                                 ATTACHMENT C
Updating Labor Rates

      The Agency has updated the estimated wages, benefits and overhead for all labor categories for affected industries, state government, and EPA employees based on publicly available data from the US Bureau of Labor Statistics. The worksheets listed in this attachment describe the formulas used to estimate the labor rates and derive the fully loaded rates and overhead costs for this ICR renewal.  This renewal uses 2015 base data.

Methodology
The methodology uses data on each sector and labor type for an Unloaded wage rate (hourly wage rate), and calculates the Loaded wage rate (unloaded wage rate + benefits), and the Fully loaded wage rate (loaded wage rate + overhead).  Fully loaded wage rates are used to calculate respondent costs.  This renewal uses 2015 base data.

Unloaded Wage Rate
Wages are estimated for labor types (management, technical, and clerical) within applicable sectors. The Agency uses average wage data for the relevant sectors available in the National Industry-Specific Occupational Employment and Wage Estimates from the Bureau of Labor Statistics (BLS) at http://www.bls.gov/oes/current/oes_nat.htm.

Sectors
The specific North American Industry Classification System (NAICS) code and website for each sector is included in that sector's wage rate table (see Attachment G).  Within each sector, the wage data are provided by Standard Occupational Classification (SOC).  The SOC system is used by Federal statistical agencies to classify workers into occupational categories for the purpose of collecting, calculating, or disseminating data (see http://www.bls.gov/oes/current/oes_stru.htm).

Loaded Wage Rate
Unless stated otherwise, all benefits represent 46% of unloaded wage rates, based on benefits for all civilian non-farm workers, from http://www.bls.gov/news.release/ecec.t01.htm. However, if other sectors are listed for which 46% is not applicable, the applicable percentage will be stated.

Fully Loaded Wage Rate
We multiply the loaded wage rate by 50% (EPA guidelines 20-70%) to get overhead costs.

             Work Sheets to Calculate Industry and EPA Labor Costs

INDUSTRY LABOR COSTS

 NAICS:  325300
 Pesticide, Fertilizer, and Other Agricultural Chemical Manufacturing
 Labor Category:
 Formula
  Managerial
  Technical
   Clerical
 Unloaded Hourly Rate1
 = W
      $57.78
      $32.73
      $19.62
 Benefits Percentage2
 Lb = B/W
        46%
        46%
        46%
 Benefits per hour
 B = W*Lb
      $26.59
      $15.06
       $9.03
 Loaded Hourly Rate
 Wb = W + B =
 W(1+Lb)
      $84.37
      $47.79
      $28.65
 Overhead Percentage3
 Lo = OH/Wb
        50%
        50%
        50%
 Overhead per hour
 OH = Wb*Lo
      $42.19
      $23.90
      $14.32
 Fully Loaded Hourly
 Rate
 Wf = Wb + OH
 = W + B + OH
     $126.56
      $71.69
      $42.97

    1.  Data Source:  BLS http://www.bls.gov/oes/current/naics4_325300.htm	May 2015 data NAICS 325300 - Pesticide, Fertilizer, and Other Agricultural Chemical Manufacturing Standard Occupational Codes:
     Management:   11-0000, Management Occupations
     Technical:	19-0000, Life, Physical, and Social Science Occupations
     Clerical:	43-0000, Office and Administrative Support Occupations
 2. Fringe benefits/wage per hour.
 3. U. S. Environmental Protection Agency, EPA Air Pollution Control Cost Manual, Sixth Edition, EPA-452-02-001, January 2002, pg. 2-34.  The loading for indirect costs is within the range of 20-70% of the load labor rate (wage + benefits) suggested in EPA guidance.

EPA LABOR COSTS

 NAICS: 999100
 Federal Executive Branch
 Labor Category:
 Formula
  Managerial
  Technical
   Clerical
 Unloaded Hourly Rate1
 = W
      $57.02
      $37.15
      $21.19
 Benefits Percentage2
 Lb = B/W
        46%
        46%
        46%
 Benefits per hour
 B = W*Lb
      $26.24
      $17.10
       $9.75
 Loaded Hourly Rate
 Wb = W + B =
 W(1+Lb)
      $83.26
      $54.25
      $30.94
 Overhead Percentage3
 Lo = OH/Wb
        50%
        50%
        50%
 Overhead per hour
 OH = Wb*Lo
      $41.63
      $27.12
      $15.47
 Fully Loaded Hourly
 Rate
 Wf = Wb + OH
 = W + B + OH
     $124.89
      $81.37
      $46.41

 1.  Data Source:  BLS http://www.bls.gov/oes/current/naics4_999100.htm   May 2015 data
    NAICS  999100 -  Federal Executive Branch
    Standard Occupational Codes:
     Management:   11-0000, Management Occupations
     Technical:	19-0000, Life, Physical, and Social Science Occupations
     Clerical:	43-0000, Office and Administrative Support Occupations
 2. Fringe benefits/wage per hour.
 3. U. S. Environmental Protection Agency, EPA Air Pollution Control Cost Manual, Sixth Edition, EPA-452-02-001, January 2002, pg. 2-34.  The loading for indirect costs is within the range of 20-70% of the load labor rate (wage + benefits) suggested in EPA guidance.


[Federal Register Volume 76, Number 81 (Wednesday, April 27, 2011)]
[Notices]
[Page 23637]
[FR Doc No: 2011-10091]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64322; File No. SR-NYSE-2011-09]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving a Proposed Rule Change Amending Exchange Rule 103B To Modify
the Application of the Exchange's Designated Market Maker Allocation
Policy in the Event of a Merger Involving One or More Listed Companies

April 21, 2011.

I. Introduction

    On February 24, 2011, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend Exchange Rule 103B to modify the
application of the Exchange's Designated Market Maker (``DMM'')
allocation policy in the event of a merger involving one or more listed
companies. The proposed rule change was published for comment in the
Federal Register on March 10, 2011.\3\ The Commission received no
comment letters on the proposal. This order approves the proposed rule
change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 64039 (March 4,
2011), 76 FR 13251.
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    Currently, Policy Note VI(D)(1) to Exchange Rule 103B provides that
when two NYSE listed companies merge, the post-merger listed company is
assigned to the DMM in the company that is determined to be the
survivor-in-fact (dominant company). Where no survivor-in-fact can be
identified, the post-merger listed company may select one of the DMM
units trading the merging companies without the security being referred
for reallocation, or it may request that the matter be referred for
allocation through the allocation process pursuant to Exchange Rule
103B, Section III.
    In addition, Policy Note VI(D)(3) to Exchange Rule 103B provides
that in situations involving the merger of a listed company and an
unlisted company, where the unlisted company is determined to be the
survivor-in-fact, the post-merger listed company may choose to remain
registered with the DMM unit that had traded the listed company entity
in the merger, or it may request that the matter be referred for
allocation through the allocation process pursuant to Exchange Rule
103B.
    The Exchange proposes to amend Policy Notes VI(D)(1) and (3) to
Exchange Rule 103B to provide that in all listed company mergers,
either between two listed companies or a listed company and an unlisted
company, the management of the post-merger listed company will be able
to choose to retain either of the incumbent DMMs (in the case of a
merger between two listed companies) or the incumbent DMM (in the case
of a merger between a listed company and an unlisted company) or
request to have the security referred for reallocation. In no case will
the policy dictate that a post-merger listed company must retain an
incumbent DMM unless it chooses to do so.
    The Exchange also proposes to amend Policy Notes VI(D)(1) and (3)
to provide that a DMM unit that is ineligible to receive a new
allocation due to its failure to meet the requirements of Exchange Rule
103B, Section II(D) and (E) will be eligible to be selected in its
capacity as the DMM for one of the two pre-merger listed companies (in
the case of a merger between two listed companies) or in its capacity
as DMM of the pre-merger listed company (in the case of a merger
between a listed company and an unlisted company), but will not be
eligible to participate in the allocation process if the post-merger
company requests that the matter be referred for allocation through the
allocation process pursuant to Exchange Rule 103B, Section III. In the
event that such a situation were to arise, the Exchange would inform
the listed company of such DMM unit's ineligibility under Exchange Rule
103B, Section II(D) or (E).

