Fema Situation Updates

7 Feb 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Louisiana Department of Natural Resources
Disaster Number: 
1603-DR-LA
DSR: 
20449
Date Signed: 
Friday, February 6, 2015
PA ID: 
000-UCPOY-00
Summary/Brief: 

Conclusion: The requested debris removal in Lake Lery and Lake Hermitage is ineligible for Public Assistance (PA) funding because the Applicant did not establish that any debris in the two lakes is a direct result of the declared disaster, or that it poses an immediate threat.

Summary Paragraph

As a result of Hurricane Katrina, debris was deposited in waterways throughout Louisiana.  FEMA executed an Inter-Agency Agreement (IAA) with the United States Coast Guard (USCG) to remove eligible marine debris.  The USCG identified and removed eligible debris from Lake Lery and Lake Hermitage.  On August 8, 2012, the Applicant requested a new Project Worksheet (PW) for the “identification, removal, and disposal of waterborne debris” related to Hurricane Katrina from both lakes.  The Applicant did not document the existence of any debris.  FEMA prepared PW 20449 to address the Applicant’s request and determined the work to be ineligible because the USCG removed all Katrina-related debris that posed an immediate threat to life, public health, and safety.  In its first appeal letter, the Applicant claimed that Hurricane Katrina deposited debris on the water bottoms of Lake Lery and Lake Hermitage.  The Applicant reasoned that this debris should be eligible for PA funding pursuant to 44 C.F.R. § 206.224 because it continued to pose a risk to life, public health, and safety.  The Applicant also claimed that the USCG did not remove all eligible debris.  The Regional Administrator (RA) denied the appeal, finding that the Applicant did not include any documentation to establish the existence of any Katrina-related debris.  In its second appeal, the Applicant reiterates its first appeal claims, states that FEMA did not consider its first appeal documentation, and provides a draft trip report to demonstrate the existence of Katrina-related debris. 

Authorities and Second Appeals

  • 44 C.F.R. § 206.223(a)(1).
  • 44 C.F.R. § 206.224(a).

Headnotes

  • 44 C.F.R. § 206.223(a)(1) provides that, to be eligible, work must be required as a direct result of the disaster.
    • The Applicant has not established that any debris in the two lakes is a direct result of Hurricane Katrina.  Therefore, the proposed work to identify, remove, and dispose of any debris in the two lakes is ineligible.
  •  According to 44 C.F.R. § 206.224(a), if debris removal is in the public interest, the RA may provide assistance for the removal of debris and wreckage from publicly and privately owned lands and waters.  Debris removal is considered to be in the public interest when it is necessary to eliminate immediate threats to life, public health, and safety, or eliminate immediate threats of significant damage to improved public or private property.
    • More than nine years after the declared disaster, the Applicant has not demonstrated that any debris in the lakes poses an immediate threat.  Thus, the requested debris removal is ineligible.

 

Letter: 

February 6, 2015

Kevin Davis
Director
Governor’s Office of Homeland Security and Emergency Preparedness
7667 Independence Boulevard
Baton Rouge, Louisiana 70806

Re:  Second Appeal – Louisiana Department of Natural Resources, PA ID 000-UCPOY-00, FEMA-1603-DR-LA, Project Worksheet (PW) 20449, Direct Result of Disaster

Dear Mr. Davis:

This is in response to your letter dated June 4, 2014, which transmitted the referenced second appeal on behalf of the Louisiana Department of Natural Resources (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of funding for debris removal from Lake Lery and Lake Hermitage. 

As explained in the enclosed analysis, I have determined that the Applicant did not establish that any debris in these two lakes is a direct result of the disaster, or that the debris poses an immediate threat to life, public health, or safety.  In accordance with Title 44 of the Code of Federal Regulations (C.F.R.) § 206.223(a)(1), eligible work must be required as a direct result of the disaster.  Therefore, I am denying this appeal.

Please inform the Applicant of my decision.  This determination constitutes the final decision on this matter pursuant to 44 C.F.R. § 206.206 Appeals.  

Sincerely,      

/s/                             

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  George A. Robinson
       Regional Administrator
       FEMA Region VI

Analysis: 

Background

On August 29, 2005, Hurricane Katrina struck the Gulf Coast and deposited debris in waterways throughout Louisiana.  In September 2006, FEMA executed an Intra-Agency Agreement (IAA) with the United States Coast Guard (USCG) to remove eligible marine debris.  The IAA scope of work provided that the USCG will perform removal of marine debris, including stranded vessels, wrecks, and debris that “pose an immediate threat to public health and safety, pose the potential for a hazard to navigation or directly impact the economy of the community at large, from the commercial waterways and navigable channels.” [1]

The USCG removed debris from Lake Lery in St. Bernard Parish and Lake Hermitage in Plaquemines Parish.  Between December 2006 and April 2007, the USCG identified and removed 490 cubic yards (CY) of eligible debris from Lake Lery.[2]  In October 2008, USCG’s side-scan sonar surveys for Lake Lery identified additional potentially eligible debris targets.  However, the USCG could not locate the debris targets during subsequent removal operations; consequently, no debris was removed.[3]  In July 2009, the USCG removed a partially submerged vessel from a canal located on the western extent of Lake Hermitage.[4]

On August 30, 2008, the USCG, FEMA, State of Louisiana, and St. Bernard Parish entered into a Memorandum of Agreement (Memorandum) stating that the USCG was authorized by FEMA to remove storm generated debris from commercial waterways in St. Bernard Parish.  The Memorandum also stated that “[d]ebris pickup is now greatly reduced and is at a rate of collection where the Parish resources can likely manage any further collection.”[5]  Representatives from the USCG, FEMA, and St. Bernard Parish signed the Memorandum. The Memorandum did not include a signature from a State of Louisiana representative.  On May 4, 2011, the same four entities entered into another Memorandum of Agreement, stating that the USCG was authorized to remove storm generated debris, and eligible debris was located and subsequently removed.  Signatures from all four entity representatives documented the completion of the FEMA debris removal mission in St. Bernard Parish as of February 1, 2011.[6]

On August 8, 2012, the Louisiana Department of Natural Resources (Applicant) submitted a new Project Worksheet (PW) requesting Public Assistance (PA) Program funding for Hurricane Katrina-related debris removal from Lake Lery and Lake Hermitage, which have state-owned water bottoms that are the Applicant’s legal responsibility.  The Applicant stated that a new PW was necessary for the “identification, removal, and disposal of waterborne debris in Lake Lery and Lake Hermitage.”  The Applicant did not include any documentation with the PW request to establish that any debris existed.  FEMA prepared PW 20449 to address the Applicant’s request, and determined the requested work to be ineligible because the USCG had removed all Katrina-related debris that posed an immediate threat to life, public health and safety.  Subsequently, FEMA obligated PW 20449 for zero dollars on November 27, 2012.

First Appeal

On February 8, 2013, the Applicant submitted a first appeal to the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Grantee).  In its appeal, the Applicant raised the following six issues:

  1. The water bottoms of Lake Lery and Lake Hermitage contained debris deposited by Hurricane Katrina.
  2. The debris removal from the lakes was eligible for Public Assistance pursuant to 44 C.F.R. §206.224.
  3. The USCG debris removal operation did not remove all eligible debris from the two lakes.
  4. The USCG was no longer actively performing debris removal in the two lakes.
  5. FEMA’s assertion—that the bathymetry of the two lakes made it difficult for the USCG to bring in debris removal equipment—was not a legally valid reason for an ineligibility determination of the Applicant’s own debris removal operation.
  6. The Applicant is entitled to Public Assistance for eligible debris removal.

On January 8, 2014, the FEMA Region VI Regional Administrator (RA) denied the first appeal, determining that the requested debris removal from Lake Lery and Lake Hermitage was ineligible.  The RA asserted that, pursuant to 44 C.F.R. § 206.223(a)(1), eligible work must be required as a direct result of the disaster; in this case, the Applicant had not established the existence of any Hurricane Katrina related debris.  Further, the RA noted that the USCG’s extensive debris removal efforts included Lake Lery and Lake Hermitage.  The RA concluded that the Applicant’s claim did not meet the requirements for debris removal in accordance with 44 C.F.R. § 206.224.

Second Appeal  

In its second appeal, dated April 4, 2014, the Applicant requests a reconsideration of its first appeal.  To further support its first appeal assertions, the Applicant provides a draft trip report, which allegedly demonstrates the existence of debris in Lake Lery and Lake Hermitage, but not that the debris is directly related to Hurricane Katrina. 

On June 4, 2014, the Grantee transmitted the Applicant’s second appeal, indicating its support of the appeal.  In addition to agreeing with the Applicant’s arguments, the Grantee suggests that it is not the Applicant’s sole responsibility to monitor and track the debris in the waterways.  The Grantee emphasizes that, from the beginning, the Applicant requested FEMA to locate and identify the debris in the waterway, in addition to the removal and disposal of this debris.  The Grantee also asserts that the Applicant may eventually be entitled to direct administrative costs. 

Discussion

Direct Result of Disaster

In general, to be eligible for PA funding, the work must be required as a direct result of the disaster.[7]  If any debris meets this threshold requirement, then the debris removal may be eligible for funding when it is in the public interest, as set forth in  44 C.F.R. § 206.224(a).[8]

The Applicant failed to establish that the debris was a direct result of Hurricane Katrina.  As evidence of the existence of debris in Lake Lery and Lake Hermitage, the Applicant provides a draft trip report, dated June 15, 2012, [9] and an email from a private citizen, dated April 6, 2012.[10]  According to the trip report, the Applicant’s field survey team found nine debris targets in Lake Lery and eight debris targets in Lake Hermitage.  The Lake Lery debris targets consisted mostly of trees and one “boat submerged near [the] bank.”[11]  The Lake Hermitage debris targets consisted of four “unknown” objects or items, with the remaining four items described as “fiberglass boat,” “tank on shore,” “loose piling,” and “iron pipes on bottom left by oil co. [o]lder than 50 years. . . [l]ikely not eligible for FEMA PA.”[12]   Notably absent from the trip report is any information related to the origin of the debris targets found.  Additionally, the email from the aforementioned private citizen conveys the message that he “recently returned to commercial crabbing in Lake Lery and discovered that it is littered with hurricane debris…that it is hazardous to navigation.”[13]  However, the information in the email is only one private citizen’s opinion that the debris is hurricane related, and does not directly support a connection between the encountered debris and the declared disaster.

In addition, Hurricane Katrina made landfall in 2005, almost seven years prior to the debris sightings documented in the 2012 draft trip report.  Given the history of frequent hurricanes that impacted the Louisiana waterways before and after Hurricane Katrina,[14] it is very possible that the debris encountered and documented in the 2012 draft trip report resulted from an event prior to Hurricane Katrina.[15]  Alternatively, an event after Hurricane Katrina could have deposited the debris in the lakes.  Further, the Grantee admits in the second appeal transmittal that, “[w]aterway debris is most often, by its nature, not stationary; it is subject to the movement of the water in which it is located.”  Moreover, the USCG noted, following its unsuccessful attempt to locate and remove debris targets previously detected in a sonar survey, that the “[i]tem may have moved from original location since date of survey.”[16] These statements reveal the lack of certainty that the debris is a direct result of Hurricane Katrina.

The Applicant attempted to document the existence of debris in the two lakes with the 2012 draft trip report.  However, this 2012 draft report, which identified alleged hurricane debris from an event seven years earlier, does not demonstrate that the identified items were the direct result of Hurricane Katrina.  Thus, the requested debris removal work is ineligible. 

Immediate Threat

Even if, arguendo, all of the debris in both Lake Lery and Lake Hermitage were a direct result of the disaster (Hurricane Katrina), the Applicant failed to demonstrate that the debris removal would be in the public interest, pursuant to 44 C.F.R. § 206.224(a).[17]   Debris removal, in this instance, is in the public interest when it is necessary to:

  1. Eliminate immediate threats to life, public health, and safety; or
  2. Eliminate immediate threats of significant damage to improved public or private property; or
  3. Ensure economic recovery of the affected community to the benefit of the community-at-large.[18]

As of the date of the second appeal, more than nine years after the disaster, any threat posed by the debris in the lakes is not considered an immediate threat, which is defined as the threat of damage from an event that could reasonably occur within five years.[19]  Furthermore, the Applicant has not presented any argument nor provided any documentation to substantiate that the debris removal from the two lakes would ensure economic recovery of the affected community to the benefit of the community at large, in accordance with the requirement set forth in the regulations.[20]  Accordingly, the debris removal is not eligible for PA funding, pursuant to 44 C.F.R. § 206.224(a).

Direct Administrative Costs

The Applicant’s direct administrative costs (DAC), if incurred and properly documented, would only be eligible for funding if the associated work is eligible.  As the work in this instance is not eligible, further discussion of DAC is unnecessary. 

Conclusion

The Applicant did not establish that any debris in Lake Lery or Lake Hermitage is a direct result of Hurricane Katrina.  Further, the Applicant did not demonstrate that the debris removal work is in the public interest, in accordance with 44 C.F.R. § 206.224(a).[21]  Therefore, the requested debris removal from Lake Lery and Lake Hermitage is ineligible for PA funding.


[1] Intra-Agency Agreement Between Federal Emergency Management Agency (FEMA) and the United States Army (sic) Coast Guard (USCG), at 7 (2006).

[2] Phase II Marine Debris Removal, Lake Lery, Case 8418, USCG/FEMA, at 7 (Undated).

[3] Waterway Subsurface Debris Target Evaluation Sheet, Lake Lery, Case 8428, Target 1003, 1004, 1005, and 1006, USCG (Oct. 1, 2008).

[4] Memorandum from Mr. George E. Amon III (Office of Claims and Litigation, USCG) to Jeffery Jones (FEMA representative for Marine Debris Removal), U.S. Coast Guard/FEMA Marine Debris Removal Effort for Lake Lery and Lake Hermitage, at 2 (Undated).

[5] Memorandum of Agreement Amoung (sic) U.S. Coast Guard, Federal Emergency Management Agency, State of Louisiana, St., Bernard Parish (Aug. 30, 2008)

[6] Memorandum of Agreement Among U.S. Coast Guard, Federal Emergency Management Agency, State of Louisiana, St., Bernard Parish (May 4, 2011)

[7] 44 C.F.R. § 206.223(a)(1) (2004). 

[8] 44 C.F.R. § 206.224(a).

[9] Lakes Hermitage and Lery Marine Debris Evaluation Trip Report, DRAFT, prepared by IEM, Inc. for Coastal Protection and Restoration Authority (CPRA) (June 15, 2012) [hereinafter “2012 Draft Trip Report”].

[10] Email from Frederick Everhardt to Leo Richardson (April 6, 2012)  [hereinafter Email from Frederick Everhardt].

[11] 2012 Trip Report.

[12] Id.

[13] Email from Frederick Everhardt.

[14] List of Louisiana hurricanes (2000–present), Wikipedia, http://en.wikipedia.org/wiki/List_of_Louisiana_hurricanes_(2000%E2%80%93present) (last visited Dec. 9, 2014) (listing the following hurricanes: Isidore (2002), Lili (2002), Cindy (2005), Katrina (2005), Rita (2005), Gustav (2008), Lee (2011), and Isaac (2012)).

[15] See 2012 Draft Trip Report (referencing iron pipes older than 50 year old, which suggests that debris encountered in the waterway is likely not caused by Hurricane Katrina).

[16] Waterway Subsurface Debris Target Evaluation Sheet, Lake Lery, Case 8428, Target 1003, USCG (Oct. 1, 2008).

[17] 44 C.F.R. § 206.224(a).

[18] Id.

[19] Public Assistance Guide, FEMA 322, at 50 (Oct. 1999) [hereinafter PA Guide].  FEMA notes that the Applicant stated in both the first and second appeal letters that “once the debris removal at issue has been determined to be eligible for public assistance, the project will be submitted to various contractors for public bid.”  If the debris in the two lakes truly posed an immediate threat, then the Applicant, as the legally responsible entity, could have performed the debris removal work regardless of PA eligibility.  The fact that the Applicant continues to wait for FEMA’s eligibility determination, more than nine years after the disaster, undermines the Applicant’s assertion that the debris poses an immediate threat.

[20] 44 C.F.R. § 206.224(a)(3).

[21] 44 C.F.R. § 206.224(a).


 

 

4 Feb 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Snohomish County Public Utility District (PUD) No. 1
Disaster Number: 
1682-DR-WA
DSR: 
65
Date Signed: 
Friday, January 23, 2015
PA ID: 
061-01C00-00
Summary/Brief: 

Conclusion: Between the Applicant equipment rates and the FEMA equipment rates, the lower set of rates should be used to calculate the total equipment cost, instead of creating a new hybrid set of lower rates.

