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Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations arbitration rather than a second appeal, they would be responsible for their share of the cost of the arbitration process.
All small entities would have to meet the final requirements to be eligible for arbitration. FEMA identified 3,478
applicants for FEMAs PA Program 39
that would be eligible for arbitration under the final requirements for the time frame from 2010 through 2019.
FEMA used Slovins formula 40 and a 90
percent confidence interval to determine the sample size. FEMA
sampled 97 of these applicants and found that 74 76 percent met the definition of a small entity based on the population size of local governments less than 50,000 population,41 or PNPs based on size standards set by the SBA.42 The remaining 23 entities were not found to be considered small entities. Eligible small entities included 67 small government agencies and seven PNP organizations. Based on information presented in the Executive Orders 12866 and 13563 section, FEMA
estimates 15 arbitration cases per year.
If 76 percent of these are small entities, FEMA estimates 11 arbitration requests per year from small entities with an average cost of between $13,211 and $22,651 per case. Eleven small entities do not represent a substantial number of small entities impacted by this final rule and the costs imposed to these small entities are not significant.

must meet all three of the following conditions: 1 The amount in dispute arises from a disaster declared after January 1, 2016; 2 the disputed amount exceeds $500,000 or $100,000
if the applicant is in a rural area, defined as having a population of less than 200,000 living outside an urbanized area; and 3 the applicant submitted a first appeal with FEMA
pursuant to the requirements established in 44 CFR 206.206.
The applicant must submit a Request for Arbitration to the recipient, CBCA, and FEMA. The Request for Arbitration must contain a written statement, which specifies the amount in dispute, all documentation supporting the position of the applicant, the disaster number, and the name and address of the applicants authorized representative or counsel. FEMA estimates that it will take an applicant 2 hours to complete the Request for Arbitration these 2
hours are accounted for in the economic analysis through the 47 hours of hearing preparation time for applicants with a wage rate of $86.36 for a general and operations manager. FEMA estimates the opportunity cost of time for completing the request will be $172.72
per applicant. With an estimated 11
cases per year, FEMA estimates the total burden for completing the request is $1,900 per year. The person completing the request would need to be familiar with PA regulations and policies.

5. Description of the projected reporting, recordkeeping, and other compliance requirements of the rule, including an estimate of the classes of small entities which will be subject to the requirement and the types of professional skills necessary for preparation of the report or record.
ArbitrationAs an alternative to the appeal process, applicants may request arbitration of the disputed determination. To be eligible for Section 423 arbitration, a PA applicants request
6. Description of the steps the agency has taken to minimize the significant economic impact on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each of the other significant alternatives to the rule considered by the agency which affect the impact on small entities was rejected.
The alternatives included: 1 Using another definition for rural and 2
not requiring electronic submission.
FEMA considered using OMBs nonmetropolitan area definition as an alternate definition of the term rural.
OMBs nonmetropolitan area is defined as areas outside the boundaries of metropolitan areas and are further subdivided into two types:
1. Micropolitan micro areas, which are nonmetro labor-market areas centered on urban clusters of 10,000
49,999 persons and defined with the same criteria used to define metro areas.
2. All remaining counties, often labeled noncore counties because they are not part of core-based metro or micro areas.

39 FEMA reported 3,778 applicants in the NPRM
to this rule. The number of applicants has since been adjusted to account for more recent data and new timeframe for analysis. The NPRM contained data from 20092017 due to the limited data available at that time. This final rule contains data from 20102019.
40 Slovins formula is n = N/1 + Ne2. 3,478/
1 + 3,478 0.12 = 97 rounded.
41 Information on population sizes was obtained using the U.S. Census Bureaus City and Town Population Totals 20102018. Available at https
www.census.gov/data/tables/time-series/demo/
popest/2010s-total-cities-and-towns.html.
42 Small Business Administration. Table of Size Standards .xlxs. Available at https
www.sba.gov/document/support-table-sizestandards. Revenue and employment information for individual PNPs was obtained from PNP
websites.

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OMB defines metropolitan areas to include:
1. Central counties with one or more urbanized areas; urbanized areas are densely-settled urban entities with 50,000 or more people.
2. Outlying counties that are economically tied to the core counties as measured by labor-force commuting.
Outlying counties are included if 25
percent of workers living in the county commute to the central counties, or if 25
percent of the employment in the county consists of workers coming out from the central countiesthe so-called reverse commuting pattern.
FEMA did not recommend using the OMBs definition as it combines rural area populations into Metropolitan counties. The OMB definition would also result in some rural areas, such as the Grand Canyon, being considered a metropolitan county. This alternative would not result in reducing the impact on small entities while accomplishing the stated objective of the rule.
FEMA considered not requiring electronic submission. Current practices allow FEMA to accept physical mail for appeals. In addition, FEMA currently accepts electronic submissions for requests for arbitration under 44 CFR
206.209. As CBCA provided an electronic address for applicants to submit their request for arbitration and documentation, applicants must use electronic method if they choose the arbitration process. Thus, electronic submission will not pose an additional undue burden on applicants that are considered small entities.
Conclusion This rule codifies legislative requirements included in the DRRA, which adds arbitration as a permanent alternative to a second appeal under the PA Program. Additionally, applicants that have had a first appeal pending with FEMA for more than 180 calendar days may withdraw such appeal and submit a request for arbitration. On December 18, 2018, FEMA implemented section 1219 of DRRA by posting a Fact Sheet on its website. On June 21, 2019, CBCA published a final rule see 84 FR
29085 and FEMA has published a corresponding fact sheet. PA arbitration has been available for disasters declared after January 1, 2016. FEMA certifies that this regulation will not have a significant economic impact on a substantial number of small entities.
C. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 658, 15011504, 1531
1536, 1571 the Act, pertains to any final rulemaking which implements any
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