[Federal Register: October 11, 2007 (Volume 72, Number 196)]
[Rules and Regulations]
[Page 57869-57879]
[DOCID:fr11oc07-14]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

44 CFR Parts 206 and 207

[Docket ID FEMA-2006-0035]
RIN 1660-AA21

Management Costs

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Interim final rule.

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SUMMARY: This interim final rule implements the management costs
provisions of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act. In so doing, it simplifies and clarifies the method by
which FEMA contributes to costs incurred by grantees and subgrantees in
implementing the Public Assistance and Hazard Mitigation Grant programs
and establishes fixed management cost rates for compensating eligible
grantees and subgrantees.

DATES: Effective Date: This rule is effective on November 13, 2007.
    Comment Date: Comments are due on or before November 13, 2007.

ADDRESSES: You may submit comments, identified by Docket ID FEMA-2006-
0035, by one of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the

instructions for submitting comments.
    E-mail<EMAIL_ADDRESS>Include Docket ID FEMA-2006-0035 in the
subject line of the message.
    Fax:<PHONE_NUMBER>.
    Mail/Hand Delivery/Courier: Rules Docket Clerk, Office of Chief
Counsel, Federal Emergency Management Agency, Room 835, 500 C Street,
SW., Washington, DC 20472.
    Instructions: All Submissions received must include the agency name
and Docket ID. Regardless of the method used for submitting comments or
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.

    Docket: For access to the docket to read background documents or
comments received, go to the Federal eRulemaking Portal at http://www.regulations.gov.
 Submitted comments may also be inspected at Office

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

FOR FURTHER INFORMATION CONTACT: Jonna M. Long, Office of the Chief
Financial Officer, Federal Emergency Management Agency, PP 632, 500 C
Street, SW., Washington, DC 20472,<PHONE_NUMBER>, (facsimile) (202) 646-
4268, or (e-mail<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Introduction

    Under the provisions of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (Stafford Act), 42 U.S.C. 5121-5206, and its
implementing regulations, the Federal Emergency Management Agency
(FEMA) has the authority to assist State and local governments in
carrying out their responsibilities pursuant to a Presidentially-
declared major disaster or emergency. Two of the major programs
authorized by the Stafford Act that provide assistance to State and
local governments are the Public Assistance (PA) program and the Hazard
Mitigation Grant Program (HMGP).
     PA, implemented at part 206 subparts G and H of this
chapter, provides funding through grants for emergency protective
measures, debris removal, and repair, replacement, or restoration of
facilities not met by insurance.
     HMGP, implemented at part 206 subpart N of this chapter,
provides funding through grants to undertake sustained mitigation
measures that will reduce or permanently eliminate the long-term risk
to people and property from natural hazards and their effects.
Sustained mitigation measures include acquisition for open space,
elevations of flood prone properties, and wind or seismic retrofitting
of structures.
    Section 324 of the Stafford Act, 42 U.S.C. 5165b, requires FEMA to
establish management cost rates for grantees and subgrantees that will
be used to determine contributions for management costs and to review
those management cost rates not later than 3 years after the date of
establishment of the rates and periodically thereafter. ``Management
costs,'' for purposes of this regulation, include any indirect costs,
any administrative expenses and any other expenses not directly
chargeable to a specific project that are reasonably incurred by a
grantee or subgrantee in administering and managing a PA program or
HMGP grant award.

    Funding for management and administrative costs for PA and HMGP
grantees and subgrantees is provided currently through one of three
mechanisms:
     Associated costs, also known as the Statutory
Administrative Costs Allowance or the ``sliding scale,'' under section
406(f) of the Stafford Act (which is repealed with the establishment of
management costs under this rule pursuant to Pub. L. 106-390, sec.
202(b)(2)), which include:
    [cir] Extraordinary costs incurred by a grantee for preparation of
damage survey reports, final inspection reports, project applications,
final audits, and related field inspections by State employees, such as
overtime pay and per diem and travel expense of such employees, but not
regular time; and
    [cir] Necessary costs incurred by a subgrantee of requesting,
obtaining, and administering Federal disaster assistance;
     State Management Costs, which include regular time labor
costs for grantee and temporary employees, contract costs, equipment
and office supplies, and communications costs; and
     Grantee indirect costs, which are costs incurred through a
project that are not directly related to it, such as utilities, rent,
and other overhead.
    These three types of costs are currently paid in accordance with
Sec.  206.228(a)(2) through 206.228(a)(3)(ii) and 206.228(b) for PA,
and Sec.  206.439(b)(1) through (c)(2) for HMGP which are revised by
this interim final rule.
    The management cost rates set forth in this regulation replace what
FEMA previously paid State and local governments for associated costs
through the ``sliding scale,'' State management costs, and grantee
indirect costs. Management cost funding will be requested through the
PA Project Worksheet (PW) or HMGP project application process. PWs and
HMGP project narratives are already submitted by grantees. Any costs
that can be directly attributable to a project (at the grantee or
subgrantee levels) will continue to be added directly to the PA PW, or
HMGP application for the project.

II. Comments, Responses, and Changes to the Proposed Rule

    FEMA published a Notice of Proposed Rulemaking (NPRM) (67 FR 56130,
August 30, 2002) proposing a methodology for calculating the management
cost rates, and guidance for the implementation of section 324 of the
Stafford Act. In the NPRM, FEMA proposed to implement section 324 of
the Stafford Act by creating an entirely new grant program for
management cost funds, separate from grants awarded for PA and HMGP.
FEMA also proposed to provide a set amount based on a percentage of the
Federal share of PA and HMGP projections for a declaration. That amount
would be available for PA and HMGP grant management and administration,
and for grantees and subgrantees, and would allow grantees the
flexibility to distribute funds in a manner representative of their
priorities for management of the two programs.
    During the 30-day comment period, FEMA received comments from 23
States, the U.S. Virgin Islands, 2 associations, and 1 consulting firm.
All comments were considered carefully in formulating this interim
final rule. A summary of the comments received, as well as FEMA's
responses, is set forth below.

a. General Comments and Changes

1. Adequacy of Rates
    FEMA received several comments about the rates that were published
in the proposed rule, with many of the commenters claiming the rates
were inadequate for effective program management and that FEMA did not
accurately reflect costs not paid with Federal funds. As the rates are
based on what FEMA historically paid grantees and subgrantees for
program management, and historically, grantees and subgrantees were
able to administer and manage PA and HMGP at that level of funding,
FEMA does not believe the rates will be inadequate for future program
management.
    FEMA acknowledges that the rates prescribed may not cover all costs
incurred by a grantee. The Stafford Act, however, in sections 101(b),
401, and 501(a), establishes the Federal Government's role in disaster
response and recovery as supplementing State efforts in carrying out
their responsibilities; management cost funds are contributions, not
full funding. FEMA believes that basing the rates on historical Federal
obligations is appropriate and, as the rates will be applied to the
Federal share of program projections, grantees and subgrantees are
reasonably expected to contribute at least a comparable amount of
management cost funds to the non-Federal share.
    In any case, as several commenters noted, the funds that FEMA will
provide for management costs are only meant to contribute to costs that
are not directly chargeable at the project level. FEMA will continue to
reimburse administrative or project management costs that can be
properly documented and directly charged to the project.
2. Separate Indirect Costs
    Several commenters were concerned that the proposed funding for
management costs did not comport with OMB Circular No. A-87 and part 13
which allow for the reimbursement of indirect costs and part 13 because
in the proposed regulations separate payment for indirect costs would
not be allowed. However, section 324 of the Stafford Act defines
management costs as including indirect costs; therefore, separate
reimbursement for indirect costs is not permitted, because doing so
would be duplicative.
3. Increased Costs Due to New Grant Process
    Some commenters were concerned that the management cost rates as
calculated did not account for the additional costs of application,
administrative, monitoring, and reporting requirements of the new grant
program outlined in the proposed rule. Since publication of the
proposed rule, and in response to comments, FEMA has decided to
implement section 324 of the Stafford Act as part of the PA and HMGP
programs and not as a separate grant program. The additional
requirements of a separate grant program no longer apply.
4. Combined Rate for PA and HMGP
    In the proposed rule, FEMA proposed to provide a combined set
amount that would be available for both PA and HMGP grant management
and administration to allow grantees the flexibility to distribute
funds in a manner representative of their priorities for management of
the two programs.
    Some commenters felt that providing a set amount for a declaration
that would be available for PA and HMGP did not provide the flexibility
to distribute the funds in a manner representative of the grantee's
priorities for management of the two programs, but rather would be
impractical and create additional burden to program managers. Because
FEMA has decided to implement section 324 of the Stafford Act as part
of PA and HMGP and not as a separate grant program, these concerns are
moot. In this interim final rule, FEMA is publishing three management
cost rates: One for PA pursuant to major disaster declarations; one for
HMGP pursuant to major disaster declarations; and one for PA pursuant
to emergency declarations.