Summary Paragraph

The OIG conducted an audit of the Applicant’s projects related to a severe winter storm in 2006 and recommended disallowing $91,582.00 from PW 65 due to excessive force account equipment costs resulting from using the FEMA equipment rates.  FEMA concurred and de-obligated $91,582.00 from PW 65.  In its first appeal, the Applicant asserted that the locally established equipment rates do not reflect actual cost, and for this reason, the FEMA/State team advised using the FEMA equipment rates during PW preparation.  The Regional Administrator denied the first appeal because PW 65 included excessive equipment costs based on the higher FEMA equipment rates rather than the lower Applicant equipment rates.  In the second appeal, the Applicant reiterated the first appeal arguments.  FEMA obtained the OIG audit working documents, and found that the OIG’s recalculation of the total equipment cost using a hybrid set of the Applicant and FEMA equipment rates was not supported by a reasonable interpretation of FEMA regulations and policy.  FEMA has determined that the Applicant has provided sufficient documentation to certify that the locally established equipment rates do not reflect actual costs, and the use of the FEMA equipment rates was appropriate. 

Authorities and Second Appeals

  • 44 C.F.R. § 206.228(a)(1)(ii) (2006).
  • PA Guide, at 38 (Oct 1999).

Headnotes

  • 44 C.F.R. § 206.228(a)(1)(ii) provides that where local guidelines are used to establish equipment rates, reimbursement will be based on those rates or rates in a Schedule of Equipment Rates published by FEMA, whichever is lower.  If an applicant certifies that its locally established rates do not reflect actual costs, reimbursement may be based on the FEMA Schedule of Equipment Rates, but the applicant will be expected to provide documentation if requested.
  • The OIG audit finding of excessive equipment cost was based on the OIG calculation method of creating a new hybrid set of equipment rates consisting of the lower rate (between the Applicant and FEMA equipment rates) for each piece of equipment.  This hybrid method is not supported by FEMA’s interpretation of its regulation.
  • The Applicant certified that its locally established equipment rates do not reflect actual costs.  Therefore, the Applicant is eligible to receive reimbursement based on the FEMA equipment rates.
  • PA Guide also states that where local rates have been developed, reimbursement is based on the local rates or the FEMA rates, whichever is lower.  If the local rate is lower and the applicant certifies that the rates do not reflect all actual costs, the higher FEMA rates may be used.
  • The guidance does not support the use of hybrid equipment rates.  The Applicant is justified in receiving reimbursement based on the FEMA equipment rates, since it certified local rates do not reflect all actual costs.
Letter: 

January 23, 2015

Robert Ezelle
Director
Washington Military Department Emergency Management Division
20 Aviation Dr.
Building 20, MS TA-20
Camp Murray, Washington 98430

Re:  Second Appeal – Snohomish County Public Utility District (PUD) No. 1, PA ID 061-01C00-00, FEMA-1682-DR-WA, Project Worksheet (PW) 65 – Equipment – Excessive Costs

Dear Mr. Ezelle:

This is in response to your office’s letter dated December 9, 2013, which transmitted the referenced second appeal on behalf of Snohomish County PUD No. 1 (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) de-obligation of $91,582.00 from PW 65 for equipment costs. 

As explained in the enclosed analysis, I have determined that the reimbursement of the force account equipment cost should be based on the locally established equipment rates or the FEMA rates, whichever set of rates is lower.  Furthermore, the Applicant has provided sufficient documentation to certify that the locally established equipment rates do not reflect actual costs, justifying reimbursement based on the FEMA equipment rates.  Accordingly, I am granting this appeal in the amount of $91,582.00.  By copy of this letter, I am requesting that the Regional Administrator take appropriate action to implement this determination.

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

Sincerely,

/s/

Alex Amparo
Assistant Administrator
Recovery Directorate

Enclosure

cc:  Kenneth Murphy
      Regional Administrator
      FEMA Region X

Analysis: 

Background

During the severe winter storm incident period from December 14 to December 15, 2006, the utility system owned and operated by the Snohomish County Public Utility District No. 1 (Applicant) sustained a variety of storm-related damages.  FEMA obligated Project Worksheets (PWs) 45, 48, and 65 for approximately $5.6 million to repair the Applicant’s utility system damaged by the declared disaster.

On June 19, 2009, the Department of Homeland Security Office of Inspector General (OIG) issued Audit Report Number DS-09-07 (Audit Report) based on an audit of the Applicant’s three PWs.  The Audit Report recommended disallowing a total of $286,533.00 for several reasons, including: lack of supporting documentation; unreasonable and ineligible costs; duplicate costs due to accounting errors; and ineligible public utility taxes paid to other applicants. 

In particular, the Audit Report Finding B identified ineligible costs on PW 65[1], which was prepared using “FEMA’s standard equipment rates rather than using [the Applicant’s] lower rates for selected equipment items.”[2]   For each piece of force account equipment claimed on PW 65, the OIG compared the Applicant equipment rate with the FEMA equipment rate and selected the lower rate.  Using this hybrid method of selecting the lower of the two rates for each piece of equipment, the OIG recalculated the total force account equipment cost.  The difference between the recalculated total force account equipment cost and the original total force account equipment cost on PW 65 was $91,582.00, which the OIG recommended for disallowance as excessive equipment costs.

FEMA concurred with the Audit Report Finding B and agreed to disallow $91,582.00 in excessive equipment costs from PW 65.  FEMA de-obligated this amount in June 2012.

First Appeal

On August 3, 2012, the Applicant submitted its first appeal request to the State of Washington Military Department Emergency Management Division (Grantee), appealing FEMA’s de-obligations on PWs 45 and 65 based on the OIG audit findings.  The Grantee transmitted the Applicant’s first appeal to Region X on October 1, 2012, indicating its support of the appeal.

Regarding FEMA’s de-obligation of $91,582.00 from PW 65, the Applicant argued that its own equipment rates, while used internally between departments, do not reflect the actual cost to operate its equipment, nor do the rates incorporate the same cost components comprising the FEMA equipment rates.  For these reasons, the Applicant indicated it was directed by the FEMA-State team to use the FEMA equipment rates during the disaster kick-off meeting.  The Applicant further argued, FEMA continued to advise the Applicant to use the FEMA equipment rates during the three declared disasters following FEMA-1682-DR-WA.

Along with the Applicant’s appeal request, the Grantee included its own analysis to provide additional details to support the Applicant’s appeal arguments.  First, the Grantee stated that the Applicant provided a written statement detailing the cost components and actual costs of the Applicant equipment rates.  Some of the cost components are the same between the Applicant and the FEMA equipment rates, including: depreciation; overhead; all maintenance; field repairs; fuel; lubricants; and tires.  However, while the Applicant equipment rate cost components include parts and material, labor, and professional services, the FEMA equipment rates cost components include OSHA equipment and incidental costs. 

Next, the Grantee explained that the Applicant certified that its own equipment rates do not reflect actual costs, because its fleet management software only tracks operation hours for vehicles assigned to a specific work order in the system, and not any other support or maintenance vehicles necessary for the total equipment operation.  The Grantee asserted that the Applicant’s equipment rates do not reflect actual costs, because the software only monitors 221 out of 464 vehicles, with the remaining vehicle operation hours unaccounted for by the system.

Finally, the Grantee stated that it was not provided a copy of the OIG’s working documents, and therefore could not determine how the recommended disallowance of $91,582.00 was calculated.  The Grantee presented its own analysis of the total equipment cost using two different methods.  This analysis showed that had the Applicant equipment rates been used instead of the FEMA equipment rates to formulate PW 65, the total equipment cost would have actually increased by $21,527.87. The analysis also indicated that if the calculation method utilized by the OIG had been used to select the lower of the Applicant or FEMA equipment rate for each piece of claimed force account equipment, the total equipment cost should have decreased by only $48,167.82, instead of $91,582.00 as determined by the OIG audit.

The FEMA Region X Regional Administrator (RA) denied the first appeal on August 8, 2013.  The RA referenced 44 C.F.R. § 206.228(a)(1)(ii) which requires that where local rates are used to establish equipment rates, reimbursement will be based on those rates or the FEMA rates, whichever is lower.[3]  The RA stated that the Applicant semi-annually conducted rate adjustments for all fleet vehicles and could have set the local rates to reflect current operating costs.  The RA agreed with the OIG’s original finding that the Applicant inappropriately used the higher FEMA equipment rates than the lower local rates, justifying the de-obligation based on the OIG audit.

Second Appeal

On December 9, 2013, the Grantee transmitted and positively endorsed the Applicant’s second appeal letter dated October 4, 2013.  The second appeal reiterated the Applicant’s first appeal argument pertaining to only PW 65. 

The Grantee again included its own analysis to support the Applicant’s position, presenting the same arguments provided with the first appeal.

Discussion

Title 44 Code of Federal Regulation (44 C.F.R.) § 206.228(a)(1)(ii) states: “[w]here local guidelines are used to establish equipment rates, reimbursement will be based on those rates or rates in a Schedule of Equipment Rates published by FEMA, whichever is lower.”[4] (emphasis added). 

FEMA interprets the use of the plural noun “rates” in the regulations[5] as an indication that the regulatory intent is for FEMA to select one set of rates over another set of rates between the Applicant equipment rates and the FEMA equipment rates.  Public Assistance guidance further clarifies that “[w]here local rates have been developed, reimbursement is based on the local rates or FEMA’s rates, whichever is lower.[6]

As such, FEMA regulations and guidance support the use of either the applicant’s equipment rates or the FEMA equipment rates, whichever set of equipment rates is lower.[7]  FEMA regulations also provide that if an applicant certifies that the locally established rates do not reflect actual costs, reimbursement may be based on the FEMA Schedule of Equipment Rates, but the applicant will be expected to provide documentation if requested.[8]

The Applicant informed FEMA and the Grantee at the time of PW preparation in 2007 that the locally established equipment rates did not reflect actual costs.  Accordingly, the Applicant was advised to use the FEMA equipment rates to calculate the total force account equipment cost on PW 65.  The Applicant also provided a written statement detailing the components of the locally established equipment rates, certified that they do not reflect actual cost, and provided the necessary justification for requesting reimbursement based on the FEMA equipment rates.

As part of the audit, the OIG recalculated the total force account equipment cost on PW 65 by selecting the lower rate between the Applicant equipment rate and the FEMA equipment rate for each piece of equipment, effectively creating a hybrid set of both equipment rates.  Although the intent of this method was to ensure FEMA reimbursement based on the lowest possible total equipment cost, the hybrid approach to calculate the total equipment cost is neither practical to implement in every PW preparation scenario, nor supported by FEMA’s interpretation of its regulations and guidelines regarding equipment rates.[9]

Conclusion

FEMA has determined that the reimbursement of the force account equipment cost should be based on the locally established equipment rates or the FEMA rates, whichever set of rates is lower, instead of creating a new hybrid set of lower rates.  Furthermore, the Applicant has provided sufficient documentation to certify that the locally established equipment rates do not reflect actual costs, in order to receive reimbursement based on the FEMA equipment rates in accordance with FEMA regulations and policy.  Therefore, the reimbursement of the Applicant’s total equipment cost on PW 65 should be based on the FEMA equipment rates.  As such, reobligation of $91,582.00 is appropriate.                                                              


[1] The Second Appeal Analysis discusses only relevant details pertaining to PW 65 because the Applicant’s second appeal only addresses PW 65.

[2] Memorandum from OIG to FEMA regarding Audit Report Number DS-09-07 (June 19, 2009).

[3] 44 C.F.R. § 206.228(a)(1)(ii) (2006).

[4] Id.

[5] 44 C.F.R. § 206.228(a)(1)(ii).

[6] PA Guide, FEMA 322, at 38 (Oct 1999).

[7] See id. See also 44 C.F.R. § 206.228(a)(1)(ii).

[8] See 44 C.F.R. § 206.228(a)(1)(ii).

[9] See id.

 

4 Feb 2015
Appeal Type: 
2nd
Report Type: 
PW
Applicant Name: 
Louisiana State University Health Care Services Division Medical Center of Louisiana at New Orleans
Disaster Number: 
1603-DR-LA
DSR: 
20644
Date Signed: 
Wednesday, January 28, 2015
PA ID: 
000-UURAV-00
Summary/Brief: 

Conclusion: The contract security services performed at Charity Hospital from August 2010 to June 2012 are neither work required as a direct result of a disaster as required by 44 C.F.R. § 206.223(a), nor an eligible emergency protective measure as defined by 44 C.F.R. § 206.225(a).

Summary Paragraph

In August 2005, Hurricane Katrina caused extensive damage to Charity Hospital, which was closed immediately following the storm and has since remained closed.  From August 2010 to June 2012, the Applicant secured the building contents by utilizing contract security services consisting of foot and mobile patrol officers around the vacant building, for a total cost of $592,920.32.  FEMA prepared PW 20644 for zero dollars for this work, finding that the security services did not constitute an eligible emergency protective measure.  In its first appeal, the Applicant argued that FEMA requested that the building contents be secured until the valuation process was completed.  The Applicant also stated that the valuation process was not completed until December 2012.  Upon review, the Regional Administrator denied the first appeal based on the finding that the security services provided five to seven years after the disaster did not meet eligibility requirements of an emergency protective measure.  In its second appeal, the Applicant requests reconsideration, claiming that the security services were necessary to avoid damage resulting from theft and vandalism, as well as to protect the public from exposure to any dangerous material within the hospital. 

Authorities and Second Appeals

  • Stafford Act § 403
  • 44 C.F.R. § 206.223(a).
  • 44 C.F.R. § 206.223(e).
  • 44 C.F.R. § 206.225(a)(1).
  • 44 C.F.R. § 206.225(a)(3).
  • PA Guide, at 23 (Oct. 1999).
  • PA Guide, at 50.

Headnotes

  • 44 C.F.R. § 206.223(a) states that to be eligible for financial assistance, an item of work must be required as the result of the major disaster.  The PA Guide specifies that work must be required as a direct result of the declared disaster.
  • The contract security services were performed to avoid theft and vandalism, and other potential consequences of such criminal acts five to seven years after the event.  This work was not required as a direct result of the major disaster; therefore, the work is ineligible for financial assistance.
  • 44 C.F.R. § 206.225(a)(1) provides that emergency protective measures to save lives, to protect public health and safety, and to protect improved property are eligible.  44 C.F.R. § 206.225(a)(3) further provides that eligible emergency protective measures must: (i) eliminate or lessen immediate threats to life, public health or safety; or (ii) eliminate or lessen immediate threats of significant additional damage to improved public or private property through measures which are cost effective.
    • The contract security services provided five to seven years after the disaster did not serve to eliminate or lessen any immediate threat.
    • The contract security services were performed to avoid theft or vandalism, which are not considered an immediate threat from a hurricane disaster event.

 

Letter: 

January 28, 2015

Kevin Davis
Director
Governor’s Office of Homeland Security and Emergency Preparedness
7667 Independence Boulevard
Baton Rouge, Louisiana 70806

Re:  Second Appeal – Louisiana State University Health Care Services Division Medical Center of Louisiana at New Orleans, PA ID 000-UURAV-00, FEMA-1603-DR-LA, Project Worksheet (PW) 20644

Dear Mr. Davis:

This is in response to your letter dated May 13, 2014, which transmitted the referenced second appeal on behalf of Louisiana State University Health Care Services Division Medical Center of Louisiana at New Orleans (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $592,920.32 in funding for contract security services at Charity Hospital. 

As explained in the enclosed analysis, I have determined that the contract security services provided at Charity Hospital five to seven years after Hurricane Katrina are not work required as a direct result of a disaster, nor are they an eligible emergency protective measure.  Therefore, I am denying this appeal. 

Please inform the Applicant of my decision.  This determination constitutes the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  George A. Robinson
       Regional Administrator
       FEMA Region VI

Analysis: 

Background

On August 29, 2005, heavy rains and wind from Hurricane Katrina caused significant damage to Charity Hospital located in New Orleans, Louisiana. The hospital was closed immediately following the storm and has since remained closed.  The State of Louisiana, Facility Planning and Control (FP&C) was legally responsible for the hospital building facility, while Louisiana State University Health Care Services Division Medical Center of Louisiana at New Orleans (LSU HCSD MCLNO or Applicant), had legal responsibility for the day-to-day operation of the hospital and all its contents and equipment, except permanently fixed equipment.

