[Federal Register Volume 86, Number 173 (Friday, September 10, 2021)]
[Rules and Regulations]
[Pages 50653-50679]
[FR Doc No: 2021-19186]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

44 CFR Parts 77, 78, 79, 80, 201, and 206

[Docket ID: FEMA-2019-0011]
RIN 1660-AA96

FEMA's Hazard Mitigation Assistance and Mitigation Planning
Regulations

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Final rule.

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SUMMARY: This final rule revises the Federal Emergency Management
Agency's Hazard Mitigation Assistance and mitigation planning
regulations to reflect current statutory authority and agency practice.

DATES: This rule is effective October 12, 2021.

ADDRESSES: The docket for this rulemaking is available for inspection
using the Federal eRulemaking Portal at http://www.regulations.gov and
can be viewed by following that website's instructions.

FOR FURTHER INFORMATION CONTACT: Katherine Fox, Assistant Administrator
for Mitigation, Federal Emergency Management Agency,<PHONE_NUMBER>,
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background and Discussion of the Rule

    On August 28, 2020, the Federal Emergency Management Agency (FEMA)
published a Notice of Proposed Rulemaking (NPRM) (85 FR 53474) to
revise FEMA's Hazard Mitigation Assistance (HMA) program regulations to
reflect current statutory authority and agency practice.\1\ FEMA's HMA
program regulations consist of the Flood Mitigation Assistance (FMA)
grant program, the Hazard Mitigation Grant Program (HMGP), financial
assistance for property acquisition and relocation of open space, and
mitigation planning regulations. The NPRM proposed to revise the FMA
grant program regulations to incorporate changes made by amendments to
the National Flood Insurance Act of 1968 (NFIA).\2\ The NPRM also
proposed to update terms and definitions throughout the HMA and
Mitigation Planning regulations to better align with uniform
administrative requirements that apply to all Federal assistance.
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    \1\ FEMA has already implemented most of the changes discussed
in this Final Rule through the Hazard Mitigation Assistance Guidance
in 2013. See FEMA, Hazard Mitigation Assistance Guidance, Feb 27,
2015, available at https://www.fema.gov/sites/default/files/2020-04/HMA_Guidance_FY15.pdf (last accessed Feb 5, 2021). FEMA is now
updating its HMA regulations to reflect these changes.
    \2\ 42 U.S.C. 4001 et seq.
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    The NPRM solicited public comment on these proposed changes. FEMA
received five comments related to the rulemaking and one unrelated
comment that was outside the scope of the rulemaking. (The unrelated
comment was an expression of the commenter's political views and
therefore not germane to this rule). FEMA does not consider the one
unrelated comment in this preamble. In this final rule, FEMA adopts the
changes it proposed in the NPRM with some minor revisions in
consideration of the related comments as well as Title 2 of the Code of
Federal Regulations (CFR) part 200. FEMA describes the comments
received and changes to the final rule below.

II. Summary and Discussion of Public Comments

    FEMA received five written responses to the amendments to its
Hazard Mitigation Assistance (HMA) program regulations. All commenters
submitted responses online at regulations.gov. FEMA reviewed each
unique comment and considered whether to change the regulation in
response to the comment. A summary of each comment and FEMA's response
is provided below. Responses are listed in order of Docket ID number.

Individual Citizen, Docket ID FEMA-2019-0011-0003

    This individual citizen recommended that FEMA eliminate the FMA
program and reallocate those resources to be available for the purposes
of obtaining open space. FEMA appreciates this comment and recognizes
the importance of maintaining open space as a critical component of
many hazard mitigation programs; indeed, this is why the acquisition of
open space is one of the eligible project types under FEMA's HMA
programs. However, FEMA lacks authority to eliminate the FMA program
because FEMA is required by statute to implement this program (42
U.S.C. 4104c(a)(1)-(3)). FEMA also recognizes that a one size fits all
approach to hazard mitigation is not aligned with the comprehensive
community and hazard mitigation planning processes.

Individual Citizen, Docket ID FEMA-2019-0011-0004

    This individual citizen recommended that the definition of
``community'' be expanded to include community organizations. In
response, FEMA notes that ``community'' is defined in statute in 42
U.S.C. 4104c(h)(1) and as a result, FEMA cannot reinterpret, expand or
change this definition. Although private nonprofits and other private
sector entities such as businesses, industry associations, native
corporations, and individuals are unable to apply for FEMA's HMA
programs based on statute, FEMA encourages partnerships and recognizes
that these entities can provide value to projects eligible for HMA
funding.

The Association of State Floodplain Managers, Docket ID FEMA-2019-0011-
0005

    The Association of State Floodplain Managers (ASFPM) is an
organization of professionals involved in floodplain management, flood
hazard mitigation, the flood insurance, and flood preparedness, warning
and recovery. The ASFPM Flood Mitigation Committee submitted a number
of comments on behalf of the organization.
    First, the ASFPM expressed concerns that the proposed 44 CFR
77.7(b) states that ``[Pre-award] costs can only be incurred during the
open application period for the FMA program.'' Under FEMA's current
practice, eligible pre-award costs may be incurred prior to application
submission (limited by 44 CFR 79.8 to costs incurred during the open
application period). However, it is not FEMA's intent to disallow
otherwise

eligible pre-award costs that were incurred prior to the open
application period. In response to this comment, FEMA has removed the
statement referenced above from 44 CFR 77.7(b). Costs incurred prior to
award may be reimbursed if they meet the eligibility requirements and
are in compliance with 2 CFR part 200 Subpart E, Cost Principles. Pre-
award costs include costs directly related to developing an application
or subapplication that are incurred prior to the date of the grant
award and are allowed subject to FEMA approval at time of award. Such
costs may include gathering National Environmental Policy Act (NEPA)
data or developing a Benefit Cost Analysis (BCA), preparing design
specifications (including the development of elevation plans), or
conducting workshops or meetings related to development and submission
of subapplications.
    Second, the ASFPM identified that the proposed 44 CFR
77.6(c)(2)(vi) states, ``Non-localized flood risk reduction projects
such as dikes, levees, floodwalls, seawalls, groins, jetties, dams and
large-scale waterway channelization projects are not eligible,'' which
is inconsistent with recent Notices of Funding Opportunity (NOFOs)
speaking to the eligibility of ``community mitigation projects,'' which
could qualify as non-localized flood risk reduction projects. It is not
FEMA's intent for these project types to be ineligible under all
circumstances. In response to this comment, FEMA has added language to
44 CFR 77.6(c)(2)(vi) for clarity and consistency with 42 U.S.C.
4014c(c)(3)(E), limiting funding to localized projects, except in rare
instances. As a result, 44 CFR 77.6(c)(2)(vi) now reads, ``Non-
localized flood risk reduction projects such as dikes, levees,
floodwalls, seawalls, groins, jetties, dams and large-scale waterway
channelization projects are not eligible unless the Administrator
specifically determines in approving a mitigation plan that such
activities are the most cost-effective mitigation activities for the
National Flood Mitigation Fund.'' This change to the regulatory text
reflects a change in FEMA's current practice and emphasizes that 42
U.S.C. 4014c allows the option to authorize these project types in very
rare circumstances.
    Third, the ASFPM noted that the revised HMA regulations do not
specifically list project scoping (previously known as ``advance
assistance'') as an eligible activity under the proposed 44 CFR
77.6(c). However, project scoping is an eligible activity under FEMA's
current practice. In response to this comment, therefore, FEMA has
added paragraph (4) to the list of eligible activities in 44 CFR
77.6(c), it reads: ``Project Scoping. Activities that enable
subapplicants to develop complete subapplications for eligible
mitigation activities including but not limited to data development.''
    Fourth, the ASFPM commented that punishing a State for an
individual community's land use violation by withholding funding from
the entire State (as outlined in the proposed 44 CFR 80.19(e)(2)) seems
mismatched and extreme, and suggested that withholding award or
assistance be limited to the community that is in violation. The
relationship between the State as the recipient, and a local community
as a subrecipient is defined in 2 CFR 200.1, 200.332, and 200.339. The
penalty of holding the State accountable for a community violation is
consistent with the State acting as the recipient of the grant and
being primarily responsible for compliance with grant terms. As a
result, FEMA has determined to retain in 44 CFR 80.19(e)(2) the option
to enforce this penalty as a result of land use noncompliance. This is
consistent with FEMA's current practice.
    Fifth, the ASFPM identified the ongoing problem that States and
communities are unable to access data on repetitive loss properties,
severe repetitive loss properties, and National Flood Insurance Program
(NFIP) insured structures due to FEMA's current restriction on privacy
data. The ASFPM stated that this information is needed for the purposes
of FEMA's application processes and the development of hazard
mitigation plans. FEMA appreciates this feedback, is aware of this
issue, and is currently working to address this problem throughout the
Federal Insurance and Mitigation Administration (FIMA). In working on
this issue, it is FEMA's intent to arrive at a solution that will both
protect government interests and property owners' privacy, while also
making the information that is needed accessible to communities.

Individual Citizen, Docket ID FEMA-2019-0011-0006

    This individual citizen spoke to the value and benefits of nature-
based solutions and suggested that FEMA explicitly speak to nature-
based solutions within the regulation. In response, FEMA notes that
nature-based solutions are eligible under FMA under localized flood
risk reduction projects or other activities as identified in a
community's hazard mitigation plan, as has been FEMA's current
practice. FEMA recognizes and embraces nature-based solutions as an
approach to project design that can be applied to many different
project types, but on its own is not a separate project type.
Therefore, FEMA does not intend to identify and speak to nature-based
solutions as a specific project type within the regulation. However,
FEMA continues to advocate for the incorporation of nature-based
solutions into mitigation activities funded through HMA grants.

Individual Citizen, Docket ID FEMA-2019-0011-0007

    This individual citizen encouraged FEMA to allow for the use of
eminent domain for the purpose of carrying out involuntary buyout
projects. The commenter speaks to proposed 44 CFR 80.11(a), which
states ``Eligible acquisition projects are those where the property
owner participates voluntarily, and the recipient/subrecipient will not
use its eminent domain authority to acquire the property for the open
space purposes should negotiations fail.'' FEMA does not intend to
change the voluntary component of 44 CFR 80.11; however, FEMA offers
clarification that this voluntary limitation is only applicable to open
space projects. Voluntary property owner participation is not required
under other project types. For example, if a community wanted to submit
an application for a flood retention or control project, it could
exercise its eminent domain powers to acquire applicable parcels.
Furthermore, in response to this comment, FEMA notes that it is up to
recipients to prioritize and submit projects for funding as outlined in
44 CFR 77.3(b)(3).

