Fema Situation Updates

9 Jul 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Ulster County Department of Public Works
Disaster Number: 
4020-DR-NY
DSR: 
3629
Date Signed: 
Monday, July 7, 2014
PA ID: 
111-99111-02
Summary/Brief: 

Conclusion:  On second appeal, the Ulster County Department of Public Works (Applicant) submitted sufficient documentation to demonstrate that the scope of work in PW 3629 does not fully address the work required to restore its culvert to pre-disaster design, function, and capacity. Accordingly, FEMA authorizes a change to the scope of work and is remanding the appeal to Region II to determine eligible costs associated with the work and to reconsider the HMP.

Summary Paragraph

Hurricane Irene caused major damage to the Applicant’s culvert and the road supported by the culvert.  In order to restore the culvert to its pre-disaster condition, the Applicant requested funding to excavate, remove and replace panels of the culvert.  The Applicant also submitted a Hazard Mitigation Proposal (HMP) that proposed excavating and removing the multi-plate steel arch culvert, creating and stabilizing abutments using sheet piling and fill, installing beam seats and precast concrete bridge decking, and installing box guardrails in lieu of W-panel guardrails.  In PW 3629, FEMA allocated $36,695.59 to repair the culvert.  However, FEMA determined that the HMP, as written for $61,152.73, was ineligible because the mitigation was 168 percent of the total eligible cost.  In its first appeal, the Applicant asserted that FEMA did not draft the scope of work in PW 3629 to accurately reflect the work necessary to repair its custom made culvert which requires considerable effort to attach and assemble the individual pieces of the culvert before it can function properly.  The FEMA Region II Acting Regional Administrator (RA) denied the first appeal because she determined that the Applicant needed to request a net small project overrun because PW 3629 was a small project.  In addition, she determined that the HMP exceeded 100 percent of the project cost and was not cost effective.  In the second appeal, the Applicant, again, asserts that the scope of work was not written to properly address the work necessary to repair its culvert.

Authorities

  • Stafford Act § 406, 42 U.S.C. § 5170b.
  • 44 C.F.R. § 206.202(d)(1)(i).
  • 44 C.F.R. § 206.226(e).
  • PA Guide, at 95, 101, and 109.
  • Recovery Policy 9526.1, Hazard Mitigation Funding Under Section 406 (Stafford Act) (Mar. 30, 2010).

Headnotes

  • 44 C.F.R. § 206.202(d)(1)(i) provides that the Project Worksheet must identify the eligible scope of work and must include a quantitative estimate for the eligible work.
    • The PW explains the disaster-related damage in the Damage Description and Dimensions section and necessary repair work in the Scope of Work section.
  • The PA Guide states that regarding small projects, if there are omissions or changes in scope, FEMA may revise an initial PW, which may result in changes in funding level and/or category.
    • The scope of work in PW 3629 does not demonstrate the necessary repair work to restore the Applicant’s culvert to pre-disaster condition, and should be revised
  • 44 C.F.R. § 206.226(e) authorizes FEMA to fund additional measures that will enhance a facility’s ability to resist similar damage in future events.
  • RP 9526.1 states mitigation measures that replace, realign, or relocate culverts are predetermined to be cost effective if they do not exceed 100 percent of project cost.
    • The Applicant submitted a HMP with PW 3629 to mitigate future damage to the culvert.
    • The Acting RA determined the HMP to not be cost effective because it exceeded 100 percent of the project cost.
    • HMP should be re-evaluated once the scope of work and cost are revised.


 

Letter: 

July 7, 2014

William R. Davis, Jr.
Acting Director
New York Office of Emergency Management
1220 Washington Avenue
Building 22, Suite 101
Albany, New York 12226

Re: Second Appeal – Ulster County Department of Public Works, PA ID 111-99111-02, Scope of Work, FEMA-4020-DR-NY, Project Worksheet (PW) 3629

Dear Mr. Feeney:

This is in response to a letter dated January 10, 2014, from the New York State Division of Homeland Security and Emergency Services, which transmitted the referenced second appeal on behalf of Ulster County Department of Public Works (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) determination regarding the scope of work in PW 3629.

As explained in the enclosed analysis, I have determined that the scope of work in PW 3629 does not accurately reflect the work required to repair the Applicant’s culvert.  Therefore, I am approving the appeal with respect to the change in the scope of work.  In addition, I am remanding the appeal to FEMA Region II to develop an appropriate scope of work, determine eligible costs, and reconsider the Hazard Mitigation Proposal (HMP) in light of the change in scope of work.  By copy of this letter, I am requesting the Regional Administrator take appropriate action to implement this determination.  In accordance with 44 CFR §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 and reconsidering the HMP.

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, Hurricane Irene caused substantial rainfall in Ulster County, New York.The storm caused a section of the shoulder and paved surface over a multi-plate steel arch culvert on County Road 24 to washout, leaving an undermined traffic lane, and the loss of the roadside guardrail.The road is owned and maintained by Ulster County through the Ulster County Department of Public Works (Applicant) and is not designated as a federal aid road.

In order to restore the road and culvert to their pre-disaster condition, the Applicant requested funding to repave and fill in the road, install a guardrail, and excavate, remove and replace panels of the culvert.The Applicant also submitted a Hazard Mitigation Proposal (HMP) that proposed excavating and removing the multi-plate steel arch culvert, creating and stabilizing abutments using sheet piling and fill, installing beam seats and precast concrete bridge decking, and installing box guardrails in lieu of W-panel guardrails.