On November 21, 2008, the US Department of Veterans Affairs, FEMA, the City of New Orleans, the Louisiana State Historic Preservation Officer, and the Advisory Council on Historic Preservation entered into a programmatic agreement to minimize adverse effects to historic properties affected by decisions to repair or replace certain historical New Orleans medical facilities, including Charity Hospital, pursuant to Section 106 of the National Historic Preservation Act (NHPA).[1]  According to the agreement, FP&C performed “secure and ventilate” asset protective measures to secure the hospital facility and preserve character-defining historic building features from deterioration or damage.  Security measures performed included the following: securing windows with rolling shutter doors to prevent access; securing strategic doors to prevent unauthorized entry into the building; installing access lighting throughout the facility including the basement, corridors, and mechanical areas; and installing a 6-foot chain link fence with barbed wire around the facility perimeter. FEMA subsequently provided over $3.9 million in Public Assistance (PA) funding for this work in Project Worksheet (PW) 19731.[2]

In January 2010, Charity Hospital was deemed eligible for replacement.  Subsequently, FEMA determined that all building contents on all 20 floors of Charity Hospital were completely damaged, with the exception of a small quantity of items removed from the hospital following Hurricane Katrina for use at temporary facilities.[3]  The costs associated with the proper removal and disposal of all damaged building contents were provided in PW 20370.[4]

On April 27, 2012, the Applicant requested a new Category B PW for emergency work to provide security services at Charity Hospital.  The Applicant submitted invoices for contract security services procured between August 6, 2010 and June 7, 2012, for a total amount of $592,920.32.  Security services consisted of one foot patrol officer at all times, one mobile patrol officer during nights and weekends, and one lead officer during the regular work week.

On March 13, 2013, FEMA obligated PW 20644 for zero dollars, because the security services did not meet emergency work requirements as defined by Title 44 of the Code of Federal Regulations (C.F.R.) Section 206.225.[5]  FEMA determined that the timeframe of the security services—five to seven years after the declared disaster—did not demonstrate an immediate need necessary for emergency work and that security was provided mainly to prevent theft or vandalism, which were not considered disaster-related damage.  FEMA noted that FP&C had already completed its “secure and ventilate” project, which consisted of passive security measures to prevent further damage from environmental conditions and vandalism.  Finally, FEMA found that the time period of the security services did not overlap or end concurrently with the intended schedule for sorting and disposing of the building contents, which started in January 2013.

First Appeal

On March 23, 2013, the Applicant submitted its first appeal to the Grantee, requesting that FEMA obligate the $592,940.32 denied on PW 20644.  The Grantee transmitted the Applicant’s first appeal to FEMA Region VI, indicating its support of the appeal, on June 10, 2013.  As a basis for the appeal, the Applicant claimed that FEMA requested that the hospital building be secured so that no assets would be destroyed or removed until a thorough review had been completed.  The Applicant contended that the valuation process was not finalized until December 2012.

The FEMA Region VI Regional Administrator (RA) denied the first appeal on January 2, 2014.  The RA determined that the security services did not meet eligibility requirements to be considered an eligible emergency protective measure in accordance with 44 C.F.R. §206.225.[6]  The RA stated that the security services provided approximately five to seven years after the disaster did not serve to eliminate or reduce any immediate threats.  Additionally, the RA noted that FP&C had previously rendered the facility secure.

Second Appeal

On May 13, 2014, the Grantee transmitted the Applicant’s second appeal letter dated March 1, 2014, indicating its support of the appeal.  In the second appeal, the Applicant reiterated its request for reconsideration of the denied funding for contract security services provided at Charity Hospital in the amount of $592,940.32. 

The Applicant asserts that the passive security measures in place (as performed by FP&C), such as securing windows/doors and installing lights/fences with barbed wire around the facility perimeter, are not sufficient to completely prevent crime, remove vagrants, or deter future damage to the exterior, interior, or assets of a historic site such as Charity Hospital.  The Applicant further explains that, based on the type of structure (a historic site), the geographical location (a crime-ridden area), the numerous previous attempts of theft, loss, vagrancy, unauthorized entry, and threats to entry, a fence is not sufficient to completely secure the facility.  The Applicant also claims that the contract security personnel have removed vagrants, persons attempting to steal copper, and persons attempting to cause structure damages to the historic site. 

The Grantee supports the Applicant’s arguments and elaborates that while the hospital stood empty, security was necessary to safeguard the property and the costly medical equipment and supplies left behind.  According to the Grantee, the Applicant believed that if it had not secured the equipment and the building contents and they got further damaged, FEMA could have considered it negligence and ineligible for reimbursement.  Finally, the Grantee claims that failure to protect and safeguard the building contents could have jeopardized the public’s safety by potentially exposing the public to various biohazards and/or dangerous equipment located inside the hospital.

Discussion

Direct Result of Disaster

Section 403 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) authorizes FEMA to provide assistance essential to meeting immediate threats to life and property resulting from a major disaster, including reduction of immediate threats to life, property, and public health and safety.[7]  Further, 44 C.F.R. § 206.223(a)(1) provides that an item of work must be required as the result of the major disaster event to be eligible for financial assistance.  Additionally, the Public Assistance Guide specifies that work must be required as a direct result of the declared disaster.[8]

In this case, the security services provided were not work required as a direct result of the declared disaster.  Here, Hurricane Katrina caused property damage, requiring Charity Hospital to be closed. The closure increased the hospital’s exposure to potential threats of theft and vandalism.  While FEMA does not dispute that theft and vandalism may present risks to the hospital facility and its contents, these risks, especially five to seven years after the event, are not direct results of the disaster.  Rather, they are ordinary risks of crime that would typically be present both before and after a disaster such as Hurricane Katrina.  Accordingly, because the declared disaster, in itself, did not directly cause theft or vandalism, or any threat thereof, the security provided to prevent theft and vandalism was not work required as a direct result of the declared disaster.  Thus, it is ineligible for PA funding.  

The Applicant also argues that security was provided not only to guard the hospital against theft and vandalism, but also to ensure public safety against potential exposure to various biohazards and dangerous equipment located inside the hospital.  However, the threat of such potential exposure to the general public at large was not a direct result of the disaster.  The potential threat would have materialized only upon unlawful access and use of the biohazards and dangerous equipment.  This would be considered a direct result of a criminal act independent of the disaster.  Therefore, any security provided to ensure public safety against potential threats from a criminal act was not eligible work required as a direct result of the disaster.

Emergency Protective Measures

Pursuant to 44 C.F.R. § 206.225(a)(1), emergency protective measures performed to save lives, to protect public health and safety, and to protect improved property are eligible.  The regulations further provide that eligible emergency protective measures must eliminate or lessen immediate threats to life, public health or safety, or eliminate or lessen immediate threats of significant additional damage to improved public or private property through cost-effective measures.[9]

The PA Guide defines the term an “immediate threat” as the threat of damage from an event that could reasonably occur within 5 years.[10]  Immediate threat from a hurricane event, such as Hurricane Katrina, may be a 5-year flooding event that could cause damage or threaten lives, public health, and safety.[11]  Accordingly, emergency protective measures performed to eliminate or lessen such immediate threats (e.g., temporarily covering a wind-damaged roof with a tarp) would be eligible. However, threats of theft, vandalism, or any public exposure to hazardous materials resulting from criminal acts more than five years after the event are not immediate threats as defined by the PA Guide.  As such, because the security services performed did not eliminate or lessen an immediate threat, as described in the PA Guide, they are ineligible for PA funding.

Furthermore, the Applicant believed that the security services were necessary to avoid any potential negligence on its part that may have resulted from failure to adequately secure the hospital building contents before inventory and valuation were completed.  FEMA agrees that avoiding negligence is a valid concern, as, pursuant to 44 C.F.R. §206.223(e), no assistance would be provided to an applicant for damages caused by its own negligence.[12]  Nevertheless, in this case, the security services did not address an immediate threat, as defined by FEMA guidelines.  FEMA notes that the FP&C secure and ventilate project was intended to prevent further damage to the hospital building (FP&C’s legal responsibility) and also served to protect the building contents (Applicant’s legal responsibility) by restricting access to the building itself.  Consequently, issues associated with theft and vandalism that might have been present in the immediate aftermath of Hurricane Katrina would have been addressed by that project.  Any additional security services procured by the Applicant were not eligible emergency protective measures as outlined in regulations and guidelines.[13]  As such, the work is ineligible for PA funding.

Reasonable Cost

In the second appeal, the Grantee asserted that the Applicant provided sufficient justification that the security services were provided at reasonable cost.  However, as the work itself is not eligible, FEMA will not determine whether the costs were reasonable.

Conclusion

The contract security services performed at Charity Hospital from August 2010 to June 2012 are neither work required as a direct result of a disaster, nor an eligible emergency protective measure.  Therefore, the work is ineligible for PA funding.  


[1] See Programmatic Agreement among the US Department of Veterans Affairs, the Federal Emergency Management Agency, the City of New Orleans, the Louisiana State Historic Preservation Officer, and the Advisory Council on Historic Preservation Regarding the Funding to Repair or Replace Healthcare Facilities Comprising the VA Medical Center and the Medical Center of Louisiana at New Orleans (Nov. 21, 2008).

[2] Project Worksheet 19731, Facility Planning and Control, State of Louisiana, Version 0 (Oct. 6, 2011).

[3] Project Worksheet 20370, LSU HCSD MCLNO, Version 0 (Oct. 15, 2012).

[4] Id.

[5] See 44 C.F.R. §206.225 (2004)

[6] See 44 C.F.R. §206.225.

[7] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, §403, 42 U.S.C. § 5170b (1988).

[8] Public Assistance Guide, FEMA 322, at 23 (Oct. 1999) [hereinafter PA Guide].

[9] 44 C.F.R. § 206.225(a)(3).

[10]PA Guide, at 50.

[11] See PA Guide, at 50 (stating that “[f]or a flood, the immediate threat exist if a 5-year flooding event could cause damage or threaten lives, public health, and safety.  This is not a flood that necessarily happens within 5 years, but a flood that has a 20 percent chance of occurring in any given year.”).

[12] 44 C.F.R. § 206.223(e).

[13] See 44 C.F.R. § 206.225(a); see also PA Guide, at 50.

 

4 Feb 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Plaquemines Parish
Disaster Number: 
1603-DR-LA
DSR: 
1645, 13495, and 13611
Date Signed: 
Thursday, January 22, 2015
PA ID: 
075-99075-00
Summary/Brief: 

Conclusion: Funding for demolition of commercial property is not eligible because the applicant did not obtain written approval from FEMA as required by FEMA policy prior to the demolition.    

Summary Paragraph

Following Hurricane Katrina, FEMA obligated $23.5 million in three Project Worksheets (PWs) to fund debris removal and demolition of public and private properties throughout Plaquemines Parish.  In response to an Office of Inspector General audit, FEMA deobligated a total of $440,824.55 from the three PWs for the demolition of 39 commercial properties found to be ineligible because the Applicant performed the work without FEMA approval. In the first appeals, the Applicant asserted that it requested and obtained prior approval for demolitions at the 39 commercial sites as demonstrated by the sites being recorded in FEMA’s private property debris removal (PPDR) property and debris matrix, a spreadsheet used to track debris removal activities within the parish.  The Region VI Regional Administrator denied the first appeals citing the Applicant’s failure to request and obtain written Federal Coordinating Officer (FCO) approval for the commercial demolition and debris removal activities as required by FEMA Recovery Policy RP9523.13 Debris Removal from Private Property (Oct. 23, 2005).  In its second appeals, the Applicant reiterates its position from the first appels.

Authorities and Second Appeals

  • RP9523.13, Debris Removal from Private Property, at 2-4 (Oct. 23, 2005).

Headnotes

  • Recovery Policy RP9523.13 Debris Removal from Private Property (Oct. 23, 2005), Section 7.C. states that any State or local government that intends to remove debris from private property must, prior to commencement of work, submit a written request to the Federal Coordinating Officer (FCO) seeking approval for reimbursement. Section 7.H. states that work may commence after receiving written approval from the FCO.
    • The Applicant did not receive written approval from the FCO.
  • Section 7.D. of the policy details specific factors to be considered by the FCO in making an eligibility determination relative to removal of debris from private commercial property.
    • The Applicant has provided no documentation to support that FEMA conducted the programmatic review required by Section 7.D.


 

Letter: 

January 22, 2015

Kevin Davis
Director
Governor’s Office of Homeland Security and Emergency Preparedness
7667 Independence Boulevard
Baton Rouge, Louisiana 70806

Re:  Second Appeal – Plaquemines Parish, PA ID 075-99075-00, FEMA-1603-DR-LA, Project Worksheets (PWs) 1645, 13495, and 13611, Debris Removal – Construction and Demolition

Dear Mr. Davis:

This letter is in response to your three letters dated July 11, 2013, which transmitted the referenced second appeals on behalf of Plaquemines Parish (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of funding in the amount of $440,824.55 for commercial property demolition and the associated debris removal.

As explained in the enclosed analysis, I have determined that the Applicant failed to demonstrate it had obtained written approval from FEMA, as required by FEMA policy, prior to commencing the commercial property demolition.  Accordingly, I am denying this appeal. 

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  George A. Robinson
       Regional Administrator
       FEMA Region VI

Analysis: 

Background

On August 29, 2005, Hurricane Katrina caused tidal surge and flooding damage to public and private property throughout Plaquemines Parish (Applicant) resulting in an immediate threat to public health, safety, and welfare.  FEMA prepared Project Worksheets (PWs) 1645, 13495, and 13611 to fund debris removal and demolition of public and private properties throughout the Parish and obligated approximately $23.5 million in the three PWs.

The Office of Inspector General (OIG) issued an audit report dated December 19, 2008, recommending that FEMA disallow certain costs claimed by the Applicant for demolition and debris removal activities at 245 commercial properties because the Applicant failed to obtain prior approval for the work from FEMA.  FEMA reviewed the OIG’s report and agreed that the Applicant had failed to obtain prior approval for demolition of 39 commercial properties listed on PWs 1645, 13495, and 13611.  FEMA disagreed with the OIG on the other sites questioned within the report, finding that the Applicant removed commercial debris from the right of way, which it did have approval to do by FEMA. 

During the evaluation of the OIG audit, FEMA determined that the Applicant’s debris contractor had not documented the quantity of debris removed or actual cost for the specific demolitions.  In absence of actual costs, FEMA re-visited the sites of the 39 properties and developed an estimate of the debris quantities that would have been generated by the property demolitions.  FEMA also estimated the haul distances.  FEMA applied the actual contract unit cost to the estimated debris quantities and included estimated costs for debris hauling to estimate the costs associated with demolition and debris removal at the 39 sites.  In April 2011, FEMA prepared versions to all three PWs deobligating a total of $440,824.55 for the demolition of 39 commercial properties.

First Appeals

On July 2 and 9, 2012, the Applicant submitted three first appeals to the State of Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Grantee) for the deobligations associated with the ineligible commercial demolition and debris removal in PWs 1645, 13495, and 13611.  The Grantee transmitted the appeal letters to FEMA through letters dated September 7, 2012.

In the appeals, the Applicant asserted that it requested prior approval for demolitions at the 39 commercial sites as demonstrated by the sites being recorded in FEMA’s private property debris removal (PPDR) property and debris matrix, a spreadsheet used to track debris removal activities within the parish.  Although there is no evidence FEMA provided approval of these demolitions, the Applicant claimed the inclusion of these properties on this FEMA produced document indicates that FEMA did recognize the submission of these properties for demolition and requested that FEMA use its authority to approve the demolition of these properties.

The Applicant also disagreed with FEMA’s method of calculating the deobligation amount, stating FEMA’s use of the maximum contract debris hauling distance for each of the sites does not accurately reflect the actual distance for each site nor does it account for the actual cost of the demolition, which it claims to be approximately $5000 per property.  The Applicant requested that if FEMA continued to find the demolition of the commercial structures ineligible, then FEMA should reevaluate its calculations used to deobligate funding to the actual cost of the demolitions.  Deobligated funding would include either the cost of the demolitions on a per property basis or actual distance the debris was hauled based on the contract rate for debris hauling.

On March 18, 2013, the FEMA Region VI Regional Administrator (RA) denied the three appeals citing the Applicant’s failure to request and obtain written Federal Coordinating Officer (FCO) approval for the commercial demolition and debris removal activities as required by FEMA Recovery Policy RP9523.13 Debris Removal from Private Property dated October 23, 2005.  The RA also determined that FEMA utilized the best information available to determine the costs associated with the commercial demolitions in each PW.

Second Appeals

On May 28, 2013, the Applicant submitted three second appeals of the deobligation of funding for commercial demolition of 39 properties and the associated debris removal in PWs 1645, 13495, and 13611, which the Grantee transmitted to FEMA in letters dated July 11, 2013. 

In the second appeals, the Applicant asserts that FEMA approved the demolition and debris removal at the commercial sites both verbally and through email, although neither claim can be supported with written documentation.  The Applicant reiterates that FEMA granted prior approval for the demolitions through its use of its PPDR property and debris tracking matrix.

Alternatively, the Applicant asserts that FEMA incorrectly based its eligibility determination on FEMA Recovery Policy RP9523.13 Debris Removal from Private Property dated October 23, 2005.  Rather it claims FEMA Response and Recovery Policy 9523.4 Demolition of Private Structures dated November 9, 1999, is the applicable policy for this work.  This policy did not explicitly state prior, written approval from the FCO was required for commercial structure demolition to be eligible.  The Applicant also requests that if FEMA continues to find the demolition costs ineligible then the debris removal costs at the sites should be found eligible and reinstated considering the FCO approved PPDR for the Parish.

