      None.
                           third party with      third party with      authorizing
                           the rights of a       the rights of a       statute's language.
                           subrogee, who has     subrogee, who has
                           compensated an        compensated an
                           injured person for    injured person for
                           Hermit's Peak/Calf    Hermit's Peak/Calf
                           Canyon Fire related   Canyon Fire related
                           injuries, may file    injuries, may file
                           a Notice of Loss      a Notice of Loss
                           under the Act for     under the Act for
                           the subrogated        the subrogated
                           claim. A subrogee     claim. A subrogee
                           may file a Notice     may file a Notice
                           of Loss without       of Loss without
                           regard to whether     regard to whether
                           the Injured Person    the Injured Person
                           who received          who received
                           payment from the      payment from the
                           subrogee filed a      subrogee filed a
                           Notice of Loss. A     Notice of Loss. A
                           Subrogation Notice    Subrogation Notice
                           of Loss should be     of Loss should be
                           filed after the       filed after the
                           subrogee has made     subrogee has made
                           all payments that     all payments that
                           it believes the       it believes the
                           Injured Person is     Injured Person is
                           entitled to receive   entitled to receive
                           for Hermit's Peak/    for Hermit's Peak/
                           Calf Canyon Fire      Calf Canyon Fire
                           related injuries      related injuries
                           under the terms of    under the terms of
                           the insurance         the insurance
                           policy or other       policy or other
                           agreement between     agreement between
                           the subrogee and      the subrogee and
                           the Injured Person,   the Injured Person,
                           but not later than    but not later than
                           November 14, 2024.    November 14, 2024.
                           By filing a Notice    By filing a Notice
                           of Loss for any       of Loss for any
                           subrogated claim,     subrogated claim,
                           the subrogee elects   the subrogee elects
                           the Act as its        the Act as its
                           exclusive remedy      exclusive remedy
                           against the United    against the United
                           States or any         States or any
                           employee, officer,    employee, officer,
                           or agency of the      or agency of the
                           United States for     United States for
                           all subrogated        all subrogated
                           claims arising out    claims arising out
                           of the Hermit's       of the Hermit's
                           Peak/Calf Canyon      Peak/Calf Canyon
                           Fire. Subrogation     Fire. Subrogation
                           claims must be made   claims must be made
                           on a Notice of Loss   on a Notice of Loss
                           form furnished by     form furnished by
                           the Claims Office.    the Claims Office
                                                 and such claims
                                                 will be paid only
                                                 after paying claims
                                                 submitted by
                                                 injured persons
                                                 that are not
                                                 insurance companies
                                                 seeking payment as
                                                 subrogees.
296.21(a)...............  (a) Allowable         (a) Allowable         Technical edit......  None.
                           damages. The Act      damages. The Act
                           provides for the      provides for the
                           payment of actual     payment of actual
                           compensatory          compensatory
                           damages for Injury    damages for injury
                           or loss of            or loss of
                           property, business    property, business
                           loss, and financial   loss, and financial
                           loss. The laws of     loss. The laws of
                           the State of New      the State of New
                           Mexico will apply     Mexico will apply
                           to the calculation    to the calculation
                           of damages. Damages   of damages. Damages
                           must be reasonable    must be reasonable
                           in amount.            in amount.

[[Page 59771]]

 
296.21(c)(2)............  Reforestation and     Reforestation and     Consistency with the  Removes the formula
                           revegetation.         revegetation.         distinctions          for compensation
                           Compensation for      Compensatory          between the           for destroyed trees
                           the replacement of    damages may be        communities           and other
                           destroyed trees and   awarded for the       impacted by the       landscaping.
                           other landscaping     cost of destroyed     Cerro Grande and     This would
                           will not exceed 25    trees and other       Hermit's Peak/Calf    potentially lead to
                           percent of the pre-   landscaping.          Canyon Fires and      an increase in the
                           fire value of the                           need to accommodate   value of awarded
                           structure and lot.                          geographic,           claims. Claimants
                                                                       economic, and         would benefit by
                                                                       cultural              receiving
                                                                       distinctions into     additional
                                                                       the Hermit's Peak/    assistance and be
                                                                       Calf Canyon Fire      able to recover
                                                                       Assistance process.   more fully.
                                                                                            This would not
                                                                                             affect the maximum
                                                                                             total impact of the
                                                                                             rule of $3.95B, but
                                                                                             transfer payments
                                                                                             from FEMA to these
                                                                                             claimants would
                                                                                             potentially
                                                                                             increase.
                                                                                            FEMA may also bear
                                                                                             an additional
                                                                                             administrative cost
                                                                                             to process the
                                                                                             additional claims.
296.21(c)(3)(ii)........  The claimant can      The claimant can      Consistency with the  None.
                           establish that the    establish that the    distinctions
                           value of the real     value of the real     between the
                           property was          property was          communities
                           permanently           significantly         impacted by the
                           diminished as a       diminished long-      Cerro Grande and
                           result of the         term as a result of   Hermit's Peak/Calf
                           Hermit's Peak/Calf    the Hermit's Peak/    Canyon Fires and
                           Canyon Fire.          Calf Canyon Fire.     need to accommodate
                                                                       geographic,
                                                                       economic, and
                                                                       cultural
                                                                       distinctions into
                                                                       the Hermit's Peak/
                                                                       Calf Canyon Fire
                                                                       Assistance process.
296.21(c)(5)............  N/A.................  Physical              Consistency with      None.
                                                 Infrastructure.       authorizing
                                                 Compensatory          statute's language
                                                 damages may be        and with the
                                                 awarded for the       distinctions
                                                 damage to physical    between the
                                                 infrastructure,       communities
                                                 including damages     impacted by the
                                                 to irrigation         Cerro Grande and
                                                 infrastructure such   Hermit's Peak/Calf
                                                 as acequia systems.   Canyon Fires and
                                                                       need to accommodate
                                                                       geographic,
                                                                       economic, and
                                                                       cultural
                                                                       distinctions into
                                                                       the Hermit's Peak/
                                                                       Calf Canyon Fire
                                                                       Assistance process.
296.21(e)(3)............  Out of pocket         Out of pocket         Reflects public       Removes time limit
                           expenses for          expenses for          comment feedback on   on reimbursements
                           treatment of mental   treatment of mental   to allow for claims   for treatment.
                           health conditions.    health conditions.    to be filed under    Additional claims
                           FEMA may reimburse    FEMA may reimburse    deadline for all      will potentially be
                           an individual         an individual         other claims and      filed after April
                           claimant for          claimant for          revised for clarity   6, 2024, leading to
                           reasonable out of     reasonable out of     on the types of       more claims and
                           pocket expenses       pocket expenses       mental health         claims payments.
                           incurred for          incurred for          conditions covered.  This would
                           treatment of a        treatment of a                              potentially lead to
                           mental health         mental health                               an increase in the
                           condition rendered    condition rendered                          value of awarded
                           by a licensed         by a licensed                               claims. Claimants
                           mental health         mental health                               would benefit by
                           professional, which   professional, which                         receiving
                           condition resulted    condition resulted                          additional
                           from the Hermit's     from or was                                 assistance and be
                           Peak/Calf Canyon      worsened by the                             able to recover
                           Fire. FEMA will not   Hermit's Peak/Calf                          more fully.
                           reimburse for         Canyon Fire.                               This would not
                           treatment rendered                                                affect the maximum
                           after April 6, 2024.                                              total impact of the
                                                                                             rule of $3.95B, but
                                                                                             transfer payments
                                                                                             from FEMA to these
                                                                                             claimants would
                                                                                             potentially
                                                                                             increase.
                                                                                            FEMA may also bear
                                                                                             an additional
                                                                                             administrative cost
                                                                                             to process the
                                                                                             additional claims.
296.21(e)(4)............  Donations. FEMA will  Donations. FEMA will  Reflects public       Extends the deadline
                           compensate            compensate            comment feedback on   by approximately 8
                           claimants for the     claimants for the     appropriate           weeks for
                           cost of               cost of               timeline.             compensation for
                           merchandise, use of   merchandise, use of                         donations to
                           equipment or other    equipment or other                          survivors of the
                           non-personal          non-personal                                fire.
                           services, directly    services, directly                         Additional claims
                           or indirectly         or indirectly                               for reimbursement
                           donated to            donated to                                  were potentially be
                           survivors of the      survivors of the                            filed between
                           Hermit's Peak/Calf    Hermit's Peak/Calf                          September 21 and
                           Canyon Fire not       Canyon Fire not                             November 14, 2022,
                           later than            later than November                         leading to more
                           September 20, 2022.   14, 2022. Donations                         claims and claims
                           Donations will be     will be valued at                           payments.
                           valued at cost.       cost.                                      This would
                                                                                             potentially lead to
                                                                                             an increase in the
                                                                                             number of awarded
                                                                                             claims. More
                                                                                             claimants would
                                                                                             benefit by
                                                                                             receiving
                                                                                             assistance and be
                                                                                             able to recover
                                                                                             more fully.
                                                                                            This would not
                                                                                             affect the maximum
                                                                                             total impact of the
                                                                                             rule of $3.95B, but
                                                                                             transfer payments
                                                                                             from FEMA to
                                                                                             claimants would
                                                                                             increase.
                                                                                            FEMA may also bear
                                                                                             an additional
                                                                                             administrative cost
                                                                                             to process the
                                                                                             additional claims.

