Fema Situation Updates

28 Jul 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nobles Cooperative Electric
Disaster Number: 
4113-DR-MN
DSR: 
PW 163
Date Signed: 
Thursday, July 23, 2015
PA ID: 
105-014FF-00
Summary/Brief: 

Conclusion:  Pursuant to the Recovery Directorate Manual, Public Assistance Program Appeals Procedures, FEMA did not properly issue the Final Request for Information (RFI) to close the administrative record.  Accordingly, the appeal is remanded to the Region to afford the Applicant an opportunity to submit pertinent documentation to substantiate its claim. 

Summary Paragraph

In April 2013, a severe winter storm affecting Southwest Minnesota caused extensive damage to electrical distribution systems owned and operated by the Applicant—a Rural Electric Cooperative.  FEMA prepared Project Worksheet 163 to reconductor the Applicant’s facility, but found the project ineligible because the Applicant did not identify a code or standard for conductor replacement that complies with 44 C.F.R. § 206.226(d).  In the first appeal, the Applicant requested $1,224,787.57 to reconductor its facility and asserted that it followed codes and standards promulgated by the Rural Utilities Service, National Electrical Safety Code, and Minnesota statutes.  FEMA Region V sent an email Final Request for Information (RFI) to the Applicant to request documentation to determine if the codes and standards proffered by the Applicant comply with 44 C.F.R. § 206.226(d)(3).  The Applicant responded in a timely manner.  The first appeal determination, however, denied the appeal on a basis different from that explained in the Final RFI, including 44 C.F.R. § 206.226(d)  in its entirety and DAP9580.6, Electric Utility Repair (Public and Private Nonprofit).  In the second appeal, the Applicant requests $4,725,310.00 to reconductor its facility, increase, where necessary, the size of some of the conductors, and bury the lines underground. 

Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • 44 C.F.R. § 206.226.
  • Recovery Directorate Manual (Appeals Manual), Public Assistance Program Appeals Procedures, at 13-15 (Apr. 7, 2014). 
  • DAP9580.6, Electric Utility Repair (Public and Private Nonprofit), at 3-5 (Sept. 22, 2009).
  • RP 9526.1, Hazard Mitigation Funding Under Section 406, at Appendix A.

Headnotes

  • The Appeals Manual requires FEMA regions to compile an administrative record for all first appeals.  In addition, the Appeals Manual requires Regional Administrators to issue a Final RFI whenever a first appeal will likely be denied or partially granted. 
    • As the Region did not properly identify the key issues of the appeal in the Final RFI, the Applicant was not afforded the opportunity to submit pertinent information within its response to the Final RFI.  Therefore, the administrative record was not properly closed.
  • Pursuant to DAP9580.6, if FEMA determines that a conductor section is damaged, the use of #2 Aluminum Conductor Steel Reinforced (ACSR) to replace a conductor with equal or lesser amperage capacity is the lower cost equivalent and eligible for PA funding. 
    • The Region must analyze the Applicant’s appeal using the standards set forth in DAP9580.6.
Letter: 

07/23/2015

Kris Eide
Director
Division of Homeland Security and Emergency Management
445 Minnesota Street, Suite 223
Saint Paul, Minnesota  55101-6223

Re: Second Appeal – Nobles Cooperative Electric, PA ID 105-014FF-00, FEMA-4113-DR-MN, Project Worksheet (PW) 163 – Rural Electrical Cooperative

Dear Ms. Eide:

This is in response to a letter from your office dated November 17, 2014, which transmitted the referenced second appeal on behalf of Nobles Cooperative Electric (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $1,224,787.57 in Public Assistance funding to replace conductors on a portion of its electrical distribution system. 

As explained in the enclosed analysis, I have determined that in issuing the Final Request for Information, FEMA Region V did not properly inform the Applicant of the potential reasons for denying or partially approving the appeal.  Thus, the administrative record was not properly closed because the Applicant was not afforded an opportunity to submit pertinent documentation to substantiate its claim that its facility was eligible for reconductoring.  Accordingly, I am remanding this appeal to the Region and requesting the Regional Administrator take appropriate action to implement this determination.  Such action will afford the Applicant a final opportunity, if necessary, to submit additional documentation to substantiate its claim, and appropriately close the administrative record.  

Please inform the Applicant of my decision.  The Applicant’s right to a second appeal is not impacted by this decision.  It may re-submit a second appeal pursuant to 44 C.F.R. § 206.206 if dissatisfied with the Regional Administrator’s decisions regarding this matter.

 

Sincerely,

Alex Amparo
Assistant Administrator
Recovery Directorate

 

Enclosure

cc: Andrew Velasquez III
     Regional Administrator
     FEMA Region V

Analysis: 

Background

From April 9 to 11, 2013, a severe winter storm produced high winds and ice that extensively damaged an electrical distribution system owned and operated by Nobles Cooperative Electric (Applicant)—a Rural Electric Cooperative (REC) located in Minnesota.  FEMA prepared Project Worksheet (PW) 163 to replace electrical conductors[1] on 134 conductor sections (facility) of the electrical distribution system.  FEMA also included inspection sheets for 134 lines documenting that they were eligible for Public Assistance (PA) funding.  However, FEMA subsequently determined the project was not eligible because, pursuant to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.226(d), the Applicant did not provide documentation to identify the adopted code or standard that dictated the requirements and methods used for conductor replacement.  FEMA obligated PW 163 for zero dollars.    

First Appeal

In a letter dated August 19, 2013, the Applicant appealed FEMA’s denial of funding in the amount of $1,224,787.57 for the replacement of 134 conductor sections.  The Applicant asserted that it has applicable codes and standards that are reasonable, in writing, and formally adopted by the cooperative’s Board of Directors and required by Rural Utilities Service (RUS).  To support this assertion, the Applicant provided copies of the applicable RUS Bulletins, Board Policy, Board Resolutions, System Plans, and other related documents. 

On May 15, 2014, FEMA Region V sent an email Final Request for Information (RFI) to the Applicant to request documentation to determine if the codes and standards proffered by the Applicant comply with 44 C.F.R. § 206.226(d)(3); specifically, evidence supporting that “a written, formally adopted, and implemented code or standard for the replacement of damaged conductors was in effect prior to the [disaster].”  FEMA Region V informed the Applicant that the administrative record would close at the issuance of the first appeal response.

On June 2, 2014, the Applicant responded to FEMA Region V’s request for information.  In the response, the Applicant asserted that it followed codes and standards promulgated by the National Electrical Safety Code (NESC) and Minnesota statutes.  In addition, the Applicant argued that FEMA inappropriately required the Applicant to demonstrate it promulgated codes or standards because FEMA does not recognize codes adopted by Private Nonprofit organizations.  

On August 29, 2014, the FEMA Region V Regional Administrator (RA) issued his first appeal determination.  The RA denied the first appeal stating the Applicant did not provide the evidence necessary to demonstrate that the codes and standards proposed by the Applicant comply with the five criteria required by 44 C.F.R. § 206.226(d)[2] and the technical requirements for conductor replacement specified in Disaster Assistance Fact Sheet (DAP) 9580.6, Electric Utility Repair (Public and Private Nonprofit).[3]

Second Appeal

In a letter dated October 30, 2014, the Applicant requests $1,224,787.57 to reconductor its facility.  The Applicant sent a letter dated November 3, 2014 to correct the amount in dispute to be $4,725,310.00.  The Applicant argues the estimate addresses the necessary cost to replace storm-damaged structures to new construction in compliance with current NESC codes and standards and the Applicant’s construction work plan.  The Applicant asserts that these compliance requirements include reconductoring with #2, #1/0, and #4/0 Aluminum Conductor Steel Reinforced (ACSR).[4]  The estimate also includes a request for additional funding to move overhead power lines underground.  Finally, the Applicant asserts that FEMA Region V based its appeal determination on additional information that it did not have the opportunity to respond to in the Final RFI.  As such, the Applicant requests FEMA either remand the appeal to the Region for proper closure of the administrative record or accept new information with its second appeal.

Discussion

Application of Public Assistance Program Appeals Procedures

The Recovery Directorate Manual, Public Assistance Program Appeals Procedures (Appeals Manual), sets forth the policies, procedures, and responsibilities for administering FEMA’s Public Assistance Program appeal system.[5]  The Appeals Manual applies to all Public Assistance staff and touches on operations at joint field offices, recovery offices, regional offices, and FEMA headquarters.[6]  To comply with the requirements of the Sandy Recovery Improvement Act of 2013, FEMA is required to compile an administrative record for all PA appeals that qualify for the Dispute Resolution Pilot Program (DRPP).[7]  As a policy matter, FEMA extended this requirement to all first appeals to ensure all first appeals decisions are thorough, properly documented, and well-supported.[8]  The administrative record contains all documents and materials considered by FEMA in making a PA eligibility determination and subsequent first appeal decision, including all PW versions, supporting backup documentation, photographs, technical reports, correspondence, and other relevant materials.[9] 

If a RA is considering denying or partially approving a first appeal, the Appeals Manual requires issuance of a Final RFI noting all information in the administrative record the Region is considering, requesting additional information that addresses the reason for denial or partial approval, and advising the grantee and applicant that the administrative record will close after the region issues the first appeal determination.[10]  Typically, an applicant has 30 days to respond to the Final RFI.[11]  Once the administrative record is closed, FEMA will not consider any new information submitted with a second appeal.  However, if the applicant has pertinent information that likely would have changed the outcome of the first appeal determination, and the applicant was unable to provide the information prior to the closure of the administrative record due to circumstances beyond its control, FEMA will remand the appeal back to the FEMA Region for further consideration.[12]  

Here, FEMA Region V issued a Final RFI explaining that the likely basis for denial is that the record does not contain documentation demonstrating that the codes and standards proffered by the Applicant comply with 44 C.F.R. § 206.226(d)(3).  The Applicant responded in a timely manner.  The first appeal determination, however, denied the appeal on a basis different from that explained in the Final RFI, including 44 C.F.R. § 206.226(d)[13] in its entirety and DAP9580.6, Electric Utility Repair (Public and Private Nonprofit).[14]  As FEMA Region V considered other standards for denying the first appeal after the Final RFI was issued, the Applicant was not afforded the opportunity to submit pertinent documentation supporting its position that its facility was eligible for reconductoring.  Further, had Region V provided the Applicant the opportunity to submit additional documentation, it may have changed the outcome of the first appeal determination.  Accordingly, this appeal is remanded to FEMA Region V to appropriately close the administrative record.  Any subsequent first appeal decision will afford the Applicant appeal rights consistent with 44 C.F.R. § 206.206 and should be guided by the below discussion.

Electric Utility Repair

DAP9580.6, Electric Utility Repair (Public and Private Nonprofit), establishes criteria to assist FEMA in determining eligibility for repair or replacement of disaster-damaged electric distribution and transmission systems.[15]  The following subsections sequentially detail the fact sheet’s section titled “Replacing Conductors” and provide examples of the critical decisions FEMA must make at each step.[16]

  1. Establishing Pre-Disaster Condition

The fact sheet lists three sources of information that applicants should provide FEMA to demonstrate the pre-disaster condition of the conductors.  Pre-disaster condition must be established by an applicant to demonstrate the damage is disaster related.  It is important to note that if an applicant is unable to provide the recommended sources of information, FEMA may accept alternative ways to substantiate pre-disaster condition.  The three sources of information should not be viewed as exhaustive or absolute requirements that must be met by an applicant, but rather as information preferred by FEMA to demonstrate pre-disaster condition.  The three sources of information are:

1. Certification[17] of the pre-disaster condition and capacity of the conductor from a licensed professional engineer who has direct experience with the damaged electrical transmission or distribution system.  Records[18] providing satisfactory evidence of the condition and capacity of the conductor as it existed prior to the disaster.  The certification may be supplemented by a professional engineering evaluation.

2. If available, copies of construction work plans demonstrating the utility’s past practices and current/future projects.

3. If required by RUS, a copy of any corrective action plans submitted to RUS in compliance with 7 CFR §1730.25, Corrective action (RUS borrowers only).[19]

If the Applicant is able to provide the information above, FEMA does not require further documentation. 

  1. Criteria for Conductor Replacement

After an applicant establishes the predisaster condition of the conductors, it must identify and FEMA must verify the disaster-related damage.  The extent of damage controls whether FEMA will fund the conductor’s repair or replacement.[20]  However, damage to conductors is not always readily apparent.  Determining the disaster-related damage to other components of a distribution or transmission system is relatively simple.  For instance, a visual inspection will often identify a bent utility pole, cracked cross-arm, or a snapped guy-wire.  Damage to conductors is often not demonstrated by an outright break in the cable, but rather sagging or stretching, which is more difficult to identify.  To assist with this determination, FEMA has pre-determined that a conductor is “eligible for replacement,” or in other words “damaged to such an extent that replacement is required,” when it is stretched beyond the point where it can be effectively repaired and re-sagged through predictable modeling to meet appropriate clearances, sag and tension, and to meet predisaster reliability.[21]  A conductor is beyond the point where it can be effectively repaired when one or more of the following exists within a line section: 25 percent or more of the conductor spans are damaged; 30 percent or more of the line spans are visibly out of sag or do not meet clearances; 40 percent or more of the poles were replaced or need to be replaced due to the disaster; 40 percent or more of the supporting structures have a disaster-related damaged component; the sum of the percentages of the above criteria is 65 percent or more; or there is other compelling information provided by a licensed professional engineer.[22] 

If a conductor is damaged but does not meet the criteria for replacement, funding is only available for repairs of the damaged line section(s) and hazard mitigation.[23]  For example, if a conductor owned by a REC is broken, but the conductor does not meet the criteria for replacement/reconductoring, FEMA may still fund work to splice the conductor back together. 

  1. Replacement Conductor

After an applicant identifies the conductors that are eligible for replacement, FEMA may reimburse replacement of the conductors to their pre-disaster design, function, and capacity in accordance with applicable codes and standards.[24]  For conductors, it is critically important that replacement work that returns the conductor to its pre-disaster design, function, and capacity is distinguished from restoration work that upgrades or improves the conductor in accordance with a code or standard.  For all permanent work projects, including replacing conductors, codes and standards are only implicated when the predisaster construction of a facility is changed due to a Federal, state, or local code or standard.[25]  In this regard, conductors are no different than other eligible facilities, such as schools, police stations, and libraries.  FEMA may reimburse an eligible applicant to replace conductors damaged or destroyed by a disaster.  An applicant is not required to cite to a code or standard that dictates the requirements or methods used to replace conductors back to predisater design, function, and capacity for the work to be eligible.  Simply replacing damaged conductor with the same or equivalent amperage capacity conductor should not be considered an upgrade or improvement that changes the predisaster design, function, or capacity of the conductors.  For example, if an applicant proposes to replace a damaged #4/0 ACSR with the same type of conductor, it does not need to cite to a code or standard because the replacement is not improving or upgrading the conductor.  In other words, if there is no code or standard that upgrades or improves a conductor in a way that changes the predisaster construction of the damaged conductors (i.e., work to predisaster design or construction that goes beyond repair),[26] 44 C.F.R. § 206.226(d) is not implicated and does not apply.

Moreover, FEMA has pre-determined in DAP 9580.6 that #2 ACSR is the lower cost equivalent[27] to replace damaged conductors with an equal or lesser amperage capacity.  The fact sheet mentions that copper weld conductor (CWC), hard and soft drawn copper wire, smaller diameter ACSR cable, and Amerductor as examples of conductors with an equal or lesser amperage capacity as compared to #2 ACSR.[28]  If one of those types of conductors is eligible for replacement, FEMA will fund the replacement of the damaged conductors with #2 ACSR and not view such as an improvement or upgrade but rather as a lower cost equivalent.[29]  Consequently, an applicant does not need to cite to a code or standard to justify replacing the damaged equivalent or lower amperage capacity conductor with #2 ACSR. 

  1. Adjustments to Components of the Electric Distribution and Transmission Systems

When an equal or lesser amperage capacity conductor is replaced with #2 ACSR, FEMA will also fund adjustments to other components of the electric distribution and transmission systems to accommodate the new #2 ACSR, including, but not limited to: increasing span lengths between utility poles and increasing pole heights and sizes to meet appropriate design requirements.[30]  Applicants do not need to cite to a code or standard for this additional work even though appropriate design requirements may come from local, state, or Federal standards, including NESC or RUS standards.

To illustrate this point, consider an eligible applicant that has two conductors that were damaged during a disaster.  Conductor 1 is a #4 ACSR supported by utility poles with a long span.  Conductor 2 is an Amerductor with an equivalent amperage capacity to #2 ACSR.  For conductor 1, FEMA should fund replacement of the damaged conductor with #2 ACSR because FEMA has pre-determined that #2 ACSR is a lower cost equivalent to #4 ACSR.[31]  FEMA should also fund work to adjust the span lengths to support the new #2 ACSR.  For conductor 2, FEMA should also fund replacement of the damaged conductor with #2 ACSR if the applicant prefers because, despite being the same amperage capacity, FEMA has pre-determined that #2 ACSR is a lower cost equivalent to replacing the Amerductor with equivalent or lesser amperage capacity.  Neither of these replacements requires the existence of or the applicant to cite to a code or standard.

  1. Codes and Standards

If a code or standard requires an improvement or an upgrade to a conductor, FEMA may reimburse an eligible applicant for replacing the conductors back to predisaster design, function, and capacity plus costs to update or improve the conductors in accordance with the code or standard.[32]  If an applicant is claiming, for example, that a code or standard contained in a RUS Bulletin, NESC, State law, or local law[33] requires a damaged #2 ACSR be replaced with a higher amperage capacity conductor, such as #4/0 ACSR, the code or standard must be evaluated for compliance with 44 C.F.R. § 206.226(d).  If the code meets all five criteria listed at 44 C.F.R. § 206.226(d), then FEMA should fund replacement of the damaged conductor with #4/0 ACSR.  If the code or standard does not meet the five criteria listed at 44 C.F.R. § 206.226(d), the project is still eligible, but funding is limited to replacing the conductor to its predisaster design, function, and capacity, i.e. #2 ACSR.

  1. Section 406 Hazard Mitigation

Pursuant to Stafford Act § 406(e), FEMA may fund cost-effective measures that would reduce or eliminate the threat of similar damage to a facility damaged during a disaster.[34]  FEMA supports funding cost-effective hazard mitigation measures for electrical transmission and distribution facilities.[35]  The five criteria in 44 C.F.R. § 206.226(d) dictate whether upgrades that meet specific codes or standards are eligible for PA funding.[36]  However, upgrades that do not meet the criteria outlined in 44 C.F.R. § 206.226(d) may still be eligible for hazard mitigation funding if they enhance the facility’s ability to resist similar damage in a future disaster and are cost-effective.[37]  For example, if an applicant claims that a code or standard requires overhead conductors to be replaced with underground conductors,[38] or smaller conductors to be replaced with larger conductors, but FEMA later determines that the code or standard cited to does not meet the five criteria listed in 44 C.F.R. § 206.226(d), the applicant could still request funding for the project as hazard mitigation.  In order to receive the requested funding, the applicant would need to demonstrate that the project is cost effective in accordance with DAP 9526.1, Hazard Mitigation Funding Under Section 406 (Stafford Act).[39]

Conclusion

Procedurally, FEMA Region V did not properly issue the Final RFI to close the administrative record.  Accordingly, I am remanding this appeal to the Region to afford the Applicant an opportunity to submit pertinent documentation to substantiate its claim that its facility was eligible for reconductoring.  In accordance with the Recovery Directorate Manual, Public Assistance Program Appeals Procedures, if the RA anticipates denying or partially approving the Applicant’s first appeal, the RA must issue a Final RFI that, among other requirements, clearly specifies the potential reasons for denying or partially approving the appeal.  If the RA anticipates approving the Applicant’s first appeal, the RA does not need to issue a Final RFI.  The first appeal decision should be informed by the policy standards discussed in this decision.  In accordance with 44 C.F.R. § 206.206, this action preserves the Applicant’s appeal rights with respect to project and hazard mitigation eligibility.

 


[1] Conductors (also known as “power lines”) transmit electricity over long distances and distribute electricity to customers.  Conductors may be suspended in the air (“overhead power lines”) by transmission towers or utility poles or placed underground (“underground power lines”).

[2] 44 C.F.R. § 206.226(d)(1)-(5) (2012).

[3] See DAP9580.6, Electric Utility Repair (Public and Private Nonprofit) (Sep. 22, 2009).

[4] ACSR are multi-stranded.  The outer stands are made of highly conductive, high quality aluminum alloy.  The inner strands are made of high ductile steel to support the outer aluminum alloy strands.  ACSR cables are available in a variety of diameters or gauges, based on the American Wire Gauge (AWG) system.  ACSR gauge diameters vary from #6 to #4/0 AWG and larger diameters are denominated in circular mil (kcmil or MCM).  A higher AWG gauge denotes decreasing wire diameter.  See Generally Standard Specification for Standard Nominal Diameters and Cross-Sectional Areas of AWG Sizes of Solid Round Wires Used as Electrical Conductors, ASTM, Designation: B258-14 (Mar. 2015).

[5] Recovery Directorate Manual, Public Assistance Program Appeals Procedures (Apr. 7, 2014).

[6] Id., at 2.

[7] See Sandy Recovery Improvement Act of 2013, Pub. L. No. 113-2, § 1105 (2013) (Mandating FEMA establish the DRPP to facilitate an efficient recovery from major disasters, including arbitration by an independent review panel, to resolve disputes relating to PA projects where the amount in dispute is $1,015,000.00 or more.  This option allows a Grantee or Subgrantee to file for arbitration, instead of a second appeal.).