5. Combined Rate for Grantee and Subgrantees
    FEMA received a few comments critical of its proposal to provide
management cost funds to grantees for both grantee and subgrantee use.
One State commented that the process could be very divisive unless
State plans were in place and accepted prior to declaration. FEMA
agrees; accordingly, in the interim final rule, FEMA is requiring
States to outline their plans for subgrantee treatment in the State
administrative plans required for PA and HMGP.
    Moreover, two States commented that management cost funding
administration would be simplified if subgrantee costs were based on
project award or the total cost of the project. FEMA agrees that these
are viable options for States to consider. Nevertheless, for the
reasons set forth below, FEMA has not changed the combined rate
concept.
    FEMA's relationship in PA and HMGP is with the grantee; the grantee
has the direct relationship with its subgrantees. FEMA believes that,
just as a grantee has the right and the ability to determine cost-
sharing requirements for its subgrantees, it has the right and the
ability to determine reasonable contributions for management costs that
cannot be directly charged to projects.
6. Updated Calculation of Management Cost Rates
    In the proposed rule, FEMA published rates for major disaster and
emergency declarations based on obligations for major disasters and
emergencies declared in the 6-year period 1995 through 2000 and
supplemented by data from States that were able to provide information
on costs not reimbursed by FEMA. As FEMA's disaster processing systems
were not fully automated for that period, data came from various
sources.
    In August 1998, FEMA implemented its National Emergency Management
Information System (NEMIS). NEMIS provides the capability to extract
data on sliding scale, State management cost, and indirect costs
obligations. In this interim final rule, FEMA is publishing three
management cost rates: One for PA pursuant to major disaster
declarations; one for HMGP pursuant to major disaster declarations; and
one for PA pursuant to emergency declarations. NEMIS data for major
disasters and emergencies declared in the six-year period August 1998
through July 2004 were used to update the management cost rate
calculations.

b. Section-by-Section Analysis

1. Definitions
    FEMA received comments from five States on Sec.  207.2 of the
proposed rule. One commenter requested that FEMA add a definition of
``close out;'' this was done.
    In the proposed rule, FEMA defined ``lock-in'' as the amount of
management cost funds available to a grantee for a particular major
disaster or emergency, as FEMA determines at 30 days, 6 months, and
after the final HMGP lock-in. Two germane comments were received on the
definition of ``lock-in.'' One commenter suggested that large projects
that take more than 6 months for FEMA approval would not be factored
into the rate and therefore the amount available to the State would be
reduced. FEMA believes this is incorrect as the amount of management
cost funding that will be made available will be based on program
projections--not approved projects. Another comment asserted that this
``produces an even harder financial hit to the grantee and subgrantee''
because current subgrantee administrative costs are based on the total
obligation, not just the Federal share. This disparity is addressed
because the percentage is based on what FEMA paid out over a 6 year
period, including the funding paid to subgrantees that is based on the
total project obligation, not just the Federal share.
    One State asked what the basis for the management cost funding
would be for the HMGP when only Individual Assistance (IA) and HMGP are
declared. Under an IA/HMGP declaration, the HMGP management cost rate
would be provided for management of that program based on the estimated
projections (Federal share) for the HMGP program.
2. Applicability and Eligibility
    FEMA received several comments about the applicable date described
in Sec.  207.3. In the preamble of the proposed rule, FEMA noted that
the anticipated implementation date was subject to change. Progress
toward implementation was slowed by several factors and the
implementation date for management costs has been changed accordingly.
3. Responsibilities
    One commenter suggested that, rather than reviewing the rate no
later than three years after the rule is in effect, FEMA should review
after 1 year. Because section 324 of the Stafford Act requires FEMA to
review the management cost rates established not later than 3 years
after the date of establishment of the rates and periodically
thereafter, FEMA retains the discretion to review sooner, if necessary.
Accordingly, this change was not made.
    Two States asked whether pass-through funding to subgrantees was
mandatory. The Stafford Act defines the management cost rates as being
for grantees and subgrantees. FEMA has added language to clarify the
grantee's responsibility for determining the amount or percentage of
management cost funding to be passed through to subgrantees and
ensuring that it provides such funds to subgrantees.
    Other States expressed concerns about setting a fixed rate.
However, the Stafford Act requires FEMA to set management cost rates to
be used to determine contributions for management costs--full
compensation to a grantee or subgrantee is not implicit. FEMA believes
that the sharing of costs--as PA and HMGP costs are shared--leads to
better fiscal responsibility and accountability.
4. Determination of Management Costs
    The title of this section has been renamed ``Determination of
management cost funding'' to more accurately reflect that what is being
determined is the amount of funding that will be available for
management costs, not whether specific costs are eligible as management
costs.
    Two comments were received about the timing of, and adjustments to,
the lock-in amount. One commenter felt that locking into a final amount
at 9 months would cause unfair fiscal burdens on grantees and
subgrantees. In the proposed rule, FEMA stated it would determine the
final lock-in amount for management cost funding at 9 months or after
the final HMGP lock-in ceiling was determined, whichever was later.
After HMGP lock-in, the projected amount of funding for that program is
set. FEMA believes that locking into a management cost amount after the
HMGP ceiling is established maximizes the amount available for
management costs. However, since the HMGP ceiling is currently expected
to lock at 12 months, FEMA has changed the final lock-in date for
management costs to 12 months or after HMGP lock-in, whichever is
later. The other commenter suggested that the phased lock-in process
should allow for increases as disaster cost estimates change; the rule
as written allows this.
    Two States provided comments on the $20 million cap proposed for
the total amount of management cost funds to be provided pursuant to a
single

declaration. One State claimed that $20 million equated to a $453
million event, which would not be out of the ordinary. FEMA does not
agree with this calculation, as it assumes the $453 million was derived
by calculating that $20 million is 4.41 percent (the rate in the
proposed rule) of $453 million. In this case, $453 million would indeed
represent combined PA and HMGP projections; however, on average, PA and
HMGP represent approximately 58 percent of total disaster costs.
Therefore, $20 million in management cost funding would approximately
equal a $781 million event ($781 million x .58 = 453 million)--far more
out of the ordinary.
    The other State commented that ``[t]he identification of $20
million as the ``not to exceed'' amount for management costs appears to
be the real reason for this proposed rule.'' FEMA disagrees with this
statement, as the rule is being promulgated in response to a change in
law (section 324 of the Stafford Act, 42 U.S.C. 5165b).
    Although FEMA is now providing separate management cost rates and
funding for PA and HMGP as part of the programs and not as a separate
grant program, the single cap for management costs for the declaration
has been retained.
5. Eligible Use of Funds
    Since publication of the proposed rule, and in response to
comments, FEMA has changed the title of this section to ``Use of
funds'' to more accurately reflect the content of the section.
    FEMA received a number of comments and questions on this section,
many related to individual items that were listed as ``eligible'' or
``ineligible.'' The items listed in the proposed rule were not meant to
be exhaustive, but rather were to be representative of the types of
costs for which the use of management cost funding would be
appropriate. In response to comments, FEMA has determined that the
lists are not necessary. Instead, the interim final rule states that
all charges must be related to administration of PA and HMGP, must be
properly documented, and must be made in accordance with Sec.  13.22.
    FEMA received a number of questions about the treatment of indirect
costs. Because the statutory definition of management costs in section
324 of the Stafford Act, 42 U.S.C. 5165b, includes indirect costs,
grantees and subgrantees may not add such costs to project costs or
request reimbursement separately. After the effective date of this
interim final rule, the only available mechanism for reimbursement of
indirect costs for PA and HMGP is use of management cost funding
provided in this section.
    In the NPRM, FEMA proposed that any management cost funds that were
not needed for a specific declaration could be retained by the grantee
or subgrantee, upon approval of a spending plan for improvement of the
disaster programs' general financial and grants management. Because
such costs are already eligible management costs, if directly
attributable to program management for that declaration, FEMA has
determined there is no need for a second spending plan. Any such
planned expenditures should be included with the documentation
submitted to support the management cost funding request and any
management cost funds not properly expended in direct support of PA or
HMGP will be deobligated by FEMA.
6. Application Procedures
    FEMA received several comments about the proposed process and
timing for applying for management cost funding. Because the
requirements of a separate grant program no longer apply, the process
for requesting management cost funding is simplified. Accordingly, FEMA
has decided to implement section 324 by continuing to use the same
application processes for management costs as it is currently using,
rather than as a separate grant program. That is, grantees will
continue to apply for PA management cost funding using a PW and its
associated forms, if applicable, and for HMGP management cost funding
using a project narrative.
    Additionally, FEMA will not require detailed justifications to
support management cost funding requests until 120 days after the date
of declaration. This change will alleviate the burden to the grantee,
at the busy time of initial response and recovery, and afford the
opportunity for the grantee to provide a more thorough and accurate
request to FEMA.
    In the interim final rule, the ``Application procedures'' section
has been changed to ``Procedures for requesting management cost
funding.''
7. Grants Management Oversight
    Since publication of the proposed rule, and in response to
comments, FEMA has decided to implement section 324 of the Stafford Act
as part of the PA and HMGP programs and not as a separate grant
program. Subsequently, this section of the rule has been changed to
``Management cost funding oversight.''
    In the proposed rule, FEMA stated that management cost funds would
need to be expended not later than 6 years from the date of major
disaster or emergency declaration, or by 90 days after grant closeout,
whichever is sooner. The 6 year limit was meant to encourage proper
grant management, which includes timely grant closeout. In response to
comments asking for additional time and after further analysis, FEMA
has changed the 6 year limit to a maximum of 8 years for major disaster
declarations and 2 years for emergency declarations, or 180 days after
the latest performance period date of a non-management cost PA PW or
HMGP project narrative, respectively, for both types of declarations,
whichever is sooner.
8. Declarations Before October 1, 2002
    Since publication of the proposed rule, FEMA has changed the
implementation date of section 324 of the Stafford Act. Subsequently,
Sec.  207.9 of the rule has been changed to ``Declarations before
November 13, 2007.'' This section includes provisions on administrative
and management costs previously described in Sec. Sec.  206.228 and
206.439.
    FEMA received four comments disagreeing with the provision in the
proposed rule that imposed a timeframe on performance periods for
declarations made before implementation of section 324. In the interest
of ensuring responsible grant management practices and moving towards
consistency in the administration of management and administrative
costs provided for the affected programs, FEMA believes this provision,
which allows a reasonable amount of time for grantees to comply, is an
appropriate and necessary provision.
9. Review of Management Cost Rates
    One State commented that it did not believe the ``solution to
controlling expenses is to adopt the flat rate percentage as published
and then go back to the drawing board after this rule is in effect''
and suggested deleting the periodic review and documentation
requirements. FEMA did not make this change, as the Stafford Act
requires the review and documentation. Further, section 324 of the
Stafford Act is not a ``solution to controlling expenses,'' but rather
a simplification of the multiple methods currently used to contribute
to grantee and subgrantee costs.