[[Page 59772]]

 
296.21(e)(5)............  Heightened Risk       Heightened Risk       Consistency with the  Removes the formula
                           Reduction. FEMA       Reduction. FEMA       distinctions          for compensation
                           will reimburse        will reimburse        between the           for measures taken
                           claimants for the     claimants for the     communities           to reduce risk from
                           costs incurred to     costs incurred to     impacted by the       natural hazards
                           implement             implement             Cerro Grande and      heightened by the
                           reasonable measures   reasonable measures   Hermit's Peak/Calf    Fire.
                           necessary to reduce   necessary to reduce   Canyon Fires and     This would
                           risks from natural    risks from natural    need to accommodate   potentially lead to
                           hazards heightened    hazards heightened    geographic,           an increase in the
                           by the Hermit's       by the Hermit's       economic, and         value of awarded
                           Peak/Calf Canyon      Peak/Calf Canyon      cultural              claims. Claimants
                           Fire to the level     Fire to the level     distinctions into     would benefit by
                           of risk prevailing    of risk prevailing    the Hermit's Peak/    receiving
                           before the Hermit's   before the Hermit's   Calf Canyon Fire      additional
                           Peak/Calf Canyon      Peak/Calf Canyon      Assistance process.   assistance and be
                           Fire. Such measures   Fire. Such measures                         able to recover
                           may include, for      may include, for                            more fully.
                           example, risk         example, risk                              This would not
                           reduction projects    reduction projects                          affect the maximum
                           that reduce an        that reduce an                              total impact of the
                           increased risk from   increased risk from                         rule of $3.95B, but
                           flooding,             flooding,                                   transfer payments
                           mudslides, and        mudslides, and                              from FEMA to these
                           landslides in and     landslides in and                           claimants would
                           around burn scars.    around burn scars.                          potentially
                           Compensation under    Claimants seeking                           increase.
                           this section may      compensation for                           FEMA may also bear
                           not exceed 25         heightened risk                             an additional
                           percent of the        reduction must                              administrative cost
                           higher of payments    include the claim                           to process the
                           from all sources      in their Notice of                          claims.
                           (i.e., the Act,       Loss by November
                           insurance proceeds,   14, 2024 or an
                           FEMA assistance       amended Notice of
                           under the Stafford    Loss filed no later
                           Act) for damage to    than November 14,
                           the structure and     2025. Claimants
                           lot, or the pre-      should take into
                           fire value of the     account current
                           structure and lot.    building codes and
                           Claimants seeking     standards and must
                           compensation for      complete the risk
                           heightened risk       reduction project
                           reduction must        for which they
                           include the claim     receive
                           in their Notice of    compensation.
                           Loss by November
                           14, 2024 or an
                           amended Notice of
                           Loss filed no later
                           than November 14,
                           2025. Claimants
                           should take into
                           account current
                           building codes and
                           standards and must
                           complete the risk
                           reduction project
                           for which they
                           receive
                           compensation.
296.21(f)...............  Insurance and other   Insurance and other   Technical edit......  None.
                           benefits. The Act     benefits. The Act
                           allows FEMA to        allows FEMA to
                           compensate Injured    compensate Injured
                           Persons only for      Persons only for
                           damages not paid,     damages not paid,
                           or will not be        and that will not
                           paid, by insurance    be paid, by
                           or other third-       insurance or other
                           party payments or     third-party
                           settlements.          payments or
                                                 settlements.
296.31(a)...............  FEMA will reimburse   FEMA will reimburse   Consistency with the  None.
                           claimants for the     claimants for the     distinctions
                           reasonable costs      reasonable costs      between the
                           they incur in         they incur in         communities
                           providing             providing             impacted by the
                           documentation         documentation         Cerro Grande and
                           requested by the      requested by the      Hermit's Peak/Calf
                           Claims Office. FEMA   Claims Office. FEMA   Canyon Fires and
                           will also reimburse   will also reimburse   need to accommodate
                           claimants for the     claimants for the     geographic,
                           reasonable costs      reasonable costs      economic, and
                           they incur in         they incur in         cultural
                           providing             providing             distinctions into
                           appraisals, or        appraisals, or        the Hermit's Peak/
                           other third-party     other third-party     Calf Canyon Fire
                           opinions, requested   opinions, that the    Assistance process.
                           by the Claims         Claims Office deems
                           Office. FEMA will     necessary to
                           not reimburse         determine the
                           claimants for the     amount of the
                           cost of appraisals    claim. FEMA will
                           or other third-       not reimburse
                           party opinions not    claimants for the
                           requested by the      cost of appraisals
                           Claims Office.        or other third-
                                                 party opinions not
                                                 requested by the
                                                 Claims Office.

[[Page 59773]]

 
296.35..................  The Director of the   The Director of the   Consistency with the  A claimant may file
                           Claims Office may     Claims Office may     distinctions          a claim for
                           reopen a claim if     reopen a claim if     between the           depreciation after
                           requested to do so    requested to do so    communities           the sale of any
                           by the claimant,      by the claimant,      impacted by the       real property, not
                           notwithstanding the   notwithstanding the   Cerro Grande and      only a home.
                           submission of the     submission of the     Hermit's Peak/Calf   The deadline to
                           Release and           Release and           Canyon Fires and      request to reopen a
                           Certification Form,   Certification Form,   need to accommodate   claim under limited
                           for the limited       for the limited       geographic,           circumstances is
                           purpose of            purpose of            economic, and         extended by
                           considering issues    considering issues    cultural              publication in the
                           raised by the         raised by the         distinctions into     Federal Register.
                           request to reopen     request to reopen     the Hermit's Peak/   Both of these
                           if, not later than    if, not later than    Calf Canyon Fire      changes would
                           November 14, 2025,    November 14, 2025,    Assistance process    potentially lead to
                           the claimant          the claimant          while also            an increase in
                           desires heightened    desires heightened    incorporating a       claims and more
                           risk reduction        risk reduction        past practice from    claims being
                           compensation in       compensation in       Cerro Grande to       awarded. Claimants
                           accordance with       accordance with       extend the deadline   would benefit by
                           Sec.                  Sec.                  by Federal Register   receiving
                           296.21(e)(5); the     296.21(e)(5); the     publication for       additional
                           claimant closed the   claimant closed the   certain losses.       assistance and be
                           sale of a home and    sale of real                                able to recover
                           wishes to present a   property and wishes                         more fully.
                           claim for decrease    to present a claim                         This would not
                           in the value of the   for decrease in the                         affect the maximum
                           real property under   value of the real                           total impact of the
                           Sec.                  property under Sec.                         rule of $3.95B, but
                           296.21(c)(3); the       296.21(c)(3).                             transfer payments
                           claimant has          Claimants may                               from FEMA to these
                           incurred additional   request to reopen                           claimants would
                           losses under Sec.     claims where the                            potentially
                           296.21(c)(1) as       claimant has                                increase.
                           part of a             incurred additional                        FEMA may also bear
                           reconstruction in     losses under Sec.                           an additional
                           excess of those       296.21(c)(1) as                             administrative cost
                           previously awarded;   part of a                                   to process the
                           or the Director of    reconstruction in                           claims.
                           the Claims Office     excess of those
                           otherwise             previously awarded
                           determines that       or the Director of
                           claimant has          the Claims Office
                           demonstrated good     otherwise
                           cause.                determines that
                                                 claimant has
                                                 demonstrated good
                                                 cause no later than
                                                 the deadline
                                                 established by the
                                                 Director of the
                                                 Claims Office as
                                                 published in the
                                                 Federal Register
                                                 and at https://www.fema.gov/hermits-peak.
----------------------------------------------------------------------------------------------------------------