[8] Recovery Directorate Manual, Public Assistance Program Appeals Procedures, at 14 (Apr. 7, 2014).

[9] Id. at 13.

[10] Id.

[11] Id. at 15.

[12] Id. at 8.

[13] See 44 C.F.R. § 206.226(d)(1)-(5) (stating for repair or replacement standards which change the predisaster construction of facility to be eligible, the standards must apply to the type of repair or restoration required, be appropriate to the predisaster use of the facility, be found reasonable, in writing, and formally adopted and implemented by the State or local government on or before the disaster declaration date or be a legal Federal requirement applicable to the type of restoration, apply uniformly to all similar types of facilities within the jurisdiction of owner of the facility, and enforced during the time of the disaster).

[14] DAP9580.6, Electric Utility Repair (Public and Private Nonprofit), at 3-4 (Sept. 22, 2009).

[15] Generally, electric distribution and transmission systems consist of the infrastructure required to transfer electrical energy from power generating sources (i.e. a power plant) to customers, which includes businesses, residents, etc.  “Transmission system” generally refers to the infrastructure required to transfer electric energy from a power generating source to an electrical substation where the voltage is adjusted for customer use.  “Electric Distribution” generally refers to infrastructure required to transfer electric energy from electrical substations to customers.

[16] DAP9580.6, Electric Utility Repair (Public and Private Nonprofit) (Sept. 22, 2009).

[17] A signed, dated, and stamped letter from a license professional engineer will satisfy the certification requirement.

[18] Satisfactory evidence may include, but is not limited to, maintenance records, contract documents, work orders, inspection logs, etc.

[19] Id. at 3.

[20] In FEMA parlance, “reconductor” is the same as “replace.”  The terms are used interchangeably throughout this decision.

[21] DAP9580.6, Electric Utility Repair (Public and Private Nonprofit), at 4 (Sept. 22, 2009).

[22] Id.

[23] Id. at 5.

[24] 44 C.F.R. § 206.226.; see also Public Assistance Guide, FEMA 322, at 79 (June 2007) [hereinafter PA Guide].

[25] Id. at § 206.226(d) (emphasis added).

[26] See DAP 9527.4, Construction Codes and Standards, at 2-3 (Feb. 5, 2008) (stating that a code that mandates an upgrade in addition to repairs changes the predisaster construction and implicates the five criteria of 44 C.F.R. § 206.226(d)).

[27] DAP9580.6, Electric Utility Repair (Public and Private Nonprofit), at 4 (Sept. 22, 2009).

[28] Id.

[29] Id.

[30] Id.

[31] It is important to note that increasing AWG gauge numbers denote decreasing wire diameters.  This means that an ACSR cable with a #2 AWG has a larger diameter than an ACSR cable with a #3 or #6 AWG.

[32] 44 C.F.R. § 206.226.; PA Guide, FEMA 322, at 79 (June 2007).

[33] It must be noted that FEMA does not recognize codes adopted by PNPs. See DAP9527.4, Construction Codes and Standards, at 6 (Feb. 5, 2008).

[34] See The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406(e), 42 U.S.C. § 5172(e) (2013); see also 44 C.F.R. § 206.226(e).

[35] DAP9580.6, Electric Utility Repair (Public and Private Nonprofit), at 5

[36] Id.; see also 44 C.F.R. § 206.226(d)(1)-(5).

[37] DAP9580.6, Electric Utility Repair (Public and Private Nonprofit), at 5.

[38] Placing power lines underground (“undergrounding”), is often performed for aesthetic purposes but can also make the power lines less susceptible to outages and damage from weather events. 

[39] Disaster Assistance Policy DAP9526.1, Hazard Mitigation Funding Under Section 406 (Stafford Act), at 3 (Mar. 30, 2010).

28 Jul 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Kansas Department of Wildlife, Parks and Tourism
Disaster Number: 
4010-DR-KS
DSR: 
PW 82, 168, 171, 212, 214, 266, FEMA-1932-DR-KS, PW 461
Date Signed: 
Thursday, July 23, 2015
PA ID: 
000-U2R7P-00
Summary/Brief: 

Conclusion:  The Applicant has maintained the shoreline and the damages are the Applicant’s legal responsibility.  While the Bureau of Reclamation does not have specific authority to provide disaster assistance, it did provide Title 28 funding to repair disaster-related damages, and this represents a duplication of benefits.

Summary Paragraph

DR-1932 caused flooding and shoreline erosion at several state parks administered by the Applicant.  FEMA obligated PW 461 for rip rap protection loss along the Waconda Lake shoreline.  Before work could be completed, DR-4010 caused flooding which damaged several facilities and caused further shoreline erosion.  FEMA obligated 10 PWs for work in Glen Elder State Park.  Later FEMA notified the Grantee that the Applicant was not legally responsible for repairs to the shoreline of Waconda Lake and the PWs written for repairs to infrastructure and recreation facilities at Glen Elder State Park constitute a duplication of benefits since Title 28 funding is available from the Bureau of Reclamation.  The Applicant appealed FEMA’s denial of $256,954.80 for damage sustained to the shoreline of Waconda Lake.  The Grantee forwarded an appeal for a total of $1,026,389.47 that included the funding sought by the Applicant and additional funding for PWs not identified by the Applicant. The Regional Administrator denied the appeal, determining that: the Applicant is not legally responsible for maintenance to the shoreline and other park facilities; funding from BOR presents a duplication of benefits; and the damages were due to a lack on maintenance instead of a direct result of the disaster.  The Applicant submitted a second appeal which reiterated its first appeal and provided further documentation.

Authorities and Second Appeals

  • 44 C.F.R. § 206.223(a)(3).
  • 44 C.F.R. § 206.226(a)(1).
  • PA Guide, at 33.
  • Stafford Act § 312(a).

Headnotes

  • 44 C.F.R. § 206.223(a)(3) states that “To be eligible for financial assistance, an item of work must … be the legal responsibility of an eligible applicant.”
    • FEMA determined that the Applicant is legally responsible for damages per the lease agreement and the legal advice of BOR.
  • 44 C.F.R. § 206.226(a)(1) states that “Generally, disaster assistance will not be made available under the Stafford Act when another Federal agency has specific authority to restore facilities damaged or destroyed by an event which is declared a major disaster.”
    • BOR does not have specific authority to restore disaster damaged facilities.
  • The Stafford Act § 312(a) states the “Federal agency administering any program providing financial assistance to … entities suffering losses as a result of a major disaster or emergency, shall assure that no such … entity will receive such assistance with respect to any part of such loss as to which he has received financial assistance under any other program … or any other source.”
    • The Applicant did receive financial assistance from BOR which matches the scope of work in some PWs.
Letter: 

07/23/2015


Major General Lee Tafanelli
Director
Kansas Division of Emergency Management
2800 SW Topeka Blvd.
Topeka, Kansas 66611-1287

Re:  Second Appeal – Kansas Department of Wildlife, Parks and Tourism, PA ID 000-U2R7P-00, FEMA-4010-DR-KS, Project Worksheets (PWs) 82, 168, 171, 212, 214, 266, FEMA-1932-DR-KS, PW 461; Legal Responsibility – Other Federal Agency; Duplication of Benefits; Deferred Maintenance

Dear Major General Tafanelli:

This is in response to your letter dated August 22, 2013, which transmitted the referenced second appeal on behalf of the Kansas Department of Wildlife, Parks and Tourism (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $256,954.80 in funding for damage sustained at Glen Elder Reservoir.  The Grantee appealed additional funding on behalf of the Applicant for a total appeal amount of $1,026,389.47.

As explained in the enclosed analysis, I have determined the damaged facilities are the Applicant’s legal responsibility per the lease agreement.  Furthermore, the Applicant has provided sufficient documentation to show that it maintained the Waconda Lake shoreline at Glen Elder State Park. While the Bureau of Reclamation does not have explicit authority to provide disaster assistance, it did provide Title 28 funding to repair disaster related damages, and such funding represents a duplication of benefits where the scopes of work overlap with the FEMA PW scopes of work.  Accordingly, I am partially granting the appeal for $595,833.76.  By copy of this letter, I am requesting 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:  Beth Freeman
       Regional Administrator
       FEMA Region VII

Analysis: 

Background

Severe storms, high winds, and heavy rain from disaster declaration FEMA-1932-DR-KS (DR 1932) caused flooding and shoreline erosion at several state parks administered by the Kansas Department of Wildlife, Parks and Tourism (Applicant) from July 7 through July 21, 2010.  FEMA obligated Project Worksheet (PW) 461 for rip rap protection loss along the Waconda Lake shoreline at the Glen Elder Camping area.  Before work could be completed for PW 461, severe storms, high winds, and heavy rain from disaster declaration FEMA-4010-DR-KS (DR 4010) caused flooding, damaging several facilities and resulting in further shoreline erosion at several state parks administered by the Applicant.  After DR 4010, FEMA obligated 10 PWs for work in Glen Elder State Park and wrote one estimated PW, but neither entered the estimated PW into EMMIE nor obligated funds.  With Version 1 of each obligated PW FEMA deobligated all funding, explaining that, among other things, the work was the legal responsibility of the Bureau of Reclamation (BOR).  The relevant PWs are:

 

Disaster

PW #

Version 0 Amount

Version 1 Amount

Description

4010-DR-KS

82

$29,177.00

$0.00

Glen Elder State Park, Osage Camp Ground – Replace Vault Toilet

4010-DR-KS

168

$19,156.01

$0.00

Glen Elder State Park – Swim Beach

4010-DR-KS

171

$3,318.48

$0.00

Glen Elder State Park – Emergency Protective Measures

4010-DR-KS

210

$3,233.32

$0.00

Glen Elder State Park – Osage Parking Lot

4010-DR-KS

211

$11,300.02

$0.00

Glen Elder State Park – Various Park Facilities

4010-DR-KS

212

$14,423.70

$0.00

Glen Elder State Park – Debris Removal

4010-DR-KS

214

$119,437.58

$0.00

Glen Elder State Park – Park Roads

4010-DR-KS

266

$23,800.74

$0.00

Glen Elder Wildlife Area – Roads and Parking Lots, 10 Sites

4010-DR-KS

271

$30,491.70

$0.00

Campsite Restrooms and Boat docks – 2 Sites

4010-DR-KS

310

$2,616.25

$0.00

Debris left from flood

4010-DR-KS

Estimated PW

$478,272.13

N/A

PW written for rip rap damages but never obligated

 

The Applicant administers state parks on lands leased from the BOR.  The lease, signed in 1967, authorizes the Applicant to exclusively administer and manage Federal lands and waters for recreation, fish and wildlife, and related uses at, among other places, Lovewell Reservoir and Lake Waconda (Glen Elder Reservoir).  In interpreting the terms of the lease, with regard to the issue of legal responsibility, the BOR  explained, in a letter dated April 13, 2012,[1]  that BOR “retains primary jurisdiction over only those areas designated as ‘Operations Areas’ which include the dam, outlet works, spillway, and water distribution system,” and it is not responsible for operation and maintenance (O&M) of the leased lands around the reservoirs as those lands are the responsibility of the Kansas Department of Wildlife and Parks.[2]  BOR further explained that it “assume[s] no liability for damages to property which may arise from the use and occupation of the leased premises or damage to the property arising from or incident to the regulation, storage, routing, and discharge of water through the reservoir, including flooding, where applicable.”[3] Lastly, BOR explained that they do “not provide funding for regular O&M purposes at Glen Elder or Lovewell Reservoirs and [have] no plans to do so in the future.”[4]

By letter dated September 21, 2012, FEMA notified the Grantee that review of the lease revealed the Applicant was not legally responsible for repairs to the shoreline of Waconda Lake.  In support of the finding FEMA cited section 4 of the lease agreement between the Applicant and BOR which states in part that “[t]his provision shall not be construed as imposing liability upon the Lessee for damage to the leased lands resulting directly or indirectly from the action of reservoir waters.”[5]  Furthermore, FEMA stated that PWs written for repairs to infrastructure and recreation facilities at Glen Elder State Park constitute a duplication of benefits since Title 28 funding is available from the Bureau of Reclamation for these projects.  As a result, FEMA deobligated PW 461 for DR-1932 and PWs 82, 168, 171, 210, 211, 212, 214, 266, 271 and 310 for DR-4010.

First Appeal

In a first appeal letter dated November 30, 2012, and submitted to the Grantee, the Applicant appealed FEMA’s denial of $256,954.80 for damage sustained to the shoreline of Waconda Lake.  The appeal letter included a legal memorandum dated November 30, 2012 which analyzes the lease and the Title 28 duplication of benefits issue.[6]  The Applicant claims that the language FEMA quotes from the lease is taken out of context.  The full provision reads: 

“The responsibility for operation and administration of recreation, fish and wildlife, and related purposes, uses and facilities within the Leased premises shall be vested exclusively in the Lessee.  This provision shall not be construed as imposing liability upon the lessee for damages to the Leased land resulting directly or indirectly from the reservoir waters.”[7]

The Applicant maintained that “responsibility for the operation and administration of the leased premises, including the shoreline, vests with the [Applicant]”[8] and provided maintenance records,[9] which included invoices and purchase orders demonstrating the work performed on the Glen Elder shoreline that was paid for by the Applicant.  The Applicant then refers to the aforementioned April 13, 2012 letter in which BOR stated the Applicant is responsible for damages to the reservoir lands per the lease agreement.  The Applicant also explains that the Title 28 Cooperative Agreement is a cost share funding mechanism for recreational enhancement projects with the intent to cost share the construction, upgrade, repair and replacement of recreational facilities for full Americans with Disabilities Act (ADA) compliance.  The Applicant goes on to explain that Title 28 funds have never been used to repair the Waconda Lake shoreline and that this would be disallowed through the Cooperative Agreement[10] since the agreement is silent on this issue.

In a letter dated January 28, 2013, the Grantee forwarded the appeal for $1,026,389.47.[11]  This amount includes the $256,954.80 that the Applicant appealed from DR-4010, $291,162.54 for DR-1932, PW 461, as well as $478,272.13 for the PW that was never entered or obligated in EMMIE.  The estimated PW was not addressed in the initial FEMA denial letter dated September 21, 2012.  The Grantee supported the appeal.  The following shows the Grantee cost breakdown by PW:

 

Disaster

PW #

Amount

Grantee Cost Breakdown

1932-DR-KS

461

$291,162.54

$291,162.54

4010-DR-KS

82

$29,177.00

$256,954.80

4010-DR-KS

168

$19,156.01

4010-DR-KS

171

$3,318.48

4010-DR-KS

212

          $14,423.70

4010-DR-KS

214

$119,437.58

4010-DR-KS

266

$23,800.74

4010-DR-KS

210

$3,233.32

4010-DR-KS

211

$11,300.02

4010-DR-KS

271

$30,491.70

4010-DR-KS

310

$2,616.25

4010-DR-KS

Estimated PW

$478,272.13

$478,272.13

TOTAL

 

$1,026,389.47

$1,026,389.47

In its recommendation for the appeal letter, the Grantee reiterated that the Applicant has legal responsibility for repairs to the facilities at state parks, and has an established history of maintaining those facilities.  The Grantee further asserts that BOR “retains primary jurisdiction over only those areas designated as ‘Operations Areas’ which include the dam, outlet works, spillway, and water distribution system.”[12]  The Grantee also supported the Applicant’s assertion that BOR has no obligation to provide any funding for disaster events under Title 28.  However, the Grantee acknowledged a duplication of benefits for rebuilding park roads (PW 214), pumping two vault toilets (PW 82), restoring a swim beach (PW 168), and restoring volleyball courts (PW 211), and did not recommend FEMA approve funding for those projects.  While the Grantee did not support those costs, they were included in the total amount appealed.

On April 24, 2013, the Region VII Regional Administrator denied the appeal, determining that the Applicant is not legally responsible for maintenance to the shoreline and other park facilities in light of the text of section 4 of the 1967 lease agreement.  Furthermore, the RA determined that funding from BOR presented a duplication of benefits because: 1) BOR recently funded O&M projects including the rebuilding of park roads, repairs to a beach, and repairs to volleyball courts, and 2) the Applicant and BOR signed a cost share agreement which would provide the Applicant $101,000.00 for improvements to recreation, and fish and wildlife facilities.  The RA also determined that the Applicant failed to demonstrate a record of maintaining the shoreline at Glen Elder State Park.  Specifically, the RA found that the invoices submitted by the Applicant lacked a detailed description, and therefore did not demonstrate the damages were a direct result of the disaster rather than a lack of maintenance.

 

Second Appeal

On July 1, 2013, the Applicant submitted to the Grantee a second appeal for $256,954.80 in funding for damage sustained at Glen Elder Reservoir. The Applicant included a memorandum from its legal counsel dated July 2, 2013, explaining their position on FEMA’s first appeal decision.  The memo explains that BOR is not legally responsible for repairs per the lease agreement and that Title 28 funding excludes funds for beach erosion control purposes, and thus cannot be a duplication of benefits.  The Applicant provided new documents including: department purchase orders showing shoreline work performed, rip rap invoices, expenditure reports, program reports, capital improvement project reports, and statements from four former employees attesting that shoreline maintenance work was performed regularly and financed by the Applicant.  Additionally, an amended legal memorandum dated August 20, 2013 provided photographs showing the baseline rip rap levels in 2008 and the extent of the rip rap damage after the two disasters.

On August 22, 2013, the Grantee transmitted the second appeal to FEMA.  The Grantee appealed additional funding on behalf of the Applicant for a total of $1,026,389.47.[13]  The Grantee first  analyzes the issue of legal responsibility and explains it believes that FEMA took the second sentence of section 4 of the 1967 lease— “[t]his provision shall not be construed as imposing liability upon the Lessee for damages to the Leased land resulting directly or indirectly from the reservoir waters[]”[14]—out of context.  The Grantee argues that the purpose of the sentence is to prevent BOR from taking legal action against the Applicant when property is damaged due to fluctuations in the reservoir waters.[15]  Next, the Grantee examines the issue of duplication of benefits and points out that Title 28 funding is not designed to be used for disaster assistance but can be redirected to assist with this purpose.  The Grantee supports the Applicant’s argument that the intent of the Cooperative Agreement between BOR and the Applicant is to “cost share the construction, upgrade, repair and replacement of recreational facilities for full ADA compliance for [five] different department leased BOR properties.”[16]  Lastly, the Grantee analyzes the issue of failure to properly maintain property and identifies documentation provided by the Applicant to demonstrate a history of maintaining the shoreline.  The Grantee concludes by stating that FEMA has considered state-run BOR facilities to be eligible for public assistance funding in the past and it would be inconsistent to single out this facility as ineligible.

On September 12, 2013, the Region VII Regional Administrator forwarded the second appeal to FEMA Headquarters.  On December 23, 2013, FEMA issued a Request For Information (RFI) requesting a detailed description and scope of work for Title 28 funding received by the Applicant as well as actual costs for the PWs in question.  On January 16, 2014, the Applicant responded with a summary of Title 28 funding projects and actual PW costs.  On September 24, 2014, FEMA issued a second RFI wherein FEMA identified the PWs and work that were similar to projects covered by Title 28 funding and requested the Applicant provide a detailed scope of work and the exact location of each project.  The Applicant responded on October 24, 2014 stating that Title 28 funds were redirected to ADA improvements in other parks.  The Applicant included a “Request To Modify Report” referring to Cooperative Agreement # R11AC60075 between the Applicant and BOR.  The report details the original projects, the new projects, and explains that the projects were modified to support other higher priority projects and because of a duplication of benefits with FEMA funding.

 

Discussion

Legal Responsibility

“To be eligible for financial assistance, an item of work must … [b]e the legal responsibility of an eligible applicant.”[17]  When discussing legal responsibility, FEMA’s Public Assistance Guide (PA Guide) specifically mentions water delivery systems constructed by BOR as an example of a Federal agency that may assign the legal and financial responsibility for the operation and maintenance of facilities over to local agencies.[18]  In this instance, because the Applicant leases the land at issue from BOR, FEMA must look to the language of the lease to determine the responsible party.  Further, should the lease be unclear about legal responsibility, FEMA may consider the opinion furnished by BOR regarding their interpretation of the lease as it relates to the matter. 

A summary of the pertinent provisions of the lease is provided below:

  • Preamble: The Applicant is charged with managing and administering recreation, fish and wildlife and related uses for, among other locations, Glen Elder Reservoir, with the federal government retaining control and administration of lands for irrigation operation, flood control, and municipal and industrial water supply purposes.[19] This portion of the lease notes that BOR does not have “at its avail the facilities, appropriations, and means to manage or administer the lands and water surfaces” for the lands identified in the lease.[20]

  • Section 3(d): BOR has primary jurisdiction over Operations Areas “for the purpose of insuring proper operation and protection of the reservoirs, but shall not preclude such recreation, fish and wildlife, and related use administration and development by the [Applicant] within the Operations Areas.”[21]

  • Section 4: “The responsibility for operation and administration of recreation, fish and wildlife, and related purposes, uses and facilities within the leased premises shall be vested exclusively in the [Applicant].”[22]The same section further indicates that “[t]his provision shall not be construed as imposing liability upon the [Applicant] for damages to the leased land resulting directly or indirectly from the action of reservoir waters.”[23]

  • Section 6: Permits the Applicant to construct improvements but requires these improvements and expenses related to them to be the Applicant’s responsibility.

  • Section 7: The Applicant must “keep and maintain the leased premises … in a good and reasonable state of repair … at its own cost and expense.”[24]

  • Section 12: Limits the liability of the BOR for a variety of reasons, to include liability for flooding.