III. Discussion and Findings

    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\4\
In particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\5\ which requires, among
other things, that the rules of a national securities exchange be
designed to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest.
---------------------------------------------------------------------------

    \4\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change is consistent
with the Act because it would provide listed companies involved in a
merger with greater flexibility with respect to the DMM allocation
process. Moreover, the Commission notes that Section 806.01 of the NYSE
Listed Company Manual provides that a listed company can request a
change of DMM at any time. Thus, giving post-merger listed companies
greater control over the allocation decision in connection with a
merger is consistent with the Exchange's current DMM allocation policy.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\6\ that the proposed rule change (SR-NYSE-2011-09) be, and hereby
is, approved.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-10091 Filed 4-26-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 68 (Wednesday, April 8, 2020)]
[Notices]
[Pages 19756-19757]
[FR Doc No: 2020-07364]

-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings

    Take notice that the Commission has received the following Natural
Gas Pipeline Rate and Refund Report filings:
    Docket Numbers: RP17-204-001.
    Applicants: Pine Needle LNG Company, LLC.
    Description: Motion to Amend Settlement and Request for Shortened
Answer Period and Expedited Action of Pine Needle LNG Company, LLC
under RP17-204.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5476.
    Comments Due: 5 p.m. ET 4/6/20.

    Docket Numbers: RP20-708-000.
    Applicants: Natural Gas Pipeline Company of America.
    Description: Compliance filing Penalty Revenue Crediting Report
from July through December 2019.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5004.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-709-000.
    Applicants: Horizon Pipeline Company, L.L.C.
    Description: Compliance filing Horizon Penalty Revenue Crediting
Report for Year 2019.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5005.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-710-000.
    Applicants: Equitrans, L.P.
    Description: Sec.  4(d) Rate Filing: Negotiated Rate Agreement--
Mercuria 4/1/2020 to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5011.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-711-000.
    Applicants: Equitrans, L.P.
    Description: Sec.  4(d) Rate Filing: Negotiated Rate Agreement--BP
4/1/2020 to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5012.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-712-000.
    Applicants: Algonquin Gas Transmission, LLC.
    Description: Sec.  4(d) Rate Filing: Negotiated Rates--Keyspan
510369 4-1-2020 Releases to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5013.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-713-000.
    Applicants: Texas Eastern Transmission, LP.
    Description: Sec.  4(d) Rate Filing: Negotiated Rate--Chevron
911109 release eff 4-1-20 to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5015.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-714-000.
    Applicants: Algonquin Gas Transmission, LLC.
    Description: Sec.  4(d) Rate Filing: Negotiated Rate--Bug Co Nat
799989 Release to Greenlight 801749 to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5016.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-715-000.
    Applicants: Equitrans, L.P.
    Description: Sec.  4(d) Rate Filing: FOSA Effective Date
Clarification to be effective 5/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5017.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-716-000.
    Applicants: Texas Eastern Transmission, LP.
    Description: Sec.  4(d) Rate Filing: Negotiated Rate--Gulfport to
EcoEnergy 8962999 eff 4-1-20 to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5026.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-717-000.
    Applicants: Trailblazer Pipeline Company LLC.
    Description: Sec.  4(d) Rate Filing: TPC 2020-03-31 Negotiated Rate
Agreements to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5032.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-718-000.
    Applicants: Transcontinental Gas Pipe Line Company, LLC.
    Description: Sec.  4(d) Rate Filing: Rate Schedules LSS and SS-2
Tracker Filing effective May 1, 2020 to be effective 5/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5053.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-719-000.
    Applicants: NEXUS Gas Transmission, LLC.
    Description: Sec.  4(d) Rate Filing: Negotiated Rates--Columbia Gas
860005 4-1-2020 Releases to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5059.
    Comments Due: 5 p.m. ET 4/13/20.
    Docket Numbers: RP20-720-000.
    Applicants: Pine Needle LNG Company, LLC.

    Description: Sec.  4(d) Rate Filing: 2020 Annual Fuel and Electric
Power Tracker Filing to be effective 5/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5068.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-721-000.
    Applicants: Iroquois Gas Transmission System, L.P.
    Description: Compliance filing 033120 Annual Fuel and Losses
Retention Calculations.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5072.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-722-000.
    Applicants: Transcontinental Gas Pipe Line Company, LLC.
    Description: Sec.  4(d) Rate Filing: Negotiated Rates--Cherokee
AGL--Replacement Shippers--Apr 2020 to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5075.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-723-000.
    Applicants: Algonquin Gas Transmission, LLC.
    Description: Sec.  4(d) Rate Filing: Negotiated Rates--ConEd 510371
Apr2020 Releases to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5095.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-724-000.
    Applicants: Equitrans, L.P.
    Description: Sec.  4(d) Rate Filing: Expired Negotiated Rate
Agreement-- 3/31/2020 to be effective 5/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5100.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-725-000.
    Applicants: El Paso Natural Gas Company, L.L.C.
    Description: Sec.  4(d) Rate Filing: Negotiated Rate Agreement
Filing (Upstream Energy) to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5111.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-727-000.
    Applicants: El Paso Natural Gas Company, L.L.C.
    Description: Sec.  4(d) Rate Filing: Non-Conforming Agreement
Update (SWG 2020) to be effective 5/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5146.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-728-000.
    Applicants: Texas Eastern Transmission, LP.
    Description: Sec.  4(d) Rate Filing: Nextera NRA releases to
Colonial & UGI eff 4-1-2020 to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5160.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-729-000.
    Applicants: Texas Eastern Transmission, LP.
    Description: Sec.  4(d) Rate Filing: Negotiated Rates--UGI 8962716
to Eco 8963124 to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5194.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-730-000.
    Applicants: Dauphin Island Gathering Partners.
    Description: Sec.  4(d) Rate Filing: Negotiated Rate Filing--Cox 3-
31-2020 to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5203.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-731-000.
    Applicants: Rockies Express Pipeline LLC.
    Description: Sec.  4(d) Rate Filing: REX 2020-03-31 Negotiated Rate
Agreements to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5218.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-732-000.
    Applicants: BBT Midla, LLC.
    Description: Compliance filing BBT (MidLa), LLC Docket No. CP15-523
Cost and Revenue Study.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5227.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-733-000.
    Applicants: Gulf South Pipeline Company, LLC.
    Description: Sec.  4(d) Rate Filing: Cap Rel Neg Rate Agmts (FPL
41618, 41619 releases eff 4-1-20) to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5230.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-734-000.
    Applicants: Texas Gas Transmission, LLC.
    Description: Sec.  4(d) Rate Filing: Cap Rel Neg Rate Agmts
(JayBee34446,34447,35450 to MacQuarie38592,38593,38594) to be effective
4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5231.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-735-000.
    Applicants: Texas Gas Transmission, LLC.
    Description: Sec.  4(d) Rate Filing: Cap Rel Neg Rate Agmts
(Gulfport34939,35446 to Eco-Energy38613,38616,CIMA38595) to be
effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5232.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-736-000.
    Applicants: Transcontinental Gas Pipe Line Company, LLC.
    Description: Sec.  4(d) Rate Filing: Non-Conforming--Leidy
Southeast Sequent to be effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5244.
    Comments Due: 5 p.m. ET 4/13/20.