IV. Regulatory Analysis

A. Administrative Procedure Act (APA)

    The IFR that this Final Rule makes final, with the changes detailed 
above in response to public comment is already in effect. FEMA issued 
the IFR pursuant to statutory authority under the Act. Specifically, 
section 104(f)(1) requires FEMA to publish ``interim final regulations 
for the processing and payment of claims under this Act.'' Further, the 
IFR had to be published ``not later than 45 days after the date of 
enactment.'' Given Congress' specific authority to issue an IFR, the 
agency had good cause to proceed without advance notice and comment as 
would have otherwise been required under the APA. See 5 U.S.C. 
553(b)(B); Hermit's Peak/Calf Canyon Fire Assistance, 87 FR 68085, 
68095 (Nov. 14, 2022) (``Consistent with Congress' direction in section 
104(f)(1) of the Act that FEMA publish `interim final regulations for 
the processing and payment of claims under [the] Act,' good cause 
exists pursuant to 5 U.S.C. 553 (b)(B) as it would be impracticable and 
contrary to the public interest to require notice and comment 
rulemaking in this instance.'').
    FEMA finds there is good cause, under 5 U.S.C. 553(d)(3), not to 
require a 30-day delayed effective date for this rulemaking because 
delaying implementation of this Final Rule by 30 days is contrary to 
the goal of the statutory purpose found at section 102(b)(2) of the Act 
to provide for the expeditious consideration and settlement of claims 
for injuries resulting from the Fire. The Act required FEMA to 
promulgate and publish an IFR within 45 days after the Act's enactment, 
and delay in the effective date of a Final Rule with changes to that 
IFR would further negatively impact claimants seeking compensation 
through the Act. The updates made in this Final Rule will address 
concerns raised by commenters on the application of the Cerro Grande 
Fire Assistance processes for the Hermit's Peak/Calf Canyon Fire 
Assistance process and ensures the process better reflects the needs of 
injured persons and impacted communities from the Hermit's Peak/Calf 
Canyon Fire given the geographic, economic, and cultural distinctions 
between the Cerro Grande and Hermit's Peak/Calf Canyon Fires. This 
Final Rule will provide additional clarity to claimants seeking to 
utilize the Hermit's Peak/Calf Canyon claims process and receive 
compensation for actual compensatory damages suffered as a result of 
the Fire. Given the Congressional mandate to expeditiously consider and 
settle these claims, this Final Rule must be effective upon 
publication.
    The Fire constitutes the largest wildfire in New Mexico 
history.\67\ Over 340,000 acres of forest burned during the Fire and 
over half of the land impacted by the Fire consisted of privately-owned 
land, with just under 200,000 total acres burned.\68\ At least 160 
homes and a total of over 900 structures were destroyed during the 
Fire.\69\ Despite containment, the impact of the Fire continues to be 
felt in the impacted areas, causing flooding and setting off a drinking 
water crisis.\70\ The higher burn severity of soil on private lands 
increases the likelihood of flooding and mudslide impacts on those 
areas. Residents in the areas of the Fire have already suffered 
significant damage from flooding, including washed out roads and 
buildings, drowned pastures, and burned debris

[[Page 59774]]

moved downstream.\71\ In addition, as noted above, Congress explicitly 
mandated in section 104(f)(1) of the Act that FEMA promulgate these 
regulations expeditiously as interim final regulations, a factor that 
supports a finding of ``good cause'' to also issue this Final Rule 
without an effective date delay. Pursuant to section 104(f)(1) of the 
Act, consistent with 5 U.S.C. 553(d)(3), and for the reasons stated 
above, FEMA therefore will make this Final Rule effective immediately 
upon publication.
---------------------------------------------------------------------------

    \67\ See Bryan Pietsch and Jason Samenow, ``New Mexico blaze is 
now largest wildfire in state history,'' The Washington Post, May 
17, 2022 found at https://www.washingtonpost.come/nation/2022/05/17/calf-canyon-hermits-peak-fire-new-mexico/ (last accessed July 27, 
2023).
    \68\ See New Mexico Forest and Watershed Restoration Institute, 
``Hermit's Peak and Calf Canyon Fire: The largest wildfire in New 
Mexico's recorded history and its lasting impacts'' Aug. 24, 2022 
found at https://storymaps.arcgis.com/stories/d48e2171175f4aa4b5613c2d11875653 (last accessed Sept. 27, 2022).
    \69\ Id.
    \70\ See Jordan Honeycutt, ``Rain brings flash flooding to 
Hermits Peak Calf Canyon burn scar,'' KRQE, July 13, 2022 found at 
https://www.krqe.com/news/new-mexico/rain-brings-flash-flooding-to-hermits-peak-calf-canyon-burn-scar/ (last accessed July 27, 2023), 
and Simon Romero, ``How New Mexico's Largest Wildfire Set Off a 
Drinking Water Crisis,'' The New York Times, Sept. 26, 2022 found at 
https://www.nytimes.com/2022/09/26/us/new-mexico-las-vegas-fire-water.html (last accessed Sept. 27, 2022).
    \71\ See New Mexico Forest and Watershed Restoration Institute, 
``Hermit's Peak and Calf Canyon Fire: The largest wildfire in New 
Mexico's recorded history and its lasting impacts'' Aug. 24, 2022 
found at https://storymaps.arcgis.com/stories/d48e2171175f4aa4b5613c2d11875653 (last accessed Sept. 27, 2022).
---------------------------------------------------------------------------

B. Executive Order 12866, Regulatory Planning and Review, as Amended, 
and Executive Order 13563, Improving Regulation and Regulatory Review

    Executive Order 12866 (Regulatory Planning and Review), as amended 
by Executive Order 14094 (Modernizing Regulatory Review) and Executive 
Order 13563 (Improving Regulation and Regulatory Review), directs 
agencies to assess the costs and benefits of available regulatory 
alternatives and, if regulation is necessary, to select regulatory 
approaches that maximize net benefits (including potential economic, 
environmental, public health and safety effects, distributive impacts, 
and equity). Executive Order 13563 emphasizes the importance of 
quantifying both costs and benefits, of reducing costs, of harmonizing 
rules, and of promoting flexibility. The Office of Management and 
Budget (OMB) has designated this rule a ``significant regulatory 
action'' as defined under section 3(f)(1) of Executive Order 12866, as 
amended by E.O. 14094. Accordingly, the rule has been reviewed by OMB.
    In the IFR, FEMA established a process by which claimants who were 
injured as a result of the Fire may apply for compensation under the 
Act. FEMA is updating that process through this Final Rule. Affected 
State, local, and Tribal governments, private sector businesses, not-
for-profit organizations, and individuals and households are eligible 
to apply for compensation based on clarifying changes made in this 
Final Rule. The established process results in costs to claimants for 
time to apply for and substantiate a claim, and for FEMA to process and 
adjudicate claims. Claimants submit a Notice of Loss to FEMA, meet with 
a FEMA Claims Reviewer, obtain the documentation needed to substantiate 
claims, sign a Proof of Loss, and complete and return a Release and 
Certification Form. Additionally, affected insurance companies are 
eligible to submit a subrogation notice of loss for possible 
compensation under the Act. Claimants who disagree with FEMA's 
evaluation of the claim may also incur costs to appeal the 
determination. FEMA estimates approximately 28,725 claimants will seek 
compensation under the Act annually, totaling 732,490 burden hours per 
year.\72\
---------------------------------------------------------------------------

    \72\ Agency Information Collection Activities: Proposed 
Collection; Comment Request; Generic Clearance for Notice of Loss 
and Proof of Loss, 88 FR 29144 (May 5, 2023). FEMA estimates that 
28,725 applicants annually will incur approximately 25.5 burden 
hours each. Over the two-year period, FEMA estimates a total of 
57,450 claims with a corresponding 1,464,980 burden hours.
---------------------------------------------------------------------------

    The IFR and this rule result in additional transfer payments from 
FEMA to victims for the settlement of claims for injuries resulting 
from the Fire. Injuries may include property, business and/or financial 
losses. Congress appropriated $3.95 billion to provide for the 
expeditious consideration and settlement of these claims.\73\ The 
maximum total economic impact of these actions, therefore, is $3.95 
billion (assuming that all funds awarded will be expended). These funds 
are for the settlement of actual compensatory damages measured by 
injuries suffered, FEMA's administration of the program, and DHS OIG 
oversight.\74\ However, without knowing the dollar amount of claims 
that will be filed for these injuries, it is impossible to predict the 
amount of the economic impact with any precision. As of July 5, 2023, 
FEMA has received 1,353 Notices of Loss, which includes 2,257 
claimants.
---------------------------------------------------------------------------

    \73\ Division A of Public Law 117-180, 136 Stat. 2144 (2022) and 
Consolidated Appropriations Act, 2023, Public Law 117-328, 136 Stat. 
4459.
    \74\ Id.
---------------------------------------------------------------------------

    The Act requires claims to be submitted no later than two years 
after publication of the IFR or November 14, 2024.\75\ The Act requires 
that FEMA determine and fix the amount to be paid for a claim within 
180 days after a claim is submitted.\76\ Although the impact of the 
rule could be spread over multiple years as claims are received, 
processed, and paid, the total economic effects of a specific payment 
would only occur once, rather than annually.
---------------------------------------------------------------------------