III. Changes to Final Rule

    In response to the comment that noted inconsistencies with the
regulatory text and Fiscal Year 2020 NOFOs for Flood Mitigation
Assistance grants, the proposed 44 CFR 77.6(c)(2)(vi) now reads,
``Localized flood risk reduction projects that lessen the frequency or
severity of flooding and decrease predicted flood damages, and that do
not duplicate the flood prevention activities of other Federal
agencies. Non-localized flood risk reduction projects such as dikes,
levees, floodwalls, seawalls, groins, jetties, dams and large-scale
waterway channelization projects are not eligible unless the
Administrator specifically determines in approving a mitigation plan
that such activities are the most cost-effective mitigation activities
for the National Flood Mitigation Fund.''
    In response to the comment that project scoping (previously known
as ``advance assistance'') is not listed as an

eligible activity under the proposed 44 CFR 77.6(c), FEMA has added
Sec.  77.6(c)(4): ``Project Scoping. Activities that enable
subapplicants to develop complete subapplications for eligible
mitigation activities including but not limited to data development.''
    In response to the comment that expressed concerns regarding the
statement ``[Pre-award] costs can only be incurred during the open
application period for the FMA program,'' this statement has been
removed. Section 77.7(b) now reads, ``Pre-award costs. FEMA may fund
eligible pre-award costs related to developing the application or
subapplication at its discretion and as funds are available. Recipients
and subrecipients may be reimbursed for eligible pre-award costs for
activities directly related to the development of the project or
planning proposal. Costs associated with implementation of the activity
but incurred prior to award are not eligible. Therefore, activities
where implementation is initiated or completed prior to award are not
eligible and will not be reimbursed.''
    In addition to the above and in order to align with 2 CFR part 200,
FEMA removed its proposed definition of ``management costs'' in the
proposed 44 CFR 77.2. The NPRM's proposed definition of ``management
costs'' inadvertently tied it to FEMA's regulations implementing its
authority under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (``Stafford Act'').\3\ However, the FMA Program is not
authorized under the Stafford Act, but rather the National Flood
Insurance Act.\4\ As a result, direct and indirect administrative costs
are governed by the cost principles of 2 CFR part 200 Subpart E, and
FEMA has added the phrase ``(direct and indirect administrative costs
pursuant to 2 CFR part 200 Subpart E)'' in 44 CFR 77.7(a)(1)(i) to
clarify this. Because the FMA Program is authorized under the National
Flood Insurance Act, FEMA also added the National Flood Insurance Act
both to the Authority citation for 44 CFR part 201 and to section
201.1. Lastly, to conform with updates to 2 CFR published on August 13,
2020,\5\ and other updates to statutory citations, FEMA removed the
phrase ``to carry out an activity under the FMA program'' in the
definition of ``recipient'' in 77.2(h) and updated citations to 2 CFR
part 200 and 25 U.S.C. 5131 as necessary.
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    \3\ Public Law 93-288 (42 U.S.C. 5121-5207); see 44 CFR part
207.
    \4\ 42 U.S.C. 4104c.
    \5\ 85 FR 49506.
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IV. Regulatory Analysis

A. Executive Order 12866, as amended, Regulatory Planning and Review

    Executive Orders 12866 (``Regulatory Planning and Review'') and
13563 (``Improving Regulation and Regulatory Review'') direct agencies
to assess the costs and benefits of available regulatory alternatives
and, if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
Executive Order 13563 emphasizes the importance of quantifying both
costs and benefits, of reducing costs, of harmonizing rules, and of
promoting flexibility.
    The Office of Management and Budget (OMB) has not designated this
rule a significant regulatory action under section 3(f) of Executive
Order 12866. Accordingly, OMB has not reviewed it.
    FEMA did not receive any public comments relating to the RIA in the
NPRM and has made no changes to this Regulatory Analysis as a result.
Additionally, changes made to the Final Rule due to public comments
were due to clarifications in regulatory text, and changes made to
better conform the text with statute. These changes will not have an
economic impact, and FEMA does not address them further in this
analysis.
Need for Regulation
    The Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12),
Public Law 112-141, 126 Stat. 916, amended the National Flood Insurance
Act of 1968 (NFIA) to require changes to FEMA's Hazard Mitigation
Assistance (HMA) programs. FEMA implemented most of these changes
through the Hazard Mitigation Assistance Guidance in 2013.\6\ FEMA is
now updating its HMA regulations to reflect these changes.
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    \6\ FEMA, Hazard Mitigation Assistance Guidance, Feb 27, 2015,
available at https://www.fema.gov/sites/default/files/2020-04/HMA_Guidance_FY15.pdf (last accessed Feb 5, 2021).
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    Following guidance in OMB Circular A-4, FEMA assessed the impacts
of this rule against a no-action baseline as well as a pre-statutory
baseline. The no-action baseline is an assessment against what the
world would be like if the rule is not adopted. The pre-statutory
baseline is an assessment against what the world would be like if the
relevant statute(s) had not been adopted and, in this case, already
been implemented through guidance.
    Under a no-action baseline, this rule results in cost savings to
FEMA, and familiarization costs to HMA recipients. Under a pre-
statutory baseline, this rule results in familiarization costs to HMA
recipients, cost savings to FEMA, distributional impacts, and
qualitative benefits, but no marginal costs. The annual distributional
impact of this rule is estimated at $24.96 million \7\ in increased
transfers from FEMA to HMA recipients.
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    \7\ In the NPRM, FEMA incorrectly stated in the introductory
text of the RIA that the annual distributional impact of the rule
was $4.16 million in transfers. 86 FR 53474 at 53490. However, this
was a clerical error which appeared in that sentence and was not
repeated in the remainder of the document. As noted in the remainder
of the RIA, the correct estimate was $28.4 million. 86 FR 53474 at
53491 (Table 1); 53495 (text and Footnote 113); and 53496 (Table 8-
A-4).
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    FEMA addressed the substantive changes in this analysis and
presented how they affect costs, benefits, and transfers. The remaining
changes are nonsubstantive, meaning they are technical and include
definitional updates and other changes that modernize and standardize
regulations, reduce redundancy, or increase readability. The
nonsubstantive changes do not have an economic impact. FEMA included a
detailed marginal analysis table that summarizes the substantive and
nonsubstantive changes in this rule and the related impacts in the
public docket for this rulemaking available on www.regulations.gov
under Docket ID FEMA-2019-0011-0002.
Affected Population
    This rule affects all recipients of FEMA's Flood Mitigation
Assistance (FMA) grants. Recipients include 56 State and territorial
governments and 574 Indian Tribal governments.\8\ Local governments and
governmental organizations such as flood districts and sewer districts
are considered subrecipients and must apply through a State or Indian
Tribal government. For simplicity, FEMA refers to the affected
population as ``recipients'' throughout the analysis, except in cases
where there are different requirements for recipients or subrecipients.
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    \8\ Indian Entities Recognized by, and Eligible to Receive
Services from the United States Bureau of Indian Affairs, 86 FR
7554, (Jan. 29, 2021).
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Baselines
    BW-12 made substantial changes to FEMA's HMA programs. FEMA
implemented most of these changes via the HMA Guidance in 2013. FEMA is
now codifying those changes in this rule. Following guidance in OMB
Circular A-4, FEMA assessed the impacts of this rule against a pre-
statutory baseline covering 2006-2012

(pre-BW-12) and a no-action baseline covering 2013-2019 \9\ (post-BW-
12).
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    \9\ 2019 is the last year complete data is available.
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    The pre-statutory baseline shows the effects of the rule compared
to the current regulations (i.e., as if FEMA had not already
implemented the changes through the HMA Guidance). The no-action
baseline shows the effects of the rule compared to current FEMA
practice (i.e., compared to the HMA Guidance, which reflects FEMA's
current practice, but not the current regulations).
    Under the pre-statutory baseline, the rule has distributional
impacts and qualitative benefits. The distributional impacts affect
recipients of Repetitive Loss (RL) grants and Severe Repetitive Loss
(SRL) grants that were combined into the FMA program pursuant to BW-12.
Under BW-12, RL and SRL properties received increased assistance, while
standard mitigation properties received decreased assistance. Under the
no-action baseline, the only impacts are implementation costs and
Federal cost savings. Table 1 shows the impacts of this rule under the
pre-statutory and no-action baselines.

                   Table 1--Annual Effects of Rule Under Pre-Statutory and No-Action Baselines
                                                     [2019$]
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               Baseline                         Costs                   Benefits                Transfers
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Pre-Statutory........................  $1,041 (year 1 only)...  Qualitative............  $24.96 million from
                                                                                FEMA to grant
                                                                                recipients.
No-Action............................  $1,041 (year 1 only)...  $81,159................  None.
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Effects
    The primary effects of BW-12 that are codified by this rule
resulted from changes in the Federal cost shares. A cost share is the
portion of the costs of a Federally assisted project or program borne
by the Federal Government. FEMA pays a portion of the cost of a
project, or the Federal cost share, and the recipient pays the
remaining share.
    FMA Grant Cost Sharing Changes. The current regulations still
reflect the pre-BW-12 cost share provisions of the RL and SRL grant
programs. BW-12 modified these two programs and FEMA implemented the
modifications in the 2013 HMA Guidance. The newly expanded FMA program
now serves the recipients of these grant programs.
    BW-12 increased the RL Federal cost share from 75 percent to
between 75 and 90 percent, and increased the SRL Federal cost share
from between 90 and 100 percent to 100 percent. Table 2 shows the cost
shares by type of grant.

                                      Table 2--Cost Share by Type of Grant
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                                                    RL                                      SRL
                                 -------------------------------------------------------------------------------
            Baseline                FEMA cost share     Recipient cost      FEMA cost share     Recipient cost
                                          (%)             share  (%)              (%)             share  (%)
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Pre-Statutory (2006-2012) Pre-BW- 75................  25................  90 to 100.........  10 to 0.
 12.
No-Action (2013-2019) Post-BW-12  75-90.............  10-25.............  100...............  0.
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    Lowering the Cap and Removing the Frequency Restriction. Prior to
BW-12, FMA funds for the development or update of the flood portion of
community multi-hazard mitigation plans were capped at $150,000 in
Federal funding for States and $50,000 for communities, with a total
cap of $300,000 in Federal funding for applications statewide. FEMA
could not award State or community planning grants more than once every
5 years.
    BW-12 limited FMA grant funds to develop or update the flood
portion of community multi-hazard mitigation plans to a $50,000 Federal
share to any recipient or a $25,000 Federal share to any subrecipient.
BW-12 also removed the restriction on awarding State or community
planning grants more than once every 5 years. FEMA discusses the
impacts of these changes in the costs section.
    Shifting from State Allocations to Competition. Prior to BW-12,
FEMA annually allocated FMA program funding to recipients based on the
number of insured properties and RL properties present within the
recipient's jurisdiction. Recipients that did not meet the minimum
threshold to receive a target allocation had to apply against funds
that were set aside for this purpose. BW-12 replaced this process with
a fully competitive program that selects subapplications against agency
priorities identified annually. This change allows FEMA to identify and
mitigate properties with the highest risk from flooding, thereby
providing the greatest savings to the NFIP.
Costs
    Costs for this rule result from implementation of the rule, rather
than the 2013 HMA Guidance. FEMA estimated these costs against the no-
action baseline since these are directly attributable to updating the
text of the regulation, and not program changes that FEMA already
implemented.
    Familiarization Costs. FEMA estimated familiarization costs for
States, but not for local emergency management divisions or
jurisdictions. FEMA assumed States regularly update their emergency
response networks and notify local emergency management divisions on
any changes. FEMA believes that States will continue to disseminate the
new information through each State's established process. FEMA assumed
that each State grant recipient will have two personnel that will need
to familiarize themselves and understand the rule by reading the
existing and new regulations to understand the changes. FEMA expects
each person to spend one hour to become familiar with the changes. FEMA
assumes that the rule is likely to be reviewed by each State's
Emergency Management Director and one administrative support personnel.
FEMA assumes that the U.S. Bureau of Labor Statistics (BLS) occupations