    Docket Numbers: RP20-737-000.
    Applicants: Northern Natural Gas Company.
    Description: Sec.  4(d) Rate Filing: 20200331 Negotiated Rate to be
effective 4/1/2020.
    Filed Date: 3/31/20.
    Accession Number: 20200331-5275.
    Comments Due: 5 p.m. ET 4/13/20.
    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified date(s). Protests may be considered,
but intervention is necessary to become a party to the proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: April 2, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2020-07364 Filed 4-7-20; 8:45 am]
 BILLING CODE 6717-01-P


credits that a State has earned.
BILLING CODE 9111-23-P

[GRAPHIC] [TIFF OMITTED] TP12JA17.024

[GRAPHIC] [TIFF OMITTED] TP12JA17.025

[GRAPHIC] [TIFF OMITTED] TP12JA17.026

I. Deductible Program Timeline and Procedures

    FEMA is committed to developing a Public Assistance deductible
program that is effective, but that also minimizes the cost and
administrative burden required of our State partners. FEMA expects to
request the minimum amount of information and reporting necessary for
the program to be successful. To do this, FEMA's model concept could
follow a strict and consistent programmatic schedule throughout the
year so that States could have a clear understanding of current and
upcoming expectations. FEMA designed this potential model schedule to
operate on the calendar year to provide simplicity and standardization
across jurisdictions that operate on various iterations of the fiscal
year.
    As with the rest of the SANPRM all numbers, figures, criteria,
timeframes, and processes detailed in this section are notional. They
are intended to aid the public in understanding how a potential
deductible program could operate and to spur discussion and feedback.
1. Model Timeline
    On August 1 of each year, FEMA could issue an Annual Notice of
Public Assistance Deductible Amounts (Annual Notice). This notice could
be published in the Federal Register and would indicate each State's
pre-credit deductible amount. The Annual Notice could provide
sufficient detail regarding the calculation methodology to provide
transparency regarding the source of the deductible figures. If a State
believes that FEMA has made a technical error in calculating its
deductible, the State could be able to appeal the amount. In addition,
FEMA would not expect to otherwise change the calculation methodology
without advance notice to the States and an opportunity for each State
to offer feedback.
    Contemporaneously with the issuance of the Annual Notice, FEMA
would publish in the Federal Register the Application and Submission
Information for Public Assistance Deductible credits to provide
guidance concerning the deductible credits that could be offered during
the next year and an application form for credits. FEMA does not
anticipate making significant changes to the credit structure year over
year, but could constantly and actively be monitoring credit types and
amounts and may adjust the structure as necessary to improve the
program's effectiveness over time. FEMA anticipates engaging
extensively with States in making any adjustments to the credit
structure.
    Credit applications could be due to FEMA by September 1 of each
year. Because there might be a limited period of about one month to
complete the application for deductible credits, it would be important
that States assess and account for their past year's activities before
the Annual Notice is published or quickly thereafter.
    The actual application could be minimal compared to other Federal
applications, grant applications in particular. FEMA envisions a simple
form in which a State could request the appropriate amount of credit
for each credit category, include a brief description of the activity
for which the credit is requested, provide the contact information for
a subject matter expert that can answer questions about the activity,
and affix the signatures of the appropriate State officials.
    For example, a State may request $1.5 million in credit for
spending $500,000 moving a fire station out of a flood hazard area
(mitigation would be credited $3.00:$1.00). Likewise, a State may
request a 16 percent reduction for maintaining BCEGS[supreg] scores of
5 for both the commercial and residential building code categories.
Generally, the State would not need to submit any additional
information or supporting documentation to support its request.
    FEMA would review the State's submission and make a determination
of the amount of deductible credit to be approved. FEMA could actively
reach out to the State-identified subject matter expert if any
additional information would be needed for purposes of determining
whether the activity would qualify for credit. If the activity appeared
to qualify, either from the face of the credit application or after
consulting with the State subject matter expert, FEMA would approve the
appropriate amount of credit up to the credit category cap (for the
categories to which a cap applies).
    FEMA envisions notifying each State individually by October 1 of
the amount of credit approved and the remaining deductible, if any,
that would apply during the subsequent calendar year. If FEMA approved
any less credit than what the State requested, FEMA would include an
explanation of the rationale for the discrepancy. In the case that FEMA
did not fully approve the State's credit request, the State could be
able to appeal the determination to FEMA. For this model timeline, FEMA
envisions appeals of credit determinations would be due by December 1.
    Once FEMA has adjudicated any appeals and all credit has been
approved, FEMA could issue a notice in the Federal Register no later
than January 1 of the subsequent year announcing each State's beginning
deductible amount, the amount of credit approved, and the final
remaining deductible, if any.
---------------------------------------------------------------------------

    \68\ Activities undertaken after the cutoff date for applying
for credits would be applied to the next year's deductible. For
example, activities undertaken in October would not be applied to
the deductible in effect 3 months later, but instead to the one in
effect 15 months later.

                             Table 10--Notional Deductible Program Annual Milestones
----------------------------------------------------------------------------------------------------------------
                  Date                               Actor                              Activity
----------------------------------------------------------------------------------------------------------------
                                                                        FEMA publishes Annual Notice of
                                                                        Public Assistance Deductible Amounts in
                                                                        the Federal Register.
August 1................................  FEMA.......................   FEMA publishes Application and
                                                                        Submission information for Public
                                                                        Assistance Deductible Credits in the
                                                                        Federal Register, which provides formal
                                                                        credit guidance and the credit
                                                                        application form.
September 1.............................  States.....................   Deadline for States to submit
                                                                        the Application for Public Assistance
                                                                        Deductible Credits.\68\
October 1...............................  States.....................   Deadline for States to appeal
                                                                        FEMA's determination of the pre-credit
                                                                        deductible amounts.
October 1...............................  FEMA.......................   FEMA completes review of the
                                                                        credit applications and notifies each
                                                                        State of the credit amounts approved and
                                                                        FEMA's proposed final deductible amount.
November 1..............................  FEMA.......................   FEMA notifies States of the
                                                                        outcome of any pre-credit deductible
                                                                        amount appeals.
December 1..............................  States.....................   Deadline for States to appeal
                                                                        FEMA's approved credit amounts and/or
                                                                        proposed final deductible amount.
January 1...............................  FEMA.......................   FEMA notifies States of the
                                                                        outcome of any pending appeals and
                                                                        publishes each State's final deductible
                                                                        and credit amounts in the Federal
                                                                        Register.

Beginning January 1.....................  FEMA.......................   FEMA provides supplemental
                                                                        Public Assistance for all of the credits
                                                                        that a State has earned in every
                                                                        disaster.
                                                                        For any permanent work disaster
                                                                        costs exceeding the State's earned
                                                                        credits, FEMA applies the remaining
                                                                        final deductible amount, if any.
----------------------------------------------------------------------------------------------------------------

2. Post Disaster Deductible Procedures
    FEMA believes it is important that for every major disaster, the
States receive assistance for emergency protective measures and debris
removal. FEMA does not want to delay those essential activities in the
immediate aftermath of a disaster incident. Under FEMA's deductible
concept, FEMA assistance for debris removal and emergency protective
measure projects could follow the normal procedures and receive funding
at the applicable cost share for that disaster.
    FEMA envisions applying the deductible amount (i.e., the portion of
a State's deductible not fully satisfied by the credits earned, if any)
on an annual basis and only to the provision of supplemental Federal
assistance for permanent repair and replacement activities. For repair
and replacement assistance, the State would receive supplemental
Federal assistance only after it has satisfied its deductible
requirement.
    If in a given year the affected State has not fully satisfied its
annual Public Assistance deductible with the credits that it earned and
a major disaster is declared, after the declaration the State would be
asked to identify projects that have a preliminary cost estimate
(Federal and non-Federal share combined) equal to the unsatisfied
deductible amount. With agreement by FEMA as to the preliminary cost
estimate, those projects the State selects to satisfy the remaining
deductible would be deemed ineligible under Section 406 of the Stafford
Act.\69\ The State would assume responsibility for these projects.\70\
FEMA would require that the States identify these projects within the
first 60 calendar days after a disaster declaration so as not to impede
the provision of supplemental Federal assistance for other projects.
---------------------------------------------------------------------------

    \69\ Stafford Act, supra FN4, Sec.  406(b) (providing the
``Federal share of assistance under this section shall be not less
than 75 percent of the eligible cost of repair, restoration,
reconstruction, or replacement carried out under this section'')
(emphasis added).
    \70\ Costs of satisfying the deductible, like cost share costs,
would not qualify for credit towards the next year's deductible.
---------------------------------------------------------------------------