    \75\ Id.
    \76\ Division G of Public Law 117-180, 136 Stat. 2114 (2022).
---------------------------------------------------------------------------

    These actions provide distributional benefits to victims of the 
Fire. FEMA has provided immediate assistance under the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), 
as amended (Pub. L. 93-288) (42 U.S.C. 5121, et seq.) to those eligible 
for public and individual assistance pursuant to the President's 
declaration of a major disaster on May 4, 2022. The additional 
compensation from the Act will more fully compensate victims and allow 
affected State, local and Tribal governments, businesses, 
organizations, and individuals to rebuild.
    In this Final Rule, FEMA is updating the established process by 
which claimants who were injured as a result of the Fire may apply for 
compensation under the Act. FEMA anticipates that several of the 
changes it made from the IFR to this Final Rule will lead to impacts on 
costs, benefits, and transfer payments. Below, FEMA discusses the 
impact of these changes relative to the IFR. Specifically, these 
changes include the following:
    In 44 CFR 296.4, FEMA added ``other natural resources'' to the 
definition of ``Subsistence Resources.'' Expanding the definition leads 
to the potential for claimants to receive compensation for claims 
including other natural resources; however, FEMA anticipates any impact 
on claim values will be a de minimis amount, as the additional language 
is intended to be clarifying in nature. In Sec.  296.21(c)(2), FEMA 
removed the formula on compensation for destroyed trees and other 
landscaping. Removing this formula leads to the potential for claimants 
to receive higher levels of compensation for these claims, and 
therefore, an increase in claims values. Section 296.21(e)(3) removes 
the time limit on reimbursements for treatment, allowing for claimants 
to file additional claims after April 6, 2024. This will potentially 
lead to an increase in the number and value of claims filed and awarded 
as compared to the IFR. Claimants will potentially benefit by receiving 
treatment for mental health conditions that they would not have sought 
out if their expenses could not be reimbursed. In Sec.  296.21(e)(4), 
FEMA extended the deadline for compensation from September 20, 2022 to 
November 14, 2022 for donations claimants made to survivors of the 
Hermit's Peak/Calf Canyon Fire. This will potentially lead to an 
increase in the number and value of claims awarded by FEMA relative to 
the IFR. In Sec.  296.21(e)(5), FEMA removed the formula for 
compensation for measures taken to reduce risk from natural disasters 
heightened by the Fire. Removing this formula leads to the potential 
for claimants to receive higher levels of compensation for these 
claims, and therefore, an increase in claims values. FEMA edited Sec.  
296.35 to allow

[[Page 59775]]

for a claimant to file a claim for depreciation after the sale of any 
real property, not only the sale of a home. FEMA also extends a 
deadline in this section, allowing for a claimant to request to reopen 
a claim under limited circumstances until the deadline established in 
the Federal Register. Both of these changes will potentially lead to an 
increase in claims and more claims being awarded as compared to the 
IFR.
    All increases in the number or value of claims payments in 
comparison to the IFR will lead to an increase in transfer payments 
from FEMA to affected recipients. The extent to which the claim values 
increase, recipients will benefit by being made more whole after their 
loss, thereby improving their ability recover and be resilient. Any 
increase in the number of claims filed will also lead to an increase in 
burden hours to claimants and administrative costs to FEMA. None of 
these changes will affect the maximum total impact of the rule of $3.95 
billion.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 605(b)) applies only 
to rules for which an agency publishes a general notice of proposed 
rulemaking pursuant to 5 U.S.C. 553(b). As discussed previously, FEMA 
did not issue a notice of proposed rulemaking, and was not required to 
do so under any law. Accordingly, the RFA's requirements do not apply 
to this Final Rule.

D. Unfunded Mandates Reform Act of 1995

    As noted above, no notice of proposed rulemaking was published in 
advance of this action. Therefore, the written statement provisions of 
the Unfunded Mandates Reform Act of 1995, as amended, (2 U.S.C. 1501 et 
seq.) do not apply to this regulatory action.

E. Paperwork Reduction Act of 1995

    This rule contains information collections necessary to support 
FEMA's implementation of the Act. The Notice of Loss and Proof of Loss 
forms (OMB Control Number 1660-0155) were submitted and approved under 
OMB's emergency clearance procedures on November 14, 2022 to allow FEMA 
to begin accepting claims immediately after publication of the IFR. A 
revision of the initial emergency collection was approved on February 
16, 2023 to incorporate additional forms necessary to effectively 
process claims under the Act. FEMA is pursuing approval under the 
normal notice and comment process for this collection and will publish 
notice in the Federal Register for comment before receiving an 
extension of the emergency approval.

F. Privacy Act

    Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must 
determine whether implementation of a regulation will result in a 
system of records. A ``record'' is any item, collection, or grouping of 
information about an individual that is maintained by an agency, 
including, but not limited to, his/her education, financial 
transactions, medical history, and criminal or employment history and 
that contains his/her name, or the identifying number, symbol, or other 
identifying particular assigned to the individual, such as a finger or 
voice print or a photograph. See 5 U.S.C. 552a(a)(4). A ``system of 
records'' is a group of records under the control of an agency from 
which information is retrieved by the name of the individual or by some 
identifying number, symbol, or other identifying particular assigned to 
the individual. An agency cannot disclose any record which is contained 
in a system of records except by following specific procedures.
    In accordance with DHS policy, FEMA has completed a Privacy 
Threshold Analysis (PTA) for this rule. DHS has determined that this 
rulemaking does not affect the 1660-0155 OMB Control Number's 
compliance with the E-Government Act of 2002 or the Privacy Act of 
1974, as amended. Specifically, DHS has concluded that the 1660-0155 
OMB Control Number is covered by the DHS/FEMA/PIA-044 National Fire 
Incident Reporting Systems (NFIRS) Privacy Impact Assessment (PIA) and 
the DHS/FEMA/PIA-049 Individual Assistance (IA) Program PIA. 
Additionally, DHS has decided that the 1660-0155 OMB Control Number is 
covered by DHS/ALL-004 General Information Technology Access Account 
Records System (GITAARS), 77 FR 70792 (Nov. 27, 2012), and DHS/ALL-013 
Department of Homeland Security Claims Records, 73 FR 63987 (Oct. 28, 
2008) System of Records Notices (SORNs).

G. Executive Order 13175, Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal Governments,'' 65 FR 67249, November 9, 2000, applies to agency 
regulations that have Tribal implications, that is, regulations that 
have substantial direct effects 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. Under this Executive Order, to the extent 
practicable and permitted by law, no agency shall promulgate any 
regulation that has Tribal implications, that imposes substantial 
direct compliance costs on Indian Tribal governments, and that is not 
required by statute, unless funds necessary to pay the direct costs 
incurred by the Indian Tribal government or the Tribe in complying with 
the regulation are provided by the Federal Government, or the agency 
consults with Tribal officials.
    FEMA entered into consultation with the Indian Tribes that have 
been impacted by the Fire and whose Tribal entities or Tribal members 
have been impacted by the Fire during the public comment period of the 
Interim Final Rulemaking. The consultation was held on December 9, 2022 
at 3:00 p.m. The concerns raised during that consultation are addressed 
above.

H. Executive Order 13132, Federalism

    Executive Order 13132, ``Federalism,'' 64 FR 43255, August 10, 
1999, 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, on the relationship between the national 
government and 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.
    FEMA has determined that this rulemaking does not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, and 
therefore does not have federalism implications as defined by the 
Executive Order. FEMA, however, met with the State of New Mexico on 
January 10, 2023 to discuss the effect of the IFR on the State. The 
transcript from that meeting can be found on the public docket at 
https://www.regulations.gov/document/FEMA-2022-0037-0142 and comments 
raised during that meeting are addressed above.

