E8-27839. Management Costs

AGENCY:

Federal Emergency Management Agency, DHS.

ACTION:

Notice of meeting and reopening of comment period.

SUMMARY:

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

DATES:

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

ADDRESSES:

The meeting will be held at 800 K Street, NW., 1st Floor, North Tower, Washington, DC 20001. Individuals will be required to present photo identification to enter the building in which the meeting will be held. All written submissions must include the Docket ID FEMA-2006-0035 and may be submitted by any one of the following methods:

Federal Rulemaking Portal: http://www.regulations.gov. Follow instructions for submitting comments on the Web site.

E-mail: [e-mail]. Include Docket ID FEMA-2006-0035 in the subject line of the message.

Facsimile: [phone].

Mail: Office of Chief Counsel, Federal Emergency Management Agency, Room 835, 500 C Street, SW., Washington, DC 20472.

Hand Delivery/Courier: Office of the Chief Counsel, Federal Emergency Management Agency, Room 835, 500 C Street, SW., Washington, DC 20472.

FOR FURTHER INFORMATION CONTACT:

Jennifer Cramer, Federal Emergency Management Agency, 800 K Street, NW, Washington, DC 20472, telephone [phone].

SUPPLEMENTARY INFORMATION:

Background

Under the provisions of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), 42 U.S.C. 5121-5207, and its implementing regulations, the Federal Emergency Management Agency (FEMA) has the authority to assist State and local governments in carrying out their responsibilities pursuant to a Presidentially declared major disaster or emergency. Section 324 of the Stafford Act, 42 U.S.C. 5165b, required FEMA to establish management cost rates to be used in determining contributions for management costs. Management costs include any indirect cost, any administrative expense and any other expense not directly chargeable to a specific project under a major disaster, emergency, or disaster preparedness or mitigation activity or measure.

On October 11, 2007, FEMA published an Interim Rule that proposed a methodology for calculating the management cost rates, as well as guidance for the implementation of section 324 of the Stafford Act (72 FR 57869). As established by the Interim Rule, management costs that are reasonably incurred by a grantee or subgrantee in administering and managing the Public Assistance (PA) program and the Hazard Mitigation Grant Program (HMGP) grant award will be reimbursed up to a fixed rate. The flat percentage rate for PA is 3.34 percent for major disaster declarations, and 3.90 percent for emergencies. The HMGP rate is 4.89 percent for major disaster declarations. FEMA determined the rate for management costs using a historical average of the Federal share of actual administrative and management costs paid to grantees and subgrantees. To calculate the figures in the Interim Rule, FEMA used data collected in the National Emergency Management Information System (NEMIS) for declarations from August 1998 to July 2004. FEMA did not establish a percentage of management costs that grantees must pass through to subgrantees.

FEMA initially held a 30-day comment period on the Interim Rule. FEMA received 34 public comments, (all of which are available in the docket for public inspection). On August 29, 2008 (73 FR 50881), seeking specific data on unreimbursed eligible management costs, FEMA reopened the Interim Rule for an additional 30-day comment period and received an additional 37 comments, (which are also available in the docket for public inspection). Some individuals who submitted comments during the second comment period, including a specific request from the Governors of California, Florida, New York and Texas, asked to meet with FEMA to discuss their concerns about the Interim Rule. In response to those requests, FEMA has agreed to hold this public listening session in which those affected by the rule may present their concerns orally. FEMA has also opened the public comment period to the regulatory docket to allow for the submission of additional written comments or data. FEMA continues to review the written comments received during the first two comment periods and will address those as well as any comments received at the public meeting in the next rulemaking document published for this project.

Additional Information

The data provided below is for informational purposes only. The management cost rates published in the Interim Rule have not changed. FEMA continues to evaluate data and the public comments received to date as well as those that it expects to receive during the public meeting. Any change to the management cost rates would occur through a Second Interim Rule or a Final Rule that would be published in the Federal Register.

In response to comments received on the Interim Rule, FEMA has been recalculating the management cost rates using NEMIS data for all declarations made before the date the Interim Rule went into effect (November 13, 2007). FEMA chose to include only those declarations for two reasons. First, after that date, grantees only received up to the percentages established in the rule, which FEMA found could artificially deflate the percentage, as they are capped at the 3.34/3.90/4.89 percent rate (as appropriate). Second, under the Interim Rule, final management cost amounts for disasters or emergencies do not “lock in” until 12 months after the disaster, so data compiled earlier than 12 months would not represent final management cost amounts. Further, because the first declaration under the Interim Rule was declared November 30, 2007, none of those disasters has received the full amount of management costs; obligations in NEMIS will only reflect the initial 25 percent of eligible management costs provided to grantees. Because management cost rates are calculated by using actual obligations, including declarations affected by the Interim Rule at this time would artificially decrease the average.