  • Section 18: Reinforces the previous paragraphs that limit BOR liability and responsibility for damages caused by fires or other unspecified causes.It states that BOR is not “liable for any loss, injury, or damage of any kind or nature whatsoever to any building or structure belonging to [the Applicant] … whether such loss, injury, or damage results from fire or other cause.”[25]

In addition to the lease provisions, in an effort to clarify legal responsibility for the damaged land, the Applicant sought and obtained the opinion of BOR.  In the letter dated April 13, 2012, the area manager for BOR clarified that BOR was “not responsible for operation and maintenance (O&M) of the leased lands around the reservoirs.”[26]  The area manager further explained that BOR “retains primary jurisdiction over only those areas designated as ‘Operations Areas’ which include the dam, outlet works, spillway and water distribution system.” Lastly, the area manager noted that BOR views damages to the reservoir lands as O&M expenses, which are the responsibility of the Applicant.  Legal counsel for the Department of Interior concurred with the area manager’s analysis.[27]  FEMA finds the legal opinion from the Regional Solicitor’s office to be persuasive on this issue.

When read together, the aforementioned lease provisions and the legal opinion of the Regional Solicitor’s office demonstrate that the parties intended for the Applicant to retain legal responsibility for damages to recreational areas covered by the lease.  FEMA accepts and agrees with this position.  Therefore, the Applicant has provided sufficient documentation demonstrating that the work in question is its legal responsibility pursuant to the terms of the lease.

Maintenance

Upon first appeal, FEMA questioned whether the Applicant maintained the shoreline at Glen Elder State Park.  Pursuant to PA policy, “[n]ormal maintenance items that existed prior to the disaster, such as pothole repair, routine pulling of ditches, and minor gravel replacement; and deferred maintenance, such as replacing rotted timber, and repairing deteriorated asphalt and leaking roofs, are not eligible because they do not meet the criterion of being disaster-related.”[28]  “For facilities that require routine maintenance to maintain their designed function, such as culverts, roads, bridges and dams, it may be possible to review pre-disaster maintenance or inspection reports to verify the pre-disaster condition and to assess eligible disaster damage.”[29] 

At second Appeal, in support of Applicant’s contention it maintained the shoreline at Glen Elder Park, the Applicant resubmitted the original invoices for maintenance, and supplemented that documentation with maintenance records showing purchases of rip rap used to maintain the shoreline[30] as well as statements from current and former employees[31] attesting to regular shoreline maintenance funded by the Applicant.  Based on the information submitted, FEMA finds the Applicant has sufficiently demonstrated it maintains the shoreline at Glen Elder State Park.

Other Federal Agency

“Generally, disaster assistance will not be made available under the Stafford Act when another Federal agency has specific authority to restore facilities damaged or destroyed by an event which is declared a major disaster.”[32]  The PA Guide clarifies that “[f]or certain types of facilities, other Federal agencies have authority to provide disaster assistance;”[33] and that “[p]ublic assistance is not available for the permanent repair of such facilities and is limited to emergency work.”[34]

The BOR has authority to enter into cost-share agreements with non-Federal partners to plan, develop, and replace recreation and fish and wildlife enhancement facilities located on BOR lands.[35]  The authority is not specific to restoring non-Federal facilities that are damaged or destroyed by a declared major disaster.  Any recreational facility on BOR lands can be modified or expanded under the program if the facility is inadequate to meet recreational demands and the non-Federal entity signs an agreement.[36]  In contrast, FEMA’s authority under the Stafford Act § 406 is more specific than the BOR’s authority in regard to restoring facilities damaged or destroyed by a declared major disaster.  FEMA provides public assistance under the Stafford Act to State and local governments or certain private, nonprofit organizations for repair, restoration, and replacement of damaged facilities.[37]  FEMA’s authority specifically states that it restores facilities damaged or destroyed by an event that is declared a major disaster.[38]  The BOR’s authority is more general and does not contain specific language to restoring damaged or destroyed facilities following a declared major disaster.  Therefore, FEMA finds that the BOR’s authority does not preclude FEMA from providing public assistance to restore non-Federal facilities located on BOR lands that are damaged or destroyed by a declared major disaster.

Duplication of Benefits

The Stafford Act states that “no such person, business concern, or other entity will receive such assistance with respect to any part of such loss as to which he has received financial assistance under any other program from insurance or any other source.”[39]  However, receipt of partial benefits for a major disaster or emergency does not preclude provision of additional Federal assistance for any part of a loss or need for which benefits have not been provided.[40]  In cases where FEMA funds are duplicated by another source, the FEMA funds must be returned.[41]

In this instance, FEMA PA funds and BOR Title 28 funds may result in both agencies conceivably funding the same project for the Applicant (i.e., a duplication of benefits).  A duplication of benefits occurs when an entity has received financial assistance from another source.  FEMA considers the receipt of funds for a specific project to be duplication regardless of whether the funds are later redirected. [42]  The fact that an Applicant subsequently requests to redirect the funds indicates an element of control and that the financial assistance was received.  FEMA will only reimburse those disaster related projects for which the Applicant has not received BOR Title 28 funds. 

A review of the FEMA PWs and BOR Title 28 funding reveals that the Applicant received BOR funding for the following projects:

 

Title 28 Description

Title 28 Funding

Location

Associated FEMA PW

Reconstruct beach and replace sand

$5,500.00

Glen Elder State Park - Osage

168

Reroof day use shelter

$5,000.00

Glen Elder State Park - Osage

211

Reconstruct sand volleyball courts

$5,000.00

Glen Elder State Park - Osage

211

Re-shingle office roof

$8,000.00

Glen Elder State Park - Office

 

Native grass seed

$3,000.00

Glen Elder State Park - Shoreline

 

Pump 2 vault toilets

$700.00

Glen Elder State Park

211

Repaint vault toilet

$400.00

Glen Elder State Park - Kanza

 

Repaint shower house

$5,000.00

Glen Elder State Park - Kanza

 

Rebuild rock roads

$30,000.00

Glen Elder State Park - Park-wide

214, 266

Rip rap

$15,000.00

Lovewell State Park

 

Picnic tables

$4,400.00

Glen Elder State Park - Prairie Dog

 

Picnic tables

$4,000.00

Cedar Bluff State Park

 

Campground refurbishment

$15,000.00

Webster State Park

 

Total

$101,000.00

 

 

 

The $478,272.13 estimated PW was written to replace PW 461, which was written for DR-1932, as well as to add additional damages that occurred to the same sites during DR-4010.  It is written for rip rap and asphalt damages at different campgrounds in Glen Elder State Park, but FEMA never obligated the project worksheet.  The BOR did not provide Title 28 funding for rip rap or asphalt work at Glen Elder State Park.  PW 461 should remain deobligated and the estimated PW is eligible for funding and should be entered into EMMIE.  Supporting documentation for the work must be provided by the Applicant at closeout.

FEMA deobligated PWs 82, 171, 210, 212, 271, and 310 for DR-4010 and the Applicant appealed the deobligations.  This work is eligible for public assistance and, as the Applicant has not received BOR Title 28 funding for the work, a duplication of benefits does not exist.

FEMA deobligated PWs 168, 211, 214, and 266 for DR-4010 and the Applicant appealed these deobligations.  The Applicant received Title 28 funding for work contained in these PWs.  FEMA requested information from the Applicant through the September 24, 2014 RFI to assess whether these costs constituted a duplication of benefits; the Applicant did not supply any information to show the costs did not constitute a duplication of benefits.  Therefore, FEMA upholds the Region VII Regional Administrator’s decision that PWs 168 and 266 constitute a duplication of benefits and are not eligible for FEMA funding.  PW 211 contains work to re-roof a day-use shelter, reconstruct sand volleyball courts, pump two vault toilets, and repair the park headquarters roof.  Title 28 funding was not provided to repair the park headquarters roof, thus it does not constitute a duplication of benefits, but other work was duplicated by Title 28 funding.  Therefore, $179.36 is eligible on PW 211 and $125.44 in Direct Administrative Costs (DAC) is eligible.  PW 214 contains road repair and jetty repair work.  The road repair work constitutes a duplication of benefits, but jetty repair work does not.  Therefore, $32,791.25 in jetty repair costs is eligible and $1,205.13 in DAC is eligible for PW 214.

Conclusion

After examining the lease agreement, it is evident that the damages are the Applicant’s legal responsibility.  The Applicant has also provided sufficient documentation to show that it has maintained the Waconda Lake shoreline at Glen Elder State Park.  Further, while the BOR does not have specific authority to provide disaster assistance, it did provide Title 28 funding to repair disaster related damages, and this represents a duplication of benefits where the scope of work overlaps with the FEMA scope of work.  FEMA finds $595,833.76 in costs to be eligible for public assistance funding, as shown in the table below. 

 

Disaster

PW #

Amount

1932-DR-KS

461

$0.00

4010-DR-KS

82

$29,177.00

4010-DR-KS

168

$0.00

4010-DR-KS

171

$3,318.48

4010-DR-KS

212

          $14,423.70

4010-DR-KS

214

$33,996.38

4010-DR-KS

266

$0.00

Disaster

PW #

Amount

4010-DR-KS

210

$3,233.32

4010-DR-KS

211

$304.80

4010-DR-KS

271

$30,491.70

4010-DR-KS

310

$2,616.25

4010-DR-KS

Estimated PW

$478,272.13

 

Total

$595,833.76

 

                                                                                                                                  

 

[1] See letter from Area Manager, Bureau of Reclamation, to Kansas Division of Emergency Management (Apr. 13, 2012) [hereinafter Letter from Area Manager].

[2] Id. at 1.

[3] Id.

[4] Id. at 2.

[5] Lease between the Bureau of Reclamation and the State of Kansas (May 31, 1967) at 4, [hereinafter Lease].

[6] A legal analysis supporting the Applicant, dated May 7, 2010, from the Department of the Army and the Air Force, Kansas National Guard was also included with the first appeal.

[7] Id.

[8] Letter from Legal Counsel, Kansas Department of Wildlife, Parks and Tourism, to Secretary Kansas Department of Wildlife, Parks and Tourism (Nov. 30, 2012) [hereinafter Letter from Legal Counsel].

[9] See Maintenance Records, First Appeal Exhibit E.

[10] Letter from Legal Counsel, supra note 8.

[11] Note that the Grantee’s first and second appeal letters sometimes state that the estimated PW was for $478,272.19 and therefore the total amount appealed is $1,026,389.53.  The estimated PW in FEMA’s possession lists a total of $478,272.13 in costs, so therefore the actual total amount appealed is $1,026,389.47.

[12] Letter from Area Manager, supra note 1.

[13] See note 11.

[14] Lease, supra note 5, at 4.

[15] Letter from Deputy Director, Kansas Division of Emergency Management, to Assistant Administrator for Recovery, FEMA (Aug. 22, 2013), at 5 [hereinafter Letter from Deputy Director].

[16] Id. at 7.

[17] 44 C.F.R. § 206.223(a)(3) (2009).

[18] Public Assistance Guide, FEMA 322, at 23 (June 2007) [hereinafter PA Guide].

[19] Lease, supra note 5, at 1.

[20] Id.

[21] Id. at 3.

[22] Id. at 4.

[23] Id.

[24] Id. at 5.

[25] Id. at 8.

[26] Letter from Area Manager, supra note 1 at 1.

[27] Email from Department of Interior, Office of the Solicitor (April 30, 2012, 09:31) (on file with FEMA).

[28] PA Guide, supra note 18, at 33.

[29] Id.

[30] See Maintenance Records, Second Appeal Appendix H.

[31] See Employee Statements, Second Appeal Appendix I.

[32] 44 C.F.R. § 206.226(a)(1) (2009).

[33] PA Guide, supra note 18, at 23.

[34] Id.

[35] Federal Water Project Recreation Act of 1965, Pub. L. 89-72, 79 Stat. 213, 16 U.S.C. §§ 460(L)(12)-460(L)(21), as amended by the Water Resources Development Act of 1974, Pub. L. 93-251; 88 Stat. 12, and the Reclamation Recreation Management Act of 1992, Pub. L. 102-575, Title XXVIII.

[36] 16 U.S.C. § 460(L)(14).

[37] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406, 42 U.S.C. § 5772 (2006).

[38] See 44 C.F.R. § 204.3 (2009).

[39] Stafford Act § 312, supra note 37.

[40] Id.

[41] PA Guide, supra note 18, at 41.

[42] 44 C.F.R. § 13.24(b)(1) (2009) provides that “[A] cost sharing or matching requirement may not be met by costs borne by another Federal grant.”  Therefore, public assistance funding cannot be used for the non-federal cost share of BOR funding and BOR funding cannot be used for the non-federal cost share of FEMA funding.  Since the Applicant has a 50 percent cost share under Title 28 funding, and a 25 percent cost share under FEMA reimbursement, FEMA cannot fund any projects for which the Applicant has received any Title 28 funding.  The “Request To Modify Report” does not, in and of itself, indicate that the redirection has actually occurred.

 

 

15 Jul 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Omochumne-Hartnell Water District
Disaster Number: 
1628-DR-CA
DSR: 
PW 468
Date Signed: 
Tuesday, July 14, 2015
PA ID: 
067-UAVRN-00
Summary/Brief: 

Conclusion: The Applicant did not provide sufficient documentation to support the reasonableness of the soft costs for the FEMA project.

Summary Paragraph

On December 31, 2005, high floodwaters caused damage to Rooney Dam, resulting in substantial scouring of the dam and the washing away of trees from the bank.  FEMA prepared a PW version for $352,077.00, an estimated cost for completing the work based on a previous project, and later the Applicant determined that actual costs on the project were $141,786.50.  On March 8, 2012, FEMA determined the Applicant did not properly procure its professional services contract, and the costs for those services were unreasonable given the construction costs.  FEMA also determined that the project was an improved project because some of the approved scope of work was completed along with a fish ladder project funded by another agency.  FEMA found eligible costs to be $74,946.64 and deobligated $277,130.36.  In the first appeal, the Applicant requested FEMA provide the actual costs, arguing that it followed procurement procedures and all costs were reasonable.  The Region IX Deputy Regional Administrator denied the first appeal on the issue of eligible costs, finding the Applicant failed to follow procurement procedures and did not verify the soft costs solely pertaining to the FEMA project.  On second appeal, the Applicant argues that all actual costs are the reasonable costs related to the FEMA project and that the fish ladder project was distinct from the FEMA project.

Authorities and Second Appeals

  • 44 C.F.R. §§ 13.22(a)(1), 13.36, 206.203(d)(1).

  • OMB Circular A-87, 2 C.F.R. § 225.

  • PA Guide (1999), at 34, 39, 75-79.

Headnotes

  • Pursuant to 44 C.F.R. § 13.36(c), applicants procurement of services under a federal grant must do so in a way that provides full and open competition, unless the applicant meets one of the exceptions under 13.36(d)(4)(i).

    • The Applicant did not demonstrate that it properly procured the professional services contract nor did it show that it met one of the exceptions.As a result, FEMA assessed, but could not verify the reasonableness of the costs.

  • Pursuant to 44 C.F.R. § 206.203(d)(1), federal funding for improved projects shall be limited to the Federal share of the approved estimate of eligible costs.

    • The construction costs for the project are $47,227.00 and the claimed amount for soft costs is $94,559.50.The Applicant provided a spreadsheet noting task descriptions and the amounts attributable to those tasks for the Rooney Dam project.The task descriptions did not provide sufficient detail for FEMA to assess cost reasonableness.

FEMA applied an approved methodology to estimate reasonable costs.

Letter: 

07/14/2015

Mark S. Ghilarducci
Secretary
California Emergency Management Agency
3650 Schriever Avenue
Mather, California 95655

Re: Second Appeal – Omochumne-Hartnell Water District, PA ID 067-UAVRN-00, FEMA-1628-DR-CA, Project Worksheet (PW) 468 – Reasonable Costs

Dear Mr. Ghilarducci:

This is in response to your letter dated October 31, 2013, which transmitted the referenced second appeal on behalf of Omochumne-Hartnell Water District (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $70,001.46 in public assistance funding in claimed professional services costs associated with repairs at Rooney Dam.

As explained in the enclosed analysis, I have determined that the Applicant did not demonstrate that it followed proper procurement procedures and failed to provide documentation to justify reasonableness of cost.  Also, at first appeal, the Applicant was granted an additional $12,279.02 not supported by statutes, regulations, or policies.  Accordingly, I am denying this appeal. By copy of this letter, I am requesting 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/


William W. Roche
Director
Public Assistance Division

                                                                  

Enclosure

cc: Karen Armes
     Acting Regional Administrator
     FEMA Region IX

Analysis: 

Background           

On December 31, 2005, high floodwaters caused damage to Rooney Dam on the Consumnes River in Sacramento County, California.  Due to high water levels, Omochumne-Hartnell Water District (Applicant) could not access the site to assess the damage for several months.  On April 1, 2006, FEMA prepared Version 0 of Project Worksheet (PW) 468, noted the accessibility issues, and instructed the Applicant to notify the California Emergency Management Agency (Grantee) when the site was accessible. 

Several months later, FEMA received information from the Grantee that the dam was accessible and, on February 26, 2007, wrote Version 1 of the PW.  The floodwaters caused substantial scouring of the dam in three locations, created a drop-off from the concrete dam sill, and washed trees away from the bank.  In order to repair the damage, the scope of work (SOW) included: (1) restoring the damaged sill, either by pressure grouting or formed concrete; (2) replacing lost rip-rap to the three scoured areas; (3) engineering for plans and bid proposals; (4) construction management; and (5) environmental permits.  In Version 1, FEMA obligated $352,077.00 as an estimated amount to complete the work.  

On February 26, 2008, FEMA prepared Version 2 to initiate consultation under the National Historic Preservation Act (NHPA) and re-initiate consultation under the Endangered Species Act.  FEMA noted in the PW that a formal NHPA consultation was required and that the Applicant would need to consult with the Miwok Tribe.  Based on comments received from the Miwok Tribe, FEMA required the Applicant to retain a qualified archaeological monitor and a Native American monitor to be present during ground-disturbing activity associated with the project.  In order to comply with federal and state laws, the Applicant had to acquire various types of environmental permits to complete the project and consult with the National Marine Fisheries Service due to impacts the project would have on fish passage.  

On January 31, 2011, the Grantee submitted the Final Inspection Report and requested closeout, indicating that the actual cost to restore the dam to pre-disaster condition was $141,786.50.  On June 3, 2011, FEMA responded to the closeout request by stating that the costs claimed were not sufficiently documented to support the approved SOW and regulatory eligibility requirements.  FEMA also requested source documentation for all final costs, professional services procurement, and information about the entities that completed both the professional services and construction on the project.  On August 4, 2011, the Grantee provided additional information in response to FEMA’s request.  On March 8, 2012, FEMA concluded that the professional services were negotiated without competitive bidding and were billed as a time-and-materials contract with cost-plus-percentage of costs added.  FEMA also determined that project management costs were for indirect costs and as such were ineligible.  Furthermore, FEMA found that the project was an improved project because some of the approved SOW for the FEMA project was completed at the same time, and by the same contractor, as a United States Fish and Wildlife Service (USFWS) fish ladder project in the same area.  After reviewing the invoices the Applicant provided, FEMA determined that construction costs of $49,307.00 were reasonable for the work completed, but that professional services costs[1] of $94,559.50 (192% of the construction costs amount) was unreasonable.  In the first appeal decision involving repairs to another dam, FEMA found that a reasonable cost for professional services for work on this type of dam is 52% of the amount of construction costs and provided the following reasoning based on cost curves in Public Assistance policy guidance from 2007[2]:

According to Cost Curves A & B depicted on Pages 58 and 60 of [the PA Guide], engineering and design services for an above-average complexity construction project…is estimated at 26% of construction costs, and for an average complexity construction project such as small dams, roads and other conventional projects is estimated at 14% of construction costs.  In recognition of the complex environmental permitting process required to repair the three dams, FEMA used Cost Curve A at 26%, and doubled that amount to 52% to account for the complex environmental permitting and coordination necessary for each site.[3]

Based on this methodology, FEMA determined the reasonable cost for professional services to be $25,639.64 and total eligible funding to be $74,946.64[4] resulting in a de-obligation of $277,130.36.[5]  Furthermore, since the project was completed as an unapproved improved project, FEMA determined that eligibility will be predicated on documentation to support the improved project.  FEMA required the Applicant to provide complete plans, professional service costs, and schedules for improvements done under the fish ladder project.  On May 8, 2012, the Grantee provided the requested documentation.  

First Appeal

In its first appeal letter submitted on June 13, 2012, the Applicant claimed that FEMA should fund the actual costs of $141,786.50 and requested that FEMA reobligate $66,839.86.  The Applicant claimed that it followed procurement procedures and the professional services costs were reasonable and necessary for completion of the project given the project type and the Applicant’s one-person staff at the time of the disaster.  The Applicant asserted that it did not competitively bid the professional services contract because there was a “public exigency or emergency” pursuant to 44 Code of Federal Regulations (C.F.R.) § 13.36(d)(4)(i)(B) because the dam was seriously damaged in the storm event and any delay in repairing the dam risked damages to property and flooding around the area.  The Applicant also claimed that its standing relationship with Robertson-Bryan, Inc. (RBI) did not bear the hallmarks of unfair competition, such as undue influence, contingency agreements, or unreasonable rates.  The Applicant also noted that RBI had a familiarity with the unique dam features and this knowledge allowed for an easy transition.  The Applicant further claimed that the project required more than the “traditional” professional services covered under Cost Curve A.[6]

The Grantee had not yet transmitted the Applicant’s appeal to FEMA Region IX, when, on July 3, 2012, FEMA prepared Version 5 of the PW, de-obligating all funding.  FEMA found that the project met the United States Army Corp of Engineers (USACE) “flood control work” definition, which removes FEMA’s authority to fund the dam repairs.  On July 30, 2012, the Grantee transmitted the appeal to Region IX.   