Emergency Management Director (SOC: 11-9160, mean hourly wage $39.68)
\10\ and First-Line Supervisor of Office and Administrative Support
Workers (SOC: 43-1010, mean hourly wage $28.91) \11\ are most
representative of these roles in a State. Using the 1.46
multiplier,\12\ the fully loaded wage rates are $57.93 and $42.21
respectively. The estimated total cost of recipients making themselves
familiar with the rule is $5,608 in year 1 ($1,041 per year annualized
at 7 percent over 7 years, and $900 at 3 percent). ((56 recipients x 1
hour x $57.93 wage) + (56 recipients x 1 hour x $42.21 wage) = $5,608)
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    \10\ May 2019 National Occupational Employment and Wage Rates,
National File (xls), First-Line Supervisors of Office & Admin
Support Workers (SOC: 43-1010, Average, Column Title: H_Mean).
Accessed and downloaded Feb 8, 2021. https://www.bls.gov/oes/tables.htm.
    \11\ May 2019 National Occupational Employment and Wage Rates,
National File (xls), Emergency Management Directors (SOC: 11-9160,
Average, Column Title: H_Mean). Accessed and downloaded Feb 8, 2021.
https://www.bls.gov/oes/tables.htm.
    \12\ December 2019 Bureau of Labor Statistics, Employer Costs
for Employee Compensation, Table 1. Employer costs per hour worked
for employee compensation and costs as a percent of total
compensation: Civilian workers, by major occupational and industry
group, page 4 ($37.73/$25.91). Accessed and downloaded Feb 8, 2021.
https://www.bls.gov/news.release/archives/ecec_06182020.pdf.
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    Summary of Costs. FEMA estimated the rule has familiarization costs
of $5,608 in the first year of implementation. FEMA assumed that all
staff and resources will come from existing sources and thus represent
an opportunity cost.
Benefits
    This rule will be beneficial to both FEMA and Hazard Mitigation
Grant recipients. While the benefits are not quantifiable, FEMA
believes that changes implemented by BW-12 allow it to target the most
vulnerable properties, and streamline the mitigation grant process.
Under the no-action baseline, most changes in this rule are technical
and include definitional updates and other changes made to harmonize
FEMA regulations with current FEMA practices and HMA guidance,
modernize and standardize the regulations, reduce redundancy, or
increase readability. These changes are largely nonsubstantive and do
not have an economic impact.
    Cost Savings. FEMA estimated annual costs savings of $81,159
resulting from removal of the definition of ``market value'' at 44 CFR
79.2(f) and (g). The removal of ``market value'' is new to this
regulation and was not implemented in previous guidance. Currently, the
regulation requires FEMA to use the market value of a structure when
making grant determinations. Removal of this requirement allows FEMA to
consider the value of the structure listed on the flood insurance
policy when considering a grant request related to a vulnerable
structure, rather than the ``market value.'' This results in a
reduction in the time it takes FEMA personnel to review a grant
application. Using ``market value'' required additional research and
appraisals, whereas the flood insurance property value is readily
available to FEMA personnel. FEMA estimates that this change reduces
the personnel time it takes to review a grant application by an
estimated 2 hours per review for a total of $81,159 annually. The
removal of ``market value'' may impact grant amounts due to possible
differences from the insured value, but FEMA does not have data
available to estimate this impact.
    FEMA based its estimates on the estimated annual average number of
FMA grant applications that required a market value review between 2013
and 2019 and the wage rates of the personnel reviewing the grants. The
annual average number of grant requests was 545. Table 3 shows the
annual number of grant requests for vulnerable properties that required
a market value review between 2013 and 2019.

      Table 3--Annual Grant Requests Requiring Market Value Review
------------------------------------------------------------------------
                          Year                              FMA Program
------------------------------------------------------------------------
2013....................................................             552
2014....................................................             374
2015....................................................             678
2016....................................................             832
2017....................................................             743
2018....................................................             485
2019....................................................             149
                                                         ---------------
  Total.................................................           3,813
------------------------------------------------------------------------
Annual Average..........................................             545
------------------------------------------------------------------------

    Reviews of the grant applications can vary widely from simple--all
documentation accompanies the request and requires very little follow-
up--to complex. For this analysis, FEMA chose to capture the
variability in the grant application reviews by using a weighted
average of the hours it takes to complete the reviews. FEMA estimated
that 25 percent of the reviews are simple; these reviews take 8 hours
each on average to complete. Reviews of applications that are average
in their complexity comprise 50 percent of the reviews and are assumed
to take 12 hours each. Twenty-five percent of the reviews are complex
and take 16 hours on average to complete.\13\ Taking a weighted average
of the times listed and using the distribution of 25 percent simple/50
percent average/25 percent complex, FEMA estimated that grant
application reviews take 12 hours on average to complete. ([(0.25 x 8)
+ (0.50 x 12) + (0.25 x 16)] = 12 hours)
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    \13\ FEMA personnel who review the FMA grant requests provided
the information on the average time to review and the discussion of
complexity.
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    Program Specialists (GS 13, step 5) and contracted Civil Engineers
conduct the reviews, the Program Specialists conduct 75 percent of
reviews and the Civil Engineers conduct the remaining 25 percent. The
fully-loaded average hourly wage for GS 13, step 5 at the FEMA regional
locations is $77.20 \14\ and FEMA estimates $66.23 \15\ is the fully-
loaded hourly wage rate for Civil Engineers. Using the 12-hour average
estimate for reviewing the grant application, FEMA estimated that each
year it spends $486,952 on average to review FMA grant applications.
([(545 grant reviews x 12 hours per review x $77.20 hourly wage for
Program Specialist x 0.75) + ([(545 grant reviews x 12 hours per review
x $66.23 hourly wage for Civil Engineer x 0.25)] = $486,952.05)
---------------------------------------------------------------------------

    \14\ Based on the OPM General Schedule of Pay, January 2019, the
average base wage of GS 13, step 5 in each of the FEMA regional
office locations is $52.88 (Boston, MA; New York, NY; Philadelphia,
PA; Atlanta, GA; Chicago, IL; Denton, TX; Kansas City, MO; Denver,
CO; Oakland, CA; and Bothell, WA), which is multiplied by a 1.46
benefits multiplier (December 2018, BLS Employer Costs for Employee
Compensation) to get a fully loaded wage rate of $77.20/hour.
Accessed and downloaded Feb 9, 2021. https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2019/general-schedule/.
    \15\ Based on Bureau of Labor Statistics May 2019 National
Employment and Wage Rate, National File (xls), a Civil Engineer, SOC
17-2050, has a base wage of $45.36, which is multiplied by a
benefits multiplier of 1.46 (December 2019, BLS Employer Costs for
Employee Compensation) to get a fully loaded wage rate of $66.23/
hour. Accessed and downloaded Feb 8, 2021. https://www.bls.gov/oes/tables.htm.
---------------------------------------------------------------------------

    FEMA estimated that removing the definition of ``market value''
will reduce its administrative burden by 2 hours per review. This
results in each review taking 10 hours instead of 12, on average. Using
the same calculation as above and 10 hours instead of 12 hours per
review, FEMA's average amount spent each year on reviewing FMA grant
applications will be $405,793 and results in an estimated annual cost
savings of $81,159. ($486,952 - $405,793 = $81,159)
    Clarification of Mitigation Grant Terms and Conditions. The current
HMA grant program regulations contain inconsistencies or vague language
that may cause confusion. Specifically,

FEMA will add definitions for ``Federal award'' and ``pass-through
entity;'' and replace definitions of ``grantee,'' ``subgrant,'' and
``subgrantee'' with ``recipient,'' ``subaward,'' and ``subrecipient,''
respectively. These changes will make the HMA regulations consistent
with FEMA's other regulations.
    Revising, Adding, or Removing Definitions. FEMA is revising
existing definitions for clarification purposes, add several
definitions to conform with BW-12 and current agency practice, and
delete others that are obsolete. FEMA believes the changes are clear
and more consistent with definitions used in 2 CFR part 200 and the HMA
Guidance.\16\
---------------------------------------------------------------------------

    \16\ Hazard Mitigation Assistance Guidance (HMA Guidance), Feb.
8, 2021, available at https://www.fema.gov/sites/default/files/2020-04/HMA_Guidance_FY15.pdf (last accessed Feb. 9, 2021).
---------------------------------------------------------------------------

    Shifting from Standard Mitigations to RL and SRL Structures. One of
the main focuses of this rulemaking is on mitigation grants made to
properties in the NFIP that have been repeatedly subject to costly loss
claims. FEMA provides a range of available mitigation options including
the FMA program to address vulnerable RL and SRL structures. Once a
structure is mitigated through one of the programs, it could be
protected from flooding, and can be removed from the repetitive flood
loss list of un-mitigated properties insured by the NFIP. This reduces
the flood vulnerability to RL and SRL structures, preventing further
losses to the policyholders, as well as to FEMA. This benefit applies
to the pre-statutory baseline, but not the no-action baseline because
recipients and FEMA both realized this benefit beginning in 2013 when
FEMA implemented it through the HMA Guidance.
    Shifting from State Allocations to Competition. Before BW-12, FMA
program funding was based on an allocation methodology that required an
analysis of the number of insured properties and RL properties present
within a jurisdiction and each State was allocated a share of the
overall available funding. BW-12 changed this process to a fully-
competitive program that allows FEMA to select subapplications
according to FEMA priorities no matter the location.
    This change lifted the constraints that were formerly in place
against multiple eligible subrecipients in the same jurisdiction with
vulnerable properties, allowing a more adequate coverage area within
and across States and contributing to the increase in the size and
volume of RL and SRL properties covered by each grant. FEMA is able to
identify and mitigate properties with the highest risk from flooding
and provide the greatest savings to the NFIP. This benefit applies to
the pre-statutory baseline, but not the no-action baseline because
recipients and FEMA both realized this benefit beginning in 2013 when
FEMA implemented it through the HMA Guidance.
    Eliminating the Limit on In-Kind Contributions. Eliminating the
limit on in-kind contributions for a recipient's cost share modifies
the nature, or make-up, of the recipient's contribution but does not
change the overall dollar amount required for the recipient's
contribution. FEMA believes this is advantageous because recipients and
subrecipients are able to leverage their own optimal mix of in-kind and
cash to meet their portion of the cost-share. There is no change to
transfers between FEMA and grantees because the cost share does not
change; however, the make-up of the recipient's portion changes.
    Summary of Benefits. Under a no-action baseline FEMA believes this
rule will promote a better understanding of the FMA program by updating
the regulations that govern the HMA programs to conform with
adjustments made by BW-12 and current agency practice. These changes
will clarify existing requirements and help facilitate the flood
portion of the Hazard Mitigation Grant Program processes.
    FEMA estimated annual cost savings of $81,159 per year. Removing
the definition of ``market value'' leads to cost savings to FEMA.
Removing this definition will reduce the time it takes to conduct an
initial grant application review by 2 hours.
    Under a pre-statutory (pre-BW-12) baseline, FEMA believes there are
considerable benefits associated with the shift to entirely competitive
awards for the grants instead of the previous State-specific
allocations, as well as the more flexible in-kind match option. The
shift to more vulnerable RL and SRL properties by modifying the cost
shares and giving priority to applications with the most vulnerable
properties are expected to reduce the frequency of loss claims and
promote community resiliency through mitigation. There are also
qualitative benefits due to the elimination of the cap on FMA funding
for States and communities and the opening of the program to a fully
competitive award system. These changes enhance FEMA's ability to
administer the FMA program in a more streamlined and cost effective
manner. Removing State allocations of grant resources and accepting in-
kind State contributions further streamline the program. Collectively,
these benefits justify the rule and update FEMA's regulations to
reflect current statutory authority.
Transfers
    Federal Cost Shares. The adjustments in cost shares made by BW-12
result in distributional impacts, with certain grant programs receiving
relative increases and decreases in grant funds. To analyze the impact
of changes to the cost shares, FEMA summarized available mitigation
project data for standard, RL, and SRL grants.\17\
---------------------------------------------------------------------------

    \17\ FEMA assumes that the mitigation project level grant data
with applications comprising mixed property categories resulting in
blended cost share percentages (any total cost share not equal to
100 percent, 90 percent, or 75 percent Federal) would be rounded up
to the nearest threshold category. This would not round up project
values or Federal cost shares in dollar terms, only their tabulation
and consideration as RL or SRL. An application with a determined
Federal cost share of 91-99 percent would be counted as part of the
100 percent SRL category, while applications with 76-89 percent
Federal cost shares would be counted as part of the 90 percent
Federal RL category.
---------------------------------------------------------------------------

    Between 2006 and 2012 (pre-BW-12), FEMA provided a total of 390
grants to 244 recipients for 1,014 properties. The value of those
grants was $292,374,087, with FEMA paying $205,762,109 and recipients
paying $86,611,978. Table 4 shows the distribution of these grants by
category.

