Disaster Assistance: Issues Related to the Development of FEMA's Insurance Requirements

GGD/OGC-00-62: Feb 25, 2000

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Pursuant to a congressional request, GAO evaluated the Federal Emergency Management Agency's (FEMA) efforts to develop its draft insurance regulations, focusing on: (1) the extent that FEMA obtained and incorporated input from state and local agencies and public entities likely to be affected by the draft regulation; (2) FEMA's compliance with Executive Order 12866, the Regulatory Flexibility Act, and applicable guidance governing the rulemaking process; and (3) FEMA's internal rulemaking processes and procedures.

GAO noted that: (1) during the process of drafting its insurance regulations, FEMA took a number of steps to obtain and incorporate input on the content of its draft regulation from representatives of state and local government entities; (2) from January through October 1999, FEMA met with various groups, including public risk managers, emergency management service agencies, state insurance commissioners, and insurance companies and organizations; (3) based on input received from these meetings, FEMA appeared to have made a number of changes to its draft regulation; (4) as required by Executive Order 12866 for significant regulatory actions, FEMA submitted its draft notice of proposed rulemaking to the Office of Management and Budget (OMB) on July 2, 1999, for its review and clearance; (5) however, FEMA had not addressed two of three key requirements contained in the executive order and related OMB guidance for economically significant regulatory actions; (6) specifically, FEMA had not performed an analysis of the expected costs and benefits of the draft regulation, and had not prepared a comprehensive analysis of other alternatives; (7) in response to GAO's preliminary discussions with FEMA about these issues, FEMA entered into a contract with a management consulting firm to conduct a cost-benefit analysis and to examine and assess alternative approaches; (8) in addition, FEMA began additional analysis of the impact of its draft regulation on small entities, such as local government agencies and nonprofit organizations, in response to OMB's concerns about FEMA's compliance with the Regulatory Flexibility Act; (9) FEMA decided in January 2000 to issue an advance notice of proposed rulemaking before issuing a notice of proposed rulemaking, which will provide affected parties an additional opportunity to provide input and provide additional time for FEMA to complete the various required analyses; (10) many of the problems GAO observed with the processes FEMA followed in developing the draft regulation appeared to be the result of weaknesses in FEMA's internal rulemaking processes and procedures; and (11) FEMA's internal guidance and procedures governing the formulation of proposed rulemaking have not been updated in more than 10 years.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On February 29, 2000, FEMA's Director appointed the General Counsel as the Regulatory Policy Officer for the agency. The appointment document charges the Regulatory Policy Officer with fulfilling the duties and responsibilities required under Executive Order 12866. Among other things, Executive Order 12866 requires the Regulatory Policy officer be involved at each stage of the rulemaking process.

    Recommendation: To help ensure that its rulemaking process complies with the requirements contained in federal laws, executive orders, and OMB guidance, the Director, FEMA, should designate a Regulatory Policy Officer, as required under Executive Order 12866, and charge that individual with responsibility for being involved at each stage of the rulemaking process.

    Agency Affected: Department of Homeland Security: Directorate of Emergency Preparedness and Response

  2. Status: Closed - Implemented

    Comments: FEMA has updated its internal guidance on federal rulemaking procedures. The updated guidance--"Guidance for Rulemaking Documents" and "Rulemaking Requirements"--is used by both the lawyers and program staff who are involved in rulemaking. The updated guidance includes references to current federal laws, executive orders, and OMB requirements governing the rulemaking process.

    Recommendation: To help ensure that its rulemaking process complies with the requirements contained in federal laws, executive orders, and OMB guidance, the Director, FEMA, should update its external regulations and internal written guidance and manuals governing the rulemaking process to reflect the current requirements contained in federal laws, executive orders, and OMB guidance.

    Agency Affected: Department of Homeland Security: Directorate of Emergency Preparedness and Response

  3. Status: Closed - Implemented

    Comments: According to a FEMA official, the agency is working closely with the Office of Management and Budget to monitor and obtain feedback on the compliance of FEMA's rulemaking with relevant federal laws, executive orders, and OMB guidance. In addition, FEMA's Director has required that all policies or the agency be run through FEMA's Office of General Counsel for review and approval before issuance. FEMA also has an ongoing process to increase the ability of its Office of General Counsel to oversee and monitor rulemaking, particularly with regard to the regulatory analyses required for each rule.

    Recommendation: To help ensure that its rulemaking process complies with the requirements contained in federal laws, executive orders, and OMB guidance, the Director, FEMA, should monitor FEMA's compliance with relevant federal laws, executive orders, and OMB guidance governing the rulemaking process.

    Agency Affected: Department of Homeland Security: Directorate of Emergency Preparedness and Response

 

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