III. Regulatory Requirements

Administrative Procedure Act

    Even though an NPRM has been published, FEMA is publishing this
interim final rule rather than proceeding

to a final rule to provide the public with an additional opportunity to
comment. FEMA has opted to provide this additional opportunity to
comment although the changes to the regulations made in this interim
rule are a logical outgrowth of the proposed regulations published in
the NPRM and additional opportunity for public comment is not
mandatory. As previously addressed in this preamble, the substantive
changes to this regulation are as follows:
     Because of comments that raised concerns of increased
costs and workload due to the creation of a new grant process, FEMA
revised the regulations to incorporate management cost funding into the
existing PA and HMGP programs.
     FEMA received comments from the public concerned that
providing a combined set amount in management cost funds that would be
available for both PA and HMGP would be impractical and create
additional burden to program managers. Because of these comments, FEMA
has revised the regulations to provide three management cost rates: PA
pursuant to major disaster declarations; HMGP pursuant to major
disaster declarations; and PA pursuant to emergency declarations. Due
to the availability of better data provided by the use of the National
Emergency Management Information System (NEMIS), in this interim rule
FEMA updated the management cost rate calculations for those three
rates.
     FEMA received comments that providing management cost
funds to grantees for both grantee and subgrantee use could be divisive
unless State plans are in place and accepted prior to declaration. FEMA
agreed and revised the regulation to require States to outline their
plans for subgrantee treatment in the State administrative plans
already required for PA and HMGP.
     The implementation date was changed, as noted in the
preamble to the NPRM.
     In response to comments concerned that locking into a
final amount at 9 months would cause unfair fiscal burdens, FEMA
changed the final lock-in date for management costs to 12 months or
after HMGP lock-in, whichever is later.
     FEMA received several comments about the proposed process
and timing for applying for management cost funding. As a response,
FEMA will not require detailed justifications to support management
cost funding requests until 120 days after the date of declaration to
alleviate the burden on the grantee and afford them the opportunity to
provide a more thorough and accurate request.
     In response to comments asking for additional time to
expend management cost funds, FEMA extended the limit of 6 years from
the date of major disaster or emergency declaration or 90 days after
grant closeout, whichever is sooner, to a maximum of 8 years for major
disaster declarations and 2 years for emergency declarations, or 180
days after the latest performance period date of a non-management cost
PA, PW or HMGP project narrative, respectively, for both types of
declarations, whichever is sooner.
    Further, under 5 U.S.C. 553(b)(B) FEMA finds that good cause exists
for not publishing a Supplemental Notice of Proposed Rulemaking
(SNPRM), because publishing an SNPRM would be contrary to public
interest since immediate action is needed to correct weaknesses in
awarding funds to cover grantee operations associated with the
administration of PA and HMGP grants. As stated earlier in the preamble
to this interim rule, Public Law 106-390, section 202(b)(2), created
section 324 of the Stafford Act which becomes effective when FEMA has
promulgated a management cost rate regulation (this regulation). Until
this regulation is published, management cost funding is provided
pursuant to subsection 406(f) of the Stafford Act, OMB Circular No. A-
87, and part 13.
    In its ``Review of FEMA Policy for Funding Public Assistance
Administrative Costs'' (GC-HQ-06-40) dated April 28, 2006, FEMA was
advised by the Department of Homeland Security Office of Inspector
General (OIG), that it should take immediate action to implement
section 324 of the Stafford Act. This was reiterated in the OIG's
``Review of FEMA Internal Controls for Funding Administrative Cost
under State Management Grants'' memorandum dated January 9, 2007 (OIG-
07-21). This interim rule is intended to establish management cost
rates to replace the administrative allowance and state management
grants and address funding and related control weaknesses immediately,
while continuing to take public comment and, perhaps, further amend the
regulations in light of those comments.
    Pursuant to 5 U.S.C. 553(d), FEMA is making this rule effective 30
days after publication in the Federal Register. FEMA invites further
comment from the public on this interim final rule.

Congressional Review of Agency Rulemaking

    FEMA has sent this interim final rule to the Congress and to the
Government Accountability Office under the Congressional Review of
Agency Rulemaking Act, 5 U.S.C. 801-808. The rule in not a ``major
rule'' within the meaning of that Act and will not result in an annual
effect on the economy of 100,000,000 or more. Moreover, it will not
result in a major increase in costs or prices for consumers, individual
industries, Federal, State, or local government agencies, or geographic
regions. Nor does FEMA expect that it will have ``significant adverse
effects'' on competition, employment, investment, productivity,
innovation, or on the ability of United States-based enterprises to
compete with foreign-based enterprises.

National Environmental Policy Act (NEPA)

    FEMA explained when the proposed rule was published that Sec.
10.8(d)(2)(ii) excludes this rule from the preparation of an
environmental assessment or environmental impact statement, where the
rule relates to actions that qualify for categorical exclusion under
Sec.  10.8(d)(2)(i), such as the provision of funding for management
costs. No commenters disagreed with our determination. FEMA has not
prepared an environmental assessment or environmental impact statement
for this interim final rule.

Paperwork Reduction Act of 1995

    In the proposed rule, FEMA proposed to provide management cost
funding through a new grant program. Because that new grant program
would collect new information from the public, FEMA determined that it
would be subject to the Paperwork Reduction Act (PRA) of 1995, 44
U.S.C. 3501-3520, and obtained Office of Management and Budget (OMB)
approval for Control Number 1660-0063, Management Costs information
collection. As a result of public comments and further analysis, as
discussed elsewhere in the preamble of this interim rule FEMA has
withdrawn its proposal to create a new grant program, and has decided
to implement section 324 of the Stafford Act as part of the already
existing PA and HMGP programs. FEMA submitted an OMB83D form on
September 16, 2005 to discontinue OMB Control Number 1660-0063,
Management Costs information collection; OMB approved the
discontinuance on September 21, 2005. FEMA no longer intends to collect
information with respect to that proposed grant program.
    In this interim rule, FEMA implements section 324 by continuing to
use the same application processes for management costs as it is
currently

using, rather than as a separate grant program. That is, grantees will
continue to apply for PA management cost funding using the Project
Worksheet (PW) and its associated forms, if applicable, as already
approved by OMB. The PW and associated forms for PA management cost
funding are approved under OMB Control Number 1660-017, Public
Assistance Progress Report and Program Forms information collection
which expires on October 31, 2008. HMGP management cost funding would
be provided using the project narrative approved under OMB Control
Number 1660-0076, Hazard Mitigation Grant Program Application and
Reporting information collection which expires May 31, 2010.
    Use of these collections under this interim final rule does not
impose additional burden under those program collections. By allowing
grantees to continue to request management cost funding via the same
processes with which they are familiar, FEMA expects that this rule
will simplify the process and reduce the burden to the public.

Regulatory Flexibility Act

    Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.),
agencies must consider the impact of their rulemakings on ``small
entities'' (small businesses, small organizations and local
governments). When 5 U.S.C. 553 requires an agency to publish a notice
of proposed rulemaking, the Regulatory Flexibility Act requires a
regulatory flexibility analysis for both the proposed rule and the
final rule if the rulemaking could ``have a significant economic impact
on a substantial number of small entities.'' The Act also provides that
if a regulatory flexibility analysis is not required, the agency must
certify in the rulemaking document that the rulemaking will not ``have
a significant economic impact on a substantial number of small
entities.''
    This interim final rule affects grantees that are State
governments, or in certain situations, Indian tribal governments. It
does not impact private sector entities. Further, the result of this
interim final rule will be to reduce the administrative burden on both
grantees and the Federal government by simplifying and clarifying the
application process, grant administration, and reimbursement methods
for management and administration costs by reducing the current three
methods and processes to one. Further, grantees currently make numerous
petitions for payment. Implementation of this interim final rule is
expected to reduce the number of times grantees will need to petition
to receive payment for management costs.
    This interim final rule does not impact the amount of funding
available for management costs, as the percentages for reimbursement
proposed are based on historical average obligations. Although there is
a proposed cap on the amount of management costs that can be provided
per declaration, the interim final rule provides a mechanism for waiver
in extraordinary circumstances.
    Because this interim final rule does not impact the amount of funds
provided to grantees, but simply reduces the administrative burden to
State and Indian tribal government grantees, FEMA certifies that it
will not have a significant economic impact on a substantial number of
small entities.