                                                          Table 4--Pre-BW-12 Mitigation Projects and Associated Value by Grant Category
                                                                                [2019$]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Standard (<=75% Federal cost share)      Repetitive loss (75% Federal cost share)   Severe repetitive loss (90-100% Federal
                                                                --------------------------------------------------------------------------------------                cost share)
                              Year                                                                                ------------------------------------------
                                                                 Number of     Value of      Federal share  Number of     Value of      Federal share  Number of     Value of      Federal share
                                                                   grants       grants         obligated      grants       grants         obligated      grants       grants         obligated
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2006...........................................................         93     $39,020,873     $28,914,463  .........  ..............  ..............          2        $150,655        $150,655
2007...........................................................         85      46,309,864      33,827,089  .........  ..............  ..............  .........  ..............  ..............

2008...........................................................         70      37,110,276      25,084,903  .........  ..............  ..............          1          35,166          31,649
2009...........................................................         54      81,136,958      59,026,566          3       3,027,774       2,475,759          3         653,292         587,963
2010...........................................................         35      32,715,929      22,915,763          2       1,480,940         897,864  .........  ..............  ..............
2011...........................................................         17      17,530,961      11,234,999  .........  ..............  ..............  .........  ..............  ..............
2012...........................................................         25      33,201,399      20,614,436  .........  ..............  ..............  .........  ..............  ..............
Average........................................................         54      41,003,751      28,802,603       0.71         644,102         481,946       0.86         119,873         110,038
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Total......................................................        379     287,026,260     201,618,219          5       4,508,714       3,373,623          6         839,113         770,267
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    The 390 grants from pre-BW-12 were one of three types--Standard
Mitigation (up to 75 percent Federal cost share); RL (75 percent
Federal cost share); or SRL (90-100 percent Federal cost share). Prior
to BW-12, there were 379 Standard Mitigation grants with a total value
of $287,026,260. FEMA's share was $201,618,219 and the recipients'
share was $85,408,041 (70 percent average Federal cost share). For RL
grants, there were five grants with a total value of $4,508,714. FEMA's
share was $3,373,623 and the recipients' share was $1,135,091 (75
percent Federal cost share). For SRL grants, there were six grants made
with a total value of $839,113. FEMA's share was $770,267 and the
recipients' share was $68,846 (92 percent Federal cost share).
    Post-BW-12 (2013-2019), FEMA provided a total of 624 grants to
1,153 recipients for 9,737 properties. The total value of those grants
was $829,481,486. FEMA's share was $758,759,675 and recipients' share
was $70,721,811. Table 5 shows the distribution of these grants by
category.

                                                          Table 5--Post-BW-12 Mitigation Projects and Associated Value by Grant Category
                                                                                [2019$]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Standard (<=75% Federal cost share)        Repetitive loss (75-90% Federal cost    Severe repetitive loss (100% Federal cost
                                                                -------------------------------------------                   share)                                     share)
                              Year                                                                         -------------------------------------------------------------------------------------
                                                                 Number of     Value of      Federal share  Number of     Value of      Federal share  Number of     Value of      Federal share
                                                                   grants       grants         obligated      grants       grants         obligated      grants       grants         obligated
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2013...........................................................         18     $10,917,788      $7,205,740          5     $12,120,501     $10,302,426         65    $100,175,666     $90,158,099
2014...........................................................         28       8,888,593       5,333,156          5       6,853,281       5,825,289         68      74,883,110      75,631,941
2015...........................................................         16       7,317,656       5,488,242          8      33,763,761      30,049,747         80     124,352,333     119,378,240
2016...........................................................         26      11,975,567       8,861,920         12      29,656,451      25,207,983         99     173,836,284     159,929,381
2017...........................................................         33      13,673,605      10,118,468          5       5,941,663       4,990,997         59      80,043,231      74,440,205
2018...........................................................          5       5,261,224       3,525,020         16      27,467,838      24,171,697         44      76,784,839      74,481,294
2019...........................................................          6       2,001,833       1,301,191          5       5,663,833       4,814,258         21      17,902,429      17,544,380
Average........................................................         19       8,576,609       5,976,248          8      17,352,475      15,051,771         62      92,568,270      87,366,220
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Total......................................................        132      60,036,266      41,833,737         56     121,467,328     105,362,397        436     647,977,892     611,563,541
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    These 624 grants were one of three types--Standard Mitigation (up
to 75 percent Federal cost share); RL (75-90 percent Federal cost
share); or SRL (90-100 percent Federal cost share) (all post-BW-12 cost
shares). There were 132 Standard Mitigation grants with a total value
of $60,036,266. FEMA's share was $41,833,737 and the recipients' share
was $18,202,529 (70 percent average Federal cost share). For RL grants,
there were 56 grants with a total value of $121,467,328. FEMA's share
was $105,362,397 and the recipients' share was $16,104,931 (87 percent
Federal cost share). For SRL grants, there were 436 grants made with a
total value of $647,977,892. FEMA's share was $611,563,541 and the
recipients' share was $36,414,351 (94 percent Federal cost share).
    These grants often include some ineligible costs, including cost
overruns or underruns, the use of insurance proceeds that FEMA deducted
as a duplication of benefits,\18\ or Increased Cost of Compliance
(ICC),\19\ so the actual cost shares do not equal the percentages
listed above. For example, although SRL grants have a 100 percent
Federal cost share, the actual average Federal share was 94 percent.
---------------------------------------------------------------------------

    \18\ Duplication of Benefits refers to assistance from more than
one source that is used for the same mitigation purpose or activity.
The purpose may apply to the whole project or only part of it. HMA
funds cannot duplicate funds received by or available to applicants
or subapplicants from other sources for the same purpose. Examples
of other sources include insurance claims, other assistance programs
(including previous project or planning grants and subawards from
HMA programs), legal awards, or other benefits associated with
properties or damage that are the subject of litigation. HMA does
not require that property owners seek assistance from other sources
(except for insurance claims). However, it is the responsibility of
the property owner to report other benefits received, any
applications for other assistance, the availability of insurance
proceeds, or the potential for other compensation, such as from
pending legal claims for damages, relating to the property.
References: Sec. 312 of the Stafford Act; 44 CFR 79.6(d)(7); Hazard
Mitigation Assistance Guidance (February 27, 2015), Part III, D.5,
pages 31-32; HMA Tool for Identifying Duplication of Benefits
https://www.fema.gov/sites/default/files/2020-04/HMA_Guidance_FY15.pdf (last accessed Feb 9, 2021).
    \19\ Increased Cost of Compliance (ICC) provides up to $30,000
to help cover the cost of mitigation measures that will reduce flood
risk. ICC coverage is a part of most standard flood insurance
policies available under the NFIP https://www.fema.gov/media-library/assets/documents/1130 (last accessed Feb 9, 2021).
---------------------------------------------------------------------------

    Changing Cost Share Amounts and to a Fully Competitive Grant
Process for FMA.
    Changing the cost shares had a distributional impact, where the
proportion of Federal funds increased while the recipients' proportion
decreased by the same amount.

Similarly, the shift from State allocations of grant funding to a
competitive-based program that allows grants to be allocated to the
most vulnerable properties, resulted in distributional impacts where
recipients in certain States receive more in grant funding where others
see a decrease. FEMA was not able to isolate this effect from the
effect of changing the cost shares, since they were implemented at the
same time.
    First, FEMA analyzed the shift in grant priorities as a
distributional impact between grant programs. This was done by
subtracting the total value of grants pre-BW-12 from the total value of
grants post-BW-12 for each program, showing the relative decreases and
increases by type of FMA grant caused by making the grants competitive
and shifting funding to riskier properties.\20\
---------------------------------------------------------------------------

    \20\ These figures include a large increase in grant funding
post-BW-12 for the 3 programs resulting from Congressional
appropriations that are not due to changes in from this rule. This
increase in overall funding is not ``held constant'' in the
comparisons shown. From 2006-2012, total funding was $292.4 million
and from 2013-2019, total funding was $829.5 million.
---------------------------------------------------------------------------

     The seven-year total share of standard mitigation grants
decreased by $226,989,994 post-BW-12 ($60,036,266-$287,026,260).
     The seven-year total share of RL grants increased by
$116,958,614 post-BW-12 ($121,467,328-$4,508,714).
     The seven-year total share of SRL grants increased by
$647,138,779 post-BW-12 ($647,977,892-$839,113).
    This shows the total seven-year relative increases and decreases
between FMA programs in terms of post-BW-12 grant funding: (-
$226,989,994 for standard grants + $116,958,614 for SL grants +
$647,138,779 SRL grants = $537,107,399).
    Table 6 shows changes in the total number of grants as well as the
Federal and non-Federal shares for all grants pre-BW-12 and post-BW-12
with the percent change in grants and funding.

             Table 6--Change in Average Annual Number of Grants and Funding Pre-BW-12 to Post-BW-12
                                                     [2019$]
----------------------------------------------------------------------------------------------------------------
                                                  Percent pre-BW-                  Percent post-
                                     Pre-BW-12          12          Post-BW-12         BW-12      Percent change
----------------------------------------------------------------------------------------------------------------
                                               Standard Mitigation
----------------------------------------------------------------------------------------------------------------
Grants per Year.................              54            97.2              19            21.3           -75.9
Funding per year................     $41,003,751            98.2      $8,576,609             7.2           -90.9
----------------------------------------------------------------------------------------------------------------
                                                 Repetitive Loss
----------------------------------------------------------------------------------------------------------------
Grants per Year.................            0.71             1.3               8               9            +7.7
Funding per year................        $644,102             1.5     $17,352,475            14.6           +13.1
----------------------------------------------------------------------------------------------------------------
                                             Severe Repetitive Loss
----------------------------------------------------------------------------------------------------------------
Grants per Year.................            0.86             1.5              62            69.7           +68.2
----------------------------------------------------------------------------------------------------------------
Funding per year................        $119,873             0.3     $92,568,270            78.1           +77.8
----------------------------------------------------------------------------------------------------------------

