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Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Rules and Regulations
estimates, FEMA looked at all PA
appeals from 2010 through 2019, rather than just the appeals resulting from Hurricanes Katrina and Rita since a second appeal was available to all applicants. FEMA found that there were 874 second appeals submitted.17 Of that total, FEMA had data on the amount in
dispute for 751 appeals. FEMA applied the urban/rural and minimum project amount requirements to these appeals and found that 353 or 47 percent would have been eligible for arbitration under this final rule 353 751 100 =
approximately 47 percent.18

FEMA used the number of second appeals by year, then applied the percent eligible for arbitration under the final rule of 47 percent, then applied the percent choosing arbitration in lieu of a first appeal of 32 percent to calculate the expected number of arbitration cases from 2010 to 2019 as shown in Table 1.

TABLE 1TOTAL AND ANNUAL AVERAGE ESTIMATED ARBITRATION CASES PER YEAR
Number of second appeals
CY

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2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

Percent eligible under final rule %

Percent choosing arbitration %

Expected number of arbitration cases

93
107
92
102
82
43
83
76
110
86

47
47
47
47
47
47
47
47
47
47

32
32
32
32
32
32
32
32
32
32

14
16
14
15
12
6 12
11
17
13

Total

874

130

Average

87

13

Based on historical data from 2010
through 2019 and case data from 44 CFR
206.209, FEMA estimates that there would be an average of 13 arbitration cases in lieu of a second appeal per year under the final rule.
Arbitration has been available under 42 U.S.C. 5189ad5 since January 1, 2016. So far, 20 cases were submitted, with three submitted for a first appeal lasting more than 180 days. Based on this limited data, FEMA estimates that 15 percent of arbitration cases would result from a withdrawal of a first appeal.19 Applying the 15 percent arbitration rate to the annual average number of expected arbitration cases would result in two additional arbitration case per year 15 percent
13 cases = 1.95, rounded to two cases.
Therefore, FEMA estimates an average of 15 arbitration cases per year 13 + 2
= 15 arbitrations per year.
In this final rule, FEMA is removing the phrase or an eligible applicant may arbitrate from 206.206b and FEMA
added a second sentence to 206.206b that says: an eligible applicant may request arbitration to dispute the eligibility for assistance or repayment of assistance so that it follows the Stafford Act. This change in this final rule will not impact the number of
arbitration cases per year since applicants can still request to arbitrate the case. However, the results of the arbitration may be impacted by the change in language. FEMA further discusses this point in our transfers and uncertainty analysis sections.

17 During the period of 20102019, 874 second level appeals were submitted. FEMA has amount in dispute data for 751 cases. FEMA does not have the amount in dispute data on the 123 cases because FEMA did not maintain electronic records for appeals prior to 2015. Prior to 2015, this data was
manually entered into a database with many fields left blank.
18 Out of 751 cases, 258 had an amount in dispute greater than $500,000 and would be eligible regardless of the urban/rural classification. 288
cases were for amounts between $100,000 and $500,000, of which 95 were classified as rural. 353

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Costs Based on experience from the arbitrations conducted for Hurricanes Katrina and Rita, costs from this final rule would arise mainly from travel expenses; opportunity costs of time for the applicant and applicants representatives, recipients representatives, and FEMAs representatives; and contract costs for applicants and FEMA to retain legal counsel and experts. Cost estimates are based on the expected number of arbitration cases per year. Since FEMA
does not reimburse for applicant arbitration expenses, FEMA does not have data on the expenses incurred by applicants who have arbitrated from Hurricanes Katrina and Rita to serve as a proxy for this final rule. Other provisions of the final rule, such as timeframe requirements, electronic filing requirements, technical advice and clarifications would not have associated costs. FEMA does not expect
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the electronic filing requirement to have associated costs since nearly all applicants have access to internet and email, and most submit arbitration requests through their attorneys. The final timeframe requirements would align the submission deadlines for arbitration and appeals and would not place additional burdens on the applicants. FEMA currently provides technical advice as needed, so this would not be a new practice under this final rule.
The arbitration process is highly customizable for the applicant. The applicant may choose to use an attorney, or several attorneys to represent them during the arbitration process. The applicant may also choose not to hire legal representation at all.
Additionally, the applicant may use any number of expert witnesses or none.
Because of the variability in the way arbitrations are conducted, FEMA is presenting what it considers a typical case upon which to base its cost estimates. This typical case is based on recent experience with the 20
arbitration cases already filed.
Generally, the applicant will use one or two attorneys and at least one expert witness. However, the arbitration = 258 + 95 cases out of 751, or 47 percent would have met the eligibility requirements for arbitration in lieu of a second appeal.
19 Calculation: 3 cases where a first appeal lasted more than 180 days 20 arbitration cases 100
= 15 percent.

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