Executive Order 12866, Regulatory Planning and Review

    Under Executive Order 12866, 58 FR 51735, Oct. 4, 1993, a
significant regulatory action is subject to OMB review and the
requirements of the Executive Order. The Executive Order defines
``significant regulatory action'' as one that is likely to result in a
rule that may:
    (1) Have an annual effect on the economy of 100 million or more, or
may adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local or tribal governments or communities;
    (2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs, or the rights and obligations of
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
    This rule is not a ``significant regulatory action'' under
Executive Order 12866; therefore, OMB has not reviewed it under that
Order. As FEMA stated in the proposed rule, it would not have an annual
effect on the economy of 100 million or more and FEMA knows of no other
conditions that would qualify the rule as a ``significant regulatory
action'' within the definition of section 3(f) of the Executive Order.
    As explained in the Regulatory Flexibility Act section, this
interim final rule does not impact the amount of funding that will be
provided by FEMA for management costs. Rather, the interim final rule
simplifies and clarifies the processing and administration of
management cost funding. The interim final rule will reduce the
administrative burden to both grantees and FEMA by reducing the
multiple methods of reimbursement from three to one. Further, grantees
currently make numerous petitions for payment. Implementation of this
interim final rule will greatly reduce the number of times grantees
will need to petition to receive payment for management costs.
    This interim final rule does not materially alter the budgetary
impact of the Public Assistance and Hazard Mitigation grant programs as
the amount of funding available for management costs under this interim
final rule is based on historical average obligations. Although there
is a proposed cap on the amount of management costs that can be
provided per declaration, the interim final rule provides a mechanism
for waiver in extraordinary circumstances.
    Because this interim final rule simplifies, clarifies, and reduces
the administrative burden to grantees and FEMA, there are no additional
costs due to this regulatory action.

Executive Order 13132, Federalism

    Executive Order 13132 sets forth principles and criteria that
agencies must adhere to in formulating and implementing policies that
have federalism implications, that is, regulations that have
``substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government.'' Federal
agencies must closely examine the statutory authority supporting any
action that would limit the policymaking discretion of the States, and
to the extent practicable, must consult with State and local officials
before implementing any such action.
    FEMA reviewed the proposed rule under Executive Order 13132 and
determined that the rule did not have ``substantial direct effects on
the States'' and therefore did not have the type of federalism
implications contemplated by the Executive Order. Four commenters
disagreed, believing that there would be a shift of power and
responsibilities. FEMA believes that the interim final rule is
consistent with the terms of Executive Order 13132 in that it ``shall
grant the States the maximum administrative discretion possible'' and
``shall encourage States to develop their own policies to achieve
program objectives'' as directed by the Executive Order. The interim
final rule does not significantly affect the rights, roles, and
responsibilities of States, involves no additional preemption of State
law, and does not limit State policymaking discretion.

Executive Order 12898, Environmental Justice

    Under Executive Order 12898, Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations, 59 FR 7629, Feb. 16, 1994, FEMA has undertaken to
incorporate environmental justice into its policies and programs. The
Executive Order requires each Federal agency to conduct its programs,
policies, and activities that substantially affect human health or the
environment in a manner that ensures that those programs, policies, and
activities do not have the effect of excluding persons from
participation in, denying persons the benefits of, or subjecting
persons to discrimination because of their race, color, or national
origin. FEMA stated when it published the proposed rule that no action
it could anticipate under the proposed rule would have a
disproportionately high and adverse human health effect on any segment
of the population. No commenter disagreed with this determination and
accordingly, FEMA reiterates that the requirements of the Executive
Order do not apply to this rule.

Executive Order 13175, Consultation and Coordination With Indian Tribal
Governments

    Under Executive Order 13175, FEMA may not issue a regulation that
is not required by statute, that significantly or uniquely affects the
communities of Indian tribal governments, and that imposes substantial
direct compliance costs on those communities, unless the Federal
Government provides the funds necessary to pay the direct compliance
costs incurred by the tribal government, or FEMA consults with those
governments.
    This rule is required by statute, and, as FEMA stated when the
proposed rule was published, it did not believe that the rule would
significantly and uniquely affect the communities of Indian tribal
governments, or the relationship between the Federal Government and
Indian tribes, or the distribution of power and responsibilities
between the Federal Government and Indian tribes. Moreover, the rule
did not impose substantial direct compliance costs on tribal
governments, nor did it preempt tribal law, impair treaty rights or
limit the self-governing powers of tribal governments. FEMA received no
comments disagreeing with this determination. The interim final rule
will also not significantly and uniquely affect the communities of
Indian tribal governments, or the relationship between the Federal
Government and Indian tribes. Moreover, the rule does not impose
substantial direct compliance costs on tribal governments, nor does it
preempt tribal law, impair treaty rights or limit the self-governing
powers of tribal governments.

List of Subjects

44 CFR Part 206

    Administrative costs, Administrative practice and procedure,
Disaster assistance, Grant programs, Management costs, Reporting and
recordkeeping requirements.

44 CFR Part 207

    Administrative costs, Administrative practice and procedure,
Disaster assistance, Grant programs, Management costs, Reporting and
recordkeeping requirements.

0
For the reasons set forth in the preamble, the Federal Emergency
Management Agency amends 44 CFR chapter I as set forth below:

PART 206--FEDERAL DISASTER ASSISTANCE

0
1. Revise the part heading of 44 CFR part 206 as set forth above:

0
2. The authority citation for part 206 is revised to read as follows:

    Authority: Robert T. Stafford Disaster Relief and Emergency
Assistance Act, 42 U.S.C. 5121 through 5206; Reorganization Plan No.
3 of 1978, 43 FR 41943, 3 CFR, 1978 Comp., p. 329; Homeland Security
Act of 2002, 6 U.S.C. 101; E.O. 12127, 44 FR 19367, 3 CFR, 1979
Comp., p. 376; E.O. 12148, 44 FR 43239, 3 CFR, 1979 Comp., p. 412;
E.O. 13286, 68 FR 10619, 3 CFR, 2003 Comp., p. 166.

0
3. Add new paragraph (b)(1)(iii)(K) to Sec.  206.207 to read as
follows:

Sec.  206.207  Administrative and audit requirements.

* * * * *
    (b) * * *
    (1) * * *
    (iii) * * *
    (K) Determining the reasonable percentage or amount of pass-through
funds for management costs provided under 44 CFR part 207 that the
grantee will make available to subgrantees, and the basis, criteria, or
formula for determining the subgrantee percentage or amount.
* * * * *

0
4. Remove paragraphs (a)(2), (a)(3), and (b); reserve paragraph (b);
redesignate paragraph (a)(4) as paragraph (a)(2) and revise it; and add
new paragraph (a)(3) to Sec.  206.228 to read as follows:

Sec.  206.228  Allowable costs.

* * * * *
    (a) * * *
    (2) Force Account Labor Costs. The straight- or regular-time
salaries and benefits of a subgrantee's permanently employed personnel
are not eligible in calculating the cost of eligible work under
sections 403 and 407 of the Stafford Act, 42 U.S.C. 5170b and 5173. For
the performance of eligible permanent restoration under section 406 of
the Stafford Act, 42 U.S.C. 5172, straight-time salaries and benefits
of a subgrantee's permanently employed personnel are eligible.
    (3) Administrative and management costs for major disasters and
emergencies will be paid in accordance with 44 CFR part 207.
    (b) [Reserved]

0
5. Add new paragraph (b)(4)(xiv) to Sec.  206.437 to read as follows:

Sec.  206.437  State administrative plan.

* * * * *
    (b) * * *
    (4) * * *
    (xiv) Determine the percentage or amount of pass-through funds for
management costs provided under 44 CFR part 207 that the grantee will
make available to subgrantees, and the basis, criteria, or formula for
determining the subgrantee percentage or amount.
* * * * *

0
6. Revise Sec.  206.439 to read as follows:

Sec.  206.439  Allowable costs.

    (a) General requirements for determining allowable costs are
established in 44 CFR 13.22. Exceptions to those requirements as
allowed in 44 CFR 13.4 and 13.6 are explained in paragraph (b) of this
section.
    (b) Administrative and management costs for major disasters will be
paid in accordance with 44 CFR part 207.

0
7. Add part 207 to read as follows:

PART 207--MANAGEMENT COSTS

Sec.
207.1 Purpose.
207.2 Definitions.
207.3 Applicability and eligibility.
207.4 Responsibilities.
207.5 Determination of management cost funding.
207.6 Use of funds.
207.7 Procedures for requesting management cost funding.
207.8 Management cost funding oversight.
207.9 Declarations before November 13, 2007.
207.10 Review of management cost rates.