On March 10, 2014, FEMA held a meeting with the Applicant representative and the Grantee.  The Applicant reiterated several assertions it made in its second appeal primarily that the FEMA FCO was aware of and approved the demolition of the commercial properties.  The Applicant also provided emails transmitted between its representatives and FEMA.  Additional documentation submitted by the Applicant in support of its appeal includes its Demolition Operations Plan, the PPDR property and debris tracking matrix, and complete files for each property included on the matrix.

Discussion

Private property debris removal is generally not eligible for reimbursement under the Public Assistance program.  However, after the catastrophic impact of Hurricane Katrina, FEMA determined that it was in the public’s interest to remove debris from private property in certain impacted areas, including Plaquemines Parish as documented in FEMA Disaster Specific Guidance DSG #3, Hurricane Katrina Private Property Debris Removal in Coastal Areas dated September 10, 2005 (DSG #3 memo).  FEMA issued the DSG #3 memo to clarify procedures that are to be followed by each Joint Field Office (JFO) for application of Recovery Policy Number 9523.13 Debris Removal from Private Property, issued September 7, 2005, for removal of debris from private property in certain areas.”[1]  FEMA updated the policy on October 23, 2005. 

Recovery Policy 9523.13 Debris Removal from Private Property dated October 23, 2005, refers to “debris removal” as the act of debris removal and disposal, including the demolition of unsafe structures when necessary from private property.[2]  Sections 7.C and 7.H require the applicant to submit a written request to the FCO seeking approval for reimbursement prior to commencement of work and inform the applicant that work may begin only after receiving approval from the FCO.[3]   Further, the policy in Section 7.D includes specific requirements for authorizing commercial property debris removal in addition to the requirements for other private property debris removal. The policy states: 

When deciding whether to authorize the removal of debris from private commercial property, the FCO should determine if it is necessary to: eliminate an immediate threat to life, public health, safety or significant damage to improved property, 44 CFR § 206.224(a)(1) and (a)(2); or ensure economic recovery of the affected community to the benefit of the community-at-large, 44 CFR § 206.224(a)(3).[4]

The policy follows with a list of factors to be considered by the FCO in making determinations relative to debris removal from commercial property.

Further, FEMA issued a letter dated December 2, 2005 to the Grantee stating that FEMA concurred with the “procedure and record-keeping process set forth” in the Applicant’s Demolition Operations Plan.[5]  The letter also states “[p]lease note that demolition of structures for which there is no record of appropriate programmatic, environmental, and historic review, may not be eligible for reimbursement.”[6]  The documentation submitted by the Applicant supports the Applicant’s claim that it worked closely with FEMA to fulfill the requirements to satisfy eligibility requirements for PPDR.  However, the Applicant was required to request and obtain prior approval by the FCO for the demolition of commercial property, and the Applicant has provided no documentation to support its claim that it received the FCO’s approval.

Applicable FEMA Policy

The Grantee and Applicant both assert that FEMA is incorrectly using FEMA Recovery Policy RP9523.13 Debris Removal from Private Property dated October 23, 2005 and that FEMA Response and Recovery Policy 9523.4 Demolition of Private Structures dated November 9, 1999, is the more applicable policy.  As stated above, RP9523.13 refers to “debris removal” as the act of debris removal and disposal, including the demolition of unsafe structures.  Therefore, RP9523.13 is the policy applicable to the issue under appeal.  

Ineligible Costs

The Applicant has requested FEMA restore the costs of the debris removal portion of the work associated with the commercial demolitions if the demolitions themselves are still found to be ineligible.  Debris generated by demolition of commercial property found to be ineligible is also not eligible for funding, because, without having the opportunity to evaluate and determine that the demolition of the commercial property itself was required to eliminate an immediate threat or to ensure economic recovery, FEMA cannot find that the removal of the debris generated by the demolition was required to eliminate an immediate threat.

Conclusion

The guidance in place at the time the Applicant performed the work required FCO written approval to consider commercial property demolition eligible for funding. The Applicant did not obtain prior FEMA approval for the demolition and debris disposal for the 39 commercial structures as required by FEMA Recovery Policy RP9523.13 Debris Removal from Private Property dated October 23, 2005.  Accordingly, the demolition and associated debris removal of those properties is not eligible for funding.


[1] Disaster Assistance Memorandum #3 explains that, with its issuance, FEMA determined that the requirements contained in paragraph 7.A of RP9523.13 were thereby satisfied. However, the memorandum also explains that “[t]he requirement for the establishment of the applicant's legal authority in paragraphs 7.B, C, and D must still be satisfied, although the process may be abbreviated. ”

[2] Recovery Policy RP9523.13, Debris Removal from Private Property, at 1 (Oct. 23, 2005).

[3] Id. at 2, 4.

[4] Id. at 3.

[5] Letter from Deputy Federal Coordinating Officer, FEMA, to Governor’s Authorized Representative, State of Louisiana Office of Homeland Security and Emergency Preparedness (Dec. 2, 2005).

[6] Id.

 

13 Jan 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Clarke Electric Cooperative
Disaster Number: 
1737-DR-IA
DSR: 
Multiple PWs
Date Signed: 
Monday, January 12, 2015
PA ID: 
000-UOTLT-00
Summary/Brief: 

Conclusion:  The Applicant has provided sufficient documentation to support that an additional $518,346.73 is associated with the approved scopes of work in the six PWs.  The additional funding is partially eligible.    

Summary Paragraph

An ice storm damaged the power lines serviced by Clarke Electric Cooperative (Applicant).  FEMA approved $5,400,844.25 in six Project Worksheets (PWs) to rebuild and repair the damaged lines and approved the Applicant’s request for improved projects to upgrade the capacity of the power lines for all six PWs.  The Applicant requested additional funding for a final aggregate cost of $7,442,239.85 for the six PWs, a cost overrun of $2,041,395.60.  The Applicant claimed that the additional costs were for work to restore the utility to pre-disaster condition and were distinct from the costs of the improvements.  FEMA Region VII determined a portion of the costs claimed was for work associated with improvements, but approved an additional $1,177,719.80 based on revised cost estimates for the approved scopes of work in the six PWs.  The Applicant submitted a first appeal claiming it separated costs of the improvements from the costs to restore the facility to pre-disaster condition.  The Regional Administrator denied the appeal because the documentation did not demonstrate the additional funding requested was for work necessary to restore the facility to its pre-disaster condition.  The Applicant submitted a second appeal, requesting $528,170.76 for cost overruns for the six PWs, a decrease from its original requests.  The Applicant developed new cost estimates for the work that would have been required to restore the facility to pre-disaster condition and based its adjusted funding request on these new cost estimates.

Authorities and Second Appeals

  • 44 C.F.R. § 206.203(d)(1), 
    § 206.204(e).
  • PA Guide, at 110.

Headnotes

  • According to 44 C.F.R. § 206.203(d)(1),  federal funding for improved projects is limited to the federal share of the approved estimate of eligible costs.
  • The Public Assistance Guide provides that an applicant may appeal the approved funding amount if approved costs are tracked separately from improvement costs.
    • The Applicant provided documentation that distinguished the actual costs incurred for restoring the facility to its pre-disaster condition from those related to the improvements to the facility.

 

Letter: 

January 12, 2015

Mark Schouten
Director
Iowa Homeland Security and Emergency Management Division
7900 Hickman Road, Suite 500
Windor Heights, IA 50324

Re:  Second Appeal – Clarke Electric Cooperative, PA ID 000-UOTLT-00, FEMA-1737-DR-IA, Multiple Project Worksheets – Improved Projects

Dear Mr. Schouten:

This is in response to your letter dated May 6, 2013, which transmitted the referenced second appeal on behalf of Clarke Electric Cooperative (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of funding in the amount of $863,675.80 for cost overruns for six improved projects.  In its appeal, the Applicant reduced its funding request to $528,170.76.

As explained in the enclosed analysis, I have determined that the Applicant provided sufficient documentation that distinguishes the actual costs incurred for restoring the facility to its pre-disaster condition from those related to the improvements to the facility, and that such costs are reasonable with the exception of some arithmetic discrepancies.  Therefore, I am partially granting the appeal in the amount of $518,346.73.  By copy of this letter, I am requesting the Regional Administrator to take appropriate action to implement this determination. 

Please inform the Applicant of my decision.  This determination constitutes the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

Sincerely,

/s/

William R. Roche
Director
Public Assistance Division

Enclosure

cc:  Beth Freeman
       Regional Administrator
       FEMA Region VII
 

Analysis: 

Background

On December 10 and 11, 2007, an ice storm caused ice to accumulate on trees and power lines,  rendering power lines inoperable throughout the Clarke Electric Cooperative’s (Applicant) power distribution systems.  FEMA approved $5,400,844.25 in six Project Worksheets (PWs) (617, 619, 620, 621, 622, and 624) to rebuild some severely damaged power lines and to repair other lines including replacing or straightening damaged poles.  In March 2010, FEMA approved the Applicant’s request for improved projects for all six PWs. The improvements included upgrades of the line capacity from single-phase to three-phase, conversion of line sections, and installation of hardware to support the upgrades.

In May 2012, FEMA received requests from the Applicant to close out the six PWs for a final aggregate cost of $7,442,239.85, a cost overrun of $2,041,395.60.  The Applicant claimed that the additional costs were for work necessary to restore the utility to pre-disaster condition and were distinct from the costs related to the improvements.  Based on a review of the documentation submitted with the requests, FEMA Region VII determined that a portion of the costs claimed was for work associated with facility improvements.  FEMA also determined that based on unit prices provided by the contractor, the actual costs for the approved scopes of work would have been higher regardless of the improvements.  Therefore, FEMA Region VII developed new cost estimates for the approved scopes of work in the six PWs based on the actual contract unit prices and determined that costs for engineering and tree trimming were also eligible.  FEMA Region VII obligated funds to all six projects and approved an additional $1,177,719.80 to increase the eligible grant amount to a total of $6,578,564.05. 

First Appeal

The Applicant submitted a first appeal on October 10, 2012, of FEMA’s denial of $863,675.80 for cost overruns in response to its close-out requests for the six PWs.  The Applicant claimed the documentation provided to FEMA separated costs of the improvements from the costs to restore the power lines to their pre-disaster condition.  The Applicant also stated that it was unclear why FEMA based the final approved amount on new estimates and not the actual documented costs.  On January 15, 2013, the FEMA Region VII Regional Administrator denied the first appeal because the Applicant did not provide documentation demonstrating the additional funding requested was for work necessary to restore the facility to its pre-disaster condition.

Second Appeal

The Applicant submitted a second appeal on March 8, 2013, requesting a total of $528,170.76[1] for cost overruns for the six PWs, a decrease from its original appeal request.  The Applicant states that FEMA did not provide its new per-mile estimate for single or three-phase electrical distribution line or the “validation documents” for the estimates making it impossible for the Applicant to review and validate FEMA’s new estimates.  The Iowa Homeland Security and Emergency Management Division (Grantee) provided the Applicant with FEMA’s new estimate for the three-phase lines, but the Applicant states that it has never received FEMA’s cost estimate for single-phase lines.  The Applicant maintains that FEMA did not consider all of the construction assembly units in its new per-mile cost estimates nor did FEMA recognize the distinction between sections of line requiring a complete rebuild and lines only requiring repairs in developing its new cost estimates.  Further, the Applicant asserts that FEMA’s new cost estimates do not accurately reflect compliance with United States Department of Agriculture Rural Utility Service (RUS) standards and that some work classified by FEMA as “improvements” was necessary for compliance.  Lastly, the Applicant states that FEMA was inconsistent in its application of its new estimates in determining final eligible cost and states that in some cases FEMA “used a 16% factor” instead of its new per-mile estimate.

After identifying issues with FEMA’s cost estimates, the Applicant developed  revised cost data for the work that would have been required to restore the facility to pre-disaster condition and based its adjusted funding request on it.  The information submitted with the second appeal includes scopes of work with more detail than those in the PWs. Specifically, the scopes of work described each line item required to restore the facility’s pre-disaster design, function, and capacity.  The costs used are based on actual unit costs for labor and materials, as well as actual determination of the number of poles and assemblies required and the actual distance of the completed project.  On May 6, 2013, the Grantee transmitted the second appeal to FEMA.  On July 19, 2013, the Region VII Regional Administrator forwarded the second appeal to FEMA Headquarters.

Discussion

The Applicant requested and FEMA approved improved projects for all six of the PWs at issue under this appeal.  Federal funding for improved projects is limited to the federal share of the approved estimate of eligible costs.[2]  However, “if eligible repair or replacement costs exceed the original estimate and costs can be separately documented (i.e., if approved costs can be tracked separately from improvement costs), the applicant may appeal the amount of the grant.”[3]

FEMA Region VII did not concur with the Applicant’s position that its documentation submitted in support of its request for additional funding was sufficient to distinguish the actual costs of the eligible scopes of work from those of the improvements.  However, FEMA Region VII did recognize that based on the actual contract costs, the Applicant would have incurred additional costs regardless of the improvements and approved additional funding by applying a new per-mile cost estimate for a three-phase line ($51,004.25 per mile).  FEMA calculated this unit cost based on the approved scopes of work in the PWs and by applying actual contract unit costs to those approved scopes of work.  In calculating the final approved cost estimate for the approved scopes of work, FEMA also used the per-mile cost estimate for single-phase lines approved in the initial PWs ($42,345.60 per mile) and added actual contract costs for tree trimming and engineering services.  Contrary to the Applicant’s understanding, FEMA did not develop a new cost estimate for single-phase lines.  The revised cost estimates resulted in a total increase of $1,177,719.80 in eligible funding for the six PWs.  FEMA Region VII took this approach, because the documentation submitted by the Applicant up through the first appeal did not sufficiently separate out the actual costs of the improvements.

As part of the second appeal, the Applicant submitted a new methodology for determining the eligible cost.  Given the actual unit costs and actual scope of work, the Applicant developed new cost data for what the cost of the unimproved work would have been.   These included minor adjustments to distances, number of poles, assembly requirements, and other factors.  The Applicant requested that the cost data submitted as part of the second appeal be used in lieu of FEMA’s per-mile cost estimates to determine the cost of the unimproved work; these costs were much more detailed than those provided with previous submittals.  The Applicant then calculated the difference between the cost of the actual work completed and the new estimated cost of the unimproved work.  This difference is referred to as the “improved work credit.”  In the second appeal, the Applicant asserts that the total eligible project cost should be taken as the total overall cost of the project (i.e. the sum of the cost of all six PWs in question) less the calculated improved work credit.

FEMA consulted a professional engineer (PE) regarding the validity of the Applicant’s approach.  FEMA determined that the approach would be acceptable if: (1) the cost data submitted for the unimproved scope of work were reasonable and (2) the calculation of the improved work credit was reasonable. 

The Applicant’s cost data were assessed on two bases:  reasonableness of unit costs and alignment with the original (unimproved) scope of work.  Material and labor unit costs were evaluated against RS Means and other industry costs.  Material and labor unit costs were evaluated for conductors, poles, and assemblies.  In each case, the Applicant’s unit costs were verified against independent references.

To evaluate the scope of work, the scope of work used in the Applicant’s estimate was compared to the original scope of work listed in the six PWs (Versions 0) for each work order in question.  The Applicant’s scope of work was taken to be the paragraphs at the beginning of each work order estimate.  The PW scope of work was taken to be a combination of the narrative “Scope of Work” section in the PW and tables included as attachments listing specific segments, pre-disaster phasing and conductor type, and the replacement phasing and conductor type.  FEMA considered the Applicant’s scope of work to be “verified” if the phasing and conductor type listed in the Applicant’s scope of work matched the phasing and conductor type listed in the relevant PW.  Differences in segment distances and numbers of poles were considered minor changes and are to be expected between a preliminary estimate and the completion of work.  Based on this methodology, FEMA was able to substantiate that the Applicant’s unit costs were reasonable and that the scopes of work the Applicant used to complete their cost estimates aligned with the original, unimproved scope of work.[4]

Given that the Applicant’s estimates of the cost of the unimproved work were reasonable, FEMA then considered the question of the improved work credit.  According to the Applicant’s explanation, the improved work credit for each work order was equal to the difference between the actual cost of work and the estimated cost of the unimproved work.  The total improved work credit was equal to the sum of the improved work credits for each work order.[5]

While FEMA was able to recreate the Applicant’s improved work credit for PWs 619, 620, 621, and 622, it could not do so for PWs 617 and 624.  For those, no documentation provided by the Applicant accounts for the significant differences between the improved work credit calculated by FEMA based on the Applicant’s cost estimates and the improved work credit reported by the Applicant.  As such, the total improved work credit was found to be $9,824.01 higher than reported by the Applicant and therefore a corresponding reduction of $9,824.01 in the total amount to be approved is required.[6]

Conclusion

The Applicant is requesting additional funding for six PWs that FEMA approved as improved projects.  In order to appeal the amount of approved funding for an improved project, the Applicant must separately document and track that the incurred costs for eligible work exceeded the original cost estimate.  In this case, the Applicant has provided sufficient documentation to support that an additional $518,346.73 is reasonable and associated with the approved scopes of work in the six PWs, and therefore, is eligible.