    After the State satisfies its deductible in any major disaster
event, any remaining eligible repair and replacement projects resulting
from disasters declared in that year could receive supplemental Federal
assistance in accordance with the standard procedures of the Public
Assistance program. If there are insufficient projects to satisfy the
full remaining deductible requirement, the unsatisfied portion of the
deductible could be carried forward to any additional major disasters
declared within the State that year. Any deductible that is remaining
unsatisfied at the end of the year would expire. Each year could start
the deductible cycle anew with regards to the starting deductibles,
credits earned, and final deductibles.
    If a State has an unsatisfied deductible requirement remaining
after a major disaster, and it receives a second major disaster
declaration that year, pursuant to this initial version of the
deductible concept, the State would be required to identify a project
or grouping of projects that have a preliminary cost estimate (Federal
and non-Federal share combined) equal to the unsatisfied deductible
requirement. With agreement by FEMA as to the preliminary cost
estimate, these projects would be deemed ineligible costs pursuant to
Section 406 of the Stafford Act. Once the State has satisfied its
annual deductible requirement, all eligible costs in subsequent
disaster declarations could be processed for reimbursement through
standard Public Assistance program procedures.
    Consider a State that has a starting deductible of $25 million and
has earned credits of $15 million. The State's final deductible would
be $10 million. This is the amount that the State would need to satisfy
before it can receive permanent repair and replacement assistance.
Suppose the State experiences a major disaster that requires $3 million
in debris removal and causes $8 million in damage to public
infrastructure. FEMA would document the debris removal costs on Project
Worksheets and process all of those eligible costs for reimbursement
assistance at the applicable disaster cost share, typically 75 percent
Federal. The State could be responsible for paying for all of the
permanent work repairs because the $8 million in damage is less than
the State's $10 million final deductible for that calendar year.
    If the State receives a second major disaster declaration in the
same calendar year, the State would need to identify $2 million in
permanent work to satisfy the deductible remaining after the first
disaster. After the deductible is fully met, all additional eligible
costs could be documented on Project Worksheets and processed for
reimbursement assistance pursuant to the applicable cost share and
standard rules and procedures of FEMA's Public Assistance program.
    Any deductible amount remaining unsatisfied due to lack of eligible
disaster costs at the end of a year would be canceled. For example,
consider a State with a starting deductible of $30 million. The State
then requests and is granted credits worth $20 million. FEMA notifies
the State on January 1 that it has a final deductible amount of $10
million for the following calendar year. The State does not experience
any incidents during the calendar year for which the President declares
a major disaster. The $10 million final deductible could expire and be
cancelled at the end of the calendar year and the State could receive a
new final deductible amount for the next year.

J. Validation Procedures

    FEMA desires for the deductible program to recognize, reward, and
incentivize mitigation and resilience building best practices.
    As with the rest of the SANPRM all numbers, figures, criteria and
processes detailed in this section are notional. They are intended to
aid the public in understanding how a potential deductible program
could operate and to spur discussion and feedback.
    In order to ensure that the program is both effective in truly
incentivizing risk reduction and is being continually improved, FEMA
would seek to validate a portion of the credits that States are
approved each year.
    FEMA believes that its analysis will ultimately show that reviewing
a sample of credit approvals would be sufficient to ensure the fidelity
of the approvals and ultimately, confidence in the credibility of the
deductible program. FEMA solicits comment on this

assumption and the ideal portion of credit submissions that would be
subject to validation. Whatever the case, FEMA would notify the State
of its intent to validate credits and would specify precisely which
credits are to be validated.
    During the validation process, FEMA would review the records and
documentation that States maintain to support their credit requests.
Every State would likely have different standards for documentation and
each credit may require a different type of documentation, none of
which FEMA plans to prescribe; however, each State would be responsible
for maintaining and providing, upon FEMA's notice of intent to validate
a credit, sufficient documentation to reasonably and objectively
substantiate the credit approval. FEMA anticipates that States would
have to maintain the relevant documentation for at least 5 years. FEMA
requests comment from States regarding the capital and startup costs
that may be involved in this recordkeeping requirement as well as
suggestions for how FEMA may minimize the burden on States to keep this
information.
    In the event that FEMA is unable to validate a credit award, either
because the underlying State activity did not actually qualify for
deductible credit or because the State was unable to produce sufficient
documentation to objectively validate the credit approval, FEMA would
notify the State of its failure to validate the credit. FEMA would
detail the applicable requirements of the deductible credit that was
approved and specifically why FEMA was unable to validate it.
    Once FEMA notifies the State that FEMA was unable to validate a
credit, FEMA could permit the State 60 days to appeal the
determination. If the State's appeal is denied, FEMA would add any
credit approval that could not be validated to the applicable State's
deductible amount in the next year. If FEMA was able to validate the
credit on appeal, the credit approval would stand and FEMA would make
no further inquiry or take any other adverse action. FEMA seeks comment
on whether and when further action could be appropriate in the case of
a State which has submitted consistently unverifiable credits.
    For example, consider a State that has received a credit approval
of $3 million for a tax incentive program that allows consumers to
purchase hurricane preparedness supplies without paying sales tax
during the first weekend of hurricane season each year. In this case,
this particular credit has been included within the sample of credit
approvals selected for validation. FEMA notifies the State of its
intent to validate the credit and requests the necessary supporting
documentation. The State is able to produce documentation for $100,000
of qualifying advertising costs and $1.1 million worth of foregone
sales tax receipts. Because the credit concept offers a deductible
credit at a ratio of $2.00:$1.00 for this credit, FEMA would be able to
validate $2.4 million worth of credit. FEMA notifies the State of its
failure to validate $600,000 of credit and of FEMA's intent to increase
the State's next annual deductible by $600,000 to compensate for the
amount of the previous credit approval that FEMA was unable to
validate.
    In this case, the State appeals the approval and is able to produce
documentation of an additional $600,000 in forgone tax receipts from
the sales tax holiday. FEMA is now able to validate the entire credit
approval and would not add any additional amount to the State's next
deductible.

K. Possible Implementation Strategy

    FEMA will gather the suggestions and concerns that have been
expressed through the ANPRM and SANPRM and use them to determine
whether it can design a deductible concept that achieves FEMA's overall
guiding principles, but does so in a way that is both appreciative of
and responsive to the needs and concerns of its emergency management
partners, particularly the States to which it would apply. If FEMA
decides the deductible program has continued merit, FEMA would issue a
Notice of Proposed Rulemaking (NPRM) before possibly issuing a final
rule. No aspect of the deductible concept would be implemented prior to
publishing a final rule in the Federal Register.
    Even if a final rule is published, FEMA also recognizes that
implementing such a fundamental change would require sufficient time to
enable all parties to thoughtfully and strategically adapt to the new
structure in the form best befitting each.
    Consequently, FEMA would likely not apply any deductible for at
least one year following publication of a final rule. Thereafter,
FEMA's concept envisions a phased implementation strategy that would
make most States responsible for only a partial deductible amount in
the beginning of the program and delaying full application of the
deductible requirement for most States over a scheduled implementation
period.
    Specifically, FEMA is considering capping the first year deductible
at each State's then-current per capita indicator as determined by FEMA
pursuant to 44 CFR 206.48(a)(1). FEMA could then increase each State's
deductible by a share of the unapplied deductible, which for the
purposes of this model is 50 percent, each year thereafter until the
State reaches the full deductible amount. FEMA could recalculate the
full deductible amount annually based on the fiscal capacity and risk
index methodology described above. Through this method and based on the
model FEMA provides in this SANPRM, half of the States could reach
their full deductible within 4 years and all of the States could reach
their full deductible within 9 years. Two States, Illinois and
Colorado, could potentially reach their full deductible in the first
year because the contemplated deductible methodology produces
deductibles below their current Public Assistance per capita
indicators. Figure 2 depicts the application of this implementation
strategy over the first 3 years of the deductible program. Figure 3
depicts the number of States that are forecast to reach their full
deductible, as calculated in this model, in each year. Table 11 depicts
the model starting deductibles for each State in each year based on
current calculations.
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    FEMA believes that this approach would allow States the opportunity
to adapt to the deductible concept and to take steps that would earn
additional credits and begin to address their future disaster risk,
without applying deductibles at levels that would be punitive.
    Similar to the phased implementation of the deductible amounts,
FEMA envisions a phased application of credits in lockstep to each
State's deductible amount. This would be done by applying the credits
earned each year in the same proportion of the State's capped
deductible to its full deductible. For example, if a State's starting
deductible is equal to its full deductible in a given year, FEMA would
apply all of the credits earned in that year. However, if because of
phased implementation the starting deductible is a lesser amount, for
example 25 percent of the full deductible, FEMA would apply the same
percentage as a cap to the credits earned, or in this case 25 percent.
    Table 12 depicts each State's notional starting deductible for the
first 9 years of the deductible program. It also depicts the model
final deductibles that FEMA expects would be applied in each year. As
described above, these model final deductibles are the model starting
deductibles minus the amount of credits that each State earns in that
particular year. For the purposes of this model, FEMA has estimated the
amount of credit that each State might earn in the first year based on
activities that FEMA believes every State is already undertaking. These
amounts were depicted in Table 9. To extrapolate into the out years,
FEMA assumed that each State would increase the amount of credit earned
by 5 percent year-over-year. FEMA then deducted that amount, in
proportion of the starting deductible to full deductible as described
above, to calculate the model projected final deductible amounts for
each State in each of the first 9 years.
    These amounts are only estimates, however, and will be affected by
many factors, including changes to the base deductible, changes to each
State's relative risk or fiscal capacity, the amount of credit each
State earns in the first year for activities already underway, and
changes to those activities that result in more or less than 5 percent
year-over-year credit increases. All shaded values are capped.