On September 11, 2012, the FEMA Region IX Deputy Regional Administrator (DRA) issued a letter which determined that the first appeal was moot.  The DRA explained that it “overlooked the fact that this facility” falls under the authority of the USACE and is not eligible for FEMA Public Assistance funding.  The DRA attached a memorandum from the USACE to FEMA noting that the facility is part of a flood control work and instructed the Applicant that it could appeal the determination to the Regional Administrator.

On November 30, 2012, the Applicant filed an appeal, asserting that the facility was not a flood control work and that the total eligible cost for the project was $141,786.50.  The Grantee forwarded the appeal on February 4, 2013.                           

The DRA partially granted the appeal on July 10, 2013.  The DRA determined that the facility was not a flood control work and is eligible for Public Assistance funding.  However, the DRA found that the Applicant did not follow the procurement process when it selected RBI to perform professional services because the Applicant did not provide evidence to support competitive bidding.  As a result, the DRA evaluated the professional services costs to assess reasonableness in accordance with 44 C.F.R. § 13.36(f).  The DRA found actual construction costs to be $47,227.00[7] with the remainder of the costs attributed to engineering, project management, and permitting services provided by RBI.  According to the DRA’s calculations, the professional services costs are as follows: (1) engineering costs totaling $23,661.60; (2) project management costs totaling $17,559.29; and (3) permitting costs totaling $53,662.77.  The DRA noted that construction in and around the Consumes River requires “extraordinary management, permitting, and monitoring requirements” due to the presence of fish species and other animals protected under the Endangered Species Act.  However, the DRA found these costs to be unreasonable when compared to the actual construction costs as well as potentially related to the fish ladder project, which was completed downstream from the dam.  The DRA specifically identified language in an August 18, 2009 letter from the National Marine and Fisheries Service (NMFS) to FEMA Region IX Environmental and Historic Preservation Officer, which stated that RBI designed both projects “simultaneously, using the same access points, equipment and construction crews.”  The letter also indicated that the organization responsible for the fish ladder project, the Fishery Foundation of California (FFC), would provide construction management for the project.  The DRA found that the Applicant did not separate costs associated with the fish ladder project from the FEMA project costs.  As a result, the DRA could not verify that the professional services costs claimed were “specifically and solely related to the FEMA approved SOW.” In addition, the Applicant did not provide adequate documentation demonstrating that the claimed soft costs were reasonable despite improper procurement.  Although the Applicant failed to establish that its claimed costs were reasonable, the DRA applied the same methodology from the eligibility determination by allowing 52% of the total actual construction costs of $47,227.00 for soft costs ($24,558.04), capped the project as an improved project, and found the total eligible amount to be $71,785.04. 

Second Appeal

The Applicant claims in a second appeal letter dated September 13, 2013 that it should receive an additional $70,001.46 in funding because the “costs claimed under PW 468 represent the true and reasonable costs necessary [to put] Rooney Dam [back] to its pre-disaster condition.” First, the Applicant argues that this project and the fish ladder project are distinct and were executed separately with different scopes of work and source funding.  However, the Applicant also states that “concurrent construction reduced FEMA’s costs” and controlled “environmental impacts and costs” by bringing aspects of both projects together.  The Applicant also explains that RBI provided services for both projects but the Applicant was not a party to RBI’s contract with FFC and RBI separately invoiced the two projects.  The Applicant attached a chart, indicating the differences between the two projects but did not identify the individual costs associated with each project.  Second, the Applicant argues that the professional services costs were reasonable given the environmental compliance, historic preservation compliance, and permitting necessary to complete the project.  The Applicant claims that the project required more than the traditional professional services costs currently covered under Cost Curve A and that such services are eligible because the costs are “reasonable in relation to the services rendered.”  Third, the Applicant argues that funding actual costs for the FEMA project is consistent with the Stafford Act, Public Assistance Guide, and OMB Circular A-87.  The Applicant notes that the FEMA project “ran under budget” based on the amount originally obligated, $352,077.00.  The Applicant again asserts that it did not competitively bid the professional services contract due to “time restrictions associated with the work and the specialized knowledge required” to complete the project. 

Discussion

Proper Procurement

Procurement of services under a federal grant must provide for “full and open competition.”[8]  Procurement by noncompetitive proposals may only be used when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals and one of the following circumstances applies: “(A) The item is available only from a single source; (B) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; (C) The awarding agency authorizes noncompetitive proposals; or (D) After solicitation of a number of sources, competition is determined inadequate.”[9]

When an applicant materially fails to comply with procurement procedures, FEMA may take one or more of the following actions: (1) temporarily withhold cash payments; (2) disallow all or part of the costs of the activity; (3) wholly or partly suspend or terminate the current award; (4) withhold further awards; or (5) take other remedies that may be legally available.[10]  Further, the Public Assistance Guide from 1999 noted that FEMA requires that contracts must be of a reasonable cost.[11]  In accordance with OMB Circular A-87, FEMA evaluates reasonable costs based on the premise “that a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.”[12]   

In its second appeal, the Applicant claims that it did not competitively bid the RBI professional services contract due to “time restrictions associated with the work and the specialized knowledge required” to complete the project.  The Applicant, however, has not provided documentation to substantiate these claims.  The Applicant has not demonstrated that procurement by small purchase procedure, sealed bid, or competitive proposal was “infeasible” at the time of the procurement action.  Additionally, the Applicant has not demonstrated that one of the circumstances listed under 44 C.F.R. § 13.36 (d)(4)(i) applied at the time of the procurement action to justify procurement by noncompetitive proposal.  Without additional information, FEMA cannot verify that the Applicant complied with applicable federal grant procurement requirements.  Pursuant to 44 C.F.R. § 13.43(a)(5), FEMA can exercise its authority to award reasonable costs when there has been improper procurement and will determine if the costs incurred for RBI’s services were reasonable in this instance.

Reasonable Costs

Pursuant to 44 C.F.R. § 206.203(d)(1), Federal funding for improved projects shall be limited to the Federal share of the approved estimate of eligible costs.[13]  If a project requires engineering and design services, the costs of the basic level of these services, which are normally performed by an architectural-engineering firm on complex construction projects, are eligible for reimbursement.[14]  Such basic services include preliminary engineering analysis, preliminary design, final design, and construction inspection.[15]  Some projects are more complex and require more than the basic engineering services.  These special services include engineering surveys, soil investigations, services of a resident engineer, and feasibility studies.[16]  When estimating costs during project formulation for basic professional services for projects of above average complexity and non-standard design, FEMA must look to Cost Curve A, matching the estimated construction costs to the associated percentage of engineering and design services.[17]  This percentage is then multiplied by the estimated construction costs to determine an appropriate engineering and design cost estimate.[18]  Because special services are not required on all projects, they are not included in the percentages on Cost Curve A and are estimated separately.[19]  Actual costs, not estimated costs, for eligible engineering and design services should be claimed in final inspection and reconciliation.[20]  Engineering and design costs that exceed the amounts determined by use of Cost Curve A[21] are reviewed for reasonableness.[22]   

Had the Applicant’s special services been properly procured, they would be viewed as reasonable.  However, because they were not, FEMA must determine the reasonable cost for these services.[23]  The PA Guide describes the following ways reasonable costs may be established: historic documentation for similar work, average costs for similar work in the area, published unit costs from national cost estimating databases, and FEMA cost codes.[24]  When FEMA cannot determine cost reasonableness using these mechanisms, FEMA follows the estimated figure provided in Cost Curve A for costs associated with engineering and design services. 

The Applicant claims that actual costs for both construction and soft costs for the project are $141,786.50; the Applicant does not contest the DRA’s determination that the actual construction costs are $47,227.00.  The Applicant does argue that FEMA should fund $70,001.46 in addition to the $71,785.04 provided on first appeal because:  (1) these additional costs are related to professional “special services” that RBI provided and (2) these special services were related to the Rooney Dam project alone, not the downstream fish ladder project.  The documents provided with the first and second appeals indicate that RBI consolidated the professional services for the two projects to reduce the overall costs. 

With its first appeal, the Applicant provided a spreadsheet listing all invoices and tasks related to the FEMA project.  Each line of the spreadsheet contains an invoice number, a task description, total invoice cost, the portion of the cost associated with the FEMA project, and a cost classification.  The costs in the spreadsheet total $144,677.96 for all eligible costs, which is $2,891.46 more than the amount the Applicant claimed were eligible costs in its first and second appeals.    

While the Applicant claimed the actual costs for professional services, FEMA determined these costs were not procured properly and consequently could not presume them to be reasonable.  In determining the appropriate amount for soft costs, the DRA acknowledged the project’s difficulty and doubled the Cost Curve A percentage that would normally be allowed for a project with $47,227.00 in construction costs.  The DRA used 52 percent instead of 26 percent, granting $24,558.04 instead of $12,279.02.  However, neither FEMA statutes, regulations, nor policies suggest doubling a cost curve percentage when an applicant completes an especially difficult project.  Accordingly, the DAR was not authorized to grant funding based on doubling an approved estimation tool.    

For purposes of the second appeal, FEMA reviewed each task description in the spreadsheet to determine if the described task supported the scope of work provided in the PW and if the cost was reasonable.  FEMA found certain tasks aligned with the FEMA project scope of work and others represented tasks associated with indirect and direct administrative costs.      

As such, the only method left to determine the appropriate amount of soft costs[25] is to utilize the Cost Curve A percentage[26] for a project with $47,227.00 in construction costs, 26 percent.[27]  Accordingly, the eligible amount for soft costs for this project is $12,279.02.     

Conclusion

The Applicant did not demonstrate that it followed proper procurement procedures when it contracted with RBI.  As a result, FEMA reviewed each task for eligibility and reasonableness. FEMA found certain tasks aligned with the FEMA project scope of work but could not determine if the costs were reasonable, and therefore utilized Curve A at 26 percent. The amount eligible for soft costs is $12,279.02 and not $24,558.04 provided at first appeal.  Accordingly, I am requesting the Regional Administrator deobligate $12,279.02 in funding for this project.

 

[1] In this appeal response, the phrases “professional services costs” and “soft costs” will be used interchangeably.

[2] Public Assistance Guide, FEMA 322, at 58 (June 2007) [hereinafter PA Guide, 2007]. The disaster occurred in 2005, but the PW’s scope of work and cost estimate were written in 2007.  FEMA made a determination about the validity of professional services costs on March 8, 2012.  As a result, FEMA used estimating cost curves in effect at the time the PW was written.

[3] FEMA First Appeal Analysis, Omochumne-Hartnell Water District PW 463, FEMA-1628-DR-CA, at 1 (Sept. 28, 2010). 

[4] In the eligibility determination, FEMA actually indicated that the total funding was $72,866.64.  This was a math error as $49,307.00 plus $25,639.64 does not equal $72,866.64.  FEMA recorded the incorrect number in Version 3 of the PW and later corrected the error in Version 4. 

[5] See note 4, indicating that FEMA made a math error in determining the eligible funding in its eligibility determination.  As a result, FEMA de-obligated an incorrect amount ($279,210.36) in Version 3 of the PW, which was later corrected in Version 4 ($277,130.36).   

[6]  PA Guide, 2007, at 58.

[7] This amount for actual construction cost is less than $49,307.00, the amount that FEMA previously found in its March 8, 2012 determination.  In the July 10, 2013 first appeal response, the DRA indicated that the amount is less than the previous amount “due to an inaccuracy of the total construction cost used for that calculation.”

[8] 44 C.F.R. § 13.36(c) (2005). 

[9] Id. § 13.36 (d)(4)(i).

[10] Id. § 13.43(a). 

[11] Public Assistance Guide, FEMA 322, at 39 (October 1999) [hereinafter PA Guide, 1999].

[12] Office of Mgmt. & Budget, Exec. Office of the President, OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, Attachment A, Section C.2 (2005) (codified at 2 C.F.R. § 225).

[13] 44 C.F.R. § 206.203 (d)(1) (2005).

[14] PA Guide 1999, at 75.

[15] Id.

[16] PA Guide, 1999 at 79; PA Guide, 2007 at 59. Both PA Guides include the same descriptions.

[17] PA Guide, 1999 at 77; PA Guide, 2007 at 58. Both PA Guides include the same services for cost curve A. The PA Guide, 2007 includes updated costs.

[18] Id.

[19] Id. at 79 and 59.

[20] Id. at 76 and 57.

[21] Id. at 75 and 57 (indicating costs related to engineering and design services including preliminary engineering analysis, preliminary design, final design, and construction inspection).

[22] PA Guide, 1999 at 39 (indicating that FEMA will look to the reasonableness of the costs on contracts).

[23] Id.

[24] Id. at 34.

[25] Id. at 75 (indicating engineering and design costs for services including preliminary engineering analysis, preliminary design, final design, and construction inspection).

[26] PA Guide, 2007, at 58.  The disaster occurred in 2005, but the PW’s scope of work and cost estimate were written in 2007.  FEMA used estimating cost curves in effect at the time the PW was written. 

[27] Id. at 58.

13 Jul 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Delaware County Department of Public Works
Disaster Number: 
4020-DR
DSR: 
PW 7989
Date Signed: 
Monday, July 6, 2015
PA ID: 
025-U4988-00
Summary/Brief: 

Conclusion:  On second appeal, Delaware County Department of Public Works (DPW)(Applicant) has provided sufficient documentation to revise the scope of work to lengthen the span of the bridge to 90 feet and include required ADA updates.  

Summary Paragraph

In 2011, Hurricane Irene caused an increase in the volume and velocity of water flowing down Vly Creek causing damage to the superstructure and east abutment of the Applicant’s pedestrian bridge (facility).  FEMA drafted Project Worksheet (PW) 7989 to restore a section of the facility that carried pedestrian traffic.  Based on costs derived from the Cost Estimating Format (CEF), PW 7989 was originally obligated for $570,933.65.  However, FEMA later determined that the in-kind estimate, as described in the PW, represented a facility that appeared to be over-designed.  Subsequently, FEMA reduced the CEF scope and costs to a total in-kind replacement cost of $222,176.00.  In its first appeal, the Applicant asserted that the size of the abutment depends more on the fact that it is a retaining wall than a bridge abutment. Consequently, the Applicant argued that the final cost to restore the facility would be closer to the original $570,933.65 figure than the revised $222,176.00 figure.  The Region II Acting Regional Administrator (RA) denied the first appeal because she determined that the Applicant had not provided adequate documentation to support its claim that the revised FEMA repair cost and scope was inaccurate.  In its second appeal, the Applicant asserts FEMA’s revised replacement for the facility is infeasible and does not comport with Americans with Disabilities Act (ADA) standards.  The Applicant supports its position with analysis and designs from a consulting engineer. 

Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • 44 C.F.R. § 206.201(k).
  • 44 C.F.R. § 206.226(d).
  • RRDP 9525.5, Americans with Disabilities Act (ADA) Access Requirements at 1-2.
  • Lewis County, FEMA-1734-DR-WA, at 3.
  • PA Guide, at 35, 40-41, and 79.

Headnotes

  • Pursuant to the Stafford Act § 406(e), FEMA may fund the cost of repairing, restoring, reconstructing, or replacing an eligible facility to predisaster design, function, and capacity.
    • Based on review of the Applicant’s consulting engineer’s analysis, replacing the bridge with an in-kind structure is not feasible because it is not cost-effective.
    • Replacing the bridge with a 90-foot span structure is the most cost-effective option and preserves the bridge’s predisaster design, function, and capacity. 
  • According to RRDP 9525.5, new facilities receiving FEMA funding and constructed as replacement facilities must be readily accessible to and useable by individuals with disabilities.  In addition, FEMA will provide funds to comply with reasonable ADA requirements whether or not the facility met compliance prior to the disaster.
    • A change in the scope of work that includes measures to conform to ADA requirements is warranted.
Letter: 

July 06, 2015

Mr. Andrew X. Feeney
Alternate Governor’s Authorized Representative
New York State Office of Emergency Management
1220 Washington Avenue, Building 7A, Suite 710
Albany, New York 12242

Re: Second Appeal – Delaware County Department of Public Works, PA ID 025-U4988-00, FEMA-4020-DR-NY, Project Worksheet (PW) 7989 – Scope of Work

 

Dear Mr. Feeney:

This is in response to your letter, dated April 21, 2014, which transmitted the referenced second appeal on behalf of Delaware County Department of Public Works (DPW) (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $621,824.00 in Public Assistance funding for repair of its pedestrian bridge.

As explained in the enclosed analysis, I have determined that the scope of work in PW 7989 does not accurately reflect the work required to replace the Applicant’s bridge.  Therefore, I am approving the appeal with respect to the change in the scope of work, contingent upon Environmental and Historic Preservation (EHP) review and approval, and requesting the Regional Administrator take appropriate action to implement this determination, including developing an appropriate scope of work and eligible costs.  The Applicant has substantiated that the Alternative C proposal, included in the second appeal, should be the new scope of work for PW 7989.  In accordance with 44 C.F.R. §206.206 (b)(1), Appeals, Levels of Appeal, the Applicant may appeal, to the Regional Administrator, any new issues that arise in determining eligible costs. 

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:  Jerome Hatfield
       Regional Administrator
       FEMA Region II

Analysis: 

Background

From August 26 to September 5, 2011, heavy rains from Hurricane Irene caused increased volume and velocity of water flowing down Vly Creek, destroying the superstructure and east abutment of a pedestrian bridge owned by Delaware County Department of Public Works’ (DPW) (Applicant), known as County Bridge 101P (facility), and eroding 20-feet of the supporting embankment on the eastern side.  Originally constructed as a vehicular bridge in the early 1900s, the facility was reconstructed in 1996 as a pedestrian bridge above the dry laid stone abutments that were remnants of the old bridge.  Due to the unknown structural stability of the old dry laid stone abutments, the applicant built new abutments behind the existing stone abutments to serve as the structural base for the new pedestrian bridge.  At the time of disaster, the distance between the new abutments was 56-feet, the beams for the superstructure were 60-feet long, and the deck was wood.   

FEMA drafted Project Worksheet (PW) 7989 to replace the section of the facility that carried pedestrian traffic from Old Halcott Road over Vly Creek to Lake Street in the Village of Fleischmanns.  Work to be completed included: 1) constructing a large spread footing abutment on the east side to support the deck and serve as a retaining wall for the filled-in east embankment; 2) replacing the superstructure comprised of two 60-foot long steel girders with assorted diaphragms; 3) installing deck and handrails comprised of 2-inch thick pressure-treated wood; 4) repaving approaches; and 5) building 200-linear feet of 3-rail wooden fence.  Based on costs derived from the Cost Estimating Format (CEF), PW 7989 was originally prepared for $570,933.65.  An alternative CEF was also developed that extended the span of the bridge to 90 feet, thus repositioning the abutments and alleviating both the need for massive retaining structures and potential constrictions of flow in the channel.

Upon further review, FEMA found the cost to replace the facility— a wooden bridge for pedestrians—excessive.  Ultimately, FEMA concluded that the in-kind estimate, as presented by the Applicant, represented a facility that was “grossly over designed,” primarily by constructing large spread footings and an accompanying abutment that utilized 356 cubic yards (CY) of concrete with 57,000 pounds of reinforcing steel.  In addition, FEMA determined that the CEF included some items that were not in-kind replacements, but rather, mitigation measures.  FEMA noted a lack of any obstacles that would prevent the structure from being rebuilt on its original footprint.  Finally, FEMA noted that the Applicant failed to identify any codes or standards that would justify the magnitude of the proposed replacement structure.  Accordingly, the CEF scope and costs were subsequently revised to a total in-kind replacement cost of $222,176.00. 

First Appeal

In its first appeal, dated February 25, 2013, the Applicant noted that the photos referenced by the FEMA reviewer did not show where the original west abutment was located.  The Applicant stated, “[w]ith the loss of that abutment, the new abutment in the same location will have to be massive.”  The Applicant also asserted that the size of the abutment depended more on the fact that it is a retaining wall than a bridge abutment.  Consequently, the Applicant argued that the final cost to restore the facility would be closer to the original $570,933.65 figure than the revised $222,176.00 figure. 

In a letter, dated November 1, 2013, the Region II Acting Regional Administrator (RA) denied the first appeal, determining that the Applicant had not provided sufficient documentation to support its claim that the revised FEMA repair cost and scope was not accurate.  The Acting RA concluded that the Applicant could request a change in scope of work with an adjusted cost estimate, if necessary, once an approved engineering study was conducted.