[[Page 59776]]

I. National Environmental Policy Act of 1969 (NEPA)

    Under Section 102 of the National Environmental Policy Act of 1969 
(NEPA), as amended, 42 U.S.C. 4321 et seq., an agency must prepare an 
environmental assessment or environmental impact statement for any 
major Federal action that significantly affects the quality of the 
human environment unless the action can be statutorily or categorically 
excluded. 40 CFR 1501.1(a), 1501.4. A ``major federal action'' includes 
new or revised agency rules or regulations. 40 CFR 1508.1(q)(2). A 
categorical exclusion is a category of actions that the Federal agency 
has determined, normally does not significantly affect the quality of 
the human environment. 42 U.S.C. 4336e(1). If there are extraordinary 
circumstances, however, a normally excluded action may have a 
significant effect, and if the effect cannot be mitigated, further 
environmental review is required. 40 CFR 1501.4.
    This rulemaking is a major Federal action subject to NEPA. Based on 
the public comments received, the rulemaking revises the IFR to better 
address the needs of the communities affected by the Fire with 
particular consideration to their geographic, economic and cultural 
characteristics. The purpose of the rulemaking is to establish a 
process and procedures for FEMA to expeditiously pay actual 
compensatory damages for injuries resulting from the Fire. FEMA has 
determined that categorical exclusion A3 included in the list of 
exclusion categories at Department of Homeland Security Instruction 
Manual 023-01-001-01, Revision 01, Implementation of the National 
Environmental Policy Act, Appendix A, issued November 6, 2014, applies 
to this rulemaking. Specifically, categorical exclusion A3 covers the 
promulgation of rules, issuance of rulings or interpretations, and the 
development and publication of policies, orders, directives, notices, 
procedures, manuals, and advisory circulars if they meet certain 
criteria provided in A3(a)-(f). This Final Rule meets Categorical 
Exclusion A3(a), ``[t]hose of a strictly administrative or procedural 
nature,'' and A3(b), ``[t]hose that implement, without substantive 
change, statutory or regulatory requirements.'' FEMA has determined 
that there are no extraordinary circumstances that prevent the use of 
this categorical exclusion for this rulemaking action.

J. Executive Orders 12898 and 14096 on Environmental Justice

    Under Executive Order 12898, ``Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations,'' 59 FR 7629 (Feb. 16, 1994), as amended by Executive 
Order 12948, 60 FR 6381, (Feb. 1, 1995), FEMA incorporates 
environmental justice into its 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 programs, denying persons the benefits of programs, or 
subjecting persons to discrimination because of race, color, or 
national origin. Further, Executive Order 14096, ``Revitalizing Our 
Nation's Commitment to Environmental Justice for All,'' 88 FR 25251 
(Apr. 26, 2023), charges Federal agencies to make achieving 
environmental justice part of their missions, consistent with statutory 
authority, by identifying, analyzing, and addressing the 
disproportionate and adverse human health and environmental effects and 
hazards of Federal activities, including those related to climate 
change and cumulative impacts of environmental and other burdens on 
communities with environmental justice concerns.
    This rulemaking does not have a disproportionate and adverse helath 
or environmental effect on communities, nor does it exclude persons 
from participation in FEMA programs, deny persons the benefits of FEMA 
programs, or subject persons to discrimination because of race, color, 
or national origin. The rulemaking finalizes the IFR and establishes 
the procedures for processing and paying claims for property, business 
and other financial losses to those person(s) sustaining losses from 
the Fire. The eligibility requirements are to ensure the validity of 
the claim for compensation. See e.g., 44 CFR 296.4 (definition of 
``injured person''), 296.20, 296.21, and 296.30. With its revisions to 
the IFR, the rulemaking better addresses the needs of the communities 
affected by the Fire based on the public comments received and the 
communities' particular geographic, economic, and cultural 
characteristics. Claimants also have appeal rights: they can file an 
administrative appeal of the decision by the Director of the Claims 
Office, and/or resolve a dispute through binding arbitration or appeal 
the Director's decision to the United States District Court for the 
District of New Mexico. All persons eligible for compensatory payments 
resulting from the Fire will benefit.

K. Congressional Review of Agency Rulemaking

    Under the Congressional Review of Agency Rulemaking Act (CRA), 5 
U.S.C. 801-808 before a rule can take effect, the Federal agency 
promulgating the rule must: submit to Congress and to the Government 
Accountability Office (GAO) a copy of the rule; a concise general 
statement relating to the rule, including whether it is a major rule; 
the proposed effective date of the rule; a copy of any cost-benefit 
analysis; descriptions of the agency's actions under the Regulatory 
Flexibility Act and the Unfunded Mandates Reform Act; and any other 
information or statements required by relevant executive orders.
    FEMA has submitted this rule to the Congress and to GAO pursuant to 
the CRA. The Office of Management and Budget has determined that this 
rule is ``economically significant,'' but this rule is not a ``major 
rule'' within the meaning of the CRA. FEMA believes this Final Rule is 
not subject to the additional review requirements under the CRA given 
the statutory mandate to issue the Interim Final Rule within 45 days of 
the Act's enactment under section 104(f) of the Act and Congress's 
desire for the agency to begin processing and paying claims pursuant to 
the Act expeditiously under section 102(b)(2). The changes made in the 
Final Rule need to be immediately effective to resolve the comments 
raised during the IFR's public comment period to the claims process and 
ensure the continued expeditious processing and payment of claims under 
the Act. This Final Rule is a procedural rule and does not confer any 
substantive rights, benefits, or obligations but rather only updates 
the agency's procedures for how to voluntarily file a claim under the 
Act. As such, this Final Rule is a ``rule of agency organization, 
procedure, or practice that does not substantially affect the rights or 
obligation of non-agency parties'' pursuant to 5 U.S.C. 804(3)(C). 
Finally, even if this final rule is considered a ``rule'' under the 
CRA, FEMA finds there is good cause to dispense with notice and public 
comment under 5 U.S.C. 808(2). Notice and public comment are 
impracticable and contrary to public interest given the Act's 
requirement for the agency to publish an IFR within 45 days of 
enactment and the Act's purpose to provide expeditious consideration 
and settlement of claims for victims of the

[[Page 59777]]

Fire as explained above. Therefore, there is no delay in its effective 
date under the CRA.

List of Subjects in 44 CFR Part 296

    Administrative practice and procedure, 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.

0
For the reasons discussed in the preamble, the Federal Emergency 
Management Agency (FEMA) is revising part 296 to read as follows:

PART 296--HERMIT'S PEAK/CALF CANYON FIRE ASSISTANCE

Sec.
Subpart A--General
296.1 Purpose.
296.2 Policy.
296.3 Information and assistance.
296.4 Definitions.
296.5 Overview of the claims process.
296.6-296.9 [Reserved]
Subpart B--Bringing a Claim Under the Hermit's Peak/Calf Canyon Fire 
Assistance Act
296.10 Filing a claim under the Hermit's Peak/Calf Canyon Fire 
Assistance Act
296.11 Deadline for notifying FEMA of injuries.
296.12 Election of remedies.
296.13 Subrogation.
296.14 Assignments.
296.15-296.19 [Reserved]
Subpart C--Compensation Available under the Hermit's Peak/Calf Canyon 
Fire Assistance Act
296.20 Prerequisite to compensation.
296.21 Allowable damages.
296.22-296.29 [Reserved]
Subpart D--Claims Evaluation
296.30 Establishing injuries and damages.
296.31 Reimbursement of claim expenses.
296.32 Determination of compensation due to claimant.
296.33 Partial payments.
296.34 Supplementing claims.
296.35 Reopening a claim.
296.36 Access to records.
296.37 Confidentiality of information.
296.38-296.39 [Reserved]
Subpart E--Dispute Resolution
296.40 Scope.
296.41 Administrative appeal.
296.42 Arbitration.
296.43 Judicial review.

    Authority: Pub. L. 117-180, 136 Stat. 2114, 2168; Homeland 
Security Act of 2002, 6 U.S.C. 101 et seq.

Subpart A--General

Sec.  296.1  Purpose.

    This part implements the Hermit's Peak/Calf Canyon Fire Assistance 
Act (Act), Division G of Public Law 117-180, 136 Stat. 2114, 2168, 
which requires the Federal Emergency Management Agency (FEMA) to 
establish the Office of Hermit's Peak/Calf Canyon Fire Claims (``Claims 
Office'') to receive, evaluate, process, and pay actual compensatory 
damages for injuries resulting from the Hermit's Peak/Calf Canyon Fire.

Sec.  296.2  Policy.

    It is our policy to provide for the expeditious resolution of 
damage claims through a process that is administered with sensitivity 
to the burdens placed upon claimants by the Hermit's Peak/Calf Canyon 
Fire.

Sec.  296.3  Information and assistance.

    Information and assistance concerning the Act is available from the 
Claims Office, Federal Emergency Management Agency online at https://www.fema.gov/hermits-peak.

Sec.  296.4  Definitions.