    When comparing pre-BW-12 standard mitigation grants to post-BW-12,
the average annual total amount of funding dropped from $41 million to
$8.6 million. For RL structures, the average annual amount of funding
increased from $0.64 million to $17.4 million. For SRL structures, the
average annual funding increased from $0.12 million to $92.6 million
when compared to pre-BW-12. This reflects BW-12 shifting priority from
standard mitigations to RL and SRL structures. FEMA's data indicate a
trend toward both larger project sizes and an increased number of RL
and SRL projects.
    FEMA then analyzed the distributional impacts of the Federal cost
shares that resulted from both the shift in priorities and the changes
in cost shares. The Federal cost share for standard mitigation grants
remained at 70 percent over the post-BW-12 period. The cost share for
RL grants increased from an average of 75 percent pre-BW-12 to 87
percent post-BW-12. SRL grants had an average 92 percent cost share
pre-BW-12 and a 94 percent cost share post-BW-12. FEMA also analyzed
the change in the Federal cost share for the three grant categories
together, which shows the impact of BW-12 changes to cost share amounts
as well as shifting funding to RL and SRL grants, which have higher
cost shares.
    The total Federal share of all FMA grant categories pre-BW-12 was
70.4 percent [($205,762,109 / $292,374,087) x 100]. Post BW-12, the
Federal share was 91.5 percent [($758,759,675 / $829,481,486) x 100].
The increase in transfers from FEMA to grantees as a result of the
changed cost shares and changed priorities, in terms of post-BW-12
grant funding, was $174,739,761(91.5 percent -70.4 percent x
$829,481,486) over seven years, or an average increase of $24,962,823
per year.
    Under a no-action baseline, this rule results in no transfer
impacts, as FEMA has already implemented the updated cost share
percentages in the 2013 HMA Guidance. Under a pre-statutory (pre-BW-12)
baseline, the revisions to the cost share and re-prioritization to
grants with higher cost shares result in distributional transfer
impacts shifting funding to the most vulnerable properties and an
increase in transfers from FEMA to grant recipients. The discounted
total seven-year transfers from FEMA to grant recipients are
$174,739,761 million ($24.96 million annual average).\21\
---------------------------------------------------------------------------

    \21\ The annualized amounts for 3 percent and 7 percent are
equal to the estimated annual transfers of $24.96 million because
the amounts for each year are identical and the first year is
discounted.
---------------------------------------------------------------------------

    Mitigation Planning Grants. BW-12 lowered the funding cap on the
amount of money that could be used for the flood portion of the
individual multi-hazard mitigation plans from $150,000 in recipients
and $50,000 for subrecipients to $50,000 per recipient and $25,000 per
subrecipient, but removed a restriction that grantees could only
receive funding for planning grants once every 5 years. Lowering the
cap on Federal funds results in decreased funding per applicant.
However, FEMA believes this is offset

by the removal of the frequency restriction, which results in a
negligible change in the number of approved applications and awards.
FEMA found that the data does not show a substantial change in the
number of applications, and thus FEMA assumed that the removal of the
5-year restriction is countered by the lowered cap on funding,
resulting in minimal distributional impacts as shown in Table 7.
Because FEMA implemented these changes concurrently, FEMA was unable to
isolate the effects of individual changes.

                                  Table 7--Mitigation Planning Grants 2006-2019
                                                     [2019$]
----------------------------------------------------------------------------------------------------------------
                                                                                Approved     Average  grant
                              Year                                 Applications       grants           amount
----------------------------------------------------------------------------------------------------------------
2006............................................................             167              92        $291,961
2007............................................................             561             481          88,076
2008............................................................             523             374          83,738
2009............................................................             491             346          83,738
2010............................................................             364             288          82,992
2011............................................................             417             363         104,024
2012............................................................             173             155         144,992
----------------------------------------------------------------------------------------------------------------
Average Pre-BW-12...............................................             385             300         125,646
----------------------------------------------------------------------------------------------------------------
2013............................................................             260             228         117,107
2014............................................................             293             264          89,362
2015............................................................             351             315          94,685
2016............................................................             329             287         173,348
2017............................................................             422             377         100,049
2018............................................................             287             248         151,711
2019............................................................             149             116         105,929
----------------------------------------------------------------------------------------------------------------
Average Post-BW-12..............................................             299             262         118,884
----------------------------------------------------------------------------------------------------------------

    Since 2013, FEMA has applied the new caps on funding for FMA
planning grants per recipient and subrecipient. The caps align with and
reflect FEMA's shift to focus the majority of FMA program funds on
mitigating the risk to the most vulnerable properties. FEMA is no
longer constrained by any limit on how often a recipient or
subrecipient can receive a planning grant or the total amount that can
be granted to a recipient. Further, the lower caps per recipient and
subrecipient allow FEMA to assist more recipients and subrecipients.
Alternatives
    Most of the changes in this rule are based on statute. FEMA has
limited discretion in determining which changes to make. The changes
that carry an economic impact under a pre-statutory (pre-BW-12)
baseline are the changes to 44 CFR 79.4 (now 44 CFR 77.4): FMA Grant
Federal Cost Shares and 44 CFR 79.6 (now 44 CFR 77.6): Flood Portion of
Multi-Hazard Mitigation Plans. BW-12 prescribed these changes. These
changes are neither new nor discretionary and FEMA did not consider
alternatives.
    Below, the OMB A-4 Accounting Statement presents the annualized
costs, benefits, and transfer payments of the final rule in 2019
dollars using the no-action baseline. Accordingly, the below accounting
statement shows the costs and benefits of this rule measured against
what the world would be like if this rule were not adopted.

                              Table 8--A-4 Accounting Statement--No Action Baseline
                                                     [2019$]
----------------------------------------------------------------------------------------------------------------
                                        Period of analysis: 2021 to 2030
-----------------------------------------------------------------------------------------------------------------
                                                                                Source citation (RIA,
               Category                7 Percent discount rate  3 Percent discount rate      preamble, etc.)
----------------------------------------------------------------------------------------------------------------
BENEFITS:
    Annualized Monetized.............  $81,159................  $81,159................  Preamble (RA).
    Annualized Quantified............  N/A....................  N/A....................
                                      --------------------------------------------------
    Qualitative......................   Allows FEMA to target most vulnerable    Preamble (RA).
                                        properties and streamline mitigation grant
                                        process.
                                        Modernize and standardize regulations
                                        to align current practice with other FEMA
                                        programs and increase readability.
                                      --------------------------------------------------
COSTS:
    Annualized Monetized.............  $746...................  $638...................  Preamble (RA).
    Annualized quantified............  N/A....................  N/A....................
                                      --------------------------------------------------
    Qualitative......................  N/A
                                      --------------------------------------------------
TRANSFERS:

    Annualized Monetized.............  0......................  0......................  Preamble (RA).
                                      --------------------------------------------------
    From/To..........................                        N/A.                        Preamble (RA).
----------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------
                                                         Source citation
           Category                     Effects          (RIA, preamble,
                                                              etc.)
------------------------------------------------------------------------
State, Local, and/or Tribal      Allows State,  Preamble (RA).
 Government.                     local, and Tribal
                                 governments to
                                 prioritize more
                                 vulnerable properties
                                 and simplifies the
                                 grant process.
Small business................  There were 391 small    Preamble (FRFA).
                                 entity recipients
                                 from 2006-2019. Prior
                                 to BW-12, an average
                                 of 16 recipients per
                                 year were small
                                 entities. Post-BW-12,
                                 there was an average
                                 of 40 small entity
                                 recipients per year.
                                 Post-BW-12, small
                                 entities were more
                                 likely to receive RL
                                 or SRL grants and
                                 slightly less likely
                                 to receive standard
                                 mitigation grants, so
                                 the Federal cost
                                 shares (i.e., the
                                 portion of the grant
                                 funded by FEMA) for
                                 small entities were,
                                 on average, higher
                                 post-BW-12.
Wages.........................  None..................
Growth........................  None..................
------------------------------------------------------------------------

    FEMA also assessed the impacts of this rule under the pre-statutory
baseline. The pre-statutory baseline is an assessment against what the
world would be like if the relevant statute(s) had not been adopted,
and in this case, already been implemented through guidance. FEMA
estimates the impact of the changes codified in this rule to primarily
be an increase in transfers from FEMA to HMA recipients of $24.96
million annualized, due to the targeting of higher risk properties for
grant funding. Additionally, the changes codified by this rule shifted
from State-based allocations to a competitive process, allowing FEMA to
select applications according to FEMA priorities rather than by
location. This rule also eliminated limits on in-kind contributions,
allowing recipients more flexibility to cover their portion of the cost
shares. FEMA implemented the pre-statutory provisions of this rule in
the 2013 HMA Unified Guidance.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.)
requires agency review of proposed and final rules to assess their
impact on small entities. When an agency promulgates a notice of
proposed rulemaking under 5 U.S.C. 553, the agency must prepare a Final
Regulatory Flexibility Analysis (FRFA) unless it determines and
certifies pursuant to 5 U.S.C. 605(b) that a rule, if promulgated, will
not have a significant impact on a substantial number of small
entities. FEMA believes this rule does not have a significant economic
impact on a substantial number of small entities.
    In accordance with the Regulatory Flexibility Act of 1980 (RFA), 5
U.S.C. 601 et seq., as amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (Pub. L. 104-121, 110 Stat. 857), FEMA
examined the effects of the adjustments made by BW-12 and implemented
by FEMA in the 2013 HMA Guidance on small entities. A small entity may
be: A small independent business, defined as independently owned and
operated, is organized for profit, and is not dominant in its field per
the Small Business Act (5 U.S.C. 632); a small organization, defined as
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field (5 U.S.C. 601); or a small
governmental jurisdiction (locality with fewer than 50,000 people) per
5 U.S.C. 601.
    The rule directly affects all eligible FMA grant recipients. FEMA
estimates that the changes from BW-12 affect FMA grant recipients that
are small governmental jurisdictions with a population of less than
50,000, as defined at 5 U.S.C. 601(5).\22\ To estimate the effects on
small entities of the adjustments made by BW-12, and codified in this
rule, FEMA used the same methodology used in the regulatory
analysis.\23\ In general, FEMA identified the affected population--
recipients of FEMA's FMA grants--and analyzed how the changes affect
those recipients. Using those results, FEMA then evaluated which
recipients qualified as ``small entities.'' Eligible FMA grant
recipients may include States, U.S. territories, and Indian Tribal
governments; subrecipients may include local governments and
governmental organizations such as flood, sewer, and water districts.
FEMA removed from its RFA dataset and analysis any recipients that are
States and U.S. territories because they have populations greater than
50,000. FEMA also removed any Indian Tribal governments because they
are not included in the definition of a small entity.\24\ The remaining
recipients

were either local governments or governmental organizations. FEMA used
the U.S. Census Bureau's annual population estimates for 2019 produced
by its Population Estimates Program (PEP) \25\ to determine the
population for each recipient.\26\ Table 9 summarizes the number of
small entities affected by the changes in BW-12.
---------------------------------------------------------------------------

    \18\ See 5 U.S.C. 601(3)-(6). In general, the term ``small
entity'' can have the same meaning as the terms ``small business,''
``small organization,'' and ``small governmental jurisdiction'' for
purposes of this analysis. Specifically, section 601(3) defines a
``small business'' as having the same meaning as ``small business
concern'' under section 3 of the Small Business Act. This includes
any small business concern that is independently owned and operated
that is not dominant in its field of operation. Section 601(4)
defines a ``small organization'' as any not-for-profit enterprise
that is independently owned and operated that is not dominant in its
field of operation. Section 601(5) defines ``small governmental
jurisdiction'' as governments of cities, counties, towns, townships,
villages, school districts, or special districts with a population
of less than 50,000. Accessed and downloaded Feb 24, 2021. http://uscode.house.gov/view.xhtml?req=(title:5section:601edition:prelim)
OR (granuleid:U.S.C.-prelim-title5-
section601)&f=treesort&edition=prelim#=0&jumpTo=true.
    \23\ FEMA's methodology is included in section IV. Regulatory
Analysis of this final rule.
    \24\ The Regulatory Flexibility Act (RFA) defines a small entity
as a small business, small nonprofit organization, or a small
governmental jurisdiction. Section 601(5) defines small governmental
jurisdictions as governments of cities, counties, towns, townships,
villages, school districts, or special districts with a population
of less than 50,000.
    \25\ FEMA used the U.S. Census Bureau's PEP estimates file
entitled, ``sub-est2019_all.csv'' because it provided 2019 estimated
populations for all States and all subgovernmental jurisdictions,
including counties, parishes, etc., towns, cities, villages, etc.
Accessed and downloaded Feb 24, 2021. https://www2.census.gov/programs-surveys/popest/datasets/2010-2019/cities/totals/.
    \26\ FEMA used the population of the county, parish, or borough
in which the grant project was located as a proxy to determine the
populations for governmental organizations. For example, FEMA used
the New Castle County, DE 2019 population of 558,753 to determine if
the New Castle Conservation District was a small entity. In this
example, the population of 558,753 is greater than the 50,000 small
entity threshold; thus, the new Castle Conservation District is not
a small entity.