Second Appeal

In its second appeal, dated February 6, 2014, the Applicant requests $621,824.00 in additional funding to replace its pedestrian bridge.  The Applicant again asserts that, as currently written, the PW scope of work does not accurately reflect the work necessary to restore its facility to predisaster design.  In addition, the Applicant states that it hired an engineering consultant to perform engineering services regarding the project described in PW 7989.  The Applicant asserts that the consultant determined that an in-kind replacement of the facility is not feasible due to costs and the need to be Americans with Disabilities Act (ADA) compliant.  The Applicant asserts that the cost to replace the facility to predisaster design (Alternative A) is approximately $403,000.00.  However, to bring the facility up to ADA compliance (Alternative B), the Applicant estimates the construction cost to be $554,000.00.  In addition, the Applicant requests funding for right-of-way taking costs, engineering costs, construction inspection costs, and a more detailed hydraulic and hydrology (H&H) study.  The Applicant’s consultant provided two plans, with estimates.  Factoring in the additional costs, the Applicant estimates Alternative A will cost $683,000.00 and Alternative B will cost $844,000.00.  For both plans, the replacement structures will have the same span length, clear span opening, and horizontal alignment as the predisaster structure.  The vertical alignments vary from the original pre-disaster grades to ADA-compliant grades with ramps to meet statutory requirements.  Following its completion of a topographic survey, the Applicant proposes a third plan, Alternative C, in which the structure would be replaced with a 90-foot span length following the original horizontal alignment estimated to cost $419,000.00.[1] 

Discussion

Facility Design, Function, and Capacity

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) Section 406(e) authorizes FEMA to fund the cost of repairing, restoring, reconstructing, or replacing an eligible facility.[2]  Eligible costs are based on “the design of [the] facility as it existed immediately prior to the major disaster” and in conformity with current applicable codes and standards.[3]  FEMA regulation refers to this as the facility’s “predisaster design,” which is defined at Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.201(k), as the size or capacity of a facility as originally designed and constructed or subsequently modified by changes or additions to the original design.[4]  FEMA policy adds the additional requirements that permanent work repairs or restores a damaged facility to predisaster function and predisaster capacity.  As such, FEMA funds the cost of repairing, restoring, reconstructing, or replacing an eligible facility to predisaster design, function and capacity.  FEMA policy defines “predisaster function” to mean the function the facility was performing immediately prior to the disaster.[5]  FEMA policy defines “predisaster capacity” to mean the same capacity available before the disaster.[6]  It is important to note that FEMA policy does not modify or restrict the regulatory definition of “predisaster design.”

The Applicant has sufficiently demonstrated through engineering reports and documentation submitted with the second appeal that the current obligated amount, $222,176.00, does not accurately reflect the costs associated with restoring the facility to predisaster design, function and capacity.  In regard to the spread footings, the amount of concrete included in the design may seem large or appear to be excessive, but drawings provided by the applicant and a description of the eroded eastern embankment reveals that a large abutment and retaining wall would be necessary to restore the bridge to its predisaster design.  The abutment and retaining wall would not be considered hazard mitigation because their purpose is not to reduce the threat of future flood damage to the bridge,[7] but rather to restore the facility to its predisaster design, function, and capacity.

FEMA does not require an applicant to replace the destroyed bridge with an in-kind bridge that strictly matches the shape, size, footprint, and dimensions of the predisaster bridge in all instances.  For a facility to be restored to “predisaster design” the new facility must match the same “size” or “capacity” of the original facility.  In this case, the Applicant proposes to replace the 60-foot span bridge with a 90-foot span bridge.  Therefore, the analysis is: does the 90-foot span bridge match the same size or capacity of the 60-bridge while maintaining the predisaster function as a pedestrian foot bridge.  While the 90-foot span bridge does not restore the bridge back to its predisaster size (60-foot span increased to 90-foot span), it still satisfies the requirement of returning the bridge to predisaster design because the 90-foot span bridge maintains the same capacity (i.e., supporting equivalent pedestrian traffic loads).[8]  Moreover, the proposed 90-foot span bridge does not alter the predisaster function of the bridge (i.e. creating a vehicular bridge), but preserves the predisaster function as a foot bridge.  Therefore, the 90-foot span bridge is a viable scope of work to return the bridge to predisaster design, function, and capacity.

When presented with multiple alternatives that would restore a facility back to predisaster design, function, and capacity, FEMA should consider good engineering practices,[9] cost effectiveness, extenuating circumstances, and environmental impacts, among other requirements.  In this case, the Applicant has demonstrated that, Alternative C, the 90-foot span bridge alternative, would restore the bridge in the most cost-effective manner by lengthening the span of the bridge so that the bridge foundations can be embedded farther back and not have to retain a large amount of dirt and soil in addition to supporting pedestrian loads.  The Applicant supports this assertion with a letter from its consulting engineers, stating, “[f]rom an engineering perspective, it was immediately obvious that the replacement structure should utilize a much larger span than the original bridge in order to increase the hydraulic opening and provide for a more cost-effective replacement of the east abutment.”[10]  In addition, the Applicant’s consultant demonstrates that replacing the 60-foot span bridge with an in-kind bridge (i.e., Alternatives A and B) that strictly matches the shape, size, footprint, and dimensions of the predisaster bridge is not consistent with good engineering practices.  An in-kind replacement would require a massive retaining wall, not already accounted for in PW 7989’s scope or work, thus increasing costs.[11]  Placement of the east abutment would need additional verification by hydraulic analysis, which has not been performed to date, and will likely drive up costs.[12]  The Applicant verified these assertions with engineering reports and pictorial evidence.  In short, FEMA agrees that Alternative C should be the preferred replacement method because it is cost effective, easily constructible, will withstand future storms with calibers as great as Hurricane Irene, and, as discussed below, is compliant with the ADA.  Accordingly, Region II will prepare a version of PW 7989 that incorporates the revised scope of work and associated engineering and design services.[13] 

Hazard Mitigation

The 90-foot span bridge should not be considered “hazard mitigation.”  Federal regulations define “hazard mitigation” as any cost effective measure which will reduce the potential for damage to a facility from a disaster event.[14]  Typically, these measures include adding new features, installing extra components, or realigning or relocating structures.[15]  The 90-foot span bridge would not incorporate any of these measures, nor does it intentionally reduce risk from similar future events.  Accordingly, the revised scope is not “hazard mitigation” pursuant to FEMA regulation and policy. 

Americans with Disabilities Act (ADA) Requirements

Although Public Assistance funding is typically only available to restore a facility to its predisaster design, FEMA may authorize funding for compliance with certain codes and standards.[16]  In order to be eligible for such funding, a facility must meet applicable ADA access requirements.[17]  According to Response and Recovery Directorate Policy (RRDP) 9525.5, Americans with Disabilities Act (ADA) Access Requirements, new facilities receiving FEMA funding and constructed as replacement facilities must be readily accessible to and useable by individuals with disabilities.[18] Accordingly, FEMA will provide funds to comply with reasonable ADA requirements whether or not the facility met compliance prior to the disaster.[19] 

It is important to note that the compliance issue does not concern the width of the bridge, but the grade or slope of the bridge.  The predisaster design of the bridge tied in directly to the existing earth.  As such, the slope of the bridge was steeper than the allowable grade under the ADA.  The current scope of work in PW 7989 does not fully address applicable ADA requirements because the shorter span, requiring massive retaining walls, would require major adjustments to the abutments to achieve an ADA-compliant slope. However, Alternative C proposal meets ADA requirements because lengthening the span of the bridge makes the slope more gradual.  As such, the revised scope of work for PW 7989, based on Alternative C, ensures that the facility is ADA compliant. 

Conclusion

The Applicant provided sufficient documentation to demonstrate that a change in the scope of work of PW 7989 is warranted.  Contingent upon EHP review and approval, Region II should develop a scope of work to fully address the work necessary to replace the bridge with a 90-foot span and meet ADA standards.  The Applicant has substantiated that the Alternative C proposal, included in the second appeal, best accomplishes these requirements and should be the new scope of work for PW 7989.  In accordance with 44 C.F.R. § 206.206, the Applicant maintains the right to appeal any new issues that arise in determining eligible costs. 

 

[1] See Letter from Associate and Professional Engineer, Modjeski and Masters, to Commissioner, Delaware County Department of Public Works, at 1 and Appendix F (June 18, 2014) [hereinafter June 2014 Letter].

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

[3] Id.

[4] 44 C.F.R. § 206.201(k) (2011).

[5] Public Assistance Guide, FEMA 322, at 79 (June 2007) [hereinafter PA Guide].

[6] Id.

[7] 44 C.F.R. § 206.201(f).

[8] See generally OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, OMB CIRCULAR A-87, COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL GOVERNMENTS (2004) (codified at 2 C.F.R. § 225); see also PA Guide, at 40 (stating eligible costs must be reasonable and necessary to accomplish the work.  Moreover, a cost is reasonable if it is both fair and equitable for the type of work being performed.)

[9] See generally Lewis County, FEMA-1734-DR-WA, at 3 (Mar. 25, 2010) (holding that although a bridge standard required adjusting the predisaster size, the standard: (1) did not change the bridge’s predisaster function or capacity, (2) was reasonable, (3) allowed engineers to use their professional judgment, (4) and constituted a good construction practice intended to reduce the likelihood of future disaster-related damage); see also Brooktrails Township Community Services District, FEMA-1628-DR-CA, at 3-4 (Apr. 27, 2009) (finding that additional work items could be added to the scope of work based on sound engineering practices, in accordance with 44 C.F.R. § 206.226). 

[10] June 2014 Letter, at 1.

[11] Id.

[12]Id.

[13] See June 2014 Letter at Appendix F; see also Modjeski and Masters, Bridge 101P Quantity Calculations (Feb. 5, 2014).

[14] 44 C.F.R. § 206.201(f).

[15] Recovery Policy 9526.1, Hazard Mitigation Funding Under Section 406 (Stafford Act) at Appendix A (Mar. 30, 2010).

[16] See 44 C.F.R. § 206.226(d) (stating a standard that changes the predisaster construction of a facility is eligible if it is a legal Federal requirement applicable to the type of restoration); see also 36 C.F.R. pt. 1190 and 28 C.F.R. pt. 35; see generally PA Guide, at 33-36.

[17] PA Guide, at 35.

[18] Response and Recovery Policy 9525.5, Americans with Disabilities Act (ADA) Access Requirements, at 1 (Oct. 26, 2000).

[19] Id. at 2; see also PA Guide, at 35.

7 Jul 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Florida Department of Transportation
Disaster Number: 
3288-EM-FL
DSR: 
PW 288
Date Signed: 
Tuesday, June 30, 2015
PA ID: 
000-U03E9-00
Summary/Brief: 

Conclusion:  The FL Department of Transportation’s (Applicant) second appeal is time barred by 44 C.F.R. § 206.206.  In addition, consistent with 44 C.F.R. § 206.225 and FEMA policy, the work completed by the Applicant’s contractor were damage assessments, not emergency work, and therefore, ineligible for PA funding.

Summary Paragraph

In 2008, Tropical Storm Fay caused widespread flooding throughout the Applicant’s District 4 located in southeast Florida.  FEMA prepared Project Worksheet (PW) 288 to address bridge inspections conducted by the Applicant’s contractor.  FEMA subsequently deemed the work was a damage assessment pursuant to FEMA policy and ineligible for PA funding.  In addition, FEMA determined the bridges fell under the purview of the Federal Highway Administration (FHWA); therefore, the Applicant was not legally responsible for them.  PW 288 was obligated for zero dollars.  In its first appeal, the Applicant requested $48,677.53 in PA funding for labor performed to identify damages resulting from the disaster.  The Applicant asserted that it had legal responsibility for inspections on the bridges and the work in PW 288 was eligible emergency work.  On May 9, 2013, the Region IV Regional Administrator (RA) denied the first appeal determining the inspections were under the authority of the FHWA.  In addition, the RA concluded that the inspections were damage assessments, and the Applicant failed to provide new information to substantiate the eligibility of the work.  In its second appeal, the Applicant again asserts that the inspections are eligible emergency work as the intent of them was to reveal damage that may endanger the public.  The Applicant also asserts that it was legally responsible for the bridge inspections.  The Grantee submitted the Applicant’s undated second appeal via an October 24, 2014 letter.

Authorities and Second Appeals

  • 44 C.F.R. § 206.206.
  • 44 C.F.R. § 223(a)(3).
  • 44 C.F.R. § 206.225(a)(1).
  • FEMA DAP 9523.2, Eligibility of Building Safety Inspections Supporting Emergency Work.
  • PA Guide, at 55.
  • FL Department of Transportation, FEMA-1561-DR-FL (Mar. 23, 2009).
  • FL Department of Transportation, FEMA-1609-DR-FL (Sep. 11, 2008).

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a)(3), an item of work must be the legal responsibility of the Applicant to be eligible for PA funding.  Facilities owned by other Federal agencies typically are not eligible for PA funding.
    • The bridges fell under the FHWA.
    • While the Applicant was responsible for routine maintenance inspections, it was not responsible for damage assessments like those performed following Tropical Storm Fay.
  • According to 44 C.F.R. § 206.225, FEMA may provide PA funding for eligible emergency work.  The PA Guide states that a bridge inspection performed to determine the possibility of damage is not eligible emergency work. 
  • The work completed by the Applicant’s contractor was an inspection to determine the possibility of bridge damage.  As such, it is not eligible.  
  • The second appeal for FL Department of Transportation, FEMA-1609-DR-FL, states FEMA DAP 9523.2, Eligibility of Building Safety Inspections Supporting Emergency Work, only applies to buildings.
    • The Grantee argues that FEMA should apply the rationale in DAP 9532.2 for building safety inspections to the work completed in PW 288, therefore making it eligible emergency work.

As the facilities in PW 288 are bridges, DAP 9523.2 is not applicable. 

Letter: 

06/30/2015

Bryan W. Koon
Director
State of Florida Division of Emergency Management
2555 Shumard Oaks Boulevard
Tallahassee, Florida  32399-2100

Re: Second Appeal – Florida Department of Transportation, PA ID 000-U03E9-00, FEMA-3288-EM-FL, Project Worksheet (PW) 288 – Damage Assessments

Dear Mr. Koon:

This is in response to a letter from your office dated October 24, 2014, which transmitted the referenced second appeal on behalf of the Florida (FL) Department of Transportation (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $48,677.53 in Public Assistance (PA) funding for damage assessments conducted following Tropical Storm Fay. 

As explained in the enclosed analysis, I have determined that the Applicant’s second appeal is time barred by 44 C.F.R. § 206.206.  Timeliness aside, the Applicant failed to demonstrate the work performed on its bridges were not damage assessments.  Pursuant to 44 C.F.R. § 206.225, damage assessments are not emergency work, and therefore, are not eligible for PA funding.  Accordingly, I am denying the appeal.

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

 

Enclosure

cc:Gracia Szczech
Regional Administrator
FEMA Region IV

Analysis: 

Background

In 2008, Tropical Storm Fay caused widespread flooding throughout Florida (FL) Department of Transportation (Applicant) District 4 in southeast Florida.  The flooding caused bridge scour and other damage to the Applicant’s bridges located within District 4.  The Applicant’s contractor inspected bridges in Broward, Palm Beach, St. Lucie, Martin, and Indian River Counties.  Project Worksheet (PW) 288 was prepared to address bridge inspections, including scour safety assessments, conducted by the Applicant’s contractor.

Initially, PW 288 was drafted categorizing the bridge inspections as emergency protective measures.  However, FEMA subsequently deemed the bridge inspections to be damage assessments and ineligible for Public Assistance (PA) funding based on the PA Guide.[1]  In addition, FEMA determined the bridges fell under the purview of the Federal Highway Administration (FHWA), and, consequently, the Applicant was not legally responsible for them.  As such, FEMA obligated PW 288 for zero dollars.

First Appeal

In its first appeal, dated August 8, 2011, the Applicant requested $48,677.53 in PA funding for labor performed to identify damages resulting from the disaster.  The Applicant asserted that FEMA’s conclusion, that the work was ineligible because it was not considered emergency work, was inaccurate.  The Applicant claimed that the work was vital to the health and safety of the traveling public because the unknown status of the bridges led to road closures which prevented emergency vehicles and personnel from accessing roads.  The Applicant also claimed that while the bridges were considered FHWA roadways, the bridge safety inspections were statutorily excluded from FHWA reimbursement.  The Applicant cited the PA Guide[2] as evidence that FEMA may consider providing assistance for work that falls outside of another Agency’s authority, but is eligible under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act).[3]

In a letter, dated November 1, 2011, the Florida Division of Emergency Management (Grantee) distinguished between a safety inspection, which may be eligible for funding, and a damage assessment, which is not.  The Grantee argued the work completed in PW 288 was a safety inspection.  The Grantee cited to the Scope of Services in the contract between the Applicant and its contractor.  The Grantee claimed that the scope demonstrates that the work completed was a safety inspection.

In a letter dated May 9, 2013, the Region IV Regional Administrator (RA) denied the first appeal determining the inspections were under the authority of the FHWA.  In addition, the RA concluded that the inspections were damage assessments, and the Applicant failed to provide new information to substantiate the eligibility of the work.  The RA partially based his decision on the denial of two second appeals that involved similar safety inspections by the Applicant.[4]

Second Appeal

In an undated second appeal, the Applicant again claims that the bridge inspections are eligible emergency protective measures.  The Applicant asserts that the disaster forced road closures, and due to emergency conditions, immediate action needed to be taken.  The Applicant argues that the intent of the bridge inspections was to reveal damage that may endanger the public.  The Applicant also asserts that it was legally responsible for bridge inspections.

In a letter dated October 24, 2014, the Grantee recommends that FEMA extend the definition of “safety inspection” in FEMA DAP 9523.2, Eligibility of Building Safety Inspections Supporting Emergency Work,[5] to include work performed by the Applicant in PW 288.  The Grantee asserts that the work embodied in PW 288 are safety inspections, not damage assessments, and as such, are the Applicant’s legal responsibility pursuant to Florida Statute (FS) 335.074.

Discussion

Appeal Timeliness

The Stafford Act Stafford Act § 423, as implemented by Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.206(c)(1), requires an Applicant to appeal a denial regarding eligibility for, from, or amount of Public Assistance within 60 days after the date on which it was notified of the denial.[6]  Pursuant to 44 C.F.R. § 206.206(c)(2), the Grantee must submit appeals from an Applicant, with a written recommendation, to the Regional Administrator within 60 days of receipt.[7]  Neither the Stafford Act nor 44 C.F.R. provides FEMA authority to grant time extensions for filing second appeals.

The RA issued the first appeal determination on May 9, 2013.  In total, the Applicant and Grantee had 120 days from receipt of the first appeal decision to submit the second appeal to FEMA.[8]  While the Applicant’s second appeal is undated, the Grantee submitted its written recommendation, with the Applicant’s second appeal attached, to FEMA on October 24, 2014, more than seventeen months after FEMA Region IV’s first appeal decision.  As such, the Applicant’s second appeal failed to meet the procedural requirements of 44 C.F.R. § 206.206(c)(2) and consequently is denied.[9]   Timeliness aside, as described below, the second appeal also is not compelling on the substantive issues and would otherwise be denied.  

Legal Responsibility

Pursuant to 44 C.F.R. § 206.223(a)(3), an item of work must be the legal responsibility of the Applicant to be eligible for PA funding.  Facilities owned by other Federal agencies typically are not eligible for PA funding.[10]  However, if the Federal agency turns over responsibility for operation and maintenance to a local agency, FEMA funding may be available.[11]

The FHWA considers safety inspections to be the responsibility of the State.[12]  The Applicant argues that, while the FHWA owns the bridges at issue, it is responsible for safety inspections of bridges within its jurisdiction.  As evidence, the Applicant cites to Florida Statute (FS) 335.074 and FDOT Policy 850-010-030-g.  FS 335.074 provides, “[a]t regular intervals, not to exceed 2 years, each bridge on a public transportation facility shall be inspected for structural soundness and safety for the passage of traffic on such bridge …  The governmental entity having maintenance responsibility for any such bridge shall be responsible for having inspections performed and reports prepared .… ”[13] 

Pursuant to Florida Department of Transportation (FDOT) Policy 850-010-030-g, Florida DOT is directly responsible for the inspection of all bridges on the state highway system.[14]  However, the policy provides that inspections are part of a bridge maintenance program and the purpose of the maintenance program is to “prevent or reduce deterioration” of the bridges and to extend the bridges’ useful lives.[15]

FEMA does not argue that the Applicant is responsible for conducting routine safety inspections of bridges within its jurisdiction.  However, as explained in FS 335.074 and FDOT Policy 850-010-030-g, these inspections are for regular maintenance to ensure the bridges are structurally sound.  The inspections are not for assessing possible damage following a declared disaster event.  The Applicant would be responsible for completing these routine inspections every two years regardless of whether a disaster occurred.  In addition, as explained below, FEMA does not classify the work embodied in PW 288 as safety inspections.  The bridges fell under the purview of the FHWA.  As such, the FHWA was legally responsible for damage assessments like those following Tropical Storm Fay.  Therefore, FS 335.074 and FDOT Policy 850-010-030-g are not applicable.