    Authority: Robert T. Stafford Disaster Relief and Emergency
Assistance Act, 42 U.S.C. 5121 through 5206; Reorganization Plan No.
3 of 1978, 43 FR 41943, 3 CFR, 1978

Comp., p. 329; Homeland Security Act of 2002, 6 U.S.C. 101; E.O.
12127, 44 FR 19367, 3 CFR, 1979 Comp., p. 376; E.O. 12148, 44 FR
43239, 3 CFR, 1979 Comp., p. 412; E.O. 13286, 68 FR 10619, 3 CFR,
2003 Comp., p. 166.

Sec.  207.1  Purpose.

    The purpose of this part is to implement section 324 of the Robert
T. Stafford Disaster Relief and Emergency Assistance Act (Stafford
Act), 42 U.S.C. 5165b.

Sec.  207.2  Definitions.

    Cap means the maximum dollar amount that may be provided to a
grantee for management cost funds for a single declaration pursuant to
Sec.  207.5(c) of this part.
    Chief Financial Officer (CFO) is the Chief Financial Officer of
FEMA, or his/her designated representative.
    Cognizant Agency means the Federal agency responsible for
reviewing, negotiating, and approving cost allocation plans or indirect
cost proposals developed on behalf of all Federal agencies. The Office
of Management and Budget (OMB) publishes a listing of cognizant
agencies.
    Grant means an award of financial assistance making payment in
cash, property, or in kind for a specified purpose, by the Federal
Government to an eligible grantee.
    Grantee for purposes of this part means the government to which a
Public Assistance (PA) or Hazard Mitigation Grant Program (HMGP) grant
is awarded that is accountable for the use of the funds provided. The
grantee is the entire legal entity even if only a particular component
of the entity is designated in the grant award document. Generally, the
State is the grantee. However, after a declaration, an Indian tribal
government may choose to be a grantee, or may act as a subgrantee under
the State for purposes of administering a grant under PA, HMGP, or
both. When an Indian tribal government has chosen to act as grantee, it
will also assume the responsibilities of a ``grantee'' under this part
for the purposes of administering management cost funding.
    Hazard Mitigation Grant Program (HMGP) means the program
implemented at part 206, subpart N of this chapter.
    HMGP lock-in ceiling means the level of HMGP funding available to a
grantee for a particular disaster declaration.
    HMGP project narrative refers to the request submitted for HMGP
funding.
    Indian tribal government is a Federally recognized governing body
of an Indian or Alaska Native tribe, band, nation, pueblo, village, or
community that the Secretary of Interior acknowledges to exist as an
Indian tribe under the Federally Recognized Tribe List Act of 1994, 25
U.S.C. 479a. This does not include Alaska Native corporations, the
ownership of which is vested in private individuals.
    Indirect Costs means costs that are incurred by a grantee for a
common or joint purpose benefiting more than one cost objective that
are not readily assignable to the cost objectives specifically
benefited.
    Lock-in means the amount of management cost funds available to a
grantee for PA or HMGP, respectively, for a particular major disaster
or emergency, as FEMA determines at 30 days, 6 months, and 12 months or
upon calculation of the final HMGP lock-in ceiling, whichever is later.
    Management Costs means any indirect costs, administrative expenses,
and any other expenses not directly chargeable to a specific project
that are reasonably incurred by a grantee or subgrantee in
administering and managing a PA or HMGP grant award. For HMGP,
management cost funding is provided outside of Federal assistance
limits defined at Sec.  206.432(b) of this chapter.
    Project refers to a project as defined at Sec.  206.201(i) of this
chapter for PA or eligible activities as defined at Sec.  206.434(d) of
this chapter for HMGP.
    Project Worksheet (PW) refers to FEMA Form 90-91, or any successor
form, on which the scope of work and cost estimate for a logical
grouping of work required under the PA program as a result of a
declared major disaster or emergency is documented.
    Public Assistance (PA) means the program implemented at part 206,
subparts G and H of this chapter.
    Regional Administrator is the head of a FEMA regional office, or
his/her designated representative, appointed under section 507 of the
Post-Katrina Emergency Management Reform Act of 2006 (Pub. L. 109-295).
The term also refers to Regional Directors as discussed in Part 2 of
this chapter.
    Stafford Act refers to the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, as amended (42 U.S.C. 5121-5206).
    State is any State of the United States, the District of Columbia,
Puerto Rico, the Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands.
    Subgrantee means the government or other legal entity to which a
grantee awards a subgrant and which is accountable to the grantee for
the use of the funds provided. Subgrantees can be a State agency, local
government, private nonprofit organization, or Indian tribal
government.

Sec.  207.3  Applicability and eligibility.

    Only PA and HMGP grantees with PA and HMGP grants awarded pursuant
to major disasters and emergencies declared by the President on or
after November 13, 2007 are eligible to apply to FEMA for management
cost funding under this part.

Sec.  207.4  Responsibilities.

    (a) General. This section identifies key responsibilities of FEMA
and grantees in carrying out section 324 of the Stafford Act, 42 U.S.C.
5165b. These responsibilities are unique to the administration of this
part and are in addition to common Federal Government requirements of
grantees and subgrantees, consistent with OMB circulars and other
applicable requirements, such as part 13 of this chapter.
    (b) FEMA. FEMA is responsible for:
    (1) Determining the lock-in amount for management costs in
accordance with Sec.  207.5.
    (2) Obligating funds for management costs in accordance with Sec.
207.5(b).
    (3) Deobligating funds provided for management costs not disbursed
in accordance with Sec.  207.8(b).
    (4) Reviewing management cost rates not later than 3 years after
this rule is in effect and periodically thereafter.
    (c) Grantee. The grantee must:
    (1) Administer management cost funds to ensure that PA and HMGP, as
applicable, are properly implemented and closed out in accordance with
program timeframes and guidance.
    (2) Determine the reasonable amount or percentage of management
cost funding to be passed through to subgrantees for contributions to
their costs for administering PA and HMGP projects and ensure that it
provides such funds to subgrantees.
    (3) Address procedures for subgrantee management costs amount or
percentage determination, pass through, closeout, and audit in the
State administrative plan required in Sec.  206.207(b) of this chapter
for PA and Sec.  206.437 of this chapter for HMGP.

Sec.  207.5  Determination of management cost funding.

    (a) General. This section describes how FEMA determines the amount
of funds that it will contribute under this part for management costs
for PA and/or HMGP for a particular major disaster or emergency.
    (b) Lock-in. FEMA will determine the amount of funds that it will
make

available for management costs by a lock-in, which will act as a
ceiling for funds available to a grantee, including its subgrantees.
    (1) Not earlier than 30 days and not later than 35 days from the
date of declaration, FEMA will provide the grantee preliminary lock-in
amount(s) for management costs based on the projections at that time of
the Federal share for financial assistance for PA and HMGP, as
applicable. In accordance with Sec.  207.7(c), FEMA will obligate 25
percent of the estimated lock-in amount(s) to the grantee.
    (2) For planning purposes, FEMA will revise the lock-in amount(s)
at 6 months after the date of the declaration. In accordance with Sec.
207.7(e), FEMA may obligate interim amount(s) to the grantee.
    (3) FEMA will determine the final lock-in amount(s) 12 months after
date of declaration or after determination of the final HMGP lock-in
ceiling, whichever is later. FEMA will obligate the remainder of the
lock-in amount(s) to the grantee in accordance with Sec.  207.7(f).
    (4) Rates. (i) For major disaster declarations, FEMA will determine
the lock-in for PA based on a flat percentage rate of the Federal share
of projected eligible program costs for financial assistance pursuant
to sections 403, 406, and 407 of the Stafford Act, 42 U.S.C. 5170b,
5172, and 5173, respectively, but not including direct Federal
assistance. For major disaster declarations on or after November 13,
2007, the PA rate will be 3.34 percent.
    (ii) For major disaster declarations, FEMA will determine the lock-
in for HMGP based on a flat percentage rate of the Federal share of
projected eligible program costs under section 404 of the Stafford Act,
42 U.S.C. 5170c. For major disaster declarations on or after November
13, 2007, the HMGP rate will be 4.89 percent.
    (iii) For emergency declarations, FEMA will determine the lock-in
for PA based on a flat percentage rate of the Federal share of
projected eligible program costs for financial assistance (sections 502
and 503 of the Stafford Act, 42 U.S.C. 5192 and 5193, respectively),
but not including direct Federal assistance. For emergency declarations
on or after November 13, 2007 the rate will be 3.90 percent.
    (c) The dollar amount provided to a grantee for management cost
funds for a single declaration will not exceed 20,000,000, except as
described in paragraphs (d) and (e) of this section.
    (d) The grantee must justify in writing to the Regional
Administrator any requests to change the amount of the lock-in or the
cap, extend the time period before lock-in, or request an interim
obligation of funding at the time of the 6-month lock-in adjustment.
The Regional Administrator will recommend to the Chief Financial
Officer whether to approve the extension, change, or interim
obligation. Extensions, changes to the lock-in, or interim obligations
will not be made without the approval of the Chief Financial Officer.
    (e) The Chief Financial Officer may change the amount of the lock-
in or the cap, or extend the time before lock-in, if the Chief
Financial Officer determines that the projections used to determine the
lock-in were inaccurate to such a degree that the change to the lock-in
would be material, or for other reasons in his or her discretion that
may reasonably warrant such changes. The Chief Financial Officer will
not make such changes without consultation with the grantee and the
Regional Administrator.