                        Table 9--Estimated Number of Small Entities Affected by This Rule
----------------------------------------------------------------------------------------------------------------
                                                                                Grants to      Properties
                                                              Year                small entities   within grants
----------------------------------------------------------------------------------------------------------------
Pre-BW-12.....................................  2006............................              30              67

                                                2007............................              25              39
                                                2008............................              16              14
                                                2009............................              18              41
                                                2010............................              11              76
                                                2011............................               4              12
                                                2012............................               8              75
Post-BW-12....................................  2013............................              23              64
                                                2014............................              27              66
                                                2015............................              18              71
                                                2016............................              25              56
                                                2017............................              26              78
                                                2018............................             122              82
                                                2019............................              38              25
                                                                                -------------------------------
    Total Small Entity Recipients.............  ................................             391             766
                                                                                -------------------------------
    Total All Recipients......................  ................................           1,551           4,521
                                                                                -------------------------------
    Small Entity Recipients as a Percent of     ................................           25.2%           17.0%
     Total Recipients.
----------------------------------------------------------------------------------------------------------------
Pre-BW-12.....................................  Total...........................             112             324
                                                Annual Average..................              16              46
Post-BW-12....................................  Total...........................             279             442
                                                Annual Average..................              40              63
----------------------------------------------------------------------------------------------------------------

    Between 2006 and 2019, FEMA awarded a total of 1,551 FMA grants to
mitigate flood risk to 4,521 properties. Of the total 1,551 recipients,
391 recipients, or 25.2 percent, had populations under 50,000 and are
considered small entities. These small entities used the FMA grants to
mitigate flood risk to 766 vulnerable properties. These 391 small
entity recipients are all local governments.
    Pre-BW-12, FEMA awarded 112 grants to small entities. Of these, 109
were for standard mitigation with an average Federal cost share of 73
percent, 2 were RL with an average Federal cost share of 82 percent,
and 1 was SRL with a cost share of 90 percent.

                                                   Table 10--Pre-BW-12 Projects and Value by Grant Category (2019$) Awarded to Small Entities
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Standard (<=75% Federal cost share)       Repetitive loss (RL) (75% Federal Cost     Severe repetitive loss (SRL) (90%-100%
                                                                -------------------------------------------                   Share)                              Federal Cost Share)
                              Year                                                                         -------------------------------------------------------------------------------------
                                                                   Grants      Value of      Federal share                Value of      Federal share                Value of      Federal share
                                                                                grants         obligated      Grants       grants         obligated      Grants       grants         obligated
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2006...........................................................         30      $6,014,828      $4,467,682  .........  ..............  ..............  .........  ..............  ..............
2007...........................................................         25      11,015,869       7,786,046  .........  ..............  ..............  .........  ..............  ..............
2008...........................................................         16       2,189,233       1,603,820  .........  ..............  ..............  .........  ..............  ..............
2009...........................................................         15       8,068,507       5,868,226          2      $2,393,363      $1,952,676          1         $59,465         $53,518
2010...........................................................         11      15,403,139      11,551,457  .........  ..............  ..............  .........  ..............  ..............
2011...........................................................          4       2,950,334       2,079,950  .........  ..............  ..............  .........  ..............  ..............
2012...........................................................          8       6,509,829       4,876,130  .........  ..............  ..............  .........  ..............  ..............
                                                                --------------------------------------------------------------------------------------------------------------------------------
    Total......................................................        109      52,151,739      38,233,311          2       2,393,363       1,952,676          1          59,465          53,518
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Post-BW-12, FEMA awarded 279 grants to small entities. Of these, 40
were standard mitigation with an average Federal cost share of 69
percent, 3 were RL with an average Federal cost share of 88 percent,
and 76 were SRL with an average Federal cost share of 90 percent. While
the cost shares did not change significantly, more applicants received
SRL grants when compared to the pre-BW-12 period. This shows the

prioritization of more vulnerable properties.

                                                   Table 11--Post-BW-12 Projects and Value by Grant Category (2019$) Awarded to Small Entities
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Standard (<=75% Federal cost share)       Repetitive loss (RL) (75%-90% Federal        Severe repetitive loss (SRL) (100%
                                                                -------------------------------------------                cost share)                            Federal cost share)
                              Year                                                                         -------------------------------------------------------------------------------------
                                                                   Grants      Value of      Federal share                Value of      Federal share                Value of      Federal share
                                                                                grants         obligated      Grants       grants         obligated      Grants       grants         obligated
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2013...........................................................          8        $972,391        $435,490          1      $7,274,609      $6,452,685         14      $5,720,524      $3,778,669
2014...........................................................         11       2,575,473       1,623,207  .........  ..............  ..............         16      12,558,967      12,235,583
2015...........................................................          3       2,478,165       1,858,623  .........  ..............  ..............         15      10,676,146      10,007,363
2016...........................................................          6         290,884         197,705          2       1,798,791       1,556,119         17      10,678,636       9,299,774
2017...........................................................         12       5,191,261       3,881,929  .........  ..............  ..............         14       9,198,557       8,627,638
2018...........................................................         41       1,703,802       1,109,366          3       2,014,308       1,764,641         78      16,081,572      14,090,559
2019...........................................................         13         648,276         422,100          1         415,348         363,867         24       3,749,428       3,285,222
                                                                --------------------------------------------------------------------------------------------------------------------------------
    Total......................................................         94      13,860,253       9,528,420          7      11,503,056      10,137,312        178      68,663,830      61,324,808
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    This rule codifies legislative requirements included in the
Biggert-Waters Flood Insurance Reform Act of 2012, Public Law 112-141,
126 Stat. 916 (BW-12), which amended the National Flood Insurance Act
of 1968 (NFIA) and required changes to all major components of the
National Flood Insurance Program (NFIP), including mitigation grants
authorized under the NFIA. FEMA implemented the legislative
requirements in BW-12 through policy/guidance in 2013 and is now
codifying these changes in regulation, to reflect current agency
practice, and to clarify existing regulations. Pursuant to 5 U.S.C.
605(b), FEMA certifies that this regulation will not have a significant
economic impact on a substantial number of small entities.

C. Unfunded Mandates Reform Act of 1995

    Pursuant to Section 201 of the Unfunded Mandates Reform Act of 1995
(Pub. L. 104-4, 2 U.S.C. 1531), each Federal agency ``shall, unless
otherwise prohibited by law, assess the effects of Federal regulatory
actions on state, local, and Tribal governments, and the private sector
(other than to the extent that such regulations incorporate
requirements specifically set forth in law).'' Section 202 of the Act
(2 U.S.C. 1532) further requires that ``before promulgating any
rulemaking that is likely to result in the promulgation of any rule
that includes any Federal mandate that may result in expenditure by
State, local, and Tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any one year, and before promulgating any final rule for
which a general notice of proposed rulemaking was published, the agency
shall prepare a written statement'' detailing the effect on State,
local, and Tribal governments and the private sector. This rule does
not result in such an expenditure, and thus preparation of such a
statement is not required.

D. National Environmental Policy Act of 1969 (NEPA)

    Section 102 of the National Environmental Policy Act of 1969
(NEPA), 83 Stat. 852 (Jan. 1, 1970) (42 U.S.C. 4321 et seq.) requires
Federal agencies to consider the impacts of their proposed actions on
the quality of the human environment. Each agency can develop
categorical exclusions (catexes) to cover actions that have been
demonstrated to not typically trigger significant impacts to the human
environment individually or cumulatively. If an action does not qualify
for a catex and has the potential to significantly affect the
environment, agencies develop environmental assessments (EAs) to
evaluate those actions. The Council on Environmental Quality's (CEQ)
procedures for implementing NEPA, 40 CFR parts 1500 through 1508,
require Federal agencies to prepare Environmental Impact Statements
(EISs) for major Federal actions significantly affecting the quality of
the human environment. At the end of the EA process, the agency will
determine whether to make a Finding of No Significant Impact (FONSI) or
whether to initiate the EIS process.
    Under the National Environmental Policy Act of 1969 (NEPA), as
amended, 42 U.S.C. 4321 et seq. an agency must prepare an Environmental
Assessment (EA) and Environmental Impact Statement (EIS) for any
rulemaking that significantly affects the quality of the human
environment. FEMA has determined that this rulemaking does not
significantly affect the quality of the human environment and
consequently has not prepared an EA or EIS.
    Catex A3 included in the list of exclusion categories at Department
of Homeland Security Instruction Manual 023-01-001-01, Revision 01,
Implementation of the National Environmental Policy Act, Appendix A,
issued November 6, 2014, covers the promulgation of rules, issuance of
rulings or interpretations, and the development and publication of
policies, orders, directives, notices, procedures, manuals, and
advisory circulars if they meet certain criteria provided in A3(a-f).
This rule meets the criteria in A3(a), (b), (c), and (d). The rule
makes a number of regulatory revisions that are strictly
administrative. In addition, the rule amends an existing regulation
without changing its environmental effect, and also implements, without
substantive change, statutory requirements and guidance documents.
Because no extraordinary circumstances have been identified, this rule
does not require the preparation of either an EA or an EIS as defined
by NEPA. See Department of Homeland Security Instruction Manual 023-01-
001-01, Revision 01, Implementation of the National Environmental
Policy Act, section (V)(B)(2).

E. Endangered Species Act

    The Endangered Species Act (ESA) mandates that Federal agencies
determine whether their proposed actions may affect listed species and/
or their designated critical habitat (critical habitat has been
designated for some, but not all listed species). Without authorization
or exemption from Federal resource agencies, it is unlawful for any
person, whether government employee or private citizen, to take listed
animal species.
    To comply with Section 7(a)(2) of the ESA, for every action that
FEMA proposes to carry out, fund, or authorize, FEMA must first
determine if species and habitat are present in the action area. If
species are present in the

action area, then FEMA must make one of the following determinations
with respect to the effect of the proposed action on listed species and
critical habitat: (1) No effect (NE); 2) may affect, but is not likely
to adversely affect (NLAA); or 3) may affect and is likely to adversely
affect (LAA).
    This rule has been evaluated by FEMA and due to the administrative
nature, FEMA has determined the rule does not have the potential to
affect federally-listed species or designated critical habitat. As
such, a ``No Effect'' determination has been made for these activities.
Per the ESA regulations, notification to, and consultation with, the
U.S. Fish and Wildlife Service and/or the National Marine Fisheries
Service are not required for activities with a ``No Effect''
determination.