The data below represents the recalculated average rates. FEMA is also conducting distributional analyses, however, that data is not yet available for publication. The average rate data provided below includes Hurricane Katrina (DR-1603-LA) data as a separate entry to highlight how the percentage of management costs is affected in extremely large disasters. Contrary to some of the comments received, FEMA found that due to economies of scale or other factors, funds obligated for management costs as a percentage of project dollars may actually decrease for extremely large disasters. The data below excludes the 9/11 World Trade Center attack (DR-1391-NY), because the funds provided by FEMA for that particular disaster were specifically mandated, accounted for separately, and obligated under different eligibility criteria.

Although the Interim Rule did not establish a percentage of management costs that must be passed through to subgrantees, FEMA received several comments requesting that such a rate be set. The rates below break out the average amount of management costs paid to subgrantees. Again, this data is provided for informational purposes only. These figures should not be used as mandatory or even suggested pass through amounts.

Finally, the rate of management costs for HMGP funds associated with Hurricane Katrina (DR-1603-LA) may appear inflated. This is because the calculated rate as shown below is based on management costs as a percentage of project funds obligated to date, not as a percentage of the total amount of HMGP funds available to the State ($1,333,208,000). As of the date of this analysis, only approximately 15 percent of the estimated available project funds have been obligated, while the management costs obligated to date are reflective of the level of effort necessary to manage the entire program. Management costs are often obligated faster than project dollars in the HMGP.

Management and Administrative Funds Paid as a Percentage of Project Funds

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

	NEMIS project obligations	NEMIS state management obligations (SMC)	NEMIS grantee obligations (“sliding scale”)	NEMIS subgrantee obligations (“sliding scale”)	Total MC grantee & subg (SMC + sliding scale)
All NEMIS Pre Sec 324 Less 1391	2,080,757,726	65,786,946	16,335,829	37,275,104	119,154,832
	5.73% MC
	3.95% Grantee
	1.79% Subgrantee
DR 1603 LA	200,003,640	10,795,418	1,051,543	3,104,886	14,951,847
	7.48% Total MC
	5.92% Grantee
	1.55% Subgrantee
All NEMIS Pre Sec 324 Less 1391, 1603	1,880,754,086	54,991,528	15,284,286	34,170,218	104,202,985
	5.54% Total MC
	3.74% Grantee
	1.82% Subgrantee
Public Assistance—Emergencies

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

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

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

Unreimbursed costs might include items eligible for sliding scale funds when such funds were insufficient, or subgrantee costs not eligible for sliding scale funds and therefore not eligible for FEMA reimbursement. Unreimbursed costs must have been incurred in support of the management and administration of PA or HMGP under a specific Presidential declaration (major disaster or emergency for PA or major disaster for HMGP), and not in support of other programs such as community relations or Disaster Recovery Center staff, or staff supporting Individual Assistance programs. Unreimbursed costs do not include State cost shares required for sliding scale, Category Z, or indirect cost funding, nor do they include costs that were not reimbursed because they were inconsistent with applicable Federal rules and cost principles, such as OMB Circular No. A-87.

Public Meeting

The December 10, 2008 meeting is open to the public and will begin at 1 p.m. e.s.t. To enter the 800 K Street, NW., 1st Floor, North Tower, Washington, DC 20001 facility in which the meeting will be held, members of the public will be required to present photo identification. The meeting will be held in the 1st Floor Conference Center. Please note that the meeting may close early if all persons who wish to comment have done so. Persons with disabilities who require special assistance should advise Jennifer Cramer (contact information provided above in the ADDRESSES section) of their anticipated special needs as early as possible. Members of the public who wish to make comments must be present and seated by 1 p.m. e.s.t.

Those who are unable to attend or speak at the meeting may submit written comments. Written comments must be received by December 11, 2008. All submissions received must include the Docket ID FEMA-2006-0035 and may be submitted by any one of the methods listed in the ADDRESSES section above. A summary of the comments received at the public meeting will be posted to the docket at www.regulations.gov.

Instructions for Submitting Information to the Docket

For access to the docket to submit comments, read the Notice of Proposed Rulemaking, Interim Rule, background documents and all comments received, go to the Federal eRulemaking Portal at http://www.regulations.gov. To the far right is a section titled “More Search Options.” Below that title, click on “Advanced Docket Search.” On the next screen, in the box provided for Docket ID, type “FEMA-2006-0035”. The next screen will provide a link to the docket. Once viewing the docket, all documents are provided in chronological order, beginning with the 2002 Notice of Proposed Rulemaking.

All Submissions received must include the agency name and Docket ID. Regardless of the method used for submitting comments or supporting material, all submissions will be posted, without change, to the Federal eRulemaking Portal at http://www.regulations.gov,, and will include any personal information you provide. Therefore, submitting this information makes it public. You may wish to read the Privacy Act notice that is available on the Privacy and Use Notice link on the Administration Navigation Bar of http://www.regulations.gov.

Dated: November 18, 2008.

R. David Paulison,

Administrator, Federal Emergency Management Agency.