Emergency Work Eligibility

Consistent with Stafford Act § 403 and 44 C.F.R. § 206.225, FEMA may reimburse a state or local government for emergency work performed immediately before, during, and following a declared disaster event.[16]  Emergency work is defined as “work which must be done immediately to save lives and to protect improved property and public health and safety, or to avert or lessen the threat of a major disaster.”[17]  FEMA policy excludes surveying facilities, and specifically bridge inspections, to determine the possibility of damage from eligible emergency work because assessing the extent of damage is the responsibility of the facility’s owner and covered by the Applicant’s administrative allowance.[18]  FEMA has a limited exception to provide funding for some building safety inspections to address immediate threats to lives, improved property or the public health and safety.[19]   PA reimbursement may be available for activities that determine whether buildings are safe for entry, occupancy, and lawful use.[20]  Such building safety inspections primarily address structural safety, but may also include electrical hazards, the presence of mold, asbestos, or other hazardous materials, or fire safety issues.[21]

The Applicant argues that it had reason to believe that there was significant scour at the bridge foundation, which could have presented immediate threats to life and property, and closed the roads leading to the bridge until it could assess the matter.  The Applicant later found no scour present on its bridges.  As evidence that the work performed was eligible emergency work, not a damage assessment, the Applicant submitted the contract governing the work performed in PW 288.[22]  The Scope of Services for the contract includes visual inspection and documentation of any deficiencies to the bridges’ undersides and on-site scour assessments.[23]

The Grantee recommends that FEMA apply the rationale for eligible safety inspections in DAP 9523.2, Eligibility of Building Safety Inspections Supporting Emergency Work, to the work completed in PW 288.  That policy provides that FEMA may consider the increased demand for building safety inspection services as an eligible emergency protective measure if such inspections are related to the disaster and are necessary to establish if damaged structures pose an immediate threat to life, public health or safety, or improved property.[24]  However, as the title suggests, the policy is specific to buildings and does not apply to bridges.[25]  As such, it is not applicable in this appeal.    FEMA policy categorizes the contractor’s visual inspection for potential structural deficiencies and scour as a damage assessment because visually inspecting the bridges to determine whether disaster-related damage is present is explicitly excluded from eligible work under the PA program.[26]   

Conclusion

Applicant’s second appeal is time barred by 44 C.F.R. § 206.206.  Timeliness aside, the Applicant failed to demonstrate the work performed on its bridges were not damage assessments.  Pursuant to FEMA policy, damage assessments are not emergency work, and therefore, are not eligible for PA funding.  As such, the appeal is denied.

 

[1] Public Assistance Guide, FEMA 322, at 55 (June 2007) [hereinafter PA Guide].

[2] Id. at 24.

[3] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, §§ 403 and 406, 42 U.S.C. §§ 5170b and 5172 (2007).

[4] See FEMA Second Appeal Analysis, FL Department of Transportation, FEMA-1561-DR-FL (Mar. 23, 2009); see also FEMA Second Appeal Analysis, FL Department of Transportation, FEMA-1609-DR-FL (Oct. 14, 2008).

[5] Disaster Assistance Policy DAP9523.2, Eligibility of Building Safety Inspections Supporting Emergency Work, at 2 (Jan. 28, 2008).

[6] Stafford Act § 423; see also 44 C.F.R. § 206.206(c)(1) (2008).

[7] 44 C.F.R. § 206.206(c)(2).

[8] See 44 C.F.R. § 206.206(c)(1) and (2).

[9] See FEMA Second Appeal Analysis, Public Health Trust of Miami-Dade County, FEMA-3259-EM-FL, at 2 (Mar. 27, 2015; see also FEMA Second Appeal Analysis, Broward County School Board of Florida, FEMA-1609-DR-FL, at 2 (Sep. 4, 2014).

[10] PA Guide, at 23.

[11] Id. at 24.

[12] See U.S. Department of Transportation Federal Highway Administration, Bridges and Structures, http://www.fhwa.dot.gov/bridge/110613.cfm (last visited May 19, 2015) (stating states are responsible for ensuring all public highway bridges within the State are inspected in accordance with the National Bridge Inspection Standards (NBIS).  In addition, if the locally owned bridge is not inspected or appropriately posted or closed to ensure safety, the FHWA will hold the State DOTs responsible, and subject to potential withholding of Federal-aid authorizations.).

[13] Fla. Stat. § 335.074(2) (2008).

[14] See Florida Department of Transportation Policy 850-010-030-g, Bridge and Other Structures Inspection and Reporting, at 5 (Dec. 21, 2007). 

[15] Id.

[16] See Stafford Act § 403; see also 44 C.F.R. § 206.225.

[17] 44 C.F.R. § 206.201(b).

[18] PA Guide, at 55.  It is important to note that, once the Applicant has determined the facility is damaged, costs for an engineering evaluation to determine the type and extent of repairs necessary to return the facility to pre-disaster condition is eligible (PA Guide, at 56).   

[19] See Disaster Assistance Policy DAP9523.2, Eligibility of Building Safety Inspections Supporting Emergency Work, at 1 (Jan. 28, 2008).

[20] Id. at 2. 

[21] Id.

[22] Emergency Contract between District Maintenance Engineer, Florida Department of Transportation, and President, Reynolds, Smith and Hills, CS, Inc. (Sep. 11, 2008) [hereinafter Emergency Contract].

[23] Id., at Exhibit A.

[24] Disaster Assistance Policy DAP9523.2, Eligibility of Building Safety Inspections Supporting Emergency Work, at 2-3.

[25] See FEMA Second Appeal Letter, FL Department of Transportation, FEMA-1609-DR-FL, at 2 (Sep. 11, 2008) (determining that a previous version of DAP 9523.2 applied to buildings, not FHWA roads); see also PA Guide, at 76 (stating building inspections are eligible if necessary to establish whether a damaged structure poses an immediate threat to life, public health or safety).

[26] See PA Guide, at 55.

7 Jul 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
City of Pass Christian
Disaster Number: 
1604-DR-MS
DSR: 
PWs 8402 and 10959
Date Signed: 
Friday, June 26, 2015
PA ID: 
047-55400-00
Summary/Brief: 

Conclusion: On second appeal, the City of Pass Christian (Applicant) failed to demonstrate that the overtime rates charged were adequately documented in the service contract pursuant to OMB Circular A-87 and FEMA policy guidance.  As such, they are not eligible for FEMA reimbursement. 

Summary Paragraph

In August 2005, Hurricane Katrina caused damage throughout the City of Pass Christian.  The Applicant used an engineering firm to repair its small craft harbor (Project Worksheet (PW) 8402) and sewer system (PW 10959).  At final inspection, FEMA determined that the Applicant included invoices from the engineering firm that contained costs that were inconsistent with the terms of the contract.  As such, FEMA disallowed $3,598.75 from PW 8402 and $11,101.00 from PW 10959.  In separate first appeal letters, the Applicant asserted that FEMA erred in disallowing architectural and engineering (A&E) costs associated with work to restore its sewer system and harbor because FEMA has no legal authority to interpret its contract with the engineering firm.  The Applicant argued that FEMA’s interpretation of the contract was clearly contrary to the two parties’ intent and past practices under the contract and would mean that the Applicant made “unlawful donations” to the engineering firm.  The Region IV Regional Administrator (RA) denied the appeals determining that the contract’s payment provisions did not provide a payment at a premium rate for hours worked over 40.  The RA stated that the hourly rates to be charged for each identified position were clearly stated in the Standard Hourly Rates Schedule of the contract.  In the second appeal, the Applicant again asserts that it is not appropriate for FEMA to independently interpret the contract at issue in these appeals.  In addition, the Applicant argues that the only issue for FEMA to decide is whether the A&E costs were reasonable and necessary to accomplish the work. 


Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • OMB Circular A-87, 2 C.F.R. § 225.
  • PA Guide, at 33-35, 75.

Headnotes

  • OMB Circular A-87 provides that procurement costs must be necessary and reasonable to accomplish the work and adequately documented to be eligible for FEMA reimbursement.  Moreover, pursuant to OMB Circular A-87, FEMA should analyze the adequacy of the contractual agreement for services, including the rate of compensation, when determining allowable costs.  
  • The A&E service contract at issue did not include a premium rate for hours worked over 40 hours per week.
  • Therefore, the overtime charges billed to the Applicant are not eligible for FEMA reimbursement.  
Letter: 

6/26/2015

Mr. Robert Latham, Jr.
Executive Director
Mississippi Emergency Management Agency
220 Popps Ferry Road
Biloxi, Mississippi  39531

Re: Second Appeal – City of Pass Christian, FEMA-1604-DR-MS, PA ID 047-55400-00, Project Worksheets (PWs) 8402 and 10959 – Procurement – Engineering and Design Services

Dear Mr. Latham:

This is in response to your letter dated November 17, 2014, which transmitted the referenced second appeal on behalf of the City of Pass Christian (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $14,699.75 in Public Assistance funding for overtime work associated with the restoration of the Applicant’s small craft harbor and sewer system.

As explained in the enclosed analysis, I have determined that the Applicant failed to demonstrate that the premium rate for overtime work was adequately documented in the contractual agreement for architectural and engineering services.  Therefore, I am denying the 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: Gracia Szczech
      Regional Administrator
      FEMA Region IV

Analysis: 

Background

In August 2005, Hurricane Katrina caused damage throughout the City of Pass Christian (Applicant).  Hurricane Katrina washed away covers on the Applicant’s sewer system causing debris and sand to enter the system and destroying many service lines.  FEMA prepared Project Worksheet (PW) 10959 to address work to restore the sewer system.  In addition, the disaster’s heavy winds and storm surge damaged the Applicant’s small craft harbor — a facility consisting of 368 recreational and commercial slips, a small beach, picnic and recreation areas, a fishing pier, and parking areas.  Regarding the damaged harbor, FEMA drafted PW 8402 to address repair work.  The Applicant used architectural and engineering (A&E) services from the same engineering firm for both projects.  At final inspection, FEMA determined that the Applicant included invoices from the engineering firm that contained costs that were inconsistent with the terms of the contract.  As such, FEMA disallowed $3,598.75 from PW 8402 and $11,101.00 from PW 10959.

First Appeal

In appeal letters dated March 6, 2013 (PW 8402) and March 26, 2013 (PW 10959), the Applicant asserted that FEMA erred in disallowing A&E costs associated with work to restore its sewer system and harbor because FEMA has no legal authority to interpret its contract with the engineering firm.  The Applicant stated that it used the engineering firm for various public works projects since 1985, meaning there was a longstanding relationship between the two parties.  In addition, the Applicant stated that, for routine projects, the engineering firm rarely accumulated overtime, and this explained why the contract did not have a provision that directly governed overtime compensation.  However, for the projects embodied in PWs 8402 and 10959, the engineering firm’s employees did work more than 40 hours a week.  The Applicant argued that FEMA’s interpretation of the contract was clearly contrary to the two parties’ intent and past practices under the contract and would mean that the Applicant made “unlawful donations” to the engineering firm.  Finally, the Applicant argued that FEMA’s sole authority is to determine whether the A&E services are eligible for PA funding, meaning the costs are reasonable and necessary for the work performed.

In a letter dated July 2, 2014 the Region IV Regional Administrator (RA) denied the appeals determining that the contract’s payment provisions did not provide a payment at a premium rate for hours worked over 40.  The RA stated that the standard hourly rates to be charged for each level of engineer were clearly stated in the Standard Hourly Rates Schedule of the contract.

Second Appeal

In an appeal dated September 26, 2014, the Applicant again asserts that it is not appropriate for FEMA to independently interpret the contract at issue in these appeals.   The Applicant argues that FEMA’s determination that the terms of the contract prohibited the Applicant from paying overtime charges is arbitrary and capricious and not supported by the laws and court decisions of the State of Mississippi.  Finally, the Applicant restates it position that the only issue for FEMA to decide is whether the A&E costs were reasonable and necessary to accomplish the work. 

Discussion

Pursuant to the Stafford Act § 406(a), FEMA may reimburse a state or local government for work associated with the repair, restoration, reconstruction, or replacement of a public facility damaged or destroyed by a declared disaster.[1]  Costs that can be directly tied to the performance of eligible work generally are eligible for reimbursement.[2]  FEMA may reimburse basic engineering and design services associated with eligible repair or restoration work.[3]  To be eligible for FEMA reimbursement, procurement costs must be necessary and reasonable to accomplish the work and adequately documented.[4]  When determining whether costs are allowable under the PA program, FEMA analyzes the adequacy of the contractual agreement for services, including the rate of compensation.[5]

The Applicant seeks reimbursement for service charges based on a premium rate for hours worked over the standard 40 hour work week, i.e., overtime charges.  In addition, the Applicant argues that it is not appropriate for FEMA to independently interpret the terms of its contract with the engineering firm.  Moreover, the Applicant contends that FEMA’s conclusion is that the Applicant is prohibited from paying the overtime charges.

Pursuant to OMB Circular A-87, the contract is the mechanism for adequately documenting costs.[6]  FEMA determines whether costs are allowable by reviewing the terms of the contract and aligning invoices with the terms of the contract.[7]  The contract at issue explicitly provides standard hourly rates, but is silent regarding overtime or premium rates.  The Applicant acknowledges this and explains that, due to the long-standing relationship between the engineering firm and it for regular, routine maintenance where overtime is not worked, there was no need to include a clause regarding overtime in the contract.  Attached to the contract is a Standard Hourly Rates Schedule addendum that sets forth the standard rate to be charged for each level of engineer.  When determining allowable costs, FEMA must follow the terms of the contract.  The contract at issue only allows a standard rate to be charged for hours worked, regardless of whether they are beyond the standard 40 hours.[8]  Therefore, FEMA correctly deobligated the overtime costs in PWs 8402 and 10959.  While the Applicant argues that FEMA concluded that the Applicant was prohibited by the contract from paying overtime charges, FEMA merely concluded that the overtime charges are not eligible for FEMA reimbursement because they were not adequately documented in the contract.

Conclusion

Pursuant to OMB Circular A-87 and FEMA policy guidance, the overtime rates charged to the Applicant were not adequately documented in the service contract.  As such, they are not eligible for FEMA reimbursement.  Accordingly, the appeal is denied.

 

[1] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406(a), 42 U.S.C. § 5172(a) (2003).

[2] Public Assistance Guide, FEMA 322, at 33 (October 1999) [hereinafter PA Guide].

[3] PA Guide, at 75. 

[4] OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, OMB CIRCULAR A-87, COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL GOVERNMENTS, at Attachment C(1)(a) and (j) (2004) (codified at 2 C.F.R. § 225).

[5] See id., at Attachment B(32)(b)(8).

[6] Id.

[7] See generally PA Guide, at 33-35.

[8] Pursuant to 44 C.F.R. § 206.206(a), the Applicant has the burden of substantiating appeal claims with supporting documentation.  Here, the Applicant failed to demonstrate any past practice of paying overtime rates that were implicitly incorporated into its contract nor a way for FEMA to ascertain the reasonableness of cost. 

7 Jul 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Okaloosa County
Disaster Number: 
1551-DR-FL
DSR: 
PW 1740
Date Signed: 
Tuesday, June 30, 2015
PA ID: 
091-99091-00
Summary/Brief: 

Conclusion:  The Applicant’s second appeal is time-barred and therefore a review of the substance of the appeal is unnecessary and is moot.

Summary Paragraph

On September 13, 2004, Okaloosa County declared a state of emergency as high winds, heavy rains, and flooding from Hurricane Ivan (1551-DR-FL) impacted the county.  Several exempt Okaloosa County employees worked overtime in response to the event.  On March 21, 2005, FEMA prepared PW 1740 and determined that overtime for exempt employees was not eligible because it was discretionary per the Applicant’s pay policy.  In a first appeal letter submitted August 5, 2005, the Applicant appealed FEMA’s denial of $69,888.02 in exempt employee overtime.  The Acting Regional Director (RD) denied the first appeal on January 17, 2006, stating that overtime for exempt employees was discretionary, contingent upon FEMA funding, and did not apply to non-federal events.  On January 30, 2006, the Grantee notified the Applicant that FEMA denied the first appeal.  In a second appeal letter submitted March 21, 2006 the Applicant maintained that it was following its pay policy.  On March 29, 2007, the Applicant emailed the Grantee to request that the second appeal be withdrawn for the issue to be resolved at closeout as recommended by the Grantee.  On March 3, 2014, following closeout, FEMA obligated PW 1740 version 1 and consistent with previous determinations, did not fund the overtime costs at issue.  On April 24, 2014, the Applicant submitted an appeal for $49,165.95 in overtime force account labor costs.  On June 10, 2014, the Grantee forwarded the appeal to FEMA as a second appeal.  The Grantee supports the Applicant’s appeal and states that the decision to pay overtime is in compliance with the Applicant’s pay policy and is not dependent on Federal funding.

Authorities and Second Appeals

  • 44 C.F.R. § 206.206 (b),(c)(1).
  • PA Guide (Oct. 1999), at 86.

Headnotes

  • 44 C.F.R. § 206.206 states that an Applicant can appeal any FEMA determination and 44 C.F.R. § 206.206(b) allows for a first appeal and a second appeal.
    • Since the Applicant had already submitted a first appeal for the FEMA determination regarding overtime for exempt employees, the Grantee was correct in characterizing the Applicant’s April 24, 2014 appeal as a second appeal.
  • 44 C.F.R. § 206.206(c)(1) and the Public Assistance Guide state that applicants must file second appeals within 60 days of the FEMA determination.
    • The RD issued the first appeal decision on January 17, 2006.  The Applicant submitted a second appeal on April 24, 2014, which is greater than 60 days from the date that the Applicant received notice of the first appeal decision.
Letter: 

06/30/2015

Bryan W. Koon
Director
State of Florida Division of Emergency Management
2555 Shumard Oaks Boulevard
Tallahassee, Florida  32399-2100

Re: Second Appeal – Okaloosa County, PA ID 091-99091-00, FEMA-1551-DR-FL, Project Worksheet 1740 – Time Extension - Appeal

Dear Mr. Koon:

This is in response to your letter dated June 10, 2014, which transmitted the referenced second appeal on behalf of Okaloosa County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $49,165.95 in overtime force account labor costs for exempt employees.

As explained in the enclosed analysis, I have determined that the appeal is time-barred.  Accordingly, I am denying the appeal.  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 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: Gracia Szczech
     Regional Administrator
     FEMA Region IV

Analysis: 

Background        

On September 13, 2004, Okaloosa County declared a state of emergency as high winds, heavy rains, and flooding from Hurricane Ivan (FEMA-1551-DR-FL) impacted the county.  Several exempt county employees worked overtime in response to the event.  On September 22, 2004, Okaloosa County prepared a Hurricane Ivan supplement to its emergency pay policy authorizing overtime for exempt employees.  On March 21, 2005, FEMA prepared PW 1740 version 0 for $238,319.41, of which $169,330.98 was labor costs.  In a memo included with the PW, FEMA determined that overtime for exempt employees was not eligible because the pay policy provided the County Manager with the discretion to authorize overtime rather than required it.                                                                                                                            

First Appeal

In a first appeal letter dated August 5, 2005, the Applicant appealed FEMA’s denial of $69,888.02 in exempt employee overtime as well as several other issues that were ultimately resolved at closeout.  The applicant reaffirmed that its pay policy was not discretionary and claimed that exempt employees were paid overtime for non-federally funded work during Tropical Storms Isidore and Barry.  On November 4, 2005, the Florida Division of Emergency Management (Grantee) forwarded the first appeal to FEMA Region IV, stating that all force account labor was eligible and complied with the Applicant’s established pay policy as well as FEMA policy.

The FEMA Region IV Acting Regional Director (RD) denied the first appeal on January 17, 2006, stating that overtime for exempt employees was discretionary, contingent upon FEMA funding, and did not apply to non-Federal events.  The RD cited OMB Circular A-87 which states that to be allowable under Federal awards, costs must be consistent with policies, regulations, and procedures that apply uniformly to both Federal awards and other activities of the governmental unit.[1]  On January 30, 2006, the Grantee notified the Applicant that the first appeal was denied.

Second Appeal

On March 21, 2006 the Applicant submitted its second appeal requesting reimbursement in the amount of $69,888.02 for overtime force account labor costs as well as several other issues that were ultimately resolved at closeout.  The Applicant maintains that it was following its pay policy and that the Hurricane Ivan supplement clarified but did not change existing policy.  The Applicant asserts that “exempt employees have been and are paid overtime for other non-Federally funded work”[2] and cites Tropical Storms Isidore and Barry as examples of Applicant’s standard overtime pay practices.  The Applicant further explains that the Okaloosa County Human Resources Policy Manual, Chapter VI, Section O authorizes overtime pay for exempt employees during emergencies and disasters and that the only discretionary action taken by the County Manager is to determine the actual time of day that the overtime begins in order to:  (1) limit the Applicant’s exposure, and (2) provide consistency across the organization.  On March 29, 2007, the Applicant emailed the Grantee to request that the second appeal be withdrawn for the issue to be resolved at closeout, as recommended by the Grantee.[3]

On February 8, 2010, the Grantee requested a large project closeout.  On March 3, 2014, FEMA obligated version 1 for $238,319.41, of which $172,634.08 was labor costs.  On April 24, 2014, the Applicant submitted an appeal requesting reimbursement for $49,165.95 in overtime force account labor costs.[4]  The Applicant reiterated that the pay policy in place at the time of the disaster allows for exempt employee overtime and that the Hurricane Ivan supplement only identified specific hours to assist the timekeepers in processing payroll.  On June 10, 2014, the Grantee forwarded the appeal to FEMA as a second appeal.  The Grantee supported the Applicant’s appeal and stated that the decision to pay overtime was in compliance with the Applicant’s pay policy and was not dependent on Federal funding.  The Grantee addressed the timeliness of the appeal and pointed out that the Applicant’s first appeal was denied on January 17, 2006, and Applicant filed a second appeal on March 21, 2006 but later withdrew it.  The Applicant then requested a closeout, and FEMA wrote version 1 on March 3, 2014.  Since this is the action that the Applicant is appealing, the Grantee considers the appeal to be timely.  The Grantee also states that the Hurricane Ivan supplement to the Applicant’s pay policy did not alter or void the established policy, but instead should be seen as an explanation rather than a change in policy.  The Grantee then reiterates that the Applicant provided overtime for exempt employees during Tropical Storms Isadore and Barry, for which they did not receive Federal funding.  On August 22, 2014, FEMA Region IV forwarded the second appeal to FEMA HQ.