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VI. Alternatives Considered

    Over the course of developing this deductible model, FEMA has
considered many alternatives, and selected the attributes that FEMA
believes could best achieve the intended outcomes of the program,
adhere to the program's guiding principles, and minimize administrative
burdens. The options that FEMA has considered included alternatives to
specific aspects of the program, such as which credits could be offered
or the value that FEMA could approve for those credits, but also
included alternatives to the entire deductible concept itself. FEMA
believes that the deductible program has the potential to improve the
nation's resilience and reduce disaster risk and costs on a broad
scale, but FEMA welcomes comment on alternative methodologies for
achieving these results.
    The following subsections detail a few of the alternatives and
options that FEMA is considering in developing its potential deductible
program concept. FEMA did not use these alternatives in the model
described in this SANPRM, but believes that they demonstrated enough
promise that including a brief discussion of each could facilitate
improved engagement and transparency in this process.
    FEMA has not made a final determination regarding the most
appropriate approach moving forward. In addition to the potential
deductible model described in this SANPRM, FEMA is still considering
the alternatives described below and may consider and pursue other
alternatives that may not necessarily be a logical outgrowth of this
SANPRM.

A. Increasing the Per Capita Indicator

    FEMA originally began consideration of the deductible concept in
the context of repeated calls--by the GAO, DHS OIG, Congress, and
others--to change the Public Assistance per capita indicator.\71\
Instead, FEMA suggests that the Public Assistance deductible program
may be a better option for reducing the costs of future disasters
because it incentivizes State investments in risk reduction. FEMA
believes simply increasing the per capita indicator, to the levels
suggested by the GAO, would likely maintain the same level of disaster
risk that exists today and transfer the future costs of disaster to
impacted State and local governments. FEMA seeks comment on this
assumption.
---------------------------------------------------------------------------

    \71\ See GAO, supra note 28; OIG supra note 29; see also 44 CFR
206.48.
---------------------------------------------------------------------------

    However, recognizing that the status quo is unsustainable in the
long term, FEMA has seriously considered adjusting the per capita
indicator and may still do so in the future. Increasing the per capita
indicator, to include an additional consideration of State fiscal
capacity, is the only viable alternative to a deductible that FEMA has
identified at this time.
    As was explained earlier in this SANPRM, the Public Assistance per
capita indicator was initially set in 1986 at $1.00 based upon PCPI. At
the time, that amount represented approximately one-hundredth of one
percent (0.01% or 0.0001) of PCPI. Had FEMA adjusted the per capita
indicator each year so that it maintained its ratio to rising PCPI,
more than 70 percent of major disasters between 2005 and 2014 would not
have been declared. Additionally, the per capita indicator would have
risen to $4.81 for 2016.\72\ For comparison, the current 2016 per
capita indicator is just $1.41. Switching to this alternative
methodology would result in a nearly a 250-percent increase to the
average per capita indicator, which could be phased in over a number of
years or decades through accelerated upward adjustment of the per
capita indicator at rates higher than inflation.
---------------------------------------------------------------------------

    \72\ Per Capita Personal Income in 2015 was $48,112 x 0.0001 =
$4.81.
---------------------------------------------------------------------------

    Under this alternative FEMA has explored also adjusting the PCPI-
adjusted per capita indicator value by the current TTR index for each
State.\73\ GAO recommended adjusting the per capita indicator values by
the current TTR index.\74\ Finally, for purposes of comparison, because
the Public Assistance per capita indicator is applied on a disaster-by-
disaster basis and FEMA envisions an annual deductible, under this
alternative FEMA has multiplied the PCPI-adjusted per capita indicator
by each State's 10-year average disaster frequency to provide a more
comparable comparison. Table 13 indicates the amount of cumulative
damage that a State would need to experience before FEMA would
recommend that the President issue a major disaster declaration in 2016
if the per capita indicator were raised to $4.81 and adjusted by the
TTR Index.
---------------------------------------------------------------------------

    \73\ Per State PCPI Adjusted Total = $4.81 Per Capita Indicator
x (State's TTR Index/100).
    \74\ See GAO, supra FN28, at 50.

                                  Table 13--Current Per Capita Indicator Compared With National PCPI Growth Adjustments
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                Data by state                                     Current per     Indicator adjusted
------------------------------------------------------------------------------ capita indicator   for national PCPI
                                                                                2016 = $1.41    growth 2016 = $4.81
                                                                              ---------------------------------------  Annual average   Annualized PCPI-
                                                                Current TTR                         National PCPI      major disaster     Adjusted per
                  State                     2010 population        index            Current         adjusted total      declarations    capita indicator
                                                                                indicator total       (with TTR
                                                                                adjustment)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama..................................         4,779,736              75.9        $6,739,428          $17,449,812               1.6       $27,919,700
Alaska...................................           710,231             126.8         1,001,426            4,331,756               1.6         6,930,809
Arizona..................................         6,392,017              70.7         9,012,744           21,737,140               0.9        19,563,426
Arkansas.................................         2,915,918              75.9         4,111,444           10,645,404               1.9        20,226,268
California...............................        37,253,956             104.9        52,528,078          187,971,913               1.5       281,957,870
Colorado.................................         5,029,196             107.9         7,091,166           26,101,477               0.7        18,271,034
Connecticut..............................         3,574,097             138.2         5,039,477           23,758,524               1.2        28,510,229
Delaware.................................           897,934             115.3         1,266,087            4,979,879               0.6         2,987,927
Florida..................................        18,801,310              82.2        26,509,847           74,336,996               1.6       118,939,193
Georgia..................................         9,687,653              90.7        13,659,591           42,264,033               0.8        33,811,226
Hawaii...................................         1,360,301              84.8         1,918,024            5,548,505               0.9         4,993,654
Idaho....................................         1,567,582              70.9         2,210,291            5,345,909               0.6         3,207,546
Illinois.................................        12,830,632             107.1        18,091,191           66,097,129               1.5        99,145,694
Indiana..................................         6,483,802              90.7         9,142,161           28,286,688               1.2        33,944,026
Iowa.....................................         3,046,355              98.8         4,295,361           14,477,132               2.3        33,297,403
Kansas...................................         2,853,118              93.3         4,022,896           12,804,023               2.3        29,449,253