[1] Note that the Applicant’s second appeal letter requests $528,180.76, but this was determined by FEMA to be an arithmetic error made by the Applicant.

[2] 44 C.F.R. § 206.203(d)(1) (2007).

[3] Public Assistance Guide, FEMA 322, at 110 (June 2007).

[4] See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Nov. 24, 2014, 4:04 pm) (on file with FEMA).

[5] See Letter from General Manager, Clarke Electric Cooperative Inc., to Alternate Governor’s Authorized Representative, Iowa Homeland Security and Emergency Management Division (Mar. 8, 2013).

[6] See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Dec. 5, 2014, 4:06 PM) (on file with FEMA).

 

12 Jan 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
City of Galveston
Disaster Number: 
1791-DR-TX
DSR: 
N/A
Date Signed: 
Friday, January 9, 2015
PA ID: 
167-28068-00
Summary/Brief: 

Conclusion:  The City of Galveston is not legally responsible for the geo textile tube at Beachside Village Beach (Facility).

Summary Paragraph

During the declared event, heavy rain, wind, and storm surge caused devastation to the City of Galveston (Applicant).  The Applicant sought PA funding to repair the section of punctured and deflated beach geo textile tube and eroded sand dune system that runs through Beachside Village Beach.  FEMA representatives prepared several Project Worksheets (PWs) to cover the restoration of damage discovered to other sections of the geo tube and other tube systems.  However, FEMA did not prepare a PW for the section of the geo textile tube (Facility) at Beachside Village Beach because it determined the Applicant was not legally responsible for this Facility.  Later, the Applicant requested that a PW be written for the work performed to repair the disaster- related damage. FEMA denied the Applicant’s request, asserting that documentation provided “clearly” demonstrated that the Beachside Village Home Owners Association (HOA) had legal responsibility for the Facility.  In its first appeal, the Applicant submitted documentation to establish it was legally responsible.  The Regional Administrator denied the appeal, finding that the documentation submitted showed that legal responsibility remains with HOA in the event of a storm or disaster.  The Applicant failed to show that it had paid for Facility repairs.  In its second appeal, the Applicant submits two letters, articulating that it is responsible for project repairs.  The Applicant also claims failure to repair the section of the geotextile tube will cause unreasonable flood hazard to habitable structures because flood waters will be channeled to the structures through gaps in the existing geotextile tube.  In an appeal meeting at FEMA headquarters, the Applicant admitted that it had the discretion to refrain from reimbursing the HOA, that it had not reimbursed the HOA for Facility repairs, and had not included such reimbursement in their annual budget.

Authorities and Second Appeals

  • 44 C.F.R. § 206.223(a)(3)

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a)(3), to be eligible for financial assistance, an item of work must be the legal responsibility of an eligible applicant.
  • An easement for the construction of a project on the Facility does not constitute legal responsibility, especially where the easement has a termination clause.  Further, the Applicant has not reimbursed the HOA for repair work on the Facility, and doing so is not mandatory but rather within the Applicant’s discretion. 
Letter: 

January 9, 2015

W. Nim Kidd, CEM
Chief
Texas Division of Emergency Management
PO Box 4087
Austin, Texas 78773-0220

Re:   Second Appeal – City of Galveston, PA ID 167-28068-00, FEMA-1791-DR-TX – Legal Responsibility

Dear Chief Kidd:

This is in response to a letter from your office dated December 3, 2013, which transmitted the referenced second appeal on behalf of the City of Galveston (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $393,961.70 in funding for the repair of a geotextile tube (Facility) at Beachside Village Beach.

As explained in the enclosed analysis, the Regional Administrator correctly determined that the Applicant did not have legal responsibility for the Facility.  As such, the Applicant is not eligible for Public Assistance funding for the repair of the Facility.  Therefore, I am denying this appeal.

Please inform the Applicant of my decision.  This determination constitutes the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  George A. Robinson
       Regional Administrator
       FEMA Region VI


 

 

Analysis: 

Background

On September 13, 2008, heavy rain, wind, and storm surge from Hurricane Ike damaged beaches in the City of Galveston (Applicant).  Afterwards, the Applicant sought FEMA Public Assistance funding to repair punctured and deflated beach geotextile tubes and eroded sand dunes. 

FEMA representatives prepared several Project Worksheets (PWs) for the repair of the Applicant’s damaged facilities, including several geotextile tubes.  However, FEMA did not prepare a PW for the geotextile tube at Beachside Village Beach (Facility).  FEMA determined that the Facility was ineligible because the City of Galveston was not legally responsible for this portion of the geotextile tube. 

After later learning that a PW could be prepared to cover omitted damages, the Applicant began to aggregate documentation to prove its ownership of the Facility through easement[1] ownership of the property upon which it was placed.  On March 22, 2012, the Applicant sent a letter to the Grantee requesting a new project worksheet be written for the work performed to repair the Facility.  The Grantee forwarded this request to FEMA on May 1, 2012.  On July 3, 2012, FEMA denied the Applicant’s request, asserting that the documentation provided “clearly” demonstrated that the Beachside Village Home Owners Association (HOA), not the Applicant, had legal responsibility for the Facility.

First Appeal

On September 11, 2012, the Applicant submitted its first appeal to the Texas Division of Emergency Management (Grantee).  The Applicant asserted that the basis of FEMA’s denial was that the Applicant did not produce documentation to establish that it owned the Facility nor had it incurred costs for the repair of the Facility.  The Applicant provided the Agreement Regarding City of Galveston Shoreline Protection Project for West Galveston Island – Beachside Village (Agreement) to demonstrate ownership which explains that, upon completion, the HOA would donate the Facility to the Applicant.[2]  Additionally, the Applicant submitted invoices from the HOA to the Applicant for the work done to repair the Facility. 

On November 20, 2012, the Region VI Recovery Division Director sent a request for information to the Applicant, through the Grantee, requesting that the Applicant provide (1) conclusive evidence that the City of Galveston had legal responsibility for the repairs and (2) canceled checks or other appropriate documentation, substantiating that the City of Galveston paid for the repairs.  In response, the Applicant pointed to the Agreement and asserted that it had not yet processed the invoices for payment.

On July 11, 2013, the FEMA Region VI Regional Administrator (RA) denied the appeal.  The RA determined that the Applicant did not have the requisite legal responsibility for the facility because the Agreement states that legal responsibility remains with the HOA in event of storm or disaster, as the HOA will reimburse the City of Galveston for any costs that exceed FEMA or state reimbursement.  Additionally, the RA noted that the Applicant proposed to own the project, but provided no documentation demonstrating that it does own it, and that the easement merely grants access to landowner’s property for construction of the project, not legal responsibility.  Further, the RA indicated that the easement has an automatic termination clause in the event that a storm or disaster destroys the Project.

Second Appeal

In the Applicant’s second appeal, dated October 23, 2013, the Applicant submits additional information in support of its claim that it has legal responsibility for the Facility.  The Applicant claims the cost of repair to the Facility to its pre-disaster condition to be $393,961.70.  The Applicant provides two letters from then Director of Planning for the City of Galveston, a November 19, 2003, letter stating that the Applicant is sponsor of the installation of the subject geotextile tube shoreline protection project, and a November 10, 2010, letter, stating that the Beachfront Construction Permit Application for repair of the partially damaged tube is based in part on the City of Galveston giving reaffirmation by the City to Texas General Land Office of its “acknowledgement that [the] sponsor of the project originally permitted in 2004 are (sic) responsible for the ongoing maintenance of the project and, if necessary, the removal of the project.”  Also, the Applicant notes that failure to repair the existing geotextile tube will cause unreasonable flood hazard to habitable structures because flood waters will be channeled to structures through gaps in the existing geotextile tube.  

Discussion

Title 44 of the Code of Federal Regulations (C.F.R.) § 206.223(a)(3) specifies, to be eligible for financial assistance, a project or item of work must be the legal responsibility of an eligible applicant at the time of the disaster.[3]  Based on the documentation provided by the Applicant, it did not have the legal responsibility for the repairs to the Facility at the time of the disaster.  Specifically, the Agreement states the Applicant has “no obligation to enhance, maintain, repair or replace” the Facility.[4]  In addition, the Agreement provides that if the Facility is destroyed by a storm or other natural disaster, the Applicant had no obligation to seek funds from FEMA or from private contributions to repair or replace the Facility.[5]  Further, as indicated in the RA’s first appeal decision, the easement governing this appeal merely grants access on the individual land owner’s property for the purpose of construction on the project and has a termination clause in the event a disaster destroys the project.[6]   On June 27, 2014, FEMA hosted an appeal meeting with the Applicant.  During this meeting, the Applicant indicated it had not reimbursed the HOA for work to repair the damage to the Facility nor had the Applicant established a timeline for when it would.  Moreover, the Applicant acknowledged that reimbursing the HOA was discretionary, rather than a mandatory legal responsibility as required by 44 C.F.R. § 206.223(a)(3).[7]  Lastly, FEMA finds neither the November 19, 2003, nor November 10, 2010, letters as persuasive evidence of legal responsibility because they do not defeat the terms of Sections 4 and 5 of the Agreement.

Conclusion

The City of Galveston is not legally responsible for the geotextile tube at Beachside Village Beach.  As such, the costs associated with repairing the geotextile tube in question are not eligible for Public Assistance funding.


[1] Sand Sock Easement (November 17, 2003).

[2] See Agreement Regarding City of Galveston Shoreline Protection Project for West Galveston Island- Beachside Village, at 1(g) (Nov. 2003) [hereinafter Agreement]. 

[3] 44 C.F.R. § 206.223(a)(3) (2007).

[4] See Agreement, at 5(d), No Obligation to Maintain.

[5] Id., at 5(c), Destruction and Removal of the Project by Beachside.

[6] See Sand Sock Easement (November 17, 2003).

[7] Although the Applicant claims that the HOA submitted invoices with the expectation of reimbursement, there has been no indication, to date, that the Applicant has reimbursed the HOA.  In addition, the Applicant has gone through budget cycles without any indication that it will ever reimburse the HOA.

 

28 Dec 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5598
Date Signed: 
Tuesday, December 16, 2014
PA ID: 
037-52004-00
Summary/Brief: 

Conclusion:  Pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5598 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $121,184.97 in additional PA funding.

Summary Paragraph

In May 2010, extensive flooding throughout Nashville-Davidson County caused damage to the Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted Project Worksheet (PW) 5598 to document damage to the Wet Weather Pump Station, Influent Pump Station, and Storm Water Pump Station of the Facility.  FEMA obligated PW 5598 for $183,362.47 based on a Cost Estimating Format (CEF).  In the first appeal, the Applicant asserted that FEMA failed to include funding for electrical wires and cables submerged in floodwaters and various other damaged items excluded from the scope of work.  The Regional Administrator (RA) partially approved PW 5598 for $91,313.50 for resident engineering costs, pipe insulation, metal door replacement, electrical testing work, and associated construction management costs.  However, the RA determined that the first appeal did not provide the level of information necessary to make eligibility determinations on the other excluded items.  In addition, the RA concluded that the Applicant failed to demonstrate that some of the excluded work items were the result of the disaster.  In the second appeal, the Applicant again asserts that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its pre-disaster condition for PW 5598.

Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • 44 C.F.R. § 206.223(a).
  • OMB Circular A-87, 2 C.F.R. § 225.
  • FEMA P-348, at 2-27, 2-28, and 3.3-2.
  • FEMA 543, at 2-50.
  • FEMA P-936, at 4-22.
  • FEMA P-942, at 5-26.

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a), an eligible item of work must be required as the result of the disaster event.
    • Based on FEMA P-348, FEMA 543, FEMA P-936, and FEMA P-942, and further substantiated by analysis from a Professional Engineer, FEMA determined that the work items excluded from the original version of PW 5598 are eligible under the PA Program as they were required as a result of the disaster.   
  • Pursuant to OMB Circular A-87, allowable procurement costs must, among other things, be adequately documented.
    • The Applicant must provide adequate procurement process documentation.


 

Letter: 

December 16, 2014

David Purkey
Director
Tennessee Emergency Management Agency
3041 Sidco Drive, P.O. Box 41502
Nashville, TN 37204-1502

Re: Second Appeal – Nashville-Davidson County, PA ID 037-52004-00, FEMA-1909-DR-TN, Project Worksheet (PW) 5598 – Scope of Work

Dear Mr. Purkey:

This is in response to a letter from your office dated February 20, 2014, which transmitted the referenced second appeal on behalf of the Metropolitan Government of Nashville and Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $121,184.97 in Public Assistance (PA) funding for various items excluded from PW 5598.

As explained in the enclosed analysis, I have determined that, pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5598 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $121,184.97 in additional PA funding.  Therefore, I am approving the appeal contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  By copy of this letter, I am requesting the Acting Regional Administrator take appropriate action to implement this determination. 

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc: Robert Samaan
      Acting Regional Administrator
      FEMA Region IV

Analysis: 

Background

In May 2010, extensive flooding throughout Nashville and Davidson County caused damage to the Metropolitan Government of Nashville and Davidson County’s (Nashville-Davidson or Applicant) Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted Project Worksheet (PW) 5598 to document disaster-related damage to the Wet Weather Pump Station, Influent Pump Station, and Storm Water Pump Station of the Facility.  FEMA obligated PW 5598 for $183,362.47 based on a Cost Estimating Format (CEF).

First Appeal

In the first appeal letter, dated June 8, 2011, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its predisaster condition for PW 5598.  In that appeal the Applicant presented five distinct issues.  First, the Applicant disagreed with FEMA’s decision to reclassify the Direct Administrative Costs (DAC) as indirect costs, thereby reducing the eligible amount in PW 5598.  Second, the Applicant requested that FEMA revise PW 5598 to reflect the actual effort expended for on-site resident engineering tasks associated with the recovery of the Facility.  Third, the Applicant asserted that it should be reimbursed for the replacement of metal doors contaminated by floodwater.  Fourth, the Applicant asserted that, pursuant to FEMA Publication 348, Protecting Building Utilities from Flood Damage (FEMA P-348), FEMA should authorize the complete replacement of all electrical wires and cables because the Facility was submerged in nine feet of contaminated floodwaters and the electrical equipment was not salvageable.[1]  Finally, the Applicant asserted that a Technical Memorandum, prepared by Brown and Caldwell Engineers (Consulting Engineers), identified several areas where damaged items were missed and should have been included in PW 5598.[2]   

In a letter dated November 25, 2013, the Region IV Regional Administrator (RA) partially granted the appeal, approving $24,296.50 for the second and third issues presented by the Applicant (i.e., resident engineering costs, metal door replacement, and associated construction management costs).  In addition, the RA approved $67,017.10 for electrical testing work and its associated construction management cost.  However, the RA determined that Nashville-Davidson had not provided sufficient information to substantiate additional direct administrative costs, complete replacement of all electrical wires and cables, or other items that were excluded from the PW (first, fourth, and fifth issues, respectively). With specific regard to issues four and five, the RA determined that the format in which the Applicant documented costs made no distinction between existing line item costs included in PW 5598 (i.e., the FEMA generated CEF) and the appealed scope addition or cost increases.

Second Appeal

In the second appeal, dated February 12, 2014, the Applicant requests reimbursement for issues three and four (i.e., excluded work described above), in the amount of $121,184.97.  The second appeal includes $66,733.07 for replacement of a Grinder Control Panel, $14,636.60 for replacement of two unit heaters, and $39,815.30 for actual costs for the replacement of the various buckets in the electrical room—all of which the applicant claims were excluded in the original PW.  The Applicant raises no issue with regard to the Direct Administrative Costs.

The Applicant also asserts that it used, and submitted to FEMA, bid documents to establish the cost to restore the Facility to predisaster condition; whereas, as mentioned earlier, FEMA used a CEF.  In the Applicant’s second appeal, it challenges FEMA’s cost methodology, stating the CEF is not reflective of the work completed or scheduled to be completed because it does not include the Contractor’s general requirements.  In addition, the Applicant asserts that the costs identified in the CEF were lower than the actual costs.  The Applicant further argues that it is not realistic to compare actual costs to each CEF line item and cites the FEMA Public Assistance Guide as evidence that actual cost of eligible repairs is the preferred methodology in determining costs for large projects.