Discussion

First vs. Second Appeal

“An eligible applicant, subgrantee, or grantee may appeal any determination previously made related to an application for or the provision of Federal assistance.”[5]  FEMA regulations provide for a first appeal and a second appeal for each FEMA determination.[6]  On August 5, 2005, the Applicant appealed FEMA’s determination about overtime for exempt employees.  On March 21, 2006, the Applicant submitted a second appeal for the same FEMA determination but later withdrew it at the Grantee’s recommendation.  On April 24, 2014, the Applicant submitted another appeal for the same FEMA determination.  Since the Applicant already submitted a first appeal for the FEMA determination regarding overtime for exempt employees, the Grantee was correct in characterizing the April 24, 2014 appeal as a second appeal.

Appeal Timeliness

“[Applicants] must file appeals within 60 days after receipt of a notice of the action that is being appealed.”[7]  “If an appeal is denied by the RD, the applicant may submit a second appeal to [FEMA Headquarters].”[8]  “The applicant must submit the appeal to the State within 60 days of receiving the RD’s denial.”[9]  In the RD’s first appeal decision, dated January 17, 2006, she stated:

The Applicant may submit a second appeal to the Associate Director.  The appeal shall be made in writing, through the Grantee and submitted within 60 days of receipt of notice of the Regional Director’s denial of the first appeal.  This is in accordance with 44 CFR Part 206, Subpart G, Section 206.206(d).[10]

The Grantee notified the Applicant of the first appeal decision on January 30, 2006 and again reminded the Applicant of its second appeal rights and time limitations:

Should you disagree with FEMA’s determination, you have the right to appeal in accordance with 44 CFR, §206.206.  You may file a second appeal within 60 days of receipt of this correspondence to the Grantee . . . .[11]

The RD issued the first appeal decision on January 17, 2006.  The Applicant received notice of the RD’s first appeal decision on January 30, 2006.  On March 21, 2006, the Applicant submitted a second appeal that it withdrew on March 29, 2007.  The withdrawal of the appeal does not impact the timeline to contest the January 17, 2006 decision.  The Applicant submitted another second appeal on April 24, 2014, more than eight years after the first appeal decision.  The Applicant’s April 24, 2014 appeal does not meet the submission requirements of 44 C.F.R. § 206.206.

The Applicant was aware of its appeal rights, as well as the procedural requirements for submission, and chose to withdraw its timely second appeal.  The second appeal that was filed on April 24, 2014 is untimely.  Consequently, a review of the substance of the appeal is unnecessary and the issue is moot.

Conclusion

The Applicant’s April 24, 2014 second appeal does not meet the submission timeline established by 44 C.F.R. § 206.206.  Consequently, the second appeal is untimely and denied.

 

[1] See Letter from Acting Regional Director, FEMA Region IV, to Director, Florida Division of Emergency Management (Jan. 17, 2006) (citing OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, OMB CIRCULAR A-87(C)(1)(e), COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL GOVERNMENTS (2004) (codified at 2 C.F.R. § 225)).

[2] Letter from Finance Director, Okaloosa County Clerk of Circuit Court, to Director, Florida Division of Emergency Management (Mar. 21, 2006).

[3] See Email from Contracts and Grants Manager, Okaloosa County Clerk of Courts, to Florida Division of Emergency Management (Mar. 29, 2007, 14:54 EST).

[4] Note that this amount differs from the March 21, 2006 appeal because other issues were resolved at closeout.

[5] 44 C.F.R. § 206.206 (2004).

[6] See 44 C.F.R. § 206.206(b) (2004).

[7] 44 C.F.R. § 206.206(c)(1) (2004).

[8] Public Assistance Guide, FEMA 322, at 86 (Oct. 1999).

[9] Id.

[10] Letter from Acting Regional Director, FEMA Region IV, to Director, Florida Division of Emergency Management (Jan. 17, 2006).

[11] Letter from Director, Florida Division of Emergency Management, to Contract and Grant Manager, Okaloosa County (Jan. 30, 2006).

16 Jun 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Clarksville Gas and Water
Disaster Number: 
1909-DR-TN
DSR: 
PW 5374
Date Signed: 
Monday, June 15, 2015
PA ID: 
125-U00B3-00
Summary/Brief: 

Conclusion:  As required by 44 C.F.R. § 206.223(a), the second appeal does not provide the level of information necessary to make a PA eligibility determination regarding the Applicant’s requested work items.  Specifically, the Applicant failed to demonstrate that the requested work was the result of the disaster.

Summary Paragraph

Beginning on April 30, 2010, severe storms, tornadoes, heavy rains, high winds, flooding, and flash flooding affected the City of Clarksville.  As a result, several buildings—collectively known as the Primary Clarifier Complex— within the Applicant’s wastewater treatment plant were inundated with floodwaters.  Project Worksheet (PW) 5374 was prepared to reflect costs to replace or repair damage to the Facility.  Upon review of PW 5374, FEMA determined that the Facility is located within a United States Army Corps of Engineers (USACE) flood easement which held harmless the United States Government from all losses resulting from flood.  As such, FEMA determined that the repair work was ineligible for Public Assistance (PA) funding, and PW 5374 was obligated for zero dollars. In the first appeal letter, the Applicant asserted that the USACE easement did not contain an indemnification provision in favor of the United States, the Cost Estimating Format (CEF) omitted ancillary material and equipment costs and did not fully account for labor costs associated with work performed, and PW 5374 was eligible for additional funding for project management tasks and Direct Administrative Costs (DAC) associated with the Facility’s repair work.  The Regional Administrator (RA) partially granted the first appeal for $22,039.85 for costs disallowed due to a USACE easement, project and construction management costs, and DAC.   The RA denied funding associated with work items excluded from the scope of work in PW 5374 because the appeal’s supporting documentation made no distinction between work already accounted for in the CEF and the specific appealed scope addition or cost increase.  In the second appeal, the Applicant requests $126,029.71 in additional PA funding for excluded work items. 

Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • 44 C.F.R. § 206.223(a).
  • 44 C.F.R. § 206.228.
  • OMB Circular A-87, 2 C.F.R. § 225.

Headnotes

  • The Stafford Act § 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.
  • 44 C.F.R. § 206.223(a) states an eligible item of work must be required as the result of the disaster event.
    • The Applicant’s second appeal does not provide sufficient documentation to demonstrate that the requested work items are the result of the disaster.
Letter: 

06/15/2015

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

Re: Second Appeal – Clarksville Gas and Water, PA ID 125-U00B3-00, FEMA-1909-DR-TN, Project Worksheet (PW) 5374 – Scope of Work

Dear Mr. Purkey:

This is in response to a letter from your office dated July 10, 2014, which transmitted the referenced second appeal on behalf of Clarksville Gas and Water (Applicant).  The Applicant appealed a total of seven PWs; the remaining PWs will be addressed in separate determination letters.  Regarding PW 5374, the Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of an additional $126,029.71 in Public Assistance (PA) funding requested for excluded work items for the Primary Clarifier Complex.

As explained in the enclosed analysis, I have determined the Applicant failed to demonstrate that the requested work items are eligible under the PA Program pursuant to 44 C.F.R. § 206.223.  Therefore, I am denying the 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: Gracia Szczech
     Regional Administrator
     FEMA Region IV

Analysis: 

Background

Beginning on April 30, 2010, severe storms, tornadoes, heavy rains, high winds, flooding, and flash flooding affected the City of Clarksville.  As a result, several buildings—collectively known as the Primary Clarifier Complex (Facility)—within the Clarksville Gas and Water’s (Applicant) wastewater treatment plant were inundated with floodwaters.  Project Worksheet (PW) 5374 was prepared to reflect costs to replace or repair damage to the Facility.  Upon review of PW 5374, FEMA determined that the Facility is located within a United States Army Corps of Engineers (USACE) flood easement which held harmless the United States Government from all losses resulting from flood.  As such, FEMA determined that the repair work was ineligible for Public Assistance (PA) funding, and PW 5374 was obligated for zero dollars.

First Appeal

In its first appeal letter, dated June 24, 2011, the Applicant presented three issues.  First, the Applicant asserted that the USACE easement did not contain an indemnification provision in favor of the United States.  Second, the Applicant asserted that the Cost Estimating Format (CEF) omitted ancillary material and equipment costs and did not fully account for labor costs associated with work performed.  Accordingly, the Applicant requested a revised scope of work and additional PA funding in PW 5374.  Lastly, the Applicant requested additional funding for project management tasks and Direct Administrative Costs (DAC) associated with the Facility’s repair work.

On May 13, 2014, the Region IV Regional Administrator (RA) partially approved the first appeal finding eligible $22,039.85 for costs disallowed due to a USACE easement, project and construction management costs, and DAC.  The RA denied funding associated with work items excluded from the scope of work in PW 5374 because the appeal’s supporting documentation made no distinction between work already accounted for in the CEF and the specific appealed scope addition or cost increase.

Second Appeal

 

Through its June 30, 2014 second appeal, the Applicant requests $126,029.71[1] in additional PA funding for excluded work items.  The Applicant claims $67,029.71 for six days of labor to complete work performed on the Facility that was not captured in the CEF for the original version of PW 5374.  In addition, the Applicant requests $58,997.01 for the repair or replacement of data conduits, data cable installation, data cable terminations, instrumentation installation, instrumentation conduit installation, instrumentation cable installation, and instrumentation cable terminations throughout the Facility.  The Applicant provides four supporting documents to substantiate its request for additional funding. 

Discussion

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.[2]  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, among other things, required as the result of the disaster event.[3]  Typically, FEMA reimburses costs that can be directly tied to the performance of eligible work.[4]  The Applicant must substantiate eligible costs with adequate documentation.[5]

The Applicant submitted four supporting documents related to PW 5374 with its second appeal.  The first, Exhibit 1, is an undated and unsigned bulleted list of uncompleted items.  The second document is the CEF attached to PW 5374 which reflects six days of labor performed by Shermco and Harlan Labor (Contractor).  The third document provides names of laborers, dates they worked, and hours worked.  The Applicant states this document demonstrates the difference between the PW estimate and the actual labor cost.  Finally, the fourth document, Attachment C, lists various electrical components and equipment and their associated costs.  These documents provide greater detail regarding the work items the Applicant wants included in the revised PW scope of work.  However, without a detailed explanation demonstrating where the damage occurred within the Facility and how the work requested addresses damage caused by the disaster, these documents do not sufficiently meet the criteria required by 44 C.F.R. § 206.223 to support PA funding.[6]  Accordingly, FEMA cannot approve an expanded scope of work to include the Applicant’s requested items.

Conclusion

As required by 44 C.F.R. § 206.223(a), the second appeal does not provide the level of information necessary to make PA eligibility determinations regarding the Applicant’s requested work items.  Specifically, the Applicant failed to demonstrate that the requested work was the result of the disaster.  Accordingly, this appeal is denied.

 

[1] In the second appeal, there is a discrepancy in the Applicant’s requested amount.  The Applicant requests a total of $126,029.71 in additional funding.  However, the breakdown of the additional amount adds up to $126,026.72 (67,029.71 + $58,997.01).

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

[3] See 44 C.F.R. § 206.223(a) (2009).

[4] See generally, 44 C.F.R. § 206.228; see also Public Assistance Guide, FEMA 322, at 40 (June 2007).

[5] See OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, OMB CIRCULAR A-87, COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL GOVERNMENTS (2004) (codified at 2 C.F.R. § 225).

[6] On October 7, 2014, FEMA sent a Request for Information (RFI) to the Applicant and Grantee requesting documentation connecting the labor logs provided with the second appeal to specific elements of PW 5374’s scope of work.  FEMA provided examples of acceptable documentation, including but not limited to, a detailed list of all damaged elements beyond what is listed in the PW including documentation of the nature and extent of the damage, a detailed scope of work provided within bid documents; a breakdown of which organization—Allied Technical Services, Shermco Industries, Harlan, and Hazen and Sawyer—was responsible for which parts of the work completed; and documentation of work completed, such as a scope of work with percent-complete by task item.  As of issuance of this appeal response, neither the Applicant nor the Grantee has submitted any documentation in response to the RFI. 

16 Jun 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
City of Southbay
Disaster Number: 
1609-DR-FL
DSR: 
PW 5403
Date Signed: 
Monday, June 15, 2015
PA ID: 
099-67175
Summary/Brief: 

Conclusion:  The City of Southbay’s (Applicant) first appeal was submitted more than 60 days after the final determination regarding costs of PW 5403.  In addition, the Grantee submitted the Applicant’s second appeal after the 60 day regulatory timeframe.  As such, the Applicant’s first and second appeals fail to meet the procedural requirements of 44 C.F.R. § 206.206(c).  Timeliness aside, the Applicant did not provide adequate documentation to justify an additional $16,300.75 in PA funding.

Summary Paragraph

Hurricane Wilma created significant vegetative debris throughout the City of Southbay.  FEMA prepared PW 5403 to reflect debris removal costs.  During closeout, FEMA determined that the Applicant’s documentation did not reflect the costs claimed for all of the debris removal work.  FEMA de-obligated $5,088.02 due to truck certification discrepancies.  In an undated first appeal, the Applicant asserted that it never submitted 24 load tickets related to the debris removal project encompassed in PW 5403 because they were missing at the time of close out.  In addition, the State of Florida (Grantee) asserted that the reimbursement for the uncaptured load tickets was originally undertaken through the interim inspection process, however, the process stalled at a certain point.  The FEMA Region IV Regional Administrator (RA) determined that the Applicant’s request to include additional costs for the missing load tickets was untimely as it was submitted two and a half years after the closeout version was issued.  In the second appeal, the Applicant asserts personnel changes, untrained staff, and internal and external deadlines following Hurricane Wilma led to its failure to submit documentation for unclaimed costs.  Due to these unforeseen consequences, the Applicant requests FEMA re-obligate $5,088.02 in PA funding and amend the closeout version of PW 5403 to include $11,212.73 for the 24 load tickets.  
Authorities and Second Appeals

  • Stafford Act Sections 403 and 407.
  • Stafford Act Section 423.
  • 44 C.F.R. § 206.206.
  • 44 C.F.R. § 206.224.
  • OMB Circular A-87, 2 C.F.R. § 225.

Headnotes

  • Pursuant to the Stafford Act § 423 and 44 C.F.R. § 206.206(c)(1), the Applicant must submit an appeal of a FEMA determination within 60 days of receipt of such determination.
    • FEMA received an undated first appeal for PW 5403 two and a half years after the regulatory timeframe, thus, making the first appeal untimely.
  • Pursuant to 44 C.F.R. § 206.206(c)(2), the Grantee must submit appeals from an Applicant, with a written recommendation, to the RA within 60 days of receipt.
    • The Grantee submitted the Applicant’s second appeal a year after the regulatory timeframe, thus, making the second appeal untimely.
  • OMB Circular A-87 requires procurement costs to be adequately documented.

The Applicant failed to provide adequate documentation demonstrating proper truck certification. 

Letter: 

06/15/2015


Bryan W. Koon
Director
State of Florida Division of Emergency Management
2555 Shumard Oaks Boulevard
Tallahassee, Florida  32399-2100

Re: Second Appeal – City of Southbay, PA ID 099-67175, FEMA-1609-DR-FL, Project Worksheet (PW) 5403 – Time Extension – Appeal

 

Dear Mr. Koon:

This is in response to a letter from your office dated August 22, 2014, which transmitted the referenced second appeal on behalf of the City of Southbay (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $16,300.75 in Public Assistance (PA) funding for debris removal work performed following Hurricane Wilma.

As explained in the enclosed analysis, the appeal was not submitted within the regulatory timelines established in 44 C.F.R. § 206.206.  Additionally, I have determined that the Applicant has not provided adequate documentation to justify the obligation of $16,300.75 in PA funding.  Therefore, I am denying the 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: Garcia Szczech
     Regional Administrator
     FEMA Region IV

Analysis: 

Background

In October 2005, Hurricane Wilma caused heavy rains and powerful winds that generated mixed storm debris throughout the City of Southbay (Applicant).  The Applicant utilized a debris removal contract with Phillips and Jordan, Inc. (Contractor) to remove and dispose of storm debris located on its public rights-of-way.  The Contractor disposed of 12,576.9 cubic yards (CY) of debris following Hurricane Wilma.  FEMA prepared Project Worksheet (PW) 5403 to address the debris-related work.  During closeout, FEMA determined that the Applicant’s documentation did not reflect the costs claimed for all of the debris removal work, and de-obligated $5,088.02 due to truck certification discrepancies.  On September 2, 2010, PW 5403 was obligated for $145,834.78.  The Grantee was notified of FEMA’s final determination in a letter dated September 8, 2010.   

First Appeal

In an undated, unaddressed document proffered as an appeal,[1] the Applicant asserted that “24 load tickets were missing and they never have been submitted for reimbursement to your office.” The Applicant further argued, without substantiating documentation, that the missing load tickets were issued by the “same vendor that was contracted to remove debris in the city.”

The Grantee noted that $5,088.02 was deobligated from PW 5304 in its January 4, 2013 letter forwarding the Applicant’s appeal.  In addition, the Grantee asserted that the Applicant’s 24 load tickets represented eligible work, totaling $11,212.73, that was not captured in PW 5403.  The Grantee contended that the load ticket costs should be added to the closeout version of PW 5403, but did not specify whether the Applicant was appealing FEMA’s determination to de-obligate $5,088.02 from PW 5403.  Finally, the Grantee stated, with no further explanation, that the Applicant’s first appeal was received in a timely manner.  

In the first appeal response dated May 24, 2013, the FEMA Region IV Regional Administrator (RA) found that the closeout version of PW 5403[2] constituted FEMA’s final determination of costs for the project.  As such, the Applicant’s request to include additional costs for the missing load tickets was untimely as it was submitted to FEMA 28 months after the closeout version was issued.  In addition, the RA determined that the de-obligation of $5,088.02 for documentation discrepancies was not germane to the issue presented in the first appeal.  Accordingly, the appeal was denied.

Second Appeal

The Applicant asserts in its second appeal dated July 10, 2013, that personnel changes following Hurricane Wilma led to delays in submitting documentation to FEMA regarding PW 5403, indicating that its staff’s inadequate training and understanding of the process resulted in the documentation not being provided properly.  The Applicant states that internal and external deadlines also led to a rushed process for submitting documentation to FEMA.  Finally, the Applicant states it is not seeking reimbursement of $5,088.00 deobligated during the closeout of PW 5403.

In a letter dated August 22, 2014, the Grantee argues that, while FEMA determined that $5,088.02 in PA funding was ineligible due to documentation discrepancies, it failed to indicate which truck certifications were in question.  The Grantee asserts that the Applicant checked internal records and found no discrepancies.  The Grantee concludes that the Applicant cannot properly respond to FEMA’s determination without additional details regarding the deduction in funding.  Additionally, the Grantee requests FEMA draft a new version of PW 5403 to include costs associated with the 24 load tickets.

Discussion

Appeal Timeliness

Pursuant to the Stafford Act § 423 and 44 C.F.R. § 206.206(c)(1), an eligible Applicant may appeal any determination previously made related to an application for PA funding within 60 days of receiving notice of the action that is being appealed.  In addition, pursuant to 44 C.F.R. § 206.206(c)(2), the Grantee must submit appeals from an Applicant, with a written recommendation, to the Regional Administrator within 60 days of receipt.[3]  Neither the Stafford Act nor its implementing regulations provide FEMA authority to grant time extensions for filing first or second appeals.[4]

The closeout version of PW 5403 was obligated on September 2, 2010.  While the Applicant’s first appeal is undated, the Grantee’s letter transmitting the appeal to FEMA is dated January 4, 2013.  While the Grantee asserted that the Applicant’s first appeal was received in a timely manner, it did not explain why it failed to forward the first appeal to FEMA within the regulatory timelines.  In the first appeal determination, the RA noted that the first appeal was submitted more than two years after the final determination of costs for PW 5403; therefore, the appeal was denied based on timeliness.  Although the Applicant’s second appeal provides an explanation regarding the delay of its first appeal, FEMA does not have the authority to waive or extend the 60 day statutory and regulatory timeframes.  Accordingly, the RA’s first appeal determination regarding timeliness was appropriate.

Regarding the second appeal, the Applicant submitted it within 60 days of receipt of FEMA’s first appeal determination.  However, the Grantee’s letter dated August 22, 2014, seeking clarification of the deobligation, was submitted to FEMA after the regulatory timeframe lapsed.  As such, the Applicant’s second appeal failed to meet the procedural requirements of 44 C.F.R. § 206.206(c)(2) and consequently is denied.  Timeliness aside, as described below, the second appeal also is not meritorious on the substantive issues and would otherwise be denied.  

Allowable Costs

Pursuant to the Stafford Act §§ 403 and 407, FEMA Public Assistance (PA) funding may be available to a state or local government for debris removal if the work is essential to saving lives and protecting property or in the public interest.[5]  Costs associated with debris removal work are eligible for PA funding if the costs are reasonable and necessary to accomplish the work and in compliance with federal and state procurement requirements.[6]  Pursuant to 44 C.F.R. § 13.22, only allowable costs are eligible for Public Assistance funding.  In addition, all allowable procurement costs must be adequately documented.[7]                                                                  

In PW 5403, FEMA determined that the debris removal work was eligible and the contract used to complete the work followed proper procurement standards.  FEMA also determined that the majority of costs claimed in PW 5403 were eligible under the PA Program.  However, during closeout, FEMA found discrepancies with three truck certification forms which caused FEMA to deobligate $5,088.02 in PA funding.  Neither in their first appeal, nor in their second has the Applicant provided adequate documentation regarding the truck certification discrepancies.[8]  Rather, they have only asserted that their process for obtaining reimbursement was stalled due to, among other things, personnel changes.  A truck certification list, including size of hauling bed in cubic yards, license plate number, truck identification number assigned by the owner, and a short physical description of each truck constitutes adequate documentation.[9]  Additionally, regarding the additional 24 load tickets, such items do not, in and of themselves demonstrate the work performed  was compliant with 2 C.F.R. § 225, FEMA 325, and other FEMA policy and guidance.[10]  The Applicant has failed to substantiate that the work associated with the 24 load

tickets, totaling $11,212.73, is eligible.  In addition, it has not explained why the $5,088.22 should be re-obligated.  As such, FEMA cannot reimburse these costs.  