Kentucky.................................         4,339,367              78.6         6,118,507           16,405,671               1.5        24,608,507
Louisiana................................         4,533,372              97.6         6,392,055           21,282,187               1.2        25,538,624
Maine....................................         1,328,361              77.6         1,872,989            4,958,187                 2         9,916,374
Maryland.................................         5,773,552             120.3         8,140,708           33,408,254                 1        33,408,254
Massachusetts............................         6,547,629             133.3         9,232,157           41,981,629               1.7        71,368,770
Michigan.................................         9,883,640              85.3        13,935,932           40,551,883               0.4        16,220,753
Minnesota................................         5,303,925             110.7         7,478,534           28,241,650               1.8        50,834,971
Mississippi..............................         2,967,297              68.1         4,183,889            9,719,708               1.4        13,607,591
Missouri.................................         5,988,927              89.6         8,444,387           25,810,838               2.4        61,946,011
Montana..................................           989,415              75.8         1,395,075            3,607,387               0.8         2,885,910
Nebraska.................................         1,826,341             105.5         2,575,141            9,267,859               2.3        21,316,075
Nevada...................................         2,700,551              82.3         3,807,777           10,690,482               0.7         7,483,338
New Hampshire............................         1,316,470             106.9         1,856,223            6,769,144               2.2        14,892,117
New Jersey...............................         8,791,894               129        12,396,571           54,552,823               1.4        76,373,952
New Mexico...............................         2,059,179              75.8         2,903,442            7,507,725               1.3         9,760,043
New York.................................        19,378,102             133.7        27,323,124          124,619,993               2.5       311,549,982
North Carolina...........................         9,535,483              86.7        13,445,031           39,765,539               1.2        47,718,646
North Dakota.............................           672,591             122.2           948,353            3,953,369                 2         7,906,738
Ohio.....................................        11,536,504              92.3        16,266,471           51,217,809                 1        51,217,809
Oklahoma.................................         3,751,351              85.3         5,289,405           15,391,531                 3        46,174,592
Oregon...................................         3,831,074              95.2         5,401,814           17,542,948                 1        17,542,948
Pennsylvania.............................        12,702,379              98.1        17,910,354           59,937,573               1.1        65,931,330
Rhode Island.............................         1,052,567             102.3         1,484,119            5,179,293               0.7         3,625,505
South Carolina...........................         4,625,364              73.2         6,521,763           16,285,537               0.3         4,885,661
South Dakota.............................           814,180              97.9         1,147,994            3,833,965               2.2         8,434,724
Tennessee................................         6,346,105              82.5         8,948,008           25,182,931               1.6        40,292,690
Texas....................................        25,145,561             106.7        35,455,241          129,053,808               1.7       219,391,474
Utah.....................................         2,763,885              83.4         3,897,078           11,087,435               0.7         7,761,205
Vermont..................................           625,741              87.1           882,295            2,621,548               1.6         4,194,477
Virginia.................................         8,001,024             114.6        11,281,444           44,103,725               1.2        52,924,469
Washington...............................         6,724,540             105.6         9,481,601           34,156,359               1.2        40,987,631
West Virginia............................         1,852,994              73.4         2,612,722            6,542,069               1.6        10,467,311
Wisconsin................................         5,686,986              95.1         8,018,650           26,014,037               0.9        23,412,633
Wyoming..................................           563,626             128.9           794,713            3,494,532               0.2           698,906
--------------------------------------------------------------------------------------------------------------------------------------------------------

    FEMA believes that the deductible concept has the potential to
result in a better outcome for the nation than increasing the per
capita indicator as it promotes State investment in risk reduction that
will ultimately reduce the financial impact of future disasters.
    Compared with the alternative option of linking the Public
Assistance per capita indicator to PCPI, the deductible model could
deliver financial advantages to the States. These financial advantages
could be even greater in the preliminary years over which the full
deductible amount is phased in. Table 14 indicates the differences that
FEMA expects might occur with each option.

 Table 14--Estimated Costs of the Notional Deductible Program Versus Adjusting the Per Capita Indicator for PCPI
----------------------------------------------------------------------------------------------------------------
                                                  Full estimated
                                                      credits                     National PCPI-    Annualized
        All amounts in $M          Full starting     (current          Final      Adjusted total   PCPI-Adjusted
                                    deductible      activities      deductible       (with TTR      per capita
                                                       only)                        adjustment)      indicator
----------------------------------------------------------------------------------------------------------------
Average State...................          $22.20           $9.74          $12.46          $29.37          $43.00
Median State....................           12.26            4.43            7.61           17.35           23.81
Minimum State...................            6.23            1.17            1.58            2.59       0.69 \75\
Maximum State...................          141.53          120.55           64.46          186.40          308.95
----------------------------------------------------------------------------------------------------------------

    FEMA recognizes that increasing the Public Assistance per capita
indictor will likely lower the amount the Federal government spends on
disasters. It is also simple to communicate and uses processes that
everyone is already familiar with. However, FEMA currently believes the
decrease in spending that the Federal government may see with the GAO's
suggested indicators would not result because future incidents are any
less devastating, but rather because the responsibility for that damage
would be transferred to State and local jurisdictions. It is true that
there is likely a level at which a high enough per capita indicator
would transfer enough risk to the States that they would be forced to
internalize sufficient disaster costs that may incentivize them to
increase mitigation. We do not

believe that level of per capita indicator is viable at this time.
Moreover, we believe that a deductible concept, which creates
incentives for States both through a transfer of risk and through
rewards provided by a credit system, will be more effective in driving
risk reduction and will lower all disaster spending over time. FEMA
will undertake more analysis over the course of this rulemaking and
will make the ultimate decision based on the outcomes of this analysis,
and not on the beliefs expressed in this section. Any direction
commenters could provide to support that analysis would be appreciated.
---------------------------------------------------------------------------

    \75\ Although the application of the annualization calculation
suggests a per capita indicator below $1 million due to low major
disaster frequency in some States, 44 CFR 206.48(a)(1) would still
set the minimum per capita indicator at $1 million. See supra FN23.
---------------------------------------------------------------------------

B. Alternative Deductible Approaches

    In developing this potential deductible concept, FEMA is
considering many variations, including simpler ways to calculate the
deductible amount, additional fiscal capacity indicators, alternative
methodologies to determine relative risk among the States, altering the
threshold, and additional possible activities that could be
incentivized through the credit structure.
1. Calculation Alternatives
    There are many different methods by which FEMA could determine a
State's deductible amount, and FEMA has considered the advantages and
disadvantages of many options as it developed the potential deductible
program. One of the simplest approaches would be to tie each State's
Public Assistance deductible amount to its current per capita Public
Assistance indicator in some way. Many commenters to the ANPRM remarked
that they appreciated the simplicity, understandability, stability, and
predictability of the current per capita indicator.
    While FEMA appreciates these values, the deductible concept, to be
successful, must incentivize greater State resilience to future
disasters. It is important, therefore, that the deductible amounts
truly represent the States' individual characteristics that are
relevant in the disaster context. Overall, FEMA believes that assessing
fiscal capacity and relative risk is a better strategy for calculating
deductibles than utilizing the current per capita indicator that lacks
relevance to either of those gauges.
2. Fiscal Capacity Index
    FEMA considered two additional financial indicators before
selecting the four contained in the fiscal capacity index included in
this model. Those additional indicators included Total Actual Revenue
(TAR),\76\ which FEMA defined as the amount of revenue a particular
State actually raises in a typical year, and State Gross Domestic
Product (GDP),\77\ which FEMA defined as the total value of the goods
and services produced within the State in a particular year. Upon
closer inspection, however, FEMA found that both of these indicators
were closely correlated to TTR by factors of 0.981 and 0.998
respectively.
---------------------------------------------------------------------------

    \76\ The United States Census Bureau produces an annual State
Government Finances report that details the amount and sources of
actual revenue captured by each State. Additional information can be
found at: https://www.census.gov/govs/state/.
    \77\ The Bureau of Economic Analysis produces annual estimates
of each State's Gross Domestic Product. These estimates are
available at: http://www.bea.gov/iTable/iTable.cfm?reqid=
70&step=1&isuri= 1&acrdn=2#reqid= 70&step=1&isuri=1.
---------------------------------------------------------------------------