Sec.  207.6  Use of funds.

    (a) The grantee or subgrantee must use management cost funds
provided under this part in accordance with Sec.  13.22 of this chapter
and only for costs related to administration of PA or HMGP,
respectively. All charges must be properly documented in accordance
with Sec.  207.8(f).
    (b) Indirect costs may not be charged directly to a project or
reimbursed separately, but rather are considered to be eligible
management costs under this part.
    (c) Activities and costs that can be directly charged to a project
with proper documentation are not eligible for funding under this part.

Sec.  207.7  Procedures for requesting management cost funding.

    (a) General. This section describes the procedures to be used by
the grantee in requesting management cost funding.
    (b) State Administrative Plan Requirements. State administrative
plans, as required in Sec.  206.207(b) of this chapter for PA and Sec.
206.437 of this chapter for HMGP, must be amended to include procedures
for subgrantee management costs amount or percentage determination,
pass through, closeout, and audit, as required by Sec.  207.4(c)(3)
before management cost funds will be provided under this part.
    (c) Initial Funding Request Submission. Upon notification of the
preliminary lock-in amount(s) for management costs based on the Federal
share of the projected eligible program costs for financial assistance
at that time for PA and HMGP, as applicable, the grantee must submit
its initial management cost funding request to the Regional
Administrator. FEMA must receive the initial funding request before it
will provide any management cost funds under this part.
    (1) For PA management costs, funding requests shall be submitted
using a PW.
    (2) For HMGP management costs, funding requests shall be submitted
using an HMGP project narrative.
    (d) Request Documentation. The grantee is required to submit, no
later than 120 days after the date of declaration, documentation to
support costs and activities for which the projected lock-in for
management cost funding will be used. In extraordinary circumstances,
FEMA may approve a request by a grantee to submit support documentation
after 120 days. FEMA will work with the grantee to approve or reject
the request within 30 days of receipt of the request. If the request is
rejected, the grantee will have 30 days to resubmit it for
reconsideration and approval. FEMA will not obligate the balance of the
management costs lock-in pursuant to a final funding request as
described in paragraph (f) of this section or any interim amounts as
allowed under paragraph (e) of this section unless the grantee's
documentation is approved. The documentation must include:
    (1) A description of activities, personnel requirements, and other
costs for which the grantee will use management cost funding provided
under this part;
    (2) The grantee's plan for expending and monitoring the funds
provided under this part and ensuring sufficient funds are budgeted for
grant closeout; and
    (3) An estimate of the percentage or amount of pass-through funds
for management costs provided under this part that the grantee will
make available to subgrantees, and the basis, criteria, or formula for
determining the subgrantee percentage or amount (e.g., number of
projects, complexity of projects, X percent to any subgrantee).
    (e) Interim Funding Request. If the grantee can justify a bona fide
need for an additional obligation of management cost funds at 6 months,
the grantee may submit a request to the Regional Administrator. Any
interim obligations by FEMA must be approved by the Chief Financial
Officer and will not exceed an amount equal to 10 percent of the 6-
month lock-in amount, except in extraordinary circumstances.
    (f) Final Funding Request. Upon notification of the final lock-in
amount(s), the grantee must submit a final management cost funding
request to the Regional Administrator. Any

necessary revisions to supporting documentation must be attached to the
final funding request.

Sec.  207.8  Management cost funding oversight.

    (a) General. The grantee has primary responsibility for grants
management activities and accountability of funds provided for
management costs as required by part 13 of this chapter, especially
Sec. Sec.  13.20 and 13.36. The grantee is responsible for ensuring
that subgrantees meet all program and administrative requirements.
    (b) Period of availability. (1) For major disaster declarations,
the grantee may expend management cost funds for allowable costs for a
maximum of 8 years from the date of the major disaster declaration or
180 days after the latest performance period date of a non-management
cost PA PW or HMGP project narrative, respectively, whichever is
sooner.
    (2) For emergency declarations, the grantee may expend management
cost funds for allowable costs for a maximum of 2 years from the date
of the emergency declaration or 180 days after the latest performance
period of a non-management cost PA PW, whichever is sooner.
    (3) The period of availability may be extended only at the written
request of the grantee, with the recommendation of the Regional
Administrator, and with the approval of the Chief Financial Officer.
The grantee must include a justification in its request for an
extension, and must demonstrate that there is work in progress that can
be completed within the extended period of availability. In no case
will an extended period of availability allow more than 180 days after
the expiration of any performance period extensions granted under PA or
HMGP for project completion. FEMA will deobligate any funds not
liquidated by the grantee in accordance with Sec.  13.23 of this
chapter.
    (c) Reporting requirements. The grantee must provide quarterly
progress reports on management cost funds to the Regional Administrator
as required by the FEMA-State Agreement.
    (d) Closeout. The grantee has primary responsibility for the
closeout tasks associated with both the program and subgrantee
requirements. Complying with each program's performance period
requirement, the grantee must conduct final inspections for projects,
reconcile subgrantee expenditures, resolve negative audit findings,
obtain final reports from subgrantees and reconcile the closeout
activities of subgrantees with PA and HMGP grant awards.
    (e) Audit requirements. Uniform audit requirements in Sec.  13.26
of this chapter apply to all assistance provided under this part.
    (f) Document Retention. In compliance with State law and procedures
and with Sec.  13.42 of this chapter, grantees must retain records,
including source documentation to support expenditures/costs incurred
for management costs, for 3 years from the date of submission of the
final Financial Status Report to FEMA that is required for PA and HMGP.
The grantee is responsible for resolving questioned costs that may
result from audit findings during the 3-year-record-retention period
and returning any disallowed costs from ineligible activities.

Sec.  207.9  Declarations before November 13, 2007.

    (a) General. This section describes how FEMA provides
administrative and management cost funding for PA and HMGP for major
disasters or emergencies declared before November 13, 2007.
    (b) Eligible direct costs. Eligible direct costs to complete
approved activities are governed by part 13 of this chapter. The
eligible direct costs for administration and management of the program
are divided into two categories as follows:
    (1) Grantee. (i) Statutory administrative costs. FEMA may provide
funds to the grantee to cover the extraordinary costs incurred in
preparing project worksheets or applications, final inspection reports,
quarterly reports, final audits, and related field inspections by State
employees, including overtime pay and per diem and travel expenses, but
not including regular time for such employees. FEMA will base the funds
on the following percentages of the total amount of assistance provided
(Federal share) for all subgrantees in the State under sections 403,
404, 406, 407, 502, and 503 of the Stafford Act (42 U.S.C. 5170b,
5170c, 5172, 5173, 5192, and 5193, respectively):
    (A) For the first 100,000 of total assistance provided (Federal
share), 3 percent of such assistance.
    (B) For the next 900,000, 2 percent of such assistance.
    (C) For the next 4,000,000, 1 percent of such assistance.
    (D) For assistance over $5,000,000, one-half of 1 percent of such
assistance.
    (ii) State management administrative costs. Except for the items
listed in paragraph (b)(1)(i) of this section, other administrative
costs will be paid in accordance with Sec.  13.22 of this chapter. The
grantee and FEMA will share such costs under the cost share provisions
of applicable PA and HMGP regulations.
    (2) Subgrantee. The grantee may provide funds to the subgrantee to
cover necessary costs of requesting, obtaining, and administering
Federal disaster assistance subgrants, based on the following
percentages of net eligible costs under sections 403, 404, 406, 407,
502, and 503 of the Stafford Act (42 U.S.C. 5170b, 5170c, 5172, 5173,
5192, and 5193, respectively), for an individual applicant (applicants
in this context include State agencies):
    (i) For the first $100,000 of net eligible costs, 3 percent of such
costs.
    (ii) For the next $900,000, 2 percent of such costs.
    (iii) For the next $4,000,000, 1 percent of such costs.
    (iv) For those costs over $5,000,000, one-half of 1 percent of such
costs.
    (c) Eligible indirect costs: (1) Grantee. Indirect costs of
administering the disaster program are eligible in accordance with the
provisions of part 13 of this chapter and OMB Circular No. A-87, if the
grantee provides FEMA with a current Indirect Cost Rate Agreement
approved by its Cognizant Agency.
    (2) Subgrantee. No indirect costs of a subgrantee are separately
eligible because the percentage allowance in paragraph (b)(2) of this
section covers necessary costs of requesting, obtaining and
administering Federal assistance.
    (d) Availability.
    (1) For major disaster declarations, FEMA will reimburse grantee
eligible costs as described in this section at (b)(1)(ii) and (c)(1)
for a maximum of 8 years from the date of the major disaster
declaration or 180 days after the latest performance period date of a
non-management cost PA PW or predecessor form or HMGP project
narrative, respectively, whichever is sooner.
    (2) For emergency declarations, FEMA will reimburse grantee
eligible costs as described in this section at (b)(1)(ii) and (c)(1)
for a maximum of 2 years from the date of the emergency declaration or
180 days after the latest performance period of a non-management cost
PA PW or predecessor form, whichever is sooner.
    (3) The reimbursement of grantee eligible costs as described in
this section at (b)(1)(ii) and (c)(1) may be provided by FEMA after the
periods of availability described in this section only at the written
request of the grantee, with the recommendation of the Regional
Administrator, and with the approval of the Chief Financial Officer.
The grantee must include a justification in its request for further
reimbursement, and must demonstrate that there is work in progress that
can be completed

within the extended period of reimbursement. In no case will
reimbursement be provided after 180 days after the expiration of any
performance period extensions granted under PA or HMGP for project
completion.