    Administrative Appeal means an appeal of the Authorized Official's 
Determination to the Director of the Claims Office in accordance with 
the provisions of Subpart E of this part.
    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 FEMA attorneys and drafts of documents 
prepared by Claims Office personnel and contractors.
    Administrator means the Administrator of the Federal Emergency 
Management Agency.
    Arbitration Administrator means the FEMA official responsible for 
administering arbitration procedures to resolve disputes regarding a 
claim. Contact information for the Arbitration Administrator can be 
found online at https://www.fema.gov/hermits-peak.
    Authorized Official means an employee of the United States who is 
delegated with authority by the Director of the Claims Office to render 
binding determinations on claims and to determine compensation due to 
claimants under the Act.
    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 
Act.
    Claims Office means the Office of Hermit's Peak/Calf Canyon Fire 
Claims.
    Claims Reviewer means an employee of the United States or a Claims 
Office contractor or subcontractor who is authorized by the Director of 
the Claims Office to review and evaluate claims submitted under the 
Act.
    Days means calendar days, including weekends and holidays.
    Director means an Independent Claims Manager appointed by the 
Administrator who will serve as the Director of the Claims Office.
    Good Cause, for purposes of extending the deadline for filing, 
supplementing a claim, or reopening a claim includes, but is not 
limited to: instances where a claimant, through no fault of their own, 
may not be able to access needed documentation in time to submit a 
claim or transmit relevant information or data; or where damage is 
found after a claim has been submitted; or other instances in which the 
Director of the Claims Office, in their discretion, determines that an 
undue hardship or change in circumstances on the claimant warrants an 
extension of a deadline or the supplementation or reopening of existing 
claims.
    Hermit's Peak/Calf Canyon Fire means:
    (1) The fire resulting from the initiation by the U.S. Forest 
Service of a prescribed burn in the Santa Fe National Forest in San 
Miguel County, New Mexico on April 6, 2022;
    (2) The pile burn holdover resulting from the prescribed burn by 
the U.S. Forest Services which reemerged on April 19, 2022; and
    (3) The merger of the two fires described in paragraphs (1) and (2) 
of this definition, reported as the Hermit's Peak Fire or the Hermit's 
Peak Fire/Calf Canyon Fire.
    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 April 6, 2022, which included one or more Tribal Members as 
continuous residents.
    Indian Tribe means the recognized governing body of any Indian or 
Alaska Native Tribe, band, nation, pueblo, village, community, 
component band, or

[[Page 59778]]

components reservation individually identified (including 
parenthetically) in the list published most recently as of September 
30, 2022, pursuant to section 104 of the Federally Recognized Indian 
Tribe List Act of 1994.
    Individual Assistance means the FEMA program established 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 
assistance to individuals and families adversely affected by a major 
disaster or an emergency.
    Injured Person means an individual, regardless of citizenship or 
alien status; or an Indian Tribe, Tribal corporation, corporation, 
partnership, company, association, county, township, city, State, 
school district, or other non-Federal entity that suffered injury 
resulting from the Hermit's Peak/Calf Canyon Fire. 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 Hermit's Peak/Calf Canyon Fire and lien 
holders are not an ``Injured Person'' for purposes of the Act.
    Injury means ``injury or loss of property, or personal injury or 
death,'' as used in the Federal Tort Claims Act, 28 U.S.C. 1346(b)(1).
    Notice of Loss means a form supplied by the Claims Office through 
which an Injured Person or Subrogee makes a claim for possible 
compensation under the Act.
    Proof of Loss means a statement attesting to the nature and extent 
of the claimant's injuries.
    Public Assistance Program means the FEMA program established 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.
    Release and Certification Form means a document in the manner 
prescribed by section 104(e) of the Act that all claimants who have 
received or are awarded compensatory damages under the Act must execute 
and return to the Claims Office as required by Sec.  296.30(c).
    Subrogee means an insurer or other third party that has paid to a 
claimant compensation for Injury and is subrogated to any right that 
the claimant has to receive payment under the Act.
    Subsistence Resources means food and other items obtained through 
hunting, fishing, firewood and other natural resource gathering, 
timbering, grazing or agricultural activities undertaken by the 
claimant without financial remuneration, on land damaged by the 
Hermit's Peak/Calf Canyon Fire.
    Tribal Member means an enrolled member of an Indian Tribe.

Sec.  296.5  Overview of the claims process.

    (a) The Act is intended to provide persons who suffered Injury from 
the Hermit's Peak/Calf Canyon Fire with a simple, expedited process to 
seek compensation 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. To obtain 
compensation under the Act, an Injured Person must submit all Hermit's 
Peak/Calf Canyon Fire related claims against the United States or any 
employee, officer, or agency of the United States to the FEMA Claims 
Office. An Injured Person who elects to accept an award under the Act 
is barred from accepting an award pursuant to a claim under the Federal 
Tort Claims Act or a civil action against the United States or any 
employee, officer, or agency of the United States arising out of or 
relating to the same subject matter. Judicial review of FEMA decisions 
under the Act is available.
    (b) The first step in the process is to file a Notice of Loss with 
the Claims Office. The Claims Office will provide the claimant with a 
written acknowledgement that the claim has been filed and a claim 
number.
    (c) Shortly thereafter, a Claims Reviewer will contact the claimant 
to review the claim. 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 their responsibility 
for establishing all elements of the injuries and the compensatory 
damages that are sought, including that the Hermit's Peak/Calf Canyon 
Fire caused the injuries. 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 the Claims 
Office. 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. Sec.  296.6-296.9  [Reserved]

Subpart B--Bringing a Claim Under the Hermit's Peak/Calf Canyon 
Fire Assistance Act

Sec.  296.10  Filing a claim under the Hermit's Peak/Calf Canyon Fire 
Assistance Act.

    (a) Any Injured Person may bring a claim under the Act 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 injury 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 their relationship to the claimant. FEMA may require a 
legal representative to submit evidence of their authority to act.
    (d) The Claims Office will provide Notice of Loss forms through the 
mail, electronically, in person at the Claims Office or by telephone 
request. The Notice of Loss form can also be downloaded from the 
internet at https://www.fema.gov/hermits-peak.
    (e) A Notice of Loss may be filed with the Claims Office by mail, 
electronically, or in person. Details regarding the filing process can 
be found at https://www.fema.gov/hermits-peak.
    (f) A Notice of Loss that is completed and properly signed is 
deemed to be filed on the date it is received and acknowledged by the 
Claims Office.

[[Page 59779]]

Sec.  296.11  Deadline for notifying FEMA of injuries.

    The deadline for filing a Notice of Loss is November 14, 2024. 
Except as provided in Sec.  296.35 with respect to a request to reopen 
a claim, an injury 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.  296.34 received by the Claims Office on or before 
November 14, 2024 cannot be compensated under the Act. The Act 
establishes this deadline and does not provide any extensions of the 
filing deadline.

Sec.  296.12  Election of remedies.

    (a) An Injured Person who accepts a final award under the Act 
waives the right to pursue all claims for injuries arising out of or 
relating to the same subject matter against the United States or any 
employee, officer, or agency of the United States through the Federal 
Tort Claims Act or a civil action authorized by any other provision of 
law.
    (b) An Injured Person who accepts a final award through a Federal 
Tort Claims Act claim or a civil action against the United States or 
any employee, officer, or agency of the United States relating to the 
Hermit's Peak/Calf Canyon Fire waives the right to pursue any claim 
arising out of or relating to the same subject matter under the Act.

Sec.  296.13  Subrogation.

    An insurer or other third party with the rights of a subrogee, who 
has compensated an injured person for Hermit's Peak/Calf Canyon Fire 
related injuries, may file a Notice of Loss under the Act for the 
subrogated claim. A subrogee may file a Notice of Loss without regard 
to whether the Injured Person who received payment from the subrogee 
filed a Notice of Loss. A Subrogation Notice of Loss should be filed 
after the subrogee has made all payments that it believes the Injured 
Person is entitled to receive for Hermit's Peak/Calf Canyon Fire 
related injuries under the terms of the insurance policy or other 
agreement between the subrogee and the Injured Person, but not later 
than November 14, 2024. By filing a Notice of Loss for any subrogated 
claim, the subrogee elects the Act as its exclusive remedy against the 
United States or any employee, officer, or agency of the United States 
for all subrogated claims arising out of the Hermit's Peak/Calf Canyon 
Fire. Subrogation claims must be made on a Notice of Loss form 
furnished by the Claims Office and such claims will be paid only after 
paying claims submitted by injured persons that are not insurance 
companies seeking payment as subrogees.

Sec.  296.14  Assignments.

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

Sec. Sec.  296.15-296.19  [Reserved]

Subpart C--Compensation Available Under the Hermit's Peak/Calf 
Canyon Fire Assistance Act

Sec.  296.20  Prerequisite to compensation.

    In order to receive compensation under the Act, a claimant must be 
an Injured Person who suffered an injury as a result of the Hermit's 
Peak/Calf Canyon Fire and sustained damages.

Sec.  296.21  Allowable damages.