    FEMA believes that TTR, with its broad consideration of potential
State revenue resources, was the best of these three indicators. FEMA
also appreciated that TTR, as a measure of potential, does not suffer
from complications of political choice in TAR or GDP that result from
differences between States in State tax obligations and the services
for which tax dollars are allocated. Since all three measures were so
highly correlated, FEMA selected to include TTR as the preferred metric
from this group. The other three fiscal capacity indicators used in the
model were less correlated with one another and, consequently,
represent a unique measure of State fiscal capacity that FEMA believes
should be considered to inform that portion of the deductible
calculation.
3. Risk Index
    The model methodology for establishing the risk index utilizes AAL
values produced from Hazus to evaluate each State's relative risk
level. One feature of the AAL approach is that AAL reflects the total
amount of the loss caused by the hazard. This includes losses by
individuals, businesses, economic drivers, and insured losses. However,
because of limitations in the types of assistance that FEMA provides
through the Public Assistance program, there is inherent variability
between Hazus-based AAL estimates of overall disaster losses and any
impact that reducing these broader disaster losses would have on Public
Assistance costs.
    FEMA is willing to accept this attribute, however, because the
intent of the deductible program is to reduce risk and build resilience
to disasters overall. FEMA considers the non-Public Assistance cost
reductions that would occur as a result of a deductible program to be
ancillary benefits of the program. This is no less true if the indirect
Public Assistance reduction benefits are just a fraction of the overall
deductible improvements through reduced AALs. FEMA seeks comment on
this approach.
    One shortcoming of the AAL methodology, at least at present, is
that Hazus does not currently produce loss estimates of any kind for
severe storms or tornadoes. Overall, these types of incidents account
for the most frequently declared major disasters and count for
approximately 20 percent of Public Assistance obligations between 2005
and 2014. However, looking below the surface of the classification,
FEMA has found that a significant amount of the damage that occurs in a
major disaster declared for severe storms is actually caused by
flooding. Consequently, just a small percentage of major disasters are
actually issued for damage from storms that do not include some
flooding. These would include damage resulting from wind (tornado,
derecho, microburst, etc.), hail, or winter storms.
    Nevertheless, it is likely that the AAL-based approach to
calculating the risk index will somewhat undervalue the risk to locals
that are particularly prone to these types of incidents, such as the
Midwest for tornadoes and the Northeast for snow and ice storms. FEMA
plans to continue seeking ways to improve the Hazus model and expand
the modeling capabilities through AAL estimates, but it also
acknowledges this particular limitation of the current approach. FEMA
is soliciting comment on ways to potentially overcome these limitations
in the Hazus model.
    FEMA also considered a completely different approach to assessing a
State's relative risk that looks specifically at the likelihood that a
State will require Public Assistance and the amount of assistance that
will likely be needed. FEMA engaged CREATE to assist in the statistical
and economic aspects of designing the deductible concept. CREATE
produced an alternative approach for modeling risk using historical
Public Assistance obligations to estimate States' risk. Essentially,
CREATE has developed a methodology for modeling the likely amounts of
Public Assistance that every State will require by leveraging
historical Public Assistance levels to forecast potential future need.
    Specifically, the CREATE model utilizes Public Assistance data from
1999 to 2015 (the broadest range for which reliable data is available).
CREATE's model assumes that both the magnitude and frequency of
disasters are random variables while

simultaneously taking a State's characteristics into account, such as
the amount of infrastructure. CREATE then developed statistical models,
adjusting the modeling parameters so that the outputs best matched the
frequency and magnitude of historical Public Assistance outlays. CREATE
was then able to use those models to look forward and determine the
likely frequency and amounts of Public Assistance that each State would
require in the future, converting those amounts to an index of relative
risk.
    CREATE's approach advanced FEMA's ability to forecast Public
Assistance requirements. However, FEMA is considering using the Hazus-
based AAL methodology for establishing each State's score on the risk
index instead for a number of reasons.
    First, FEMA was concerned with the small quantity of data that it
was able to offer to CREATE and upon which CREATE relied to build its
model. FEMA could only provide reliable data for 17 years' worth of
Public Assistance. FEMA was concerned that this dataset was of
insufficient length to form the basis for establishing long-term
forecast trends for the Public Assistance program. Some types of
disasters, in some areas occur on 100-year, 500-year, 1,000-year, or
even longer cycles. It is likely that FEMA's 17-year dataset is
insufficient to capture these types of events. This is particularly
true of rare but devastating hazards, such as major earthquakes.
Conversely, States that have happened to experience a major disaster in
the past 17 years may have their relative risk overstated by this
dataset compared to what may be expected from a longer-term trend.
    Likewise, it is also likely that the Public Assistance dataset will
include incidents that are unlikely to occur again in the near future
and that may be skewing the data. The costs associated with Hurricane
Katrina is an example of this possibility. While the chances of the
Gulf Coast being struck by a moderate to major hurricane in the coming
years are reasonable, the likelihood that it will cause the level of
destruction as Hurricane Katrina is much lower. This is because a
significant portion of the costs from Katrina stemmed from the flooding
that resulted from failure of the water management and levee systems in
New Orleans, Louisiana. Following extensive improvements to those
systems over the past decade, a hurricane of similar intensity to
Katrina might not cause the same level of damage to public facilities
and infrastructure today.
    FEMA was also concerned that because the CREATE approach is novel,
it might not engender the same level of public confidence as the AAL-
based methodology. AAL estimates are used by many organizations within
the risk management and insurance industries and are generally accepted
and defensible approaches to modeling future hazard costs.
Additionally, FEMA expects that many within the emergency management
community will be familiar with Hazus and the capabilities of that
platform. Hazus data is openly available and FEMA values the
transparency and reproducibility that use of the existing Hazus
platform offers to the deductible methodology.
    Finally, FEMA believes that utilizing Hazus-based AALs will offer
benefits to other programs as well by creating a significant use of the
Hazus platform. FEMA will enjoy an efficiency by leveraging an existing
platform instead of designing and constructing a new one. Additionally,
because the deductible program has the potential to become a major
consumer of Hazus outputs, it increases the value of the Hazus platform
to FEMA and to the nation. This likely would lead to future updates and
improvements to Hazus capabilities that would benefit not only the
deductible program, but also all other users of Hazus products.
However, FEMA certainly welcomes comment on the use of Hazus data, and
AALs generally, and their application to formulating a risk-informed
deductible calculation.
    In deciding between the Hazus-based AAL approach and the CREATE
historical Public Assistance approach, FEMA decided that the former was
the better option to incorporate as the risk index into the broader
potential deductible formula. FEMA believes that the advantages of
using the Hazus-based AAL approach described above outweigh the
disadvantages of slightly lessening the risk assessment portion of the
deductible methodology's strict nexus to the Public Assistance program.
In other words, FEMA believes that taking a more expansive view of risk
through use of Hazus-based AALs, which include costs not typically
associated with the Public Assistance program, is acceptable given the
intent of the deductible concept is to reduce risk nationally.
4. Additional Credits
    FEMA carefully considered the credits included in the model
described in this SANPRM. FEMA attempted to offer a menu of credits
that cover a range of activities and that would support a diversified
approach to risk reduction and improved preparedness. FEMA intended
each model credit to independently contribute to those outcomes, but
also to work within the broader system to create a cohesive structure
of achievable progress for all States.
    When developing the model credit offerings, FEMA considered other
credits as well. These credits were not ultimately selected for the
model for a variety of reasons. In some cases, the credit was too
complicated or could create an unreasonable burden upon the State or
FEMA to administer. In other cases, the ability of the credit to
actually reduce risk or improve resilience was dubious. Ultimately,
FEMA believes it included in the model the best mix of credits
available from what it considered.
    One credit in particular that FEMA considered at length would have
been tied to FEMA's Community Rating System (CRS). Many of the comments
that FEMA received from stakeholders when it published the ANPRM
suggested that FEMA should offer deductible credit for CRS
participation. CRS is a program administered by FEMA's National Flood
Insurance Program (NFIP). The NFIP provides federally-backed flood
insurance within communities that enact and enforce floodplain
regulations. FEMA recognizes that CRS is an important program that
incentivizes important floodplain management activities, many of which
mirror or support activities that FEMA is looking to incentivize
through deductible credits, and that inclusion as a separate credit
could further incentivize those activities. At this point, however, as
discussed below, FEMA does not believe that inclusion of CRS as a
credit is appropriate at this time.
    A structure must be located within an NFIP community to be eligible
for federally-backed NFIP coverage. NFIP communities may also elect to
participate in the CRS program to receive a percentile reduction to the
premiums for every NFIP policy within the community. As of October
2015, 1,368 of the 21,600 NFIP communities have chosen to participate
in the CRS program. This provides discounted flood insurance premiums
to nearly 3.8 million policyholders.
    The CRS classifies each participating community on a scale from 10
to 1 based on multiple scoring criteria relating to floodplain
management, investments, and enforcement. Each CRS class receives a
corresponding percentile reduction to the premiums of all of the NFIP
flood insurance policies covering property within those communities.
The lower the community's CRS class, the larger the