Sec.  207.10  Review of management cost rates.

    (a) FEMA will review management cost rates not later than 3 years
after this rule is in effect and periodically thereafter.
    (b) In order for FEMA to review the management cost rates
established, and in accordance with part 13 of this chapter, the
grantee and subgrantee must document all costs expended for management
costs (including cost overruns). After review of this documentation,
FEMA will determine whether the established management cost rates are
adequate for the administration and closeout of the PA and HMGP
programs.

    Dated: October 4, 2007.
R. David Paulison,
Administrator, Federal Emergency Management Agency.
 [FR Doc. E7-20035 Filed 10-10-07; 8:45 am]

BILLING CODE 9110-49-P


[Federal Register Volume 82, Number 42 (Monday, March 6, 2017)]
[Notices]
[Pages 12584-12585]
[FR Doc No: 2017-04287]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER17-1037-000]

Innovative Solar 37, LLC; Supplemental Notice That Initial
Market-Based Rate Filing Includes Request for Blanket Section 204
Authorization

    This is a supplemental notice in the above-referenced proceeding of
Innovative Solar 37, LLC's application for market-based rate authority,
with an accompanying rate tariff, noting that such application includes
a request for blanket authorization, under 18 CFR part 34, of future
issuances of securities and assumptions of liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is March 20, 2017.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling

link to log on and submit the intervention or protests.
    Persons unable to file electronically should submit an original and
5 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426.
    The filings in the above-referenced proceeding are accessible in
the Commission's eLibrary system by clicking on the appropriate link in
the above list. They are also available for electronic review in the
Commission's Public Reference Room in Washington, DC. There is an
eSubscription link on the Web site that enables subscribers to receive
email notification when a document is added to a subscribed docket(s).
For assistance with any FERC Online service, please email
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.

    Dated: February 28, 2017.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2017-04287 Filed 3-3-17; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 80, Number 103 (Friday, May 29, 2015)]
[Notices]
[Page 30689]
[FR Doc No: 2015-12977]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2014-N-1081]

Agency Information Collection Activities; Announcement of Office
of Management and Budget Approval; Guidance for Industry on
Postmarketing Adverse Event Reporting for Medical Products and Dietary
Supplements During an Influenza Pandemic

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing that a
collection of information entitled, ``Guidance for Industry on
Postmarketing Adverse Event Reporting for Medical Products and Dietary
Supplements During an Influenza Pandemic'' has been approved by the
Office of Management and Budget (OMB) under the Paperwork Reduction Act
of 1995.

FOR FURTHER INFORMATION CONTACT: FDA PRA Staff, Office of Operations,
Food and Drug Administration, 8455 Colesville Rd., COLE-14526, Silver
Spring, MD 20993-0002<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: On January 8, 2015, the Agency submitted a
proposed collection of information entitled, ``Guidance for Industry on
Postmarketing Adverse Event Reporting for Medical Products and Dietary
Supplements During an Influenza Pandemic'' to OMB for review and
clearance under 44 U.S.C. 3507. An Agency may not conduct or sponsor,
and a person is not required to respond to, a collection of information
unless it displays a currently valid OMB control number. OMB has now
approved the information collection and has assigned OMB control number
0910-0701. The approval expires on April 30, 2018. A copy of the
supporting statement for this information collection is available on
the Internet at http://www.reginfo.gov/public/do/PRAMain.

    Dated: May 22, 2015.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2015-12977 Filed 5-28-15; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register Volume 83, Number 149 (Thursday, August 2, 2018)]
[Notices]
[Pages 37867-37870]
[FR Doc No: 2018-16530]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83731; File No. SR-GEMX-2018-26]

Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Codify the
Protocol Definitions That Members Use To Enter Quotes and Orders

July 27, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 16, 2018, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to codify the definitions of the protocols
that Members can use to enter quotes and orders on the Exchange.
    The text of the proposed rule change is available on the Exchange's
website at http://nasdaqgemx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to codify the
definitions of the protocols that Members use to enter quotes and
orders on the Exchange, specifically, the Specialized Quote Feed
(``SQF''), Ouch to Trade Options (``OTTO''), Financial Information
eXchange (``FIX''), and Nasdaq Precise (``Precise''). On April 27,
2017, the Exchange filed a proposed rule change that established the
ports that Members use to connect to the Exchange, including ports used
for quote and order entry--i.e., SQF, OTTO and FIX.\3\ The Exchange has
also filed proposed rule changes that briefly describe the availability
of Precise, which is the Exchange's proprietary front-end interface
used by Electronic Access Members (``EAMs'') and their Sponsored
Customers \4\ to send orders to the

Exchange and perform other related functions.\5\ The protocols used by
Members to submit quotes and orders play an important role in the
operation of the trading system as critical Exchange functionality used
by Members to transact in options is offered through these protocols.
The Exchange therefore believes that codifying definitions of these
protocols in its rules will increase transparency around its
operations.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 80649 (May 10,
2017), 82 FR 22595 (May 16, 2017) (SR-GEMX-2017-07).
    \4\ A ``Sponsored Customer'' is a non-member of the Exchange
that trades under a sponsoring member's execution and clearing
identity pursuant to a sponsorship arrangement between such non-
member and sponsoring member, as set forth in Supplementary Material
to Rule 706. Market makers must connect to the Exchange via SQF,
which is the Exchange's quoting protocol, and are therefore not
eligible to use Precise.
    \5\ See Securities Exchange Act Release No. 81109 (July 10,
2017), 82 FR 32594 (July 14, 2017) (SR-GEMX-2017-28) (proposed rule
change regarding how Immediate-or-Cancel Orders will be handled);
and Securities Exchange Act Release No. 81970 (October 27, 2017), 82
FR 50910 (November 2, 2017) (SR-GEMX-2017-50) (proposed rule change
related to the Kill Switch risk protection).
---------------------------------------------------------------------------

    As it relates to FIX, OTTO, and SQF, the proposed language is
substantially similar to the language included in SR-GEMX-2017-07 with
changes to more clearly and accurately reflect the certain information
included on each protocol, such as by separating out different
categories of messages (e.g., auction orders, auction notifications,
and auction responses). Furthermore, the proposed definitions will be
harmonized where appropriate with definitions to be included in the
rules of the Exchange's affiliated options markets, including by using
consistent terms to define the buckets of information transmitted, or
the features available, on each protocol.\6\ Although the Exchange is
changing how it categorizes various features included on FIX, OTTO, and
SQF as part of its harmonization effort, the list of features included
in the proposed definitions are intended to be exhaustive with respect
to the buckets of information provided on each protocol. The Exchange
also seeks to memorialize Precise to reflect the specific categories of
features that are available on the Precise front-end today (e.g., order
and execution management, market data, and risk management). Overall,
the Exchange believes that the proposed changes will allow Members to
more easily understand what information is available on which protocol.
---------------------------------------------------------------------------

    \6\ The Exchange's affiliates--i.e., Nasdaq ISE, LLC (``ISE''),
Nasdaq MRX, LLC (``MRX''), Nasdaq PHLX LLC (``Phlx''), Nasdaq
Options Market (``NOM''), and Nasdaq BX, LLC (``BX'')--intend to
file similar rule changes as part of this exercise.
---------------------------------------------------------------------------

    As proposed, Supplementary Material .03 to Rule 715 (i.e., Types of
Orders) will provide that the Exchange offers Members the following
protocols for entering orders and quotes respectively:

A. Financial Information eXchange Ports

    When the Exchange initially filed to adopt order and quote entry
protocols, it described the FIX protocol as follows: ``FIX is an
interface that allows market participants to connect and send orders
and auction orders into the Exchange. Data includes the following: (1)
Options Symbol Directory Messages; (2) System Event Messages (e.g.,
start of messages, start of system hours, start of quoting, start of
opening); (3) Option Trading Action Messages (e.g., halts, resumes);
(4) Execution Messages; (5) Order Messages (order messages, risk
protection triggers or purge notifications).''
    The Exchange now proposes to codify the following definition of FIX
in its rulebook: ``Financial Information eXchange'' or ``FIX'' is an
interface that allows Members and their Sponsored Customers to connect,
send, and receive messages related to orders and auction orders to the
Exchange. Features include the following: (1) Execution messages; (2)
order messages; (3) risk protection triggers and cancel notifications;
and (4) post trade allocation messages.