    (a) Allowable damages. The Act provides for the payment of actual 
compensatory damages for injury or loss of property, business loss, and 
financial loss. The laws of the State of New Mexico will apply to the 
calculation of damages. Damages must be reasonable in amount.
    (b) Exclusions. Punitive damages, statutory damages under section 
30-32-4 of the New Mexico Statutes Annotated (2019), interest on 
claims, attorney's fees and agents' fees incurred in prosecuting a 
claim under the Act or an insurance policy, and adjusting costs 
incurred by an insurer or other third party with the rights of a 
subrogee 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 Act does not constitute compensatory 
damages and is not recoverable from FEMA, except as provided in Sec.  
296.31(b).
    (c) Loss of property. Compensatory damages may be awarded for an 
uninsured or underinsured property loss, a decrease in the value of 
real property, damage to physical infrastructure, cost resulting from 
lost subsistence, cost of reforestation or revegetation not covered by 
any other Federal program, and any other loss that the Administrator 
determines to be appropriate for inclusion as a loss of property.
    (1) Real property and contents. Compensatory damages for the damage 
or destruction of real property and its contents may include the 
reasonable cost of reconstruction of a structure comparable in design, 
construction materials, size, and improvements, taking into account 
post-fire construction costs in the community in which the structure 
existed before the fire and current building codes and standards. 
Compensatory damages may also include the cost of removing debris and 
burned trees, including hazardous materials or soils, stabilizing the 
land, replacing contents, and compensation for any decrease in the 
value of land on which the structure sat pursuant to paragraph (c)(3) 
of this section.
    (2) Reforestation and revegetation. Compensatory damages may be 
awarded for the cost of replacement of destroyed trees and landscaping.
    (3) Decrease in the value of real property. Compensatory damages 
may be awarded for a decrease in the value of real property that a 
claimant owned before the Hermit's Peak/Calf Canyon Fire if:
    (i) The claimant sells the real property in a good faith, arm's 
length transaction that is closed no later than November 14, 2024 and 
realizes a loss in the pre-fire value; or
    (ii) The claimant can establish that the value of the real property 
was significantly diminished long-term as a result of the Hermit's 
Peak/Calf Canyon Fire.
    (4) Subsistence. Compensatory damages will be awarded for lost 
Subsistence Resources.
    (i) FEMA may reimburse an injured party for the reasonable cost of 
replacing Subsistence Resources customarily and traditionally used by 
the claimant on or before April 6, 2022, but no longer available to the 
claimant as a result of the Hermit's Peak/Calf Canyon 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 Hermit's Peak/Calf 
Canyon Fire or for the cost of procuring substitute resources in the 
cash economy.
    (ii) 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.
    (iii) Compensatory damages for subsistence losses will be paid for 
the period between April 6, 2022 and the date when Subsistence 
Resources can reasonably be expected to return to the level of 
availability that existed before the Hermit's Peak/Calf Canyon Fire. 
FEMA may rely upon the advice of experts in making this determination.
    (iv) Long-term damage awards for subsistence resources will be made 
to claimants in the form of lump sum cash payments.
    (5) Physical infrastructure. Compensatory damages may be awarded 
for the damage to physical

[[Page 59780]]

infrastructure, including damages to irrigation infrastructure such as 
acequia systems.
    (d) Business loss. Compensatory damages may be awarded for damage 
to tangible assets or inventory, including timber, crops, and other 
natural resources; business interruption losses; overhead costs; 
employee wages for work not performed; loss of business net income; and 
any other loss that the Administrator determines to be appropriate for 
inclusion as a business loss.
    (e) Financial loss. Compensatory damages may be awarded for 
increased mortgage interest costs, insurance deductibles, temporary 
living or relocation expenses, lost wages or personal income, emergency 
staffing expenses, debris removal and other cleanup costs, costs of 
reasonable heightened risk reduction, premiums for flood insurance, and 
any other loss that the Administrator determines to be appropriate for 
inclusion as financial loss.
    (1) Recovery loans. FEMA will reimburse claimants awarded 
compensation under the Act for interest paid on loans, including Small 
Business Administration disaster loans obtained after April 6, 2022 for 
damages resulting from the Fire. 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 award 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 
their compensation award.
    (2) Flood insurance. FEMA will reimburse claimants for flood 
insurance premiums to be paid on or before May 31, 2024 if, as a result 
of the Hermit's Peak/Calf Canyon Fire, a claimant who was not required 
to purchase flood insurance before the Hermit's Peak/Calf Canyon Fire 
is required to purchase flood insurance or the claimant did not 
maintain flood insurance before the Fire but purchased flood insurance 
after the Fire due to fear of heightened flood risk. Alternatively, 
FEMA may provide flood insurance to such claimants directly through a 
group or blanket policy.
    (3) 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 or was worsened by the Hermit's Peak/Calf 
Canyon Fire. FEMA will not reimburse for treatment identified after 
November 14, 2024
    (4) Donations. FEMA will compensate claimants for the cost of 
merchandise, use of equipment or other non-personal services, directly 
or indirectly donated to survivors of the Hermit's Peak/Calf Canyon 
Fire not later than November 14, 2022. Donations will be valued at 
cost.
    (5) Heightened risk reduction. FEMA will reimburse claimants for 
the costs incurred to implement reasonable measures necessary to reduce 
risks from natural hazards heightened by the Hermit's Peak/Calf Canyon 
Fire to the level of risk prevailing before the Hermit's Peak/Calf 
Canyon Fire. Such measures may include, for example, risk reduction 
projects that reduce an increased risk from flooding, mudslides, and 
landslides in and around burn scars. Claimants seeking compensation for 
heightened risk reduction must include the claim in their Notice of 
Loss by November 14, 2024 or an amended Notice of Loss filed no later 
than November 14, 2025. Claimants should take into account current 
building codes and standards and must complete the risk reduction 
project for which they receive compensation.
    (f) Insurance and other benefits. The Act allows FEMA to compensate 
Injured Persons only for damages not paid, and that will not be paid, 
by insurance or other third-party payments or settlements.
    (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 the Claims Office with such insurance documentation as the 
Claims Office reasonably requests.
    (2) Coordination with FEMA's Public Assistance Program. Injured 
Persons eligible for disaster assistance under FEMA's Public Assistance 
Program are expected to apply for all available assistance. Pursuant to 
the Act, the Federal share of the costs for Public Assistance projects 
is 100 percent. Compensation will not be awarded under the Act for 
injuries or costs that are eligible under the Public Assistance 
Program.
    (3) Benefits provided by FEMA's Individual Assistance program. 
Compensation under the Act will not be awarded for injuries or costs 
that have been reimbursed under the Federal Assistance to Individual 
and Households Program or any other FEMA Individual Assistance Program.
    (4) 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.
    (5) Benefits provided by non-governmental organizations and 
individuals. Gifts or donations 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 the Claims Office by 
claimants.

Sec.  296.22-296.29  [Reserved]

Subpart D--Claims Evaluation

Sec.  296.30  Establishing injuries and damages.

    (a) Burden of proof. The burden of proving injuries and damages 
rests with the claimant. A claimant may submit for the Administrative 
Record a statement explaining why the claimant believes that the 
injuries and damages are compensable and any documentary evidence 
supporting the claim. Claimants will provide documentation, which is 
reasonably available, including photographs and video, to corroborate 
the nature, extent, and value of their injuries and/or to execute 
affidavits in a form established by the Claims Office. FEMA may 
compensate a claimant for an injury 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 injury is not reasonably available. FEMA may also 
require an inspection of real property. 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 the DHS Office of the Inspector General or 
the Government Accountability Office during an audit of the claim.
    (b) Proof of Loss. All claimants are required to attest to the 
nature and extent of each injury for which compensation is sought in 
the Proof of Loss. The Proof of Loss, which will be in a form specified 
by the Claims Office, must be signed by the claimant or the claimant's 
legal representative if the claimant is 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. Non-
subrogation claimants should submit a signed Proof of Loss to the 
Claims Office not later than 150 days after the date when the Notice of

[[Page 59781]]

Loss was submitted. This deadline may be extended at the discretion of 
the Director of the Claims Office 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 the Claims Office, the Claims Office 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 Act are required to sign a Release and 
Certification Form, including for partial payments under Sec.  296.33. 
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. 
A Release and Certification Form must be received by the Claims Office 
before the Claims Office provides payment on the claim. 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.  
296.36 or a material mistake by FEMA.
    (d) Authority to settle or compromise claims. Notwithstanding any 
other provision of this part, the Director of the Claims Office may 
extend an offer to settle or compromise a claim or any portion of a 
claim at any time during the process outlined in this part, 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 FEMA's part or the claimant's failure to cooperate in an 
audit as required by Sec.  296.36.

Sec.  296.31  Reimbursement of claim expenses.

    (a) FEMA will reimburse claimants for the reasonable costs they 
incur in providing documentation requested by the Claims Office. FEMA 
will also reimburse claimants for the reasonable costs they incur in 
providing appraisals, or other third-party opinions that the Claims 
Office deems necessary to determine the amount of the claim. FEMA will 
not reimburse claimants for the cost of appraisals or other third-party 
opinions not deemed necessary by the Claims Office.
    (b) FEMA will provide a lump sum payment for incidental expenses 
incurred in claims preparation to claimants that are awarded 
compensatory damages under the Act after a properly executed Release 
and Certification Form has been returned to the Claims Office. The 
amount of the lump sum payment will be the greater of $150 or 5% of the 
Act's compensatory damages and insurance proceeds recovered by the 
claimant for Hermit's Peak/Calf Canyon Fire related injuries (not 
including the lump sum payment or monies reimbursed under the Act for 
the purchase of flood insurance) but will not exceed $25,000. 
Subrogation claimants and claimants whose only Hermit's Peak/Calf 
Canyon Fire related loss is for flood insurance premiums will not be 
eligible.