percentile premium reduction will be. For example, a CRS class 7
community would receive a 15 percent premium reduction on all policies
covering property within the community's Special Flood Hazard Area,
whereas a CRS class 1 community would receive a 45 percent reduction.
    As of October 2015, more than 50 percent of CRS communities were
assigned to either class 8 or 9. Less than 1 percent of CRS communities
have reached beyond class 5. Figure 4 depicts the number of communities
in each CRS class (as of October 2015).
[GRAPHIC] [TIFF OMITTED] TP12JA17.032

    FEMA examined multiple ways by which it could potentially include
such a credit in the deductible model. The major problem with creating
a deductible credit in this instance is that the CRS program is
administered exclusively at the community level, and FEMA has never
produced statewide CRS scores. FEMA would need to be able to translate
participating community classes into statewide scores for purposes of
the deductible. In considering the credit, FEMA developed a basic
framework for how this process might work.
    FEMA has considered calculating statewide CRS scores by utilizing
population-weighted averages of the participating communities' CRS
classes compared to the statewide population. FEMA would multiply the
population of each CRS community by its assigned CRS class. FEMA would
then add all of those values together and divide by the population of
the State. The resulting number would then be subtracted from 9, the
lowest class for which credit would be offered, to derive the statewide
CRS score.
    Consider for example the State of Iowa. As of October 2015, Iowa
had seven CRS communities. Those communities are as follows:

                               Table 15--Example Statewide CRS Credit Score--Iowa
----------------------------------------------------------------------------------------------------------------
                                                                                Pop. x CRS
                          CRS community                             Population       CRS class         class
----------------------------------------------------------------------------------------------------------------
City of Cedar Falls.............................................          39,260               5         196,300
City of Cedar Rapids............................................         126,326               6         757,956
City of Coralville..............................................          18,907               7         132,349
City of Davenport...............................................          99,685               8         797,480
City of Des Moines..............................................         203,433               7       1,424,031
City of Iowa City...............................................          67,862               7         475,034
Linn County \78\................................................          84,900               8         679,200
                                                                 -----------------------------------------------

    Sum.........................................................  ..............  ..............       4,462,350
                                                                 -----------------------------------------------
        State of Iowa...........................................       3,046,355             7.5  ..............
----------------------------------------------------------------------------------------------------------------

    FEMA has also considered multiplying the population of each
community by the community's CRS class. For example, the City of Cedar
Falls would contribute 196,300 to the calculation (population of 39,260
multiplied by CRS Class 5). FEMA would then add up all of those values
from each CRS community. In this case, that would equal 4,462,350. This
total would then be divided by the population of the entire State
(4,462,350/3,046,355 = 1.5). The result is then subtracted from 9 to
yield the statewide CRS score for purposes of the deductible. In this
case, Iowa's CRS score would be 7.5 (9.00 - 1.5 = 7.5). This value
could then be recognized with some level of credit based upon a
standardized conversion schedule. At this time, FEMA has not developed
a potential deductible credit schedule for the CRS.
---------------------------------------------------------------------------

    \78\ The population of Linn County included in this example
excludes the population of the City of Cedar Rapids because it is
accounted for separately as an independent CRS community.
---------------------------------------------------------------------------

    Ultimately, FEMA decided not to include a model CRS deductible
credit in this SANPRM for three reasons. First, FEMA believes that the
flood insurance premium reductions should sufficiently incentivize NFIP
communities to participate or better their standing within the CRS
program. Second, FEMA would need to develop a new methodology for
creating statewide CRS classes. This would be a novel undertaking for
FEMA and the agency seeks comment from its State partners and the
public regarding this endeavor. Furthermore, creating such a
methodology is complicated because CRS communities are not necessarily
the same as census-based communities, meaning that population numbers
will need to be validated on a community-by-community basis for the
calculation. Finally, even if FEMA does create a methodology for
statewide CRS scores, FEMA is concerned that doing so would be
confusing to stakeholders because FEMA would not be offering any NFIP
insurance premium discounts for those scores. In other words, if a
statewide score is better than a particular NFIP community's CRS class,
there may be an expectation that FEMA would use the statewide score in
place of the community's CRS Class. In fact, FEMA would not be willing
to use the statewide score in lieu of the community score for purposes
of granting NFIP premium discounts and FEMA believes that the creation
of statewide CRS scores solely for the purposes of the deductible
program would be confusing, and ultimately disappointing, to some CRS
communities and NFIP policyholders.

VII. Legal Authority

    FEMA administers the Public Assistance program pursuant to the
President's statutory authority conferred in Section 406 of the
Stafford Act to ``make contributions--(A) to a State or local
government for the repair, restoration, reconstruction, or replacement
of a public facility damaged or destroyed by a major disaster and for
associated expenses incurred by the government.'' \79\ These
contributions are limited to ``. . . not less than 75 percent of the
eligible costs of repair, restoration, reconstruction, or replacement
carried out under this section''--known as the Federal share.\80\ The
President has delegated this authority to the Administrator of FEMA to
authorize the Public Assistance program, inter alia.\81\
---------------------------------------------------------------------------

    \79\ 42 U.S.C. 5172(a)(1)(A).
    \80\ 42 U.S.C. 5172(b)(1).
    \81\ Executive Order 12148, 44 FR 43239 (July 24, 1979).
---------------------------------------------------------------------------

    ``Eligible'' is a term of qualification indicating that not all
resultant costs are automatically reimbursable. Because the Stafford
Act does not define ``eligible costs'' within the text of the law
itself, it is within FEMA's discretion to define the term for purposes
of its programs authorized pursuant to that provision. FEMA has,
through regulation and policy, leveraged its discretion to determine
which disaster costs are ``eligible.'' For purposes of the deductible
program, FEMA is considering revising its regulations and policies to
reflect a determination that disaster costs that cumulatively fall
below the amount of the State's annual deductible, as adjusted by its
earned credits, are not ``eligible costs'' as defined by the Stafford
Act.

VIII. Conclusion

    The concept for a deductible program responds to calls for FEMA to
address the increasing frequency of disaster declarations, particularly
smaller events that should be within the capacity of State and local
governments, and to decrease Federal disaster costs. While increasing
the per capita indicator is one way to accomplish this, solely through
the transfer of costs from the Federal government to State and local
jurisdictions, FEMA believes that doing so would miss a valuable
opportunity to increase the nation's overall disaster resilience,
thereby reducing costs for all stakeholders.
    While FEMA seeks comment on all aspects of the deductible concept,
in particular FEMA seeks detailed comment and supporting data on the
methodology for calculating each State's deductible amount, including
how FEMA should consider each State's individual risk and fiscal
capacity; and on whether FEMA's estimates of projected credits for each
State are accurate. Detailed stakeholder comment and supporting data
are crucial to FEMA's development of a fair and transparent means to
calculate deductible amounts and creation of an effective and efficient
deductible program.

    Dated: January 6, 2017.
W. Craig Fugate,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2017-00467 Filed 1-11-17; 8:45 am]
 BILLING CODE 9111-23-P