Discussion

Work Eligibility

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), Section 406, authorizes FEMA to make contributions to a local government to restore eligible facilities on the basis of the design of such facilities as they existed immediately prior to the disaster.[3]  Pursuant to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.223(a), which implements that provision, an eligible item of work must be required as the result of the disaster event, be located within a designated disaster area, and be the legal responsibility of the applicant.[4] The Applicant has fulfilled the latter two requirements of § 206.223(a); the issue on appeal is whether the work is required as a result of the disaster event.

As stated earlier, in the first appeal determination, the RA noted that the items excluded from the scope of work may be eligible for Public Assistance (PA) funding.  However, the RA could neither determine whether all items were damaged by the disaster nor distinguish between line item costs already included in PW 5598 and additional scope or cost increases not previously included in PW 5598.

It must be noted that, among other things, the Applicant’s Consulting Engineers conducted a detailed flood damage assessment of the Facility.[5]  The assessment included high water mark locations and an inventory of equipment that was reviewed by a licensed Professional Engineer.[6]  The inventory list is a detailed record that accounts for all of the Facility’s electrical equipment and distinguishes between disaster-damaged and non-damaged equipment.[7]  The inventory list was the basis for the scope of work in bid documents.[8]  In addition to the water mark locations and inventory list, the assessment notes that the floodwater was contaminated and, therefore, likely had harmful impacts on electrical components.[9]  The Consulting Engineers substantiate this claim by providing laboratory reports that indicated the presence of contaminating factors, including pH and corrosivity levels above the Environmental Protection Agency’s recommended levels.[10]

Generally, FEMA policy and guidance states that wet electrical components must be replaced.[11]  Specifically, FEMA P-348 recommends replacing any wire or cable that is listed for dry locations that has been submerged in water[12] and notes that “sediments and contaminants contained in water may find their way into the internal components of installed electrical products and may remain there even after the products have been dried or washed….”[13]  Furthermore, it explains that “[i]nundation of electrical equipment in a building creates the danger of short circuits, electrical shock, damage of electric components and appliances, injury, fire, or even death.”[14]  Accordingly, FEMA P-348 recommends replacing damaged electrical components with new undamaged products because the damaged components are not suitable for continued use.[15]

FEMA 543, Design Guide for Improving Critical Facility Safety from Flooding and High Winds (FEMA 543), further explains that, in general, if electrical components get wet, they are likely to be damaged or destroyed.[16]  It provides that “electrical systems and components, and electrical controls of heating, ventilation, and air conditioning systems, are subject to damage simply by getting wet, even for short durations.”[17]  Additionally, unless specifically designed for wet locations, switches and other electrical components can short out due to deposits of sediment, or otherwise not function even when allowed to dry before operation.[18]  FEMA 543 also notes that wiring and components that have been submerged may be functional, although generally it is more cost-effective to discard flooded outlets, switches, and other less expensive components than to attempt thorough cleaning.[19]

In addition to FEMA 543, FEMA Publication 936, Floodproofing Non-Residential Buildings (FEMA P-936), describes conditions under which wiring and cables should be considered damaged.[20]  Specifically, FEMA P-936 explains that cable systems cannot be cleaned if floodwaters have entered the exterior sheaths of the cables.[21]  However, conduits inundated with flooding may be cleaned, provided the floodwaters are not corrosive or otherwise damaging and the conduits are routed and installed to prevent water from accumulating inside them.[22]  Furthermore, after flooding it should be assumed that conductors are damaged unless it can be proven otherwise.[23]

Based upon the Applicant’s supporting documents, and the above noted agency policy and guidance, FEMA has determined that contaminated floodwater inundated the Facility and, therefore, likely had detrimental impacts on its electrical components.[24]  As such, the items excluded from the original scope of work in PW 5598 are eligible for Public Assistance funding.

Allowable Costs

Pursuant to the Stafford Act § 406, FEMA is authorized to provide reimbursement for the associated expenses incurred by a local government during the repair, restoration reconstruction, or replacement of a facility damaged as the result of a declared disaster.[25]  Generally, costs that can be directly tied to the performance of eligible work are eligible for FEMA reimbursement.[26]  However, these costs must, among other things, be reasonable and necessary to accomplish the work, comply with applicable federal, state, and local laws, regulations and procurement requirements, and be adequately documented.[27]  Adequate documentation in this instance would include documents that validate actual costs for work items claimed in this appeal.

As explained above, the work items requested by the Applicant are necessary to restore the Facility to predisaster condition, design, and function.  With the second appeal, the Applicant provided bid documents, invoices, order forms, accounting reports, and other documentation that validate the scope and actual costs for the work items requested in this appeal.[28]  The costs associated with the requested work items were adequately documented by the Applicant.  Accordingly, the costs are eligible for FEMA reimbursement.     

Conclusion

Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5598 are eligible under the PA Program.  In addition, pursuant to OMB Circular A-87, the Applicant provided sufficient documentation to substantiate its request for additional PA funding.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement.  Final costs for PW 5598 will be reconciled by FEMA during the closeout process. 


[1] See Protecting Building Utilities from Flood Damage, FEMA P-348, at 2-27 (Nov. 1999) [hereinafter FEMA 348].

[2] See generally Technical Memorandum from Maintenance and Reliability Specialist, Brown and Caldwell, prepared for Nashville Metropolitan Water Services, (Sep. 7, 2010) [hereinafter Technical Memorandum 1].

[3] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406, 42 U.S.C. § 5172 (2007).

[4] 44 C.F.R. § 206.223(a) (2009).

[5] See generally Technical Memorandum 1.

[6] Id.

[7] Id.

[8] Second Appeal, Nashville-Davidson County, FEMA-1909-DR-TN, at 2 (Feb. 12, 2014).

[9] Id.

[10] Id.; see also Technical Memorandum from Professional Engineer, Brown and Caldwell, prepared for Metropolitan Water Services Nashville, at Attachment A (May 27, 2011) (referencing the National Electric Code (NEC) that forbids the use of electrical equipment and connections “…deteriorated by corrosion, chemical action, or overheating” as support for the Applicant’s assertion that various electrical components had to be replaced)    [hereinafter Technical Memorandum 2].

[11] See Design Guide for Improving Critical Facility Safety from Flooding and High Winds, FEMA 543, (Jan. 2007) [hereinafter FEMA 543]; see also Floodproofing Non-Residential Buildings, FEMA P-936, (July 2013) [hereinafter FEMA P-936].

[12] FEMA P-348, at 2-27. 

[13] Id., at 2-28.

[14] Id., at 3.3-2.

[15] Id., at 2-28. 

[16] FEMA 543, at 2-50.

[17] Id.; see also FEMA Mitigation Assessment Team (MAT) Report: Hurricane Sandy in New Jersey and New York, FEMA P-942, at 5-26 (Nov. 2013) (providing, “[i]n general, all inundated electrical components had to be replaced, including electric controls and SCADA systems. Other equipment and systems damaged by floodwater included boilers, communication systems, fire protection systems, settling tanks, and biological systems for treatment.”) [hereinafter FEMA P-942].

[18] FEMA 543, at 2-50.

[19] Id.

[20] See FEMA P-936, at 4-22.

[21] Id.

[22] Id.

[23] Id. (providing that, “conductors should be replaced after flooding unless it can be confirmed that they have not been damaged from inundation”).

[24]During evaluation of the second appeal, FEMA consulted a professional engineer (PE) regarding the validity of the Applicant’s assertions regarding the excluded work items.  The PE reviewed the Applicant’s appeal documentation submitted on first and second appeal, FEMA policy, and FEMA guidance to form a professional opinion regarding the eligibility of work items the Applicant claims were improperly excluded in PW 5598.  The PE concluded that the Applicant’s documentation was sufficient to establish that the excluded items were damaged by the flood.  See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Aug. 15, 2014, 5:24 pm) (on file with FEMA).

[25] Stafford Act § 406(a)(1)(A), 42 U.S.C. § 5172.

[26] Public Assistance Guide, FEMA 322, at 40 (June 2007).

[27] See Office of Mgmt. & Budget, Exec. Office of the President, OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, at Attachment A  (2004) (codified at 2 C.F.R. § 225).

[28] Nashville-Davidson County, FEMA-1909-DR-TN, Attachments.

 

28 Dec 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5597
Date Signed: 
Tuesday, December 16, 2014
PA ID: 
037-52004-00
Summary/Brief: 

Conclusion:  Pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5597 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $1,560,819.15 in additional PA funding.

Summary Paragraph

In May 2010, extensive flooding throughout Nashville-Davidson County caused damage to the Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted Project Worksheet (PW) 5597 to document damage to the Secondary Treatment System building of the Facility.  FEMA obligated PW 5597 for $197,913.64 based on a Cost Estimating Format (CEF).  The Applicant prepared, and attached to the PW, a statement explaining that they were “signing this PW without proper review of scope and/or damage description elements due to FEMA’s self-imposed February 25, 2011 deadline for closing the Joint Field Office.”  In the first appeal, the Applicant asserted that FEMA failed to include funding for electrical wires and cables submerged in floodwaters and various other damaged items excluded from the scope of work.  The Regional Administrator (RA) partially approved PW 5597 for $84,960.76 for resident engineering costs, pipe insulation, and associated construction management costs.  However, the RA determined that the first appeal did not provide the level of information necessary to make eligibility determinations on the other excluded items.  In addition, the RA concluded that the Applicant failed to demonstrate that some of the excluded work items were the result of the disaster.  In the second appeal, the Applicant again asserts that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its pre-disaster condition for PW 5597.

Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • 44 C.F.R. § 206.223(a).
  • OMB Circular A-87, 2 C.F.R. § 225.
  • FEMA P-348, at 2-27, 2-28, and 3.3-2.
  • FEMA 543, at 2-50.
  • FEMA P-936, at 4-22.
  • FEMA P-942, at 5-26.

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a), an eligible item of work must be required as the result of the disaster event.
    • Based on FEMA P-348, FEMA 543, FEMA P-936, and FEMA P-942, and substantiated by analysis from a Professional Engineer, FEMA determined that the work items excluded from the original version of PW 5597 are eligible under the PA Program as they were required as a result of the disaster.   
  • Pursuant to OMB Circular A-87, allowable procurement costs must, among other things, be adequately documented.
    • The Applicant must provide adequate procurement documentation.
Letter: 

December 16, 2014

David Purkey
Director
Tennessee Emergency Management Agency
3041 Sidco Drive, P.O. Box 41502
Nashville, TN 37204-1502

Re: Second Appeal – Nashville-Davidson County, PA ID 037-52004-00, FEMA-1909-DR-TN, Project Worksheet (PW) 5597 – Scope of Work

Dear Mr. Purkey:

This is in response to a letter from your office dated February 20, 2014, which transmitted the referenced second appeal on behalf of the Metropolitan Government of Nashville and Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $1,560,819.15 in Public Assistance (PA) funding for various items excluded from PW 5597.

As explained in the enclosed analysis, I have determined that, pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5597 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $1,560,819.15 in additional PA funding.  Therefore, I am approving the appeal contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  By copy of this letter, I am requesting the Acting Regional Administrator take appropriate action to implement this determination. 

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  Robert Samaan
       Acting Regional Administrator
       FEMA Region IV
 


 

Analysis: 

Background

In May 2010, extensive flooding throughout Nashville and Davidson County caused damage to the Metropolitan Government of Nashville and Davidson County’s (Nashville-Davidson or Applicant) Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted Project Worksheet (PW) 5597 to document disaster-related damage to the Secondary Treatment System building, consisting of a multi-level below grade equipment gallery and tunnel system, an aeration structure, and two final settling tanks, of the Facility.  FEMA obligated PW 5597 for $197,913.64 based on a Cost Estimating Format (CEF). 

First Appeal

In the first appeal letter, dated June 8, 2011, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its predisaster condition for PW 5597.  In that appeal the Applicant presented five distinct issues.  First, the Applicant disagreed with FEMA’s decision to reclassify the Direct Administrative Costs (DAC) as indirect costs, thereby reducing the eligible amount in PW 5597.  Second, the Applicant requested that FEMA revise PW 5597 to reflect the actual effort expended for on-site resident engineering tasks associated with the recovery of the Facility.  Third, the Applicant asserted that it should be reimbursed for removal, disposal, and replacement of contaminated pipe insulation because such action complied with FEMA policy and guidance regarding mold remediation.  Fourth, the Applicant asserted that, pursuant to FEMA Publication 348, Protecting Building Utilities from Flood Damage (FEMA P-348), FEMA should authorize the complete replacement of all electrical wires and cables because the Facility was submerged in nine feet of contaminated floodwaters and the electrical equipment was not salvageable.[1]  Finally, the Applicant asserted that a Technical Memorandum, prepared by Brown and Caldwell Engineers (Consulting Engineers), identified several areas where damaged items were missed and should have been included in PW 5597.[2]   

In a letter dated November 25, 2013, the Region IV Regional Administrator (RA) partially granted the appeal, approving $84,960.76 for the second and third issues presented by the Applicant (i.e., resident engineering costs, pipe insulation, and associated construction management costs).  However, the RA determined that Nashville-Davidson had not provided sufficient information to substantiate additional direct administrative costs, complete replacement of all electrical wires and cables, or other items that were excluded from the PW (first, fourth, and fifth issues, respectively). With specific regard to issues four and five, the RA determined that the format in which the Applicant documented costs made no distinction between existing line item costs included in PW 5597 (i.e., the FEMA generated CEF) and the appealed scope addition or cost increases.

Second Appeal

In the second appeal, dated February 12, 2014, the Applicant requests reimbursement for issues three and four (i.e., excluded work described above), in the amount of $1,560,819.15.  The second appeal includes $3,280.00 for labor used during the restoration of the Facility, $208,620.42 for replacement of cable and conduit, power and control cables, and flow tubes, $58,319.99 to field verify, supply, install, rewire, test, and replace various lighting and receptacle components, and $1,290,578.74 for actual costs for several items listed in PW 5597 that were priced using lower cost estimates—all of which the applicant claims were excluded in the original PW.  The Applicant raises no issue with regard to the Direct Administrative Costs.

The Applicant also asserts that it used, and submitted to FEMA, bid documents to establish the cost to restore the Facility to predisaster condition; whereas, as mentioned earlier, FEMA used a CEF.  In the Applicant’s second appeal, it challenges FEMA’s cost methodology, stating the CEF is not reflective of the work completed or scheduled to be completed because it does not include the Contractor’s general requirements.  In addition, the Applicant asserts that the costs identified in the CEF were lower than the actual costs.  The Applicant further argues that it is not realistic to compare actual costs to each CEF line item and cites the FEMA Public Assistance Guide as evidence that actual cost of eligible repairs is the preferred methodology in determining costs for large projects.

Discussion

Work Eligibility

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), Section 406, authorizes FEMA to make contributions to a local government to restore eligible facilities on the basis of the design of such facilities as they existed immediately prior to the disaster.[3]  Pursuant to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.223(a), which implements that provision, an eligible item of work must be required as the result of the disaster event, be located within a designated disaster area, and be the legal responsibility of the applicant.[4] The Applicant has fulfilled the latter two requirements of § 206.223(a); the issue on appeal is whether the work is required as a result of the disaster event.

As stated earlier, in the first appeal determination, the RA noted that the items excluded from the scope of work may be eligible for Public Assistance (PA) funding.  However, the RA could neither determine whether all items were damaged by the disaster nor distinguish between line item costs already included in PW 5597 and additional scope or cost increases not previously included in PW 5597.

It must be noted that, among other things, the Applicant’s Consulting Engineers conducted a detailed flood damage assessment of the Facility.[5]  The assessment included high water mark locations and an inventory of equipment that was reviewed by a licensed Professional Engineer.[6]  The inventory list is a detailed record that accounts for all of the Facility’s electrical equipment and distinguishes between disaster-damaged and non-damaged equipment.[7]  The inventory list was the basis for the scope of work in bid documents.[8]  In addition to the water mark locations and inventory list, the assessment notes that the floodwater was contaminated and, therefore, likely had harmful impacts on electrical components.[9]  The Consulting Engineers substantiate this claim by providing laboratory reports that indicated the presence of contaminating factors, including pH and corrosivity levels above the Environmental Protection Agency’s recommended levels.[10]

Generally, FEMA policy and guidance states that wet electrical components must be replaced.[11]  Specifically, FEMA P-348 recommends replacing any wire or cable that is listed for dry locations that has been submerged in water[12] and notes that “sediments and contaminants contained in water may find their way into the internal components of installed electrical products and may remain there even after the products have been dried or washed….”[13]  Furthermore, it explains that “[i]nundation of electrical equipment in a building creates the danger of short circuits, electrical shock, damage of electric components and appliances, injury, fire, or even death.”[14]  Accordingly, FEMA P-348 recommends replacing damaged electrical components with new undamaged products because the damaged components are not suitable for continued use.[15]

FEMA 543, Design Guide for Improving Critical Facility Safety from Flooding and High Winds (FEMA 543), further explains that, in general, if electrical components get wet, they are likely to be damaged or destroyed.[16]  It provides that “electrical systems and components, and electrical controls of heating, ventilation, and air conditioning systems, are subject to damage simply by getting wet, even for short durations.”[17]  Additionally, unless specifically designed for wet locations, switches and other electrical components can short out due to deposits of sediment, or otherwise not function even when allowed to dry before operation.[18]  FEMA 543 also notes that wiring and components that have been submerged may be functional, although generally it is more cost-effective to discard flooded outlets, switches, and other less expensive components than to attempt thorough cleaning.[19]

In addition to FEMA 543, FEMA Publication 936, Floodproofing Non-Residential Buildings (FEMA P-936), describes conditions under which wiring and cables should be considered damaged.[20]  Specifically, FEMA P-936 explains that cable systems cannot be cleaned if floodwaters have entered the exterior sheaths of the cables.[21]  However, conduits inundated with flooding may be cleaned, provided the floodwaters are not corrosive or otherwise damaging and the conduits are routed and installed to prevent water from accumulating inside them.[22]  Furthermore, after flooding it should be assumed that conductors are damaged unless it can be proven otherwise.[23]

Based upon the Applicant’s supporting documents, and the above noted agency policy and guidance, FEMA has determined that contaminated floodwater inundated the Facility and, therefore, likely had detrimental impacts on its electrical components.[24]  As such, the items excluded from the original scope of work in PW 5597 are eligible for Public Assistance funding.