Sec.  296.32  Determination of compensation due to claimant.

    (a) Authorized Official's report. After the Claims Office 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 determination by submitting a Release and Certification Form 
to FEMA and/or initiate an Administrative Appeal in accordance with 
Sec.  296.41. Claimants must sign the Release and Certification Form to 
receive payment on their claims (including 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, the claimant will be conclusively presumed to 
have accepted the Authorized Official's determination. The Director of 
the Claims Office may modify the deadlines set forth in this subsection 
at the request of a claimant for good cause shown.

Sec.  296.33  Partial payments.

    The Claims Office at the request of a claimant may make one or more 
partial payments on any aspect of a claim that is severable. Receipt by 
a claimant of a partial payment is contingent on the claimant signing a 
Release and Certification Form for the severable part of the claim for 
which partial payment is being made. 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 Act with respect to any portion of a claim for which a 
Release and Certification Form has not been executed. The Claims Office 
decision on whether to provide a partial payment cannot be appealed.

Sec.  296.34  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 a Release and 
Certification Form, a claimant may request that the Director of the 
Claims Office consider one or more injuries not addressed in the Proof 
of Loss. The request must be submitted in writing to the Director of 
the Claims Office and received not later than the deadline for filing 
an Administrative Appeal under Sec.  296.32 or November 14, 2024, 
whichever is earlier. It must be supported by the claimant's 
explanation of why the injury was not previously reported. If good 
cause is found to consider the additional injury, the Director will 
determine whether compensation is due to the claimant for the Loss 
under the Administrative Appeal procedures described in Sec.  296.41.

Sec.  296.35  Reopening a claim.

    The Director of the Claims Office 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, not later than November 14, 2025, 
the claimant desires heightened risk reduction compensation in 
accordance with Sec.  296.21(e)(5) or the claimant closed the sale of 
real property and wishes to present a claim for decrease in the value 
of the real property under Sec.  296.21(c)(3). Claimants may request to 
reopen claims where the claimant has incurred additional losses under 
Sec.  296.21(c)(1) as part of a reconstruction in excess of those 
previously awarded or the Director of the Claims Office otherwise 
determines that claimant has demonstrated good cause no later than the 
deadline established by the Director of the Claims Office as published 
in the Federal

[[Page 59782]]

Register and at https://www.fema.gov/hermits-peak.

Sec.  296.36  Access to records.

    For purpose of audit and investigation, a claimant will grant the 
DHS 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 (including any 
relevant tax records) maintained by a claimant or under the claimant's 
control pertaining or relevant to the claim.

Sec.  296.37  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.

Sec.  296.38-296.39  [Reserved]

Subpart E--Dispute Resolution

Sec.  296.40  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.  296.41  Administrative appeal.

    (a) Notice of appeal. A claimant may request that the Director of 
the Claims Office review the Authorized Official's determination by 
written request to the Appeals Docket, Office of Hermit's Peak/Calf 
Canyon Claims, postmarked or delivered within 120 days after the date 
that appears on the Authorized Official's determination pursuant to 
Sec.  296.32. The claimant will submit along with the notice of appeal 
a statement explaining why the Authorized Official's determination was 
incorrect. Information regarding where to file can be found at http://www.fema.gov/hermits-peak.
    (b) Acknowledgement of appeal. The Claims Office will acknowledge 
receipt of an appeal. Following the receipt of a timely filed appeal, 
the Director of the Claims Office will obtain the Administrative Record 
from the Authorized Official and transmit a copy to the claimant.
    (c) Supplemental filings. The claimant may supplement their 
statement accompanying the appeal and provide any additional 
documentary evidence supporting the appeal within 60 days after the 
date when the appeal is filed. The Director of the Claims Office may 
extend these timeframes or authorize additional filings either on their 
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 the Claims Office may 
request from the claimant or from the Authorized Official any 
additional information that is relevant to the issues posed by the 
appeal in their discretion.
    (f) Conferences. The Director of the Claims Office may schedule a 
conference to gain a better understanding of the issues or to explore 
settlement or compromise possibilities. The claimant may also request a 
conference. Conferences will generally be conducted virtually. In 
limited circumstances, the Director may convene an in-person conference 
at a location in New Mexico designated by the Director. A claimant may 
request that the Director of the Claims Office appoint a mediator at 
FEMA's expense to facilitate such conferences.
    (g) Hearings. The Director of the Claims Office 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 the Claims Office and 
provided to the claimant. Formal rules of evidence applicable to court 
proceedings will not be used in hearings under this subsection. 
Hearings will generally be conducted virtually, be transcribed, and the 
transcript will be entered in the Administrative Record. In limited 
circumstances, the Director may convene an in-person hearing at a 
location in New Mexico designated by the Director.
    (h) Decision on appeal. After the allotted time for submission of 
evidence has passed, the Director of the Claims Office will close the 
Administrative Record and render a written decision on the 
Administrative Appeal. The Director of the Claims Office's decision on 
the Administrative Appeal will constitute the final decision of the 
Administrator of FEMA under sections 104(d)(2)(B) and 104(i)(1) of the 
Act.
    (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.  296.42 or seeks judicial review in accordance with Sec.  296.43. 
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.  296.42  Arbitration.

    (a) Initiating arbitration. A claimant who is dissatisfied with the 
outcome of the Administrative Appeal may elect to submit the dispute to 
a binding arbitration process. A claimant may initiate arbitration by 
submitting a written request to the Arbitration Administrator for 
Hermit's Peak/Calf Canyon Claims. Additional information regarding how 
to submit a written arbitration request can be found at http://www.fema.gov/hermits-peak. The written request for arbitration must be 
electronically stamped or postmarked no 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) Selection of arbitrator. The Arbitration Administrator will 
maintain a list of qualified arbitrators who have agreed to serve. The 
arbitration will be decided by one arbitrator if the amount in dispute 
is $500,000 or less and a panel of three arbitrators if the amount in 
dispute exceeds $500,000. Arbitrators will be assigned by the 
Arbitration Administrator through a random drawing.
    (d) Conduct of arbitration. Pursuant to guidelines from the 
Arbitration Administrator, which will be provided directly to claimants 
who have filed a request for arbitration, the arbitration process will 
include an arbitration hearing with consideration of the claimant's 
written request for arbitration, the Administrative Record, and oral 
testimony. Hearings will generally be conducted virtually. In limited 
circumstances, the arbitrator may convene an in-person hearing at a 
location in New Mexico designated by the Arbitration Administrator.
    (e) Decision. After a hearing and reviewing the evidence, the 
arbitrator(s)

[[Page 59783]]

will render a written decision and will transmit the decision to the 
Arbitration Administrator, the claimant, and the Director of the Claims 
Office. If a panel of three arbitrators conducts the arbitration, at 
least two of the three arbitrators must sign the decision. The 
arbitrator(s) should render a decision no later than 10 Days after a 
hearing is concluded. The Arbitration Administrator may extend the time 
for a decision with notice to the claimant and the Director of the 
Claims Office. The decision will establish the compensation due to the 
claimant, if any, and the reasons therefor.
    (f) Action on arbitration decision. The Arbitration Administrator 
will forward the arbitration decision to the claimant and, if 
additional compensation is awarded to the claimant, a Release and 
Certification Form. Additional compensation awarded in the arbitration 
will be paid to the claimant after the signed Release and Certification 
Form is received by the Arbitration Administrator.
    (g) Final decision. The decision of the arbitrator(s) will be final 
and binding on all parties and will not be subject to any 
administrative or judicial review. The arbitrator(s) may correct 
clerical, typographical or computational errors as requested by the 
Arbitration Administrator.
    (h) Administration of arbitration. The Arbitration Administrator 
oversees arbitration procedures and will resolve any procedural 
disputes arising in the course of the arbitration.
    (i) Expenses. The Arbitration Administrator will pay all fees and 
expenses of the arbitrator(s). The claimant is responsible for any 
expenses they incur, including travel costs.

Sec.  296.43  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. Pursuant to section 104(i) of the Act, the court may 
only consider evidence in the Administrative Record. The court will 
uphold FEMA's decision if it is supported by substantial evidence on 
the record considered as a whole.

Deanne Criswell,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2023-18457 Filed 8-28-23; 8:45 am]
BILLING CODE 9111-68-P