Last month, the Federal Emergency Management Agency (FEMA) published a final rule outlining a new arbitration option for applicants dissatisfied with public assistance determinations.
Until now, cities and counties unhappy with FEMA disaster assistance determinations had but one course of action available – a two-level appeal process requiring a regional office or headquarters to find decisions made by FEMA field staff arbitrary, capricious, or an abuse of discretion or in violation of law. Some appellants found the appeal process unhelpful because upper level FEMA officials reviewed field workers’ decisions – a less than optimal situation from the appellant’s perspective.
Under the new arbitration option, FEMA must choose an arbitration sponsor that is unaffiliated with the dispute to ensure independence of the arbitration process. The sponsor is responsible for choosing the panel which will be comprised of three members who are qualified to review and resolve disputes. The arbitrators must be neutral and independent and must not have had any prior involvement with the contested appeal.
Under the new rule, the arbitration panel is required to issue a written and reasoned decision within 60 days of the arbitration hearing or administrative conference. Some recent appellants will appreciate this timeline as the old appeals process has, in some cases, taken many months and even years. The standard of review under arbitration does not appear to differ from the existing appeals process; the arbitration panel will only set aside the agency determination if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. In the case of a FEMA finding of material fact adverse to the applicant on the first appeal, the panel will only set aside or reverse such a finding if the finding was clearly erroneous. The lack of authority to review the case de novo makes arbitration less attractive to some applicants.
Arbitration will be available for disputes related to disasters declared on or after October 30, 2012, in an amount equal to or greater than $1,000,000, for projects with a non-Federal cost share requirement, and for applicants that have completed a first appeal. The arbitration decisions will be binding. The authority for the arbitration option sunsets on December 31, 2015. FEMA’s final rule is located here.