B. Ouch To Trade Options Ports

    When the Exchange initially filed to adopt order and quote entry
protocols, it described the OTTO protocol as follows: ``OTTO is an
interface that allows market participants to connect and send orders,
auction orders and auction responses into the Exchange. Data includes
the following: (1) Options Auction Notifications (e.g., Flash, PIM,
Solicitation and Facilitation or other information); (2) Options Symbol
Directory Messages; (3) System Event Messages (e.g., start of messages,
start of system hours, start of quoting, start of opening); (5) Option
Trading Action Messages (e.g., halts, resumes); (6) Execution Messages;
(7) Order Messages (order messages, risk protection triggers or purge
notifications).''
    The Exchange now proposes to codify the following definition of
OTTO in its rulebook: ``Ouch to Trade Options'' or ``OTTO'' is an
interface that allows Members and their Sponsored Customers to connect,
send, and receive messages related to orders, auction orders, and
auction responses to the Exchange. Features include the following: (1)
Options symbol directory messages (e.g., underlying instruments); (2)
system event messages (e.g., start of trading hours messages and start
of opening); (3) trading action messages (e.g., halts and resumes); (4)
execution messages; (5) order messages; (6) risk protection triggers
and cancel notifications; (7) auction notifications; (8) auction
responses; and (9) post trade allocation messages.

C. Specialized Quote Feed Ports

    When the Exchange initially filed to adopt order and quote entry
protocols, it described the SQF protocol as follows: ``SQF is an
interface that allows market makers to connect and send quotes, sweeps
and auction responses into the Exchange. Data includes the following:
(1) Options Auction Notifications (e.g., opening imbalance, Flash, PIM,
Solicitation and Facilitation or other information); (2) Options Symbol
Directory Messages; (3) System Event Messages (e.g., start of messages,
start of system hours, start of quoting, start of opening); (4) Option
Trading Action Messages (e.g., halts, resumes); (5) Execution Messages;
(6) Quote Messages (quote/sweep messages, risk protection triggers or
purge notifications).''
    The Exchange now proposes to codify the following definition of SQF
in its rulebook: ``Specialized Quote Feed'' or ``SQF'' is an interface
that allows market makers to connect, send, and receive messages
related to quotes, Immediate-or-Cancel Orders, and auction responses to
the Exchange. Features include the following: (1) Options symbol
directory messages (e.g., underlying instruments); (2) system event
messages (e.g., start of trading hours messages and start of opening);
(3) trading action messages (e.g., halts and resumes); (4) execution
messages; (5) quote messages; (6) Immediate-or-Cancel Order messages;
(7) risk protection triggers and purge notifications; (8) opening
imbalance messages; (9) auction notifications; and (10) auction
responses. The SQF Purge Interface only receives and notifies of purge
requests from the market maker.\7\
---------------------------------------------------------------------------

    \7\ All of the notification messages available on SQF ports as
described above (i.e., options symbol directory messages, system
event messages, trading action messages, etc.) are configurable in
that market makers can select the specific types of notifications
they wish to receive on their SQF ports. As such, SQF Purge
Interface ports are a subpart of SQF ports that have been configured
to only receive and notify of purge requests.
---------------------------------------------------------------------------

D. Nasdaq Precise

    ``Nasdaq Precise'' or ``Precise'' is a front-end interface that
allows Electronic Access Members and their Sponsored Customers to send
orders to the Exchange and perform other related functions. Features
include the following: (1) Order and execution management: Enter,
modify, and cancel orders on the Exchange, and manage executions (e.g.,
parent/child orders, inactive orders, and post-trade allocations); (2)
market data: Access to real-time market data (e.g., NBBO and

Exchange BBO); (3) risk management: set customizable risk parameters
(e.g., kill switch); and (4) book keeping and reporting: comprehensive
audit trail of orders and trades (e.g., order history and done away
trade reports).
    Precise is a software application that is offered by the Exchange
to EAMs and their Sponsored Customers. Use of Precise is completely
voluntary. The Exchange makes Precise available to EAMs and their
Sponsored Customers as a convenience for entering and managing orders,
but the protocol is not an exclusive means for any user to send orders
to GEMX. Precise is merely a front-end interface to the Exchange's
existing trading system, and is designed as an alternative to the
Exchange's other protocols (i.e., FIX, OTTO, and SQF) for the sending
of orders to GEMX. Precise is also an alternative to similar front-end
order and execution management systems currently offered by other
technology providers as well as other exchanges.\8\
---------------------------------------------------------------------------

    \8\ For example, Cboe Exchange, Inc. currently offers a similar
front-end order and execution management system called PULSe\SM\
that allows users to send orders to Cboe Options Exchange, C2
Options, Cboe Futures Exchange, and other U.S. options and stock
exchanges. See https://www.cboe.org/hybrid/pulsesalessheet.pdf.
---------------------------------------------------------------------------

    Precise provides users with access to GEMX's regular order book.
The protocol offers order and execution features that allow users to
send, modify, and cancel their orders, and manage executions. For
example, the protocol offers users the capability to stage larger
orders and divide them into smaller orders for execution (i.e., parent/
child orders), or stage multiple orders to send for execution at a
later time (i.e., inactive orders). Precise also offers post trade
allocation, including the capability for users to directly adjust
clearing information on the front-end protocol. Precise users can also
access and display real-time market data such as the National Best Bid
and Offer (``NBBO'') and the Exchange Best Bid and Offer (``Exchange
BBO'').
    Precise also provides risk management capabilities that allow users
to set customizable risk parameters.\9\ For example, Precise supports
the kill switch risk protection feature, which is an optional tool that
enables members to initiate a message(s) to the Exchange's trading
system to promptly cancel orders and restrict entry of new orders until
re-entry has been enabled.\10\ Lastly, Precise provides a comprehensive
audit trail of orders and trades through its book keeping and reporting
features, including order history reports and done away trade
reports.\11\
---------------------------------------------------------------------------

    \9\ The Exchange is characterizing the risk protections on
Precise under a broader category of risk management compared to the
risk protection categories on the other protocols because Precise
also supports administrator capability for accessing and setting
risk parameters for multiple users within a member firm.
    \10\ See Rule 711(d). Precise is able to send a message to the
Exchange to initiate the kill switch through Precise.
    \11\ Done away trade reports allow Precise users to record
orders and executions, including executions on a different venue
than the Exchange.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Securities Exchange Act of 1934 (the
``Act''),\12\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\13\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism for a free and open market and a national
market system, and, in general, to protect investors and the public
interest.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is consistent
with the protection of investors and the public interest as it codifies
the protocols used to connect to the Exchange's trading system. As
discussed above, the Exchange previously filed to establish FIX, OTTO,
and SQF in SR-GEMX-2017-07. These protocols will now be codified in the
Exchange's rulebook. In addition, the Exchange has briefly described
Precise in various proposed rule changes filed with the Commission. In
the interest of transparency, the Exchange has included a more fulsome
description of the functionalities offered via Precise in this proposed
rule change, and is codifying language in its rules that would describe
this protocol.
    While no functional changes to the protocols are proposed in this
filing, the Exchange believes that including a description of the
protocols in its rulebook will benefit Members by increasing
transparency around the operation of the Exchange. Furthermore, the
proposed definitions being included in the rulebook will more clearly
and accurately reflect the information included on the protocols, and
will be harmonized with language to be included in the rules of its
affiliated exchanges to the extent that the protocols operate in the
same manner. The protocols described in this filing provide a range of
important features to Members, including the ability to submit quotes
and orders, and perform other functions necessary to manage trading on
the Exchange. The Exchange believes codifying the quote and order entry
protocols will increase transparency to the Members that use these
protocols to connect to the Exchange.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\14\ the Exchange
does not believe that the proposed rule change will impose any burden
on intermarket or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As explained
above, the Exchange is codifying the quote and order entry protocols
that Members use to connect to the Exchange's trading system. The
Exchange does not believe that codifying these protocols in the
rulebook will have any competitive impact. FIX, OTTO, and SQF were
established in SR-GEMX-2017-07, and are already available to Members,
who use these protocols to connect and manage their trading activity on
the Exchange. Adding rule language that describes these Exchange
offerings will increase transparency around the operation of the
Exchange without having any impact on intermarket or intramarket
competition. Furthermore, Precise is a voluntary piece of functionality
that EAMs and their Sponsored Customers may use as a convenience for
entering and managing orders and executions, as an alternative to the
Exchange's other protocols (i.e., FIX, OTTO, and SQF). Precise is also
an alternative to similar front-end order and execution management
systems currently offered by other technology providers as well as
other exchanges (e.g., PULSe). If market participants believe that
other products available in the marketplace are more beneficial than
Precise, they will simply use those products instead. For the foregoing
reasons, the Exchange does not believe that its proposal to codify
Precise will impose any burden on intermarket or intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \15\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
In this case, the Commission waives the five-day pre-filing
requirement.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-GEMX-2018-26 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-GEMX-2018-26. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-GEMX-2018-26 and should be submitted on
or before August 23, 2018.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

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

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-16530 Filed 8-1-18; 8:45 am]
 BILLING CODE 8011-01-P