Conclusion

The Applicant’s first appeal was submitted more than 60 days after the final determination regarding costs of PW 5403.  In addition, regarding the second appeal, the Grantee submitted their request for clarification of the deobligation after the 60 day regulatory timeframe.  As such, the Applicant’s first and second appeals failed to meet the procedural requirements of 44 C.F.R. § 206.206(c).  Timeliness aside, the Applicant has not provided adequate documentation to justify re-obligating $5,088.02 in PA funding nor substantiated that funding for the 24 load tickets meets all eligibility requirements.  The second appeal is denied.



[1] Pursuant to 44 C.F.R. § 206.206(a) , an appeal of a FEMA determination must contain documented justification supporting the appellant's position, specifying the monetary figure in dispute, and citing the provisions in Federal law, regulation, or policy with which the appellant believes the initial action was inconsistent.  The statement submitted by the Applicant lacks these three criteria.   

[2] Project Worksheet 5403, City of Southbay, Version 6 (Sep. 2, 2010).

[3] 44 C.F.R. § 206.206(c)(2).

[4] But see Public Assistance Guide, FEMA 322 at 86 (Oct. 1999) [hereinafter PA Guide] (stating, “[t]he State will then prepare a written recommendation on the merits of the appeal and forward that recommendation to FEMA within 60 days of its receipt of the appeal letter or receipt of additional information that it had requested.” (Emphasis added).  However, it is important to note that this language is not found in the Stafford Act or 44 C.F.R., and it only applies to first level appeals.)

[5] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, §§ 403 and 407, 42 U.S.C. §§ 5170b and 5192 (2003); see also 44 C.F.R. § 206.224(a). 

[6] See OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, OMB CIRCULAR A-87, COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL GOVERNMENTS (2004) (codified at 2 C.F.R. § 225), Basic Guidelines, at 8; see also 44 C.F.R. § 13.36.

[7] See OMB Circular A-87, 2 C.F.R. § 225. 

[8] Grantee Second Appeal Letter, City of Southbay, FEMA-1609-DR-FL, at 1 (Aug. 22, 2014) (stating the Applicant is unable to respond to FEMA’s determination regarding truck certification discrepancies because FEMA did not specify which certifications were questioned, and the Applicant found no discrepancies in its records).  However, pursuant to 44 C.F.R. § 206.206(c), the Applicant’s request for clarification should have occurred within 60 days of the final determination. 

[9] Public Assistance Debris Management Guide, FEMA 325, at 109 (April 1999) [hereinafter FEMA 325].

[10] See OMB Circular A-87, 2 C.F.R. § 225; see also FEMA 325 (stating that applicants must maintain and update notarized lists of trucks involved in debris removal operations); see also FEMA Second Appeal Analysis, City of West Miami, FEMA-1602-DR-FL, at 1 (Feb. 18, 2014) (finding that FEMA requires Applicant to substantiate truck certifications through notarized lists).

16 Jun 2015
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
City of Duluth
Disaster Number: 
4069-DR-MN
DSR: 
Multiple PWs
Date Signed: 
Monday, June 15, 2015
PA ID: 
137-17000-00
Summary/Brief: 

Conclusion:  The Applicant’s claimed DAC constituted indirect costs because they were not assigned to specific projects as required by DAP9525.9.  The claimed costs were divided evenly across multiple PWs, pertained to sites subject to multiple PWs, or constituted expenses that did not correspond to any one specific project.  Therefore, funding for DAC is denied. 

Summary Paragraph

Between June 14 and June 21, 2012, severe storms and resulting flooding caused damage to buildings, public works facilities, and equipment owned and operated by the City of Duluth (Applicant).  Dozens of facilities sustained flood-related damage.  The Applicant retained a contractor, Adjusters International, Inc. (AI) to assist with the disaster recovery process.  FEMA, the State of Minnesota Homeland Security and Emergency Management (Grantee), the Applicant, and AI agreed that the direct administrative costs (DAC) incurred would be managed separately from the project formulation process in order to avoid delaying project obligation.  The Applicant provided FEMA with an invoice of the contractor’s claimed costs that included expenses that could not be charged directly to a particular project as required by DAP9525.9,  Section 324 Management Costs and Direct Administrative Costs.  FEMA therefore disallowed those indirect expenses from the amount of DAC claimed by the Applicant.  The Applicant appealed, arguing that the claimed DAC represented work that corresponded to specific projects and that its allocation of the total amount of claimed travel expenses across all sites was a reasonable approach.  The Regional Administrator denied the appeal, explaining that claimed costs that simply were divided evenly across multiple PWs or that applied to a specific flood-damage site that later was subject to multiple PWs constituted indirect costs, and travel expenses supporting all of the Applicant’s PWs are not direct costs.  On second appeal, the Applicant again asserts that the claimed DAC was not divided across multiple PWs and that its costs, including travel expenses, correlate with specific projects.

Authorities and Second Appeals

  • 44 C.F.R. § 207
  • Disaster Assistance Policy DAP9525.9, Section 324 Management Costs and Direct Administrative Costs
  • Memorandum from Elizabeth A. Zimmerman, Assistant Administrator, Disaster Assistance Directorate, to Regional Administrators, Acting Regional Administrators, Transitional Recovery Office Directors, Federal Coordinating Officers, and Disaster Assistance Division Directors (Sept. 8, 2009)
  • Public Assistance Guide, FEMA 322 at 63 (June 2007)

Headnotes

  • Under 44 C.F.R. § 207, grantees and applicants have the opportunity to obtain reimbursement for management costs—indirect costs, administrative expenses, and any other expenses that a grantee or subgrantee reasonably incurs in administering and managing the PA grant that are not directly chargeable to a specific project.
  • Under Disaster Assistance Policy DAP9525.9, Section 324 Management Costs and Direct Administrative Costs, applicants may be reimbursed for direct administrative costs— costs that can be identified separately and assigned to a specific project.
    • The Applicant’s claimed DAC constituted indirect costs because they could not be assigned to specific projects; claimed costs were divided evenly across multiple PWs, pertained to sites subject to multiple PWs, or constituted expenses that did not correspond to any one specific project.
Letter: 

06/15/2015

Joe Kelly
Director
Minnesota Homeland Security and Emergency Management
445 Minnesota Street - Suite 223
Saint Paul, Minnesota  55101-6223

Re: City of Duluth, PA ID 137-17000-00, FEMA-4069-DR-MN, Multiple Project Worksheets (PWs) – Direct Administrative Costs

Dear Mr. Kelly:

This is in response to a letter from your office dated March 27, 2014, which transmitted the referenced second appeal on behalf of the City of Duluth (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) denial of certain claimed direct administrative costs associated with recovery from 2012 flood damage.

As explained in the enclosed analysis, the Applicant retained a contractor to assist in the recovery process, and claimed direct administrative costs (DAC) incurred by the contractor separately from project formulation.   The documentation that Applicant provided FEMA summarizing the contractor’s claimed costs, however, included numerous expenses that could not be charged directly to a particular project in accordance with Disaster Assistance Policy 9525.9, Section 324 Management Costs and Direct Administrative Costs.  FEMA properly disallowed those indirect expenses from the amount of DAC claimed by the Applicant. Therefore, I am denying the 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: Andrew Velasquez III
     Regional Administrator
     FEMA Region V

Analysis: 

Background

Between June 14 and June 21, 2012, severe storms and resulting flooding caused damage to buildings, public works facilities, and equipment owned and operated by the City of Duluth (Applicant).  Dozens of facilities sustained flood-related damage.

On July 6, 2012, the president declared a major disaster for the state (FEMA-4069-DR-MN).  The Applicant retained a consulting firm to assist with the disaster recovery process.  FEMA, the State of Minnesota Homeland Security and Emergency Management (Grantee), and the Applicant agreed that the direct administrative costs (DAC) incurred would be managed separately from the project formulation process in order to avoid delaying project obligation.  An August 30, 2012 concept of operations plan agreed to by the parties memorialized this plan and noted that “[d]etermining the eligibility of DAC[] for an applicant[-]hired contractor… is complicated” because FEMA requires “proper documentation of hours and work, demonstration of the skills and knowledge of the individuals hired, identification of eligible work, and the determination of cost reasonableness.”  The plan explained that by handling DAC separately from project formulation, unnecessary delay could be avoided and proper documentation collected.

The consulting firm discontinued its work for the Applicant while the recovery effort was ongoing.  The Applicant submitted a final invoice dated December 14, 2012, for claimed direct administrative costs incurred by the consulting firm.  The Applicant claimed a total of $297,276.22 in DAC.  On March 14, 2013, FEMA informed the Grantee that $270,341.11 of the claimed amount was not eligible for reimbursement as DAC.  FEMA explained that it removed over 80 indirect tasks that had their costs evenly divided across multiple PWs. FEMA also removed tasks not tied to a specific PW, together with travel expenses allocated to every task on every PW in proportion to the hours worked. 

First Appeal

The Applicant submitted a first appeal to the Grantee in a letter dated May 15, 2013.  As to costs determined ineligible as DAC, the Applicant asserted that its claimed DAC “was not randomly divided among PWs” but, instead, was incurred by the consulting firm on numerous sites on any given day and that submitted invoice costs represented actual time worked on tasks specifically tied to PWs on the specified day.  The Applicant also stated that, prior to the firm’s departure during the recovery process (at a point where PWs had not been written and damaged sites were referenced by flood damage site numbers), the Applicant did not know which sites related to specific PWs.  The Applicant asserted that, in many cases, PWs were written after the DAC in question was incurred, and the Applicant later added PW numbers in place of flood damage site numbers on the firm’s summary invoice.  As to the expense costs, the Applicant asserted that firm travel expenses “were allocated to all work performed, whether eligible or ineligible, based upon total hours incurred,” and that allocating the total amount of expenses across all sites was a reasonable approach, given that such expenses would be expected from an out-of-state contractor.

The Grantee transmitted the first appeal to FEMA Region V in a letter dated June 12, 2013.  The Grantee stated that it supported “only the Direct Administrative Costs as applied to each specific project worksheet” and that it had stressed to the consulting firm that it review every project worksheet at closeout and that eligible reimbursable costs (including DAC) must be documented specifically to each PW.

On September 3, 2013, while reviewing the first appeal, FEMA Region V submitted a request for information (RFI) to the Grantee seeking (1) information that clearly correlated claimed DAC and specific PWs, and (2) the total dollar amount in dispute.  The Applicant responded to the RFI on September 20, 2013, providing a revised claimed DAC invoice summary that eliminated costs associated with ineligible flood damage sites and identified specific PWs for each listed task, and stating that it was seeking $103,097.07 in denied claimed DAC across 113 PWs.

On December 20, 2013, the Regional Administrator (RA) issued a response denying the first appeal.  As to costs deemed ineligible because they were divided evenly across multiple PWs, the RA reiterated that the Applicant’s claimed DAC were ineligible because they were not incurred for specific PWs.  The RA noted that the firm’s summary invoice divided hours and costs worked on a single task for multiple PWs evenly across multiple PWs.  As an example, it was noted that on the original summary invoice, the firm indicated that it spent .02 hours on a task described as “City project listing update” for 225 PWs.  The RA reasonably concluded that the firm simply divided the total time spent on “City project listing update” across those PWs, rather than actually spending exactly 1.2 minutes on that task on each of the 225 PWs.  According to the Regional Administrator, the even division across multiple PWs indicated that an actual cost on each PW was unknown.

The RA also reiterated that for claimed DAC related to a specific flood-damaged site that later was subject to multiple PWs, tasks associated with the site could not be correlated to any one PW.  As an example, the RA pointed to the Applicant’s zoo: the zoo was designated as one flood damage site, but it sustained damage and was the subject of recovery work on multiple elements, such as bridges, animal enclosures, buildings, roads, and footpaths.  Zoo-related work was subject to multiple PWs; therefore, entries on the consulting firm invoice summary assigned to the zoo as a single flood damage site could not be tied to any specific PW written to address a specific portion of zoo-related work.  The RA further explained that the revised invoice submitted in response to the RFI simply assigned all zoo-related tasks to a single zoo-related PW (PW 854, addressing repairs to a dry stack retaining wall)—including unrelated tasks associated with animal enclosures and the preparation of improved project requests.  Thus, the RA found the allocation was not done based on DAC actually associated with the PW.

As to travel expenses, the RA explained that general travel expenses were allocated to every task for all PWs in proportion to the hours worked on the task and, therefore, those expenses could not be considered direct costs because they did not pertain to a specific project.  Under FEMA policy, the RA noted that travel and expense tasks related to general support and not tied directly to one specific project are considered indirect costs.  The RA found that FEMA had determined eligible as direct costs those travel expenses in the invoice that were directly related to a specific PW (for example, mileage for driving to a site visit).

Second Appeal

The Applicant submitted a second appeal in a letter dated March 6, 2014.  The Applicant stresses that PWs were prepared after the consulting firm had stopped its work and asserts that there is no guidance governing standards for documentation of costs where the documentation relates to activities prior to the formulation of PWs.

Specifically as to indirect costs, the Applicant asserts that references to DAC being related to a “specific project” in the FEMA policy governing management costs and DAC should not be conflated with references to a specific “PW.”  The Applicant argues that invoices and supporting documentation it provided offer enough information to track costs to single sites and that its costs were directly charged to a specific site or project.  The Applicant asserts that the claimed DAC has been properly documented, can be tracked to specific projects, and that the preparation of PWs after the work had been completed “created an appearance, not a reality, that some of its charges were indirect.”

As to travel expenses, the Applicant points to FEMA policy stating that travel and per diem costs are eligible as direct costs if they can be “attributed” to individual projects.  The Applicant asserts that, under accounting principles, “attribution is a function of allocation,” and that it reasonably allocated its travel costs to individual projects.  The Applicant states it “first allocates all expenses that can be directly allocated to a particular job to that job,” and remaining expenses are attributed based on time charged to all jobs within an expense reporting period.” Expenses for each job are allocated “based on the relative portion of direct and indirect hours incurred by all individuals providing services for that job.”

The Grantee transmitted the second appeal to the FEMA Region V RA in a letter dated March 27, 2014.  The Grantee again supports reimbursement of DAC applicable to each specific PW.

Discussion

Under the Public Assistance (PA) program, applicants for assistance have the opportunity to recover costs they incur to manage and administer PA grants they receive.  Under FEMA regulations, “indirect costs” are those a grantee or subgrantee incurs “for a common or joint purpose benefiting more than one cost objective that are not readily assignable to the cost objectives specifically benefited.”[1]  The regulations provide that “management costs” are “any indirect costs, administrative expenses, and any other expenses not directly chargeable to a specific project that are reasonably incurred by a grantee or subgrantee in administering and managing a PA or HMGP grant award.”[2]   Under the management cost regulations, “[a]ctivities and costs that can be directly charged to a project with proper documentation are not eligible for funding under this part.”[3]

However, FEMA policy affords PA applicants the ability to obtain reimbursement for such expenses as “Direct Administrative Costs,”—“costs incurred by the grantee or subgrantee that can be identified separately and assigned to a specific project.”[4] Under Disaster Assistance Policy (DAP) 9525.9, Section 324 Management Costs and Direct Administrative Costs, DAC “include costs that can be tracked, charged, and accounted for directly to a specific project, such as staff time to complete field inspection and preparation of a PW.”[5]  DAC “are limited to actual reasonable costs incurred for a specific project” and are “considered project costs.”[6]  The policy notes that DAC ‘are cost-shared at the prevailing cost-share rate for the [major disaster] or [emergency] declaration” because “they are part of a specific project.”[7]  When an applicant seeks reimbursement for DAC, the policy instructs that specified text be added to the appropriate PW’s scope of work and that a certain line item cost code be included in the PW’s project cost.[8]  Final payment of DAC for large projects is based on actual costs incurred, while final payment of DAC on small projects is paid upon approval.[9]

Additional FEMA Recovery Directorate guidance on implementing DAP 9525.9, provides a non-exhaustive list of PA administrative activities.[10]  This guidance notes that all the listed activities are eligible for reimbursement with section 324 Management Cost funding, and those marked as “Direct” may be “directly charged to projects [as DAC] if they can be fully documented as such.”[11]  Descriptions of all of the activities marked as “Direct” note that they must pertain to “one specific project.”[12]

Applying this regulatory and policy framework to the claimed DAC sought by the Applicant here, it is clear that these costs cannot be reimbursed as direct costs.  As mentioned, in order for direct costs to be eligible for reimbursement as DAC, the costs must be able to be identified and assigned to a specific project. If the costs cannot be assigned to a specific project, they will be considered indirect and eligible as management costs, subject to the Grantee’s approach under its state administrative plan for passing through such costs to applicants.

In determining what requested DAC was eligible for reimbursement, FEMA regional personnel performed a detailed review of the consulting firm’s invoice provided by the Applicant.  As noted in the first appeal response, the invoice revealed numerous costs reflecting work performed on multiple sites or single sites subject to multiple PWs and, thus, those costs could not be “identified separately and assigned to a specific project” and were not costs “incurred for a specific project” as required by DAP 9525.9.  FEMA personnel reviewed each task entry and removed those reflecting indirect costs, including costs for the same task allocated in equal fractions of time across multiple sites.  For example, the invoice included approximately five and a half hours of a task described as “Proj List Devel – Data Collect & Dissemination” with the accompanying comment, “Accumulation of data for specific sites from utility data for submission of data to FEMA.”  These hours were divided across 129 sites, with .04 of the task’s hours assigned to each site.  On second appeal, the invoice summary provided by the Applicant contains the same deficiencies.  For example, under the same task, “Proj List Devel – Data Collect & Dissemination,” with the accompanying comment, “Extracting data for each site from city documents,” are allocated .10 hours across numerous PWs.  Because this work was not performed for any specific PW, the associated costs are indirect and not reimbursable as DAC.  The RA correctly determined that such costs could not be reimbursed as DAC.

As to the requested travel expenses, FEMA reimbursed those expenses that could be tied to specific projects, such as site-visit expenses.  Expenses allocated to every task for all PWs in proportion to the hours worked on the task are not eligible as DAC.  Under FEMA policy, travel and related expenses are eligible as DAC during the project listing development, project formulation, PW processing, and PW management and closeout phases if they “relate to one specific project for any of the direct administrative activities” in the respective phase.[13]  Travel expenses “related to general support and not tied directly to one specific project,” however, are not eligible as DAC and, instead, may be eligible as indirect costs.[14]  The Applicant’s description of how it submitted travel costs—allocating non-direct expenses for an individual “charged to all jobs” based on hours incurred all individuals providing the same services—clearly demonstrates that these expenses are not eligible as DAC.

As to the Applicant’s comments regarding after-the fact preparation of PWs, there is no merit to the argument that a PW cannot be prepared after a project is completed.  DAP 9525.9 recognizes that a project may be completed when a PW is written and that eligible DAC can be included in the PW.[15]  The Applicant’s assertion that DAP9525.9 does not tie DAC eligibility to specific PWs also is incorrect.  To the contrary, DAP9525.9, stresses that, in order to be eligible as DAC, requested costs must be chargeable to specific projects and specific PWs.[16]

Conclusion

To be eligible for reimbursement, claimed DAC must be able to be charged directly to a PW.  Based on FEMA’s review, the $103,097.07 in claimed DAC sought by the Applicant are not charged as such.  Therefore, they constitute indirect costs not eligible for reimbursement as DAC.

[1]  See 44 C.F.R. § 207.2 (2012).

[2]  See id.

[3]  See 44 C.F.R. § 207.6(c) (2012).

[4]  Disaster Assistance Policy (DAP) 9525.9, Section 324 Management Costs and Direct Administrative Costs at 2 (Mar. 12, 2008)

[5]  Id. at 6.

[6]  Id.

[7]  Id.; see also Public Assistance Guide, FEMA 322 at 63 (June 2007) (“[D]irect costs of managing specific projects that are completed using Public Assistance funds … are eligible as part of the grant for each project, as long as they can be specifically identified and justified as necessary to do the work.”).

[8]  See DAP 9525.9, at 7.

[9]  Id. at 7.

[10] See Memorandum from Assistant Administrator, Disaster Assistance Directorate, to Regional Administrators, Acting Regional Administrators, Transitional Recovery Office Directors, Federal Coordinating Officers, and Disaster Assistance Division Directors (Sept. 8, 2009) [hereinafter Memorandum from Assistant Administrator].

[11] Id.

[12] See attachment to Memorandum from Assistant Administrator, Public Assistance Program Indirect and Direct Administrative Activity List.

[13] See attachment to Memorandum from Assistant Administrator, Public Assistance Program Indirect and Direct Administrative Activity List.

[14]  Id.

[15] See DAP 9525.9, Section 324 Management Costs and Direct Administrative Costs at 6.  (“If a project is completed when the PW is prepared, actual direct administrative costs … will be included in the PW for the subgrantee”).

[16]  See, e.g., DAP 9525.9, Section 324 Management Costs and Direct Administrative Costs at 6 (providing as an example that costs for preparation of a PW are eligible DAC); id. at 7 (instructing what language to include in a PW when an applicant seeks DAC reimbursement).