Allowable Costs

Pursuant to the Stafford Act § 406, FEMA is authorized to provide reimbursement for the associated expenses incurred by a local government during the repair, restoration reconstruction, or replacement of a facility damaged as the result of a declared disaster.[25]  Generally, costs that can be directly tied to the performance of eligible work are eligible for FEMA reimbursement.[26]  However, these costs must, among other things, be reasonable and necessary to accomplish the work, comply with applicable federal, state, and local laws, regulations and procurement requirements, and be adequately documented.[27]  Adequate documentation in this instance would include documents that validate actual costs for work items claimed in this appeal.

As explained above, the work items requested by the Applicant are necessary to restore the Facility to predisaster condition, design, and function.  With the second appeal, the Applicant provided bid documents, invoices, order forms, accounting reports, and other documentation that validate the scope and actual costs for the work items requested in this appeal.[28]  The costs associated with the requested work items were adequately documented by the Applicant.  Accordingly, the costs are eligible for FEMA reimbursement.   

Conclusion

Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5597 are eligible under the PA Program.  In addition, pursuant to OMB Circular A-87, the Applicant provided sufficient documentation to substantiate its request for additional PA funding.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement.  Final costs for PW 5597 will be reconciled by FEMA during the closeout process. 


[1] See Protecting Building Utilities from Flood Damage, FEMA P-348, at 2-27 (Nov. 1999) [hereinafter FEMA 348].

[2] See generally Technical Memorandum from Maintenance and Reliability Specialist, Brown and Caldwell, prepared for Nashville Metropolitan Water Services, (Sep. 7, 2010) [hereinafter Technical Memorandum 1].

[3] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406, 42 U.S.C. § 5172 (2007).

[4] 44 C.F.R. § 206.223(a) (2009).

[5] See generally Technical Memorandum 1.

[6] Id.

[7] Id.

[8] Second Appeal, Nashville-Davidson County, FEMA-1909-DR-TN, at 3 (Feb. 12, 2014).

[9] Id.

[10] Id.; see also Technical Memorandum from Professional Engineer, Brown and Caldwell, prepared for Metropolitan Water Services Nashville, at Attachment A (May 27, 2011) (referencing the National Electric Code (NEC) that forbids the use of electrical equipment and connections “…deteriorated by corrosion, chemical action, or overheating” as support for the Applicant’s assertion that various electrical components had to be replaced)    [hereinafter Technical Memorandum 2].

[11] See Design Guide for Improving Critical Facility Safety from Flooding and High Winds, FEMA 543, (Jan. 2007) [hereinafter FEMA 543]; see also Floodproofing Non-Residential Buildings, FEMA P-936, (July 2013) [hereinafter FEMA P-936].

[12] FEMA P-348, at 2-27. 

[13] Id., at 2-28.

[14] Id., at 3.3-2.

[15] Id., at 2-28. 

[16] FEMA 543, at 2-50.

[17] Id.; see also FEMA Mitigation Assessment Team (MAT) Report: Hurricane Sandy in New Jersey and New York, FEMA P-942, at 5-26 (Nov. 2013) (providing, “[i]n general, all inundated electrical components had to be replaced, including electric controls and SCADA systems. Other equipment and systems damaged by floodwater included boilers, communication systems, fire protection systems, settling tanks, and biological systems for treatment.”) [hereinafter FEMA P-942].

[18] FEMA 543, at 2-50.

[19] Id.

[20] See FEMA P-936, at 4-22.

[21] Id.

[22] Id.

[23] Id. (providing that, “conductors should be replaced after flooding unless it can be confirmed that they have not been damaged from inundation”).

[24]During evaluation of the second appeal, FEMA consulted a professional engineer (PE) regarding the validity of the Applicant’s assertions regarding the excluded work items.  The PE reviewed the Applicant’s appeal documentation submitted on first and second appeal, FEMA policy, and FEMA guidance to form a professional opinion regarding the eligibility of work items the Applicant claims were improperly excluded in PW 5597.  The PE concluded that the Applicant’s documentation was sufficient to establish that the excluded items were damaged by the flood.  See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Aug. 15, 2014, 5:24 pm) (on file with FEMA).

[25] Stafford Act § 406(a)(1)(A), 42 U.S.C. § 5172.

[26] Public Assistance Guide, FEMA 322, at 40 (June 2007).

[27] See Office of Mgmt. & Budget, Exec. Office of the President, OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, at Attachment A  (2004) (codified at 2 C.F.R. § 225).

[28] Nashville-Davidson County, FEMA-1909-DR-TN, Attachments.

 

28 Dec 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5574
Date Signed: 
Tuesday, December 16, 2014
PA ID: 
037-52004-00
Summary/Brief: 

Conclusion:  Pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5574 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $3,189,722.88 in additional PA funding.

Summary Paragraph

In May 2010, extensive flooding throughout Nashville-Davidson County caused damage to the Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted Project Worksheet (PW) 5574 to document the facility’s various electrical system components, including substations, pad-mounted transformers, main breakers, fuses, and conductors, damaged by the disaster.  FEMA obligated PW 5574 for $131,419.77 based on a Cost Estimating Format (CEF).  In the first appeal, the Applicant asserted that FEMA failed to include funding for voltage lines, the U-3 transformer, repair, cleaning, and testing of the main switch, and other labor and materials associated with the restoration of the facility. The Regional Administrator (RA) partially approved PW 5574 for $49,791.00 for resident engineering costs.  However, the RA determined that the first appeal did not provide the level of information necessary to make eligibility determinations on the other excluded items.  In addition, the RA concluded that the Applicant failed to demonstrate that some of the excluded work items were the result of the disaster.  In the second appeal, the Applicant again asserts that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its pre-disaster condition for PW 5574.

Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • 44 C.F.R. § 206.223(a).
  • OMB Circular A-87, 2 C.F.R. § 225.
  • FEMA P-348, at 2-27, 2-28, and 3.3-2.
  • FEMA 543, at 2-50.
  • FEMA P-936, at 4-22.
  • FEMA P-942, at 5-26.

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a), an eligible item of work must be required as the result of the disaster event.
    • Based on FEMA P-348, FEMA 543, FEMA P-936, and FEMA P-942, and further substantiated by analysis from a Professional Engineer, FEMA determined that the work items excluded from the original version of PW 5574 are eligible under the PA Program as they were required as a result of the disaster.   
  • Pursuant to OMB Circular A-87, allowable procurement costs must, among other things, be adequately documented. 
  • The Applicant must provide adequate procurement process documentation.


 

Letter: 

December 16, 2014

David Purkey
Director
Tennessee Emergency Management Agency
3041 Sidco Drive, P.O. Box 41502
Nashville, TN 37204-1502

Re: Second Appeal – Nashville-Davidson County, PA ID 037-52004-00, FEMA-1909-DR-TN, Project Worksheet (PW) 5574 – Scope of Work

Dear Mr. Purkey:

This is in response to a letter from your office dated January 22, 2014, which transmitted the referenced second appeal on behalf of the Metropolitan Government of Nashville and Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $3,189,722.88 in Public Assistance (PA) funding for various items excluded from PW 5574.

As explained in the enclosed analysis, I have determined that, pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5574 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $3,189,722.88 in additional PA funding.  Therefore, I am approving the appeal contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  By copy of this letter, I am requesting the Acting Regional Administrator take appropriate action to implement this determination. 

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

Sincerely,

/s/


William W. Roche
Director
Public Assistance Division

Enclosure

cc: Robert Samaan
      Acting Regional Administrator
      FEMA Region IV

Analysis: 

Background

In May 2010, extensive flooding throughout Nashville and Davidson County caused damage to the Metropolitan Government of Nashville and Davidson County’s (Nashville-Davidson or Applicant) Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted Project Worksheet (PW) 5574 to document the facility’s various electrical system components, including substations, pad-mounted transformers, main breakers, fuses, and conductors, damaged by the disaster.  FEMA obligated PW 5574 for $207,338.07 based on a Cost Estimating Format (CEF). 

First Appeal

In the first appeal letter, dated June 8, 2011, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its predisaster condition for PW 5574.  In that appeal the Applicant presented four distinct issues.  First, the Applicant disagreed with FEMA’s decision to reclassify the Direct Administrative Costs (DAC) as indirect costs, thereby reducing the eligible amount in PW 5574.  Second, the Applicant requested that FEMA revise PW 5574 to reflect the actual effort expended for on-site resident engineering tasks associated with the recovery of the Facility.  Third, the Applicant asserted that, pursuant to FEMA Publication 348, Protecting Building Utilities from Flood Damage (FEMA P-348), FEMA should authorize the complete replacement of all electrical wires and cables because the Facility was submerged in nine feet of contaminated floodwaters and the electrical equipment was not salvageable.[1]  Finally, the Applicant asserted that a Technical Memorandum, prepared by Brown and Caldwell Engineers (Consulting Engineers), identified several areas where damaged items were missed and should have been included in PW 5574.[2]    

In a letter dated November 8, 2013, the Region IV Regional Administrator (RA) partially granted the appeal, approving $49,791.00 for the second issue presented by the Applicant (i.e., resident engineering costs).  However, the RA determined that Nashville-Davidson had not provided sufficient information to substantiate additional direct administrative costs, complete replacement of all electrical wires and cables, or other items that were excluded from the PW (first, third, and fourth issues, respectively). With specific regard to issue three, the RA determined that the format in which the Applicant documented costs made no distinction between existing line item costs included in PW 5574 (i.e., the FEMA generated CEF) and the appealed scope addition or cost increases.  Regarding issue four, the RA determined that the Applicant had not demonstrated that the additional work items were the result of the disaster.   

Second Appeal

In the second appeal, dated January 17, 2014, the Applicant requests reimbursement for issues three and four (i.e., excluded work described above), in the amount of $3,189,722.88.  The second appeal includes $1,773,452.74 for restoration work performed on several transformers and their associated components, cables, and wires, and $1,416,270.14 for removal, cleaning, and replacement of damaged power and control cables and conduits in the U-4, U-7, U-8, U-9, and U-10 substations of the Facility—all of which the applicant claims were excluded in the original PW.  The Applicant raises no issue with regard to the Direct Administrative Costs.

The Applicant also asserts that it used, and submitted to FEMA, bid documents to establish the cost to restore the Facility to predisaster condition; whereas, as mentioned earlier, FEMA used a CEF.  In the Applicant’s second appeal, it challenges FEMA’s cost methodology, stating the CEF is not reflective of the work completed or scheduled to be completed because it does not include the Contractor’s general requirements.  In addition, the Applicant asserts that the costs identified in the CEF were lower than the actual costs.  The Applicant further argues that it is not realistic to compare actual costs to each CEF line item and cites the FEMA Public Assistance Guide as evidence that actual cost of eligible repairs is the preferred methodology in determining costs for large projects.

Discussion

Work Eligibility

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), Section 406, authorizes FEMA to make contributions to a local government to restore eligible facilities on the basis of the design of such facilities as they existed immediately prior to the disaster.[3]  Pursuant to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.223(a), which implements that provision, an eligible item of work must be required as the result of the disaster event, be located within a designated disaster area, and be the legal responsibility of the applicant.[4] The Applicant has fulfilled the latter two requirements of § 206.223(a); the issue on appeal is whether the work is required as a result of the disaster event.

As stated earlier, in the first appeal determination, the RA noted that the items excluded from the scope of work may be eligible for Public Assistance (PA) funding.  However, the RA could neither determine whether all items were damaged by the disaster nor distinguish between line item costs already included in PW 5574 and additional scope or cost increases not previously included in PW 5574.

It must be noted that, among other things, the Applicant’s Consulting Engineers conducted a detailed flood damage assessment of the Facility.[5]  The assessment included high water mark locations and an inventory of equipment that was reviewed by a licensed Professional Engineer.[6]  The inventory list is a detailed record that accounts for all of the Facility’s electrical equipment and distinguishes between disaster-damaged and non-damaged equipment.[7]  The inventory list was the basis for the scope of work in bid documents.[8]  In addition to the water mark locations and inventory list, the assessment notes that the floodwater was contaminated and, therefore, likely had harmful impacts on electrical components.[9]  The Consulting Engineers substantiate this claim by providing laboratory reports that indicated the presence of contaminating factors, including pH and corrosivity levels above the Environmental Protection Agency’s recommended levels.[10]

Generally, FEMA policy and guidance states that wet electrical components must be replaced.[11]  Specifically, FEMA P-348 recommends replacing any wire or cable that is listed for dry locations that has been submerged in water[12] and notes that “sediments and contaminants contained in water may find their way into the internal components of installed electrical products and may remain there even after the products have been dried or washed….”[13]  Furthermore, it explains that “[i]nundation of electrical equipment in a building creates the danger of short circuits, electrical shock, damage of electric components and appliances, injury, fire, or even death.”[14]  Accordingly, FEMA P-348 recommends replacing damaged electrical components with new undamaged products because the damaged components are not suitable for continued use.[15]

FEMA 543, Design Guide for Improving Critical Facility Safety from Flooding and High Winds (FEMA 543), further explains that, in general, if electrical components get wet, they are likely to be damaged or destroyed.[16]  It provides that “electrical systems and components, and electrical controls of heating, ventilation, and air conditioning systems, are subject to damage simply by getting wet, even for short durations.”[17]  Additionally, unless specifically designed for wet locations, switches and other electrical components can short out due to deposits of sediment, or otherwise not function even when allowed to dry before operation.[18]  FEMA 543 also notes that wiring and components that have been submerged may be functional, although generally it is more cost-effective to discard flooded outlets, switches, and other less expensive components than to attempt thorough cleaning.[19]

In addition to FEMA 543, FEMA Publication 936, Floodproofing Non-Residential Buildings (FEMA P-936), describes conditions under which wiring and cables should be considered damaged.[20]  Specifically, FEMA P-936 explains that cable systems cannot be cleaned if floodwaters have entered the exterior sheaths of the cables.[21]  However, conduits inundated with flooding may be cleaned, provided the floodwaters are not corrosive or otherwise damaging and the conduits are routed and installed to prevent water from accumulating inside them.[22]  Furthermore, after flooding it should be assumed that conductors are damaged unless it can be proven otherwise.[23]

Based upon the Applicant’s supporting documents, and the above noted agency policy and guidance, FEMA has determined that contaminated floodwater inundated the Facility and, therefore, likely had detrimental impacts on its electrical components.[24]  As such, the items excluded from the original scope of work in PW 5574 are eligible for Public Assistance funding.

Allowable Costs

Pursuant to the Stafford Act § 406, FEMA is authorized to provide reimbursement for the associated expenses incurred by a local government during the repair, restoration reconstruction, or replacement of a facility damaged as the result of a declared disaster.[25]  Generally, costs that can be directly tied to the performance of eligible work are eligible for FEMA reimbursement.[26]  However, these costs must, among other things, be reasonable and necessary to accomplish the work, comply with applicable federal, state, and local laws, regulations and procurement requirements, and be adequately documented.[27]  Adequate documentation in this instance would include documents that validate actual costs for work items claimed in this appeal.

As explained above, the work items requested by the Applicant are necessary to restore the Facility to predisaster condition, design, and function.  With the second appeal, the Applicant provided bid documents, invoices, order forms, accounting reports, and other documentation that validate the scope and actual costs for the work items requested in this appeal.[28]  The costs associated with the requested work items were adequately documented by the Applicant.  Accordingly, the costs are eligible for FEMA reimbursement.   