F. National Historic Preservation Act of 1966

    The National Historic Preservation Act (NHPA) (54 U.S.C. 300101,
formerly 16 U.S.C. 470) was enacted in 1966, with various amendments
throughout the years. Section 106 of the NHPA (54 U.S.C. 306108)
requires Federal agencies to take into account the effect of their
actions on any historic property. It mandates a consultation process in
the early stages of project planning and must be completed prior to the
approval of expenditure of any Federal funds for the undertaking.
Subpart B of 36 CFR part 800 lays out a four-step Section 106 process
to fulfill this obligation: (1) Initiate the process (800.3); (2)
identify historic properties (800.4); (3) assess adverse effects
(800.5); and (4) resolve adverse effects (800.6).
    Pursuant to section 106 of the NHPA and its implementing
regulations at 36 CFR part 800, FEMA has determined that this rule does
not have the potential to cause effects to historic properties and in
accordance with 36 CFR part 800.3(a)(1), FEMA has no further
obligations under section 106.

G. Paperwork Reduction Act of 1995

    Under the Paperwork Reduction Act of 1995 (PRA), as amended, 44
U.S.C. 3501-3520, an agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless the
agency obtains approval from the Office of Management and Budget (OMB)
for the collection and the collection displays a valid OMB control
number. See 44 U.S.C. 3506, 3507. This rule contains collections of
information that are subject to review by OMB. The information
collections included in this rule are approved by OMB under control
numbers 1660-0072 (Flood Mitigation Assistance (eGrants) and Grant
Supplement Information), 1660-0062 (State/Local/Tribal Hazard
Mitigation Plans), 1660-0026 (State Administrative Plan for the Hazard
Mitigation Grant Program), and 1660-0076 (Hazard Mitigation Grant
Program Application and Reporting). Currently, FEMA is working to
reinstate 1660-0103 (Property Acquisition and Relocation for Open
Space).
    This rulemaking calls for no new collections of information under
the PRA. This rule includes information currently collected by FEMA and
approved in OMB information collections 1660-0072, 1660-0062, 1660-
0026, and 1660-0076. Currently, FEMA is working to reinstate 1660-0103.
The actions of this rulemaking do not impose any additional burden to
this collection of information. The changes in this rulemaking do not
change the forms, the substance of the forms, or the number of
recipients who would submit the forms to FEMA.

H. Privacy Act/E-Government Act

    Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must
determine whether implementation of a proposed regulation will result
in a system of records. A record is any item, collection, or grouping
of information about an individual that is maintained by an agency,
including, but not limited to, his/her education, financial
transactions, medical history, and criminal or employment history and
that contains his/her name, or the identifying number, symbol, or other
identifying particular assigned to the individual, such as a finger or
voice print or a photograph. See 5 U.S.C. 552a(a)(4). A system of
records is a group of records under the control of an agency from which
information is retrieved by the name of the individual or by some
identifying number, symbol, or other identifying particular assigned to
the individual. An agency cannot disclose any record which is contained
in a system of records except by following specific procedures.
    The E-Government Act of 2002, 44 U.S.C. 3501 note, also requires
specific procedures when an agency takes action to develop or procure
information technology that collects, maintains, or disseminates
information that is in an identifiable form. This Act also applies when
an agency initiates a new collection of information that will be
collected, maintained, or disseminated using information technology if
it includes any information in an identifiable form permitting the
physical or online contacting of a specific individual. A Privacy
Threshold Analysis was completed.

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

    Executive Order 13175, Consultation and Coordination with Indian
Tribal Governments, 65 FR 67249, November 9, 2000, applies to agency
regulations that have Tribal implications, that is, regulations that
have substantial direct effects on one or more Indian Tribes, on the
relationship between the Federal Government and Indian Tribes, or on
the distribution of power and responsibilities between the Federal
Government and Indian Tribes. Under this Executive Order, to the extent
practicable and permitted by law, no agency shall promulgate any
regulation that has Tribal implications, that imposes substantial
direct compliance costs on Indian Tribal governments, and that is not
required by statute, unless funds necessary to pay the direct costs
incurred by the Indian Tribal government or the Tribe in complying with
the regulation are provided by the Federal Government, or the agency
consults with Tribal officials.
    Although Indian Tribal governments are potentially eligible
applicants under HMA programs, FEMA has determined that this rule does
not have a substantial direct effect on one or more Indian Tribes, on
the relationship between the Federal Government and Indian Tribes, or
on the distribution of power and responsibilities between the Federal
Government and Indian Tribes. There is no substantial direct compliance
cost associated with this rule. The HMA programs are voluntary programs
that provide funding to applicants, including Tribal governments, for
eligible mitigation planning and projects that reduce disaster losses
and protect life and property from future disaster damages. An Indian
Tribal government may participate as either an applicant/recipient or a
subapplicant/subrecipient. FEMA does not expect the regulatory changes
in this rule to disproportionately affect Indian Tribal governments
acting as recipients.

J. Executive Order 13132, Federalism

    Executive Order 13132, Federalism, 64 FR 43255, August 10, 1999,
sets forth principles and criteria that agencies must adhere to in
formulating and implementing policies that have federalism
implications, that is, regulations that have substantial direct effects
on the States, on the relationship between the national government and
the States, or on the distribution of power and responsibilities among
the various levels of government. Federal agencies must closely examine
the

statutory authority supporting any action that would limit the
policymaking discretion of the States, and to the extent practicable,
must consult with State and local officials before implementing any
such action.
    FEMA has reviewed this rule under Executive Order 13132 and has
determined that this rule does not 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, and therefore does not have federalism
implications as defined by the Executive Order. FEMA has determined
that this rule does not significantly affect the rights, roles, and
responsibilities of States, and involves no preemption of State law nor
does it limit State policymaking discretion. This rulemaking amends
regulations governing voluntary grant programs that may be used by
State, local and Tribal governments to fund eligible mitigation
activities that reduce disaster losses and protect life and property
from future disaster damages. States are not required to seek grant
funding, and this rulemaking does not limit their policymaking
discretion.

K. Executive Order 11988, Floodplain Management

    Pursuant to Executive Order 11988, each Federal agency is required
to provide leadership and take action to reduce the risk of flood loss,
to minimize the impact of floods on human safety, health and welfare,
and to restore and preserve the natural and beneficial values served by
floodplains in carrying out its responsibilities for (1) acquiring,
managing, and disposing of Federal lands and facilities; (2) providing
Federally undertaken, financed, or assisted construction and
improvements; and (3) conducting Federal activities and programs
affecting land use, including but not limited to water and related land
resources planning, regulating, and licensing activities. In carrying
out these responsibilities, each agency must evaluate the potential
effects of any actions it may take in a floodplain; to ensure that its
planning programs and budget requests reflect consideration of flood
hazards and floodplain management; and to prescribe procedures to
implement the policies and requirements of the Executive Order.
    Before promulgating any regulation, an agency must determine
whether the regulation will affect a floodplain(s), and if so, the
agency must consider alternatives to avoid adverse effects and
incompatible development in the floodplain(s). If the head of the
agency finds that the only practicable alternative consistent with the
law and with the policy set forth in Executive Order 11988 is to
promulgate a regulation that affects a floodplain(s), the agency must,
prior to promulgating the regulation, design or modify the regulation
in order to minimize potential harm to or within the floodplain,
consistent with the agency's floodplain management regulations and
prepare and circulate a notice containing an explanation of why the
action is located in the floodplain. The purpose of the rule is to
update FEMA's HMA program regulations to reflect statutory changes that
have already been implemented. While the rule revises the regulations
for FMA administered by the NFIP, it would not impact other NFIA
regulations that pertain to land use, floodplain management, or flood
insurance. The majority of the revisions in this rulemaking apply to
the regulations for the FMA program, which is a voluntary grant program
that provides funding for activities designed to reduce the risk of
flood damage to structures insured under the NFIP. When FEMA undertakes
specific actions that may have effects on floodplain management, FEMA
follows the procedures set forth in 44 CFR part 9 to assure compliance
with this Executive Order. These procedures include a specific, 8-step
process for conducting floodplain management and wetland reviews. The
rule does not change this process.

L. Executive Order 11990, Protection of Wetlands

    Pursuant to Executive Order 11990, each Federal agency must provide
leadership and take action to minimize the destruction, loss or
degradation of wetlands, and to preserve and enhance the natural and
beneficial values of wetlands in carrying out the agency's
responsibilities for (1) acquiring, managing, and disposing of Federal
lands and facilities; and (2) providing Federally undertaken, financed,
or assisted construction and improvements; and (3) conducting Federal
activities and programs affecting land use, including but not limited
to water and related land resources planning, regulating, and licensing
activities. Each agency, to the extent permitted by law, must avoid
undertaking or providing assistance for new construction located in
wetlands unless the head of the agency finds (1) that there is no
practicable alternative to such construction, and (2) that the proposed
action includes all practicable measures to minimize harm to wetlands
which may result from such use. In making this finding the head of the
agency may take into account economic, environmental and other
pertinent factors.
    In carrying out the activities described in the Executive Order,
each agency must consider factors relevant to a proposal's effect on
the survival and quality of the wetlands. Among these factors are:
Public health, safety, and welfare, including water supply, quality,
recharge and discharge; pollution; flood and storm hazards; and
sediment and erosion; maintenance of natural systems, including
conservation and long-term productivity of existing flora and fauna,
species and habitat diversity and stability, hydrologic utility, fish,
wildlife, timber, and food and fiber resources; and other uses of
wetlands in the public interest, including recreational, scientific,
and cultural uses.
    The requirements of Executive Order 11990 apply in the context of
the provision of Federal financial assistance relating to, among other
things, construction and property improvement activities. However, this
rule would not have an effect on land use or wetlands. The purpose of
the rule is to update FEMA's HMA program regulations to reflect
statutory changes that have already been implemented. While the rule
revises the regulations for FMA administered by the NFIP, it does not
impact other NFIP regulations that pertain to land use, floodplain
management, or flood insurance. The majority of the revisions in this
rulemaking apply to the regulations for the FMA program, which is a
voluntary grant program that provides funding for activities designed
to reduce the risk of flood damage to structures insured under the
NFIP. When FEMA undertakes specific actions that may have effects on
wetlands, FEMA follows the procedures set forth in 44 CFR part 9 to
assure compliance with this Executive Order. These procedures include a
specific, 8-step process for conducting floodplain management and
wetland reviews. The rule would not change this process.

M. Executive Order 12898, Environmental Justice

    Pursuant to Executive Order 12898, Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations, 59 FR 7629, February 16, 1994, as amended by Executive
Order 12948, 60 FR 6381, February 1, 1995, FEMA incorporates
environmental justice into its policies and programs.

The Executive Order requires each Federal agency to conduct its
programs, policies, and activities that substantially affect human
health or the environment in a manner that ensures that those programs,
policies, and activities do not have the effect of excluding persons
from participation in programs, denying persons the benefits of
programs, or subjecting persons to discrimination because of race,
color, or national origin. This rulemaking will not have a
disproportionately high or adverse effect on human health or the
environment.

N. Congressional Review of Agency Rulemaking

    Under the Congressional Review of Agency Rulemaking Act (CRA), 5
U.S.C. 801-808, before a rule can take effect, the Federal agency
promulgating the rule must submit to Congress and to the Government
Accountability Office (GAO) a copy of the rule, a concise general
statement relating to the rule, including whether it is a major rule,
the proposed effective date of the rule, a copy of any cost-benefit
analysis, descriptions of the agency's actions under the Regulatory
Flexibility Act and the Unfunded Mandates Reform Act, and any other
information or statements required by relevant executive orders.
    FEMA has sent this rule to the Congress and to GAO pursuant to the
CRA. The rule is not a major rule within the meaning of the CRA. It
will not have an annual effect on the economy of $100,000,000 or more,
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, and it will not 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 in domestic and export markets.

List of Subjects

44 CFR Part 77

    Flood insurance, Grant programs.

44 CFR Parts 78 and 79

    Flood insurance, Grant programs.