Conclusion

Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5574 are eligible under the PA Program.  In addition, pursuant to OMB Circular A-87, the Applicant provided sufficient documentation to substantiate its request for additional PA funding.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement.  Final costs for PW 5574 will be reconciled by FEMA during the closeout process. 


[1] See Protecting Building Utilities from Flood Damage, FEMA P-348, at 2-27 (Nov. 1999) [hereinafter FEMA 348].

[2] See generally Technical Memorandum from Maintenance and Reliability Specialist, Brown and Caldwell, prepared for Nashville Metropolitan Water Services, (Sep. 7, 2010) [hereinafter Technical Memorandum 1].

[3] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406, 42 U.S.C. § 5172 (2007).

[4] 44 C.F.R. § 206.223(a) (2009).

[5] See generally Technical Memorandum 1.

[6] Id.

[7] Id.

[8] Second Appeal, Nashville-Davidson County, FEMA-1909-DR-TN, at 3-4 (Jan. 17, 2014).

[9] Id.

[10] Id.; see also Technical Memorandum from Professional Engineer, Brown and Caldwell, prepared for Metropolitan Water Services Nashville, at Attachment A (May 27, 2011) (referencing the National Electric Code (NEC) that forbids the use of electrical equipment and connections “…deteriorated by corrosion, chemical action, or overheating” as support for the Applicant’s assertion that various electrical components had to be replaced)    [hereinafter Technical Memorandum 2].

[11] See Design Guide for Improving Critical Facility Safety from Flooding and High Winds, FEMA 543, (Jan. 2007) [hereinafter FEMA 543]; see also Floodproofing Non-Residential Buildings, FEMA P-936, (July 2013) [hereinafter FEMA P-936].

[12] FEMA P-348, at 2-27. 

[13] Id., at 2-28.

[14] Id., at 3.3-2.

[15] Id., at 2-28. 

[16] FEMA 543, at 2-50.

[17] Id.; see also FEMA Mitigation Assessment Team (MAT) Report: Hurricane Sandy in New Jersey and New York, FEMA P-942, at 5-26 (Nov. 2013) (providing, “[i]n general, all inundated electrical components had to be replaced, including electric controls and SCADA systems. Other equipment and systems damaged by floodwater included boilers, communication systems, fire protection systems, settling tanks, and biological systems for treatment.”) [hereinafter FEMA P-942].

[18] FEMA 543, at 2-50.

[19] Id.

[20] See FEMA P-936, at 4-22.

[21] Id.

[22] Id.

[23] Id. (providing that, “conductors should be replaced after flooding unless it can be confirmed that they have not been damaged from inundation”).

[24]During evaluation of the second appeal, FEMA consulted a professional engineer (PE) regarding the validity of the Applicant’s assertions regarding the excluded work items.  The PE reviewed the Applicant’s appeal documentation submitted on first and second appeal, FEMA policy, and FEMA guidance to form a professional opinion regarding the eligibility of work items the Applicant claims were improperly excluded in PW 5574.  The PE concluded that the Applicant’s documentation was sufficient to establish that the excluded items were damaged by the flood.  See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Aug. 15, 2014, 5:24 pm) (on file with FEMA).

[25] Stafford Act § 406(a)(1)(A), 42 U.S.C. § 5172.

[26] Public Assistance Guide, FEMA 322, at 40 (June 2007).

[27] See Office of Mgmt. & Budget, Exec. Office of the President, OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, at Attachment A  (2004) (codified at 2 C.F.R. § 225).

[28] Nashville-Davidson County, FEMA-1909-DR-TN, Attachments.

 

28 Dec 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5541
Date Signed: 
Tuesday, December 16, 2014
PA ID: 
037-52004-00
Summary/Brief: 

Conclusion:  Pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5541 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $119,311.80 in additional PA funding.

Summary Paragraph

In May 2010, extensive flooding throughout Nashville-Davidson County caused damage to the Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted PW 5541 to address damage to the Equalization Basin System of the Facility.  FEMA prepared PW 5541 for $52,690.94.  In the first appeal, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its pre-disaster condition for PW 5541.  The Regional Administrator (RA) partially approved PW 5541 for $10,105.14 for resident engineering costs, actuator wiring and conduit, and associated construction management costs.  However, the RA determined that the first appeal did not provide the level of information necessary to make eligibility determinations on the other excluded items.  In the second appeal, the Applicant asserts that FEMA failed to include funding for labor and materials to repair Motor Control Center buckets and replacement of lighting instrumentation.

Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • 44 C.F.R. § 206.223(a).
  • OMB Circular A-87, 2 C.F.R. § 225.
  • FEMA P-348, at 2-27, 2-28, and 3.3-2.
  • FEMA 543, at 2-50.
  • FEMA P-936, at 4-22.
  • FEMA P-942, at 5-26.

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a), an eligible item of work must be required as the result of the disaster event.
    • Based on FEMA P-348, FEMA 543, FEMA P-936, and FEMA P-942, and further substantiated by analysis from a Professional Engineer, FEMA determined that the work items excluded from the original version of PW 5541 are eligible under the PA Program as they were required as a result of the disaster.   
  • Pursuant to OMB Circular A-87, allowable procurement costs must, among other things, be adequately documented. 
  • The Applicant must provide adequate procurement process documentation.


 

Letter: 

December 16, 2014

David Purkey
Director
Tennessee Emergency Management Agency
3041 Sidco Drive, P.O. Box 41502
Nashville, TN 37204-1502

Re: Second Appeal – Nashville-Davidson County, PA ID 037-52004-00, FEMA-1909-DR-TN, Project Worksheet (PW) 5541 – Scope of Work

Dear Mr. Purkey:

This is in response to a letter from your office dated February 20, 2014, which transmitted the referenced second appeal on behalf of the Metropolitan Government of Nashville and Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $119,311.80 in Public Assistance (PA) funding for various items excluded from PW 5541.

As explained in the enclosed analysis, I have determined that, pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5541 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $119,311.80 in additional PA funding.  Therefore, I am granting the appeal contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  By copy of this letter, I am requesting the Acting Regional Administrator take appropriate action to implement this determination. 

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeal.

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc: Robert Samaan
      Acting Regional Administrator
      FEMA Region IV

Analysis: 

Background

In May 2010, extensive flooding throughout Nashville and Davidson County caused damage to the Metropolitan Government of Nashville and Davidson County’s (Nashville-Davidson or Applicant) Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted PW 5541 to address damage to the Equalization Basin System of the Facility.  FEMA prepared PW 5541 for $52,690.94 based on a project cost estimate using RS Means and other sources.   

First Appeal

In the first appeal letter, dated June 8, 2011, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its predisaster condition for PW 5541.  In that appeal the Applicant presented four distinct issues.  First, the Applicant disagreed with FEMA’s decision to reclassify the Direct Administrative Costs (DAC) as indirect costs, thereby reducing the eligible amount in PW 5541.  Second, the Applicant requested that FEMA revise PW 5541 to reflect the actual effort expended for on-site resident engineering tasks associated with the recovery of the Facility.  Third, the Applicant asserted that, pursuant to FEMA Publication 348, Protecting Building Utilities from Flood Damage (FEMA P-348), FEMA should authorize the complete replacement of all electrical wires and cables because the Facility was submerged in nine feet of contaminated floodwaters and the electrical equipment was not salvageable.[1]  Finally, the Applicant asserted that a Technical Memorandum, prepared by Brown and Caldwell Engineers (Consulting Engineers), identified several areas where damaged items were missed and should have been included in PW 5541.[2]    

In a letter dated November 25, 2013, the Region IV Regional Administrator (RA) partially granted the appeal, approving $4,607.00 for the second issue presented by the Applicant (i.e., resident engineering costs) and $5,498.14 for the actuator wiring and conduit and its associated construction management cost.  However, the RA determined that Nashville-Davidson had not provided sufficient information to substantiate additional direct administrative costs, complete replacement of all electrical wires and cables, or other items that were excluded from the PW (first, third, and fourth issues, respectively). With specific regard to issues three and four, the RA determined that the format in which the Applicant documented costs made no distinction between existing line item costs included in PW 5541 and the appealed scope addition or cost increases.

Second Appeal

In the second appeal, dated February 12, 2014, the Applicant requests reimbursement for issues three and four (i.e., excluded work described above), in the amount of $119,311.80.  The second appeal includes $103,500.80 for labor and materials procured to repair Motor Control Center (MCC) buckets and $15,811.00 to supply, install, rewire, test, and calibrate damaged lighting instrumentation—all of which the applicant claims were excluded in the original PW.  The Applicant raises no issue with regard to the Direct Administrative Costs.

The Applicant also asserts that the original PW is based on an inadequate cost level and explains that it used bid documents to establish the cost to restore the Facility to predisaster condition.  In the Applicant’s second appeal, it contends that, had FEMA used its bid documents during the preparation of PW 5541, the excluded work items that were damaged as the result of the disaster would have qualified for PA funding.  

Discussion

Work Eligibility

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), Section 406, authorizes FEMA to make contributions to a local government to restore eligible facilities on the basis of the design of such facilities as they existed immediately prior to the disaster.[3]  Pursuant to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.223(a), which implements that provision, an eligible item of work must be required as the result of the disaster event, be located within a designated disaster area, and be the legal responsibility of the applicant.[4] The Applicant has fulfilled the latter two requirements of § 206.223(a); the issue on appeal is whether the work is required as a result of the disaster event.

As stated earlier, in the first appeal determination, the RA noted that the items excluded from the scope of work may be eligible for Public Assistance (PA) funding.  However, the RA could neither determine whether all items were damaged by the disaster nor distinguish between line item costs already included in PW 5541 and additional scope or cost increases not previously included in PW 5541.

It must be noted that, among other things, the Applicant’s Consulting Engineers conducted a detailed flood damage assessment of the Facility.[5]  The assessment included high water mark locations and an inventory of equipment that was reviewed by a licensed Professional Engineer.[6]  The inventory list is a detailed record that accounts for all of the Facility’s electrical equipment and distinguishes between disaster-damaged and non-damaged equipment.[7]  The inventory list was the basis for the scope of work in bid documents.[8]  In addition to the water mark locations and inventory list, the assessment notes that the floodwater was contaminated and, therefore, likely had harmful impacts on electrical components.[9]  The Consulting Engineers substantiate this claim by providing laboratory reports that indicated the presence of contaminating factors, including pH and corrosivity levels above the Environmental Protection Agency’s recommended levels.[10]

Generally, FEMA policy and guidance states that wet electrical components must be replaced.[11]  Specifically, FEMA P-348 recommends replacing any wire or cable that is listed for dry locations that has been submerged in water[12] and notes that “sediments and contaminants contained in water may find their way into the internal components of installed electrical products and may remain there even after the products have been dried or washed….”[13]  Furthermore, it explains that “[i]nundation of electrical equipment in a building creates the danger of short circuits, electrical shock, damage of electric components and appliances, injury, fire, or even death.”[14]  Accordingly, FEMA P-348 recommends replacing damaged electrical components with new undamaged products because the damaged components are not suitable for continued use.[15]

FEMA 543, Design Guide for Improving Critical Facility Safety from Flooding and High Winds (FEMA 543), further explains that, in general, if electrical components get wet, they are likely to be damaged or destroyed.[16]  It provides that “electrical systems and components, and electrical controls of heating, ventilation, and air conditioning systems, are subject to damage simply by getting wet, even for short durations.”[17]  Additionally, unless specifically designed for wet locations, switches and other electrical components can short out due to deposits of sediment, or otherwise not function even when allowed to dry before operation.[18]  FEMA 543 also notes that wiring and components that have been submerged may be functional, although generally it is more cost-effective to discard flooded outlets, switches, and other less expensive components than to attempt thorough cleaning.[19]

In addition to FEMA 543, FEMA Publication 936, Floodproofing Non-Residential Buildings (FEMA P-936), describes conditions under which wiring and cables should be considered damaged.[20]  Specifically, FEMA P-936 explains that cable systems cannot be cleaned if floodwaters have entered the exterior sheaths of the cables.[21]  However, conduits inundated with flooding may be cleaned, provided the floodwaters are not corrosive or otherwise damaging and the conduits are routed and installed to prevent water from accumulating inside them.[22]  Furthermore, after flooding it should be assumed that conductors are damaged unless it can be proven otherwise.[23]

Based upon the Applicant’s supporting documents, and the above noted agency policy and guidance, FEMA has determined that contaminated floodwater inundated the Facility and, therefore, likely had detrimental impacts on its electrical components.[24]  As such, the items excluded from the original scope of work in PW 5541 are eligible for Public Assistance funding.

Allowable Costs

Pursuant to the Stafford Act § 406, FEMA is authorized to provide reimbursement for the associated expenses incurred by a local government during the repair, restoration reconstruction, or replacement of a facility damaged as the result of a declared disaster.[25]  Generally, costs that can be directly tied to the performance of eligible work are eligible for FEMA reimbursement.[26]  However, these costs must, among other things, be reasonable and necessary to accomplish the work, comply with applicable federal, state, and local laws, regulations and procurement requirements, and be adequately documented.[27]  Adequate documentation in this instance would include documents that validate actual costs for work items claimed in this appeal.

As explained above, the work items requested by the Applicant are necessary to restore the Facility to predisaster condition, design, and function.  With the second appeal, the Applicant provided bid documents, invoices, order forms, accounting reports, and other documentation that validate the scope and actual costs for the work items requested in this appeal.[28]  The costs associated with the requested work items were adequately documented by the Applicant.  Accordingly, the costs are eligible for FEMA reimbursement.  

Conclusion

Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5541 are eligible under the PA Program.  In addition, pursuant to OMB Circular A-87, the Applicant provided sufficient documentation to substantiate its request for additional PA funding.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement.  Final costs for PW 5541 will be reconciled by FEMA during the closeout process. 


[1] See Protecting Building Utilities from Flood Damage, FEMA P-348, at 2-27 (Nov. 1999) [hereinafter FEMA 348].

[2] See generally Technical Memorandum from Maintenance and Reliability Specialist, Brown and Caldwell, prepared for Nashville Metropolitan Water Services, (Sep. 7, 2010) [hereinafter Technical Memorandum 1].

[3] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406, 42 U.S.C. § 5172 (2007).

[4] 44 C.F.R. § 206.223(a) (2009).

[5] See generally Technical Memorandum 1.

[6] Id.

[7] Id.

[8] Second Appeal, Nashville-Davidson County, FEMA-1909-DR-TN, at 2-3 (Feb. 12, 2014).

[9] Id.

[10] Id.; see also Technical Memorandum from Professional Engineer, Brown and Caldwell, prepared for Metropolitan Water Services Nashville, at Attachment A (May 27, 2011) (referencing the National Electric Code (NEC) that forbids the use of electrical equipment and connections “…deteriorated by corrosion, chemical action, or overheating” as support for the Applicant’s assertion that various electrical components had to be replaced)    [hereinafter Technical Memorandum 2].

[11] See Design Guide for Improving Critical Facility Safety from Flooding and High Winds, FEMA 543, (Jan. 2007) [hereinafter FEMA 543]; see also Floodproofing Non-Residential Buildings, FEMA P-936, (July 2013) [hereinafter FEMA P-936].

[12] FEMA P-348, at 2-27. 

[13] Id., at 2-28.

[14] Id., at 3.3-2.

[15] Id., at 2-28. 

[16] FEMA 543, at 2-50.

[17] Id.; see also FEMA Mitigation Assessment Team (MAT) Report: Hurricane Sandy in New Jersey and New York, FEMA P-942, at 5-26 (Nov. 2013) (providing, “[i]n general, all inundated electrical components had to be replaced, including electric controls and SCADA systems. Other equipment and systems damaged by floodwater included boilers, communication systems, fire protection systems, settling tanks, and biological systems for treatment.”) [hereinafter FEMA P-942].

[18] FEMA 543, at 2-50.

[19] Id.

[20] See FEMA P-936, at 4-22.

[21] Id.

[22] Id.

[23] Id. (providing that, “conductors should be replaced after flooding unless it can be confirmed that they have not been damaged from inundation”).

[24]During evaluation of the second appeal, FEMA consulted a professional engineer (PE) regarding the validity of the Applicant’s assertions regarding the excluded work items.  The PE reviewed the Applicant’s appeal documentation submitted on first and second appeal, FEMA policy, and FEMA guidance to form a professional opinion regarding the eligibility of work items the Applicant claims were improperly excluded in PW 5541.  The PE concluded that the Applicant’s documentation was sufficient to establish that the excluded items were damaged by the flood.  See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Aug. 15, 2014, 5:24 pm) (on file with FEMA).

[25] Stafford Act § 406(a)(1)(A), 42 U.S.C. § 5172.

[26] Public Assistance Guide, FEMA 322, at 40 (June 2007).

[27] See Office of Mgmt. & Budget, Exec. Office of the President, OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, at Attachment A  (2004) (codified at 2 C.F.R. § 225).

[28] Nashville-Davidson County, FEMA-1909-DR-TN, Attachments.