44 CFR Part 80

    Disaster assistance, Grant programs.

44 CFR Part 201

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

44 CFR Part 206

    Administrative practice and procedure, Coastal zone, Community
facilities, Disaster assistance, Fire prevention, Grant programs-
housing and community development, Housing, Insurance,
Intergovernmental relations, Loan programs-housing and community
development, Natural resources, Penalties, and Reporting and
recordkeeping requirements.

    For the reasons set forth in the preamble, FEMA amends 44 CFR parts
77, 78, 79, 80, 201, and 206 as follows:

PART 78--[REMOVED AND RESERVED]

0
2. Under the authority of 6 U.S.C. 101 et seq.; 42 U.S.C. 4001 et seq.;
42 U.S.C. 4104c, 4104d, remove and reserve part 78.

PART 79--[REDESIGNATED]

0
2. Redesignate part 79 as part 77:

0
3. Revise newly redesignated part 77 to read as follows:

PART 77--FLOOD MITIGATION GRANTS

Sec.
77.1 Purpose and applicability.
77.2 Definitions.
77.3 Responsibilities.
77.4 Availability of funding.
77.5 Application process.
77.6 Eligibility.
77.7 Allowable costs.
77.8 Grant administration.

    Authority: 6 U.S.C. 101 et seq.; 42 U.S.C. 4001 et seq.; 42
U.S.C. 4104c, 4104d.

Sec.  77.1   Purpose and applicability.

    (a) The purpose of this part is to prescribe actions, procedures,
and requirements for administration of the Flood Mitigation Assistance
(FMA) grant program made available under the National Flood Insurance
Act of 1968, as amended, and the Flood Disaster Protection Act of 1973,
as amended, 42 U.S.C. 4001 et seq. The purpose of the FMA program is to
assist States, Indian Tribal governments, and communities for planning
and carrying out mitigation activities designed to reduce the risk of
flood damage to structures insured under the National Flood Insurance
Program (NFIP).
    (b) This part applies to the administration of funds under the FMA
program for which the application period opens on or after October 12,
2021.

Sec.  77.2  Definitions.

    (a) Except as otherwise provided in this part, the definitions set
forth in Sec.  59.1 of this subchapter are applicable to this part.
    (b) Applicant means the entity, such as a State or Indian Tribal
government, applying to FEMA for a Federal award under the FMA program.
Once funds have been awarded, the applicant becomes the recipient and
may also be a pass-through entity.
    (c) Closeout means the process by which FEMA or the pass-through
entity determines that all applicable administrative actions and all
required work of the Federal award have been completed and takes
actions as described in 2 CFR 200.344, ``Closeout.''
    (d) Community means:
    (1) A political subdivision, including any Indian Tribe, authorized
Tribal organization, Alaska Native village or authorized native
organization, that has zoning and building code jurisdiction over a
particular area having special flood hazards, and is participating in
the NFIP; or
    (2) A political subdivision of a State or other authority that is
designated by political subdivisions, all of which meet the
requirements of paragraph (d)(1) of this section, to administer grants
for mitigation activities for such political subdivisions.
    (e) Federal award means the Federal financial assistance a
recipient or subrecipient receives directly from FEMA or indirectly
from a pass-through entity. The terms ``award'' and ``grant'' may also
be used to describe a Federal award under this part.
    (f) Indian Tribal government means any 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
Indian Tribe List Act of 1994, 25 U.S.C. 5131. This does not include
Alaska Native corporations, the ownership of which is vested in private
individuals.
    (g) Pass-through entity means a recipient that provides a subaward
to a subrecipient to carry out part of the FMA program.
    (h) Recipient means the State or Indian Tribal government that
receives a Federal award directly from FEMA. A recipient may also be a
pass-through entity. The term recipient does not include subrecipients.
    (i) Repetitive loss structure means a structure covered under an
NFIP flood insurance policy that:
    (1) Has incurred flood-related damage on 2 occasions, in which the
cost of repair, on average, equaled or exceeded 25% of the value of the
structure at the time of each such flood event; and

    (2) At the time of the second incidence of flood related damage,
the contract for flood insurance contains increased cost of compliance
coverage.
    (j) Severe repetitive loss structure means a structure that is
covered under an NFIP flood insurance policy and has incurred flood-
related damage:
    (1) For which 4 or more separate claims payments have been made
under flood insurance coverage under subchapter B of this chapter, with
the amount of each claim (including building and contents payments)
exceeding $5,000, and with the cumulative amount of such claims
payments exceeding $20,000; or
    (2) For which at least 2 separate flood insurance claims payments
(building payments only) have been made, with cumulative amount of such
claims exceeding the value of the insured structure.
    (k) State means any state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, and the Commonwealth of the Northern Mariana
Islands.
    (l) Subaward means an award provided by a pass-through entity to a
subrecipient, for the subrecipient to carry out part of a Federal award
received by the pass-through entity. It does not include payments to a
contractor or payments to an individual that is a beneficiary of a
Federal program. A subaward may be provided through any form of legal
agreement, including an agreement that the pass-through entity
considers a contract.
    (m) Subapplicant means a State agency, community, or Indian Tribal
government submitting a subapplication to the applicant for assistance
under the FMA program. Upon grant award, the subapplicant is referred
to as the subrecipient.
    (n) Subrecipient means the State agency, community, or Indian
Tribal government that receives a subaward from a pass-through entity
for the subrecipient to carry out an activity under the FMA program.
    (o) Administrator means the head of the Federal Emergency
Management Agency, or his/her designated representative.
    (p) Regional Administrator means the head of a Federal Emergency
Management Agency regional office, or his/her designated
representative.

Sec.  77.3  Responsibilities.

    (a) Federal Emergency Management Agency (FEMA). Administer and
provide oversight to all FEMA-related hazard mitigation programs and
grants, including:
    (1) Issue program implementation procedures, as necessary, which
will include information on availability of funding;
    (2) Award all grants to the recipient after evaluating subaward
applications for eligibility and ensuring compliance with applicable
Federal laws, giving priority to such properties, or to the subset of
such properties, as the Administrator may determine are in the best
interest of the NFIF;
    (3) Provide technical assistance and training to State, local and
Indian Tribal governments regarding the mitigation and grants
management process;
    (4) Review and approve State, Indian Tribal, and local mitigation
plans in accordance with part 201 of this chapter;
    (5) Comply with applicable Federal statutory, regulatory, and
Executive Order requirements related to environmental and historic
preservation compliance, including reviewing and supplementing, if
necessary, the environmental analyses conducted by the State and
subrecipient in accordance with applicable laws, regulations, and
agency policy;
    (6) Monitor implementation of awards through quarterly reports; and
    (7) Review all closeout documentation for compliance and sending
the recipient a request for additional supporting documentation, if
needed.
    (b) Recipient. The recipient must have working knowledge of NFIP
goals, requirements, and processes and ensure that the program is
coordinated with other mitigation activities. Recipients will:
    (1) Have a FEMA approved Mitigation Plan in accordance with part
201 of this chapter;
    (2) Provide technical assistance and training to communities on
mitigation planning, mitigation project activities, developing subaward
applications, and implementing approved subawards;
    (3) Prioritize and recommend subaward applications to be approved
by FEMA, based on the applicable mitigation plan(s), other evaluation
criteria, and the eligibility criteria described in Sec.  77.6;
    (4) Award FEMA-approved subawards;
    (5) Monitor and evaluate the progress of the mitigation activity in
accordance with the approved original scope of work and budget through
quarterly reports;
    (6) Closeout the subaward in accordance with 2 CFR 200.344 and
200.345, and applicable FEMA guidance; and
    (7) Comply with program requirements under this part, grant
management requirements identified under 2 CFR parts 200 and 3002, the
grant agreement articles, and other applicable Federal, State, Tribal
and local laws and regulations.
    (c) Subrecipient. The subrecipient (or subapplicant, as applicable)
will:
    (1) Complete and submit subaward applications to the recipient for
FMA planning and project subawards;
    (2) Implement all approved subawards;
    (3) Monitor and evaluate the progress of the mitigation activity in
accordance with the approved original scope of work and budget through
quarterly reports;
    (4) Comply with program requirements under this part, grant
management requirements identified under 2 CFR parts 200 and 3002, the
grant agreement articles, and other applicable Federal, State, Tribal
and local laws and regulations; and
    (5) Closeout the subaward in accordance with 2 CFR 200.344 and
200.345, and applicable FEMA guidance.

Sec.  77.4  Availability of funding.

    (a) Allocation. (1) For the amount made available for the FMA
program, the Administrator will allocate the available funds based upon
criteria established for each application period. The criteria may
include the number of NFIP policies, severe repetitive loss structures,
repetitive loss structures, and any other factors the Administrator
determines are in the best interests of the NFIF.
    (2) The amount of FMA funds used may not exceed $50,000 for any
mitigation plan of a State or $25,000 for any mitigation plan of a
community.
    (b) Cost share. All mitigation activities approved under the grant
will be subject to the following cost share provisions:
    (1) For each severe repetitive loss structure, FEMA may contribute
either:
    (i) Up to 100 percent of all eligible costs if the activities are
technically feasible and cost effective; or
    (ii) Up to the amount of the expected savings to the NFIP for
acquisition or relocation activities;
    (2) For repetitive loss structures, FEMA may contribute up to 90
percent of the eligible costs;
    (3) For all other mitigation activities, FEMA may contribute up to
75 percent of all eligible costs.
    (4) For projects that contain a combination of severe repetitive
loss, repetitive loss, and/or other insured structures, the cost share
will be calculated as appropriate for each type of structure submitted
in the project subapplication.

    (c) Failure to make award within 5 years. Any FMA application or
subapplication that does not receive a Federal award within 5 years of
the application/subapplication submission date is considered to be
denied, and any funding amounts allocated for such applications/
subapplications will be made available for other FMA awards and
subawards.

Sec.  77.5  Application process.

    (a) Applicant. (1) Applicants will be notified of the availability
of funding for the FMA program pursuant to 2 CFR 200.203 and 200.204.
    (2) The applicant is responsible for soliciting applications from
eligible communities, or subapplicants, and for reviewing and
prioritizing applications prior to forwarding them to FEMA for review
and award.
    (b) Subapplicant. Communities or other subapplicants who choose to
apply must develop subapplications within the timeframes and
requirements established by FEMA and must submit subapplications to the
applicant.

Sec.  77.6  Eligibility.

    (a) NFIP requirements. (1) States, Indian Tribal governments, and
communities must be participating in the NFIP and may not be suspended
or withdrawn under the program.
    (2) For projects that impact individual structures, for example,
acquisitions and elevations, an NFIP policy for the structure must be
in effect prior to the opening of the application period and be
maintained for the life of the structure.
    (b) Plan requirement--(1) Applicants. States must have a FEMA-
approved mitigation plan meeting the requirements of Sec.  201.4 of
this chapter that provides for reduction of flood losses to structures
for which NFIP coverage is available. Indian Tribal governments must
have a FEMA-approved mitigation plan meeting the requirements of Sec.
201.7 of this chapter that provides for reduction of flood losses to
structures for which NFIP coverage is available. The FEMA-approved
mitigation plan is required at the time of application and award.
    (2) Subapplicants. To be eligible for FMA project grants,
subapplicants must have an approved mitigation plan in accordance with
part 201 of this chapter that provides for reduction of flood losses to
structures for which NFIP coverage is available. The FEMA-approved
mitigation plan is required at the time of application and award.
    (c) Eligible activities--(1) Planning. FMA planning grants may be
used to develop or update State, Indian Tribal and/or local mitigation