In Project Worksheet (PW) 3629, FEMA allocated $36,695.59 to repair the culvert, fill and repave the road, and replace the guardrail.  The estimated cost for the proposed hazard mitigation was $61,152.73.  FEMA determined that the HMP, as written, was ineligible because the mitigation was 168 percent of the total eligible cost.  The PW noted that there was no history of damage to the site, which would be information relevant to a Benefit Cost Analysis (BCA).

First Appeal

In a first appeal letter submitted July 20, 2012, the Applicant asserted that the road and culvert experienced the same type of damage as the facilities referenced in two other PWs,[1] obligated by FEMA, in response to Hurricane Irene.  The Applicant also asserted that its policy was to replace this type of structure with sheet piling abutments and precast concrete decks because it can withstand backfill erosion without any damage to the superstructure.

The FEMA Region II Acting Regional Administrator (RA) denied the first appeal on July 23, 2013.  Pursuant to FEMA policy, the Acting RA determined that the Applicant would need to request a net small project overrun for any additional FEMA funding because the work to repair the culvert was determined to be a small project.[2]  In addition, the Acting RA determined that the original PW was consistent with PA regulations and policy because FEMA policy allows for mitigation measures that do not exceed 100 percent of the cost of the eligible repair work on the project.  At the Applicant’s request, the Acting RA subtracted $7,500 from the HMP cost estimate because the item of work was not necessary for the repair of the culvert.  Accordingly, the Acting RA determined that the original PW was for $36,695.59 and the revised HMP cost estimate was $53,652.73, making the HMP cost estimate 146.21 percent of the total eligible cost. 

Second Appeal

In a second appeal letter, dated October 18, 2013, the Applicant again asserts that PW 3629 was not written properly and should have been written in the same manner as the two other PWs, referenced above, because all three PWs involve the same type of damage.  In a memorandum, dated December 23, 2013, the Grantee makes several assertions regarding this appeal.  The Grantee asserts that, unlike conventional corrugated metal pipe installations, the pipe-arch requires considerable effort to attach and assemble the individual pieces before it can function as an integral unit and is capable of supporting the design load.  In addition, the Grantee states that the Applicant objected to the way the scope of work was written, but was told that there was no time to change the PW.   Finally, the Grantee states that new documentation demonstrates that the project referenced in PW 3629 is a large project, and the cost for the project should be considered individually.

Discussion

Scope of Work

Pursuant to Section 406 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), FEMA Public Assistance funding may be provided to a state or local government for the repair, restoration, and replacement of damaged or destroyed facilities under a major disaster.[3]  The PW explains the disaster-related damage in the Damage Description and Dimensions section and necessary repair work in the Scope of Work section.[4]  The scope of work must include the necessary repair work that corresponds directly to the cause of damage in quantifiable and descriptive terms.[5]  Other information documented in the scope of work includes, but is not limited to, eligible codes and standards; evidence of pre-disaster damage; pre-disaster inspection reports noting deficiencies; ineligible work, maintenance, or ineligible facilities; reference to a HMP; and any special equipment or construction approaches.[6]   Regarding small projects, if there are omissions or changes in scope, FEMA may revise an initial PW, which may result in changes in funding level and/or category.[7]  A change to the scope of work does not require the Applicant to appeal for a net small project overrun.[8]       

The Applicant has consistently stated that the original scope of work in PW 3629 does not accurately and completely address the repair work necessary to restore its culvert to pre-disaster condition.  The Grantee asserts that the Applicant’s culverts are custom made, and repair of these culverts differs from the standard repair of typical culverts.  With its second appeal, the Applicant submitted a document entitled, Repair and Replacement of Ulster County Box Culverts, and plans and cost estimates reflective of the work associated with the repair of the Applicant’s culverts.[9]  In addition, the Applicant provided a Project Description for the replacement of the culvert in 2010.[10]  Analyzed together, these documents purport to demonstrate the additional work that is needed to repair the culvert, including excavating the culvert, taking it to a separate location, repairing it by hand, and reinstalling the culvert. 

Upon considering the second appeal, a FEMA civil engineer reviewed the documents and plans submitted by the Applicant.  Based upon that review, it was determined that the original scope of work in PW 3629 does not fully address the repairs needed to restore the culvert to pre-disaster design, function, and capacity.  In short, the Applicant’s assertions regarding repair of the culvert and the need to revise the scope of work to reflect the additional work to repair the culvert to its pre-disaster condition are reasonable.  However, based on available information, the civil engineer was unable to determine the reasonableness of the Applicant’s cost estimates for labor and equipment to repair the culvert. 

Hazard Mitigation

Pursuant to Title 44 of the Code of Federal Regulations (C.F.R.) § 206.226, Restoration of damaged facilities, FEMA is authorized to fund additional measures that will enhance a facility’s ability to resist similar damage in future events.[11]  Mitigation measures that replace, realign, or relocate culverts are pre-determined to be cost effective if they: 1) do not exceed 100 percent of project cost, 2) are appropriate to the disaster damage, 3) will prevent similar damage, 4) are directly related to the eligible damaged elements, 5) do not increase risks or cause adverse effects on property elsewhere, and 6) are not otherwise prohibited by FEMA regulations or policy.[12]

During the formulation of PW 3629, the Applicant submitted an HMP to replace the culvert with sheet pile abutments and a precast concrete superstructure.  In both PW 3629 and the first appeal determination, FEMA determined that the mitigation measures were not cost effective, as they exceeded 100 percent of the project cost.  Based on the revision to the scope of work of PW 3629, it is likely the cost associated with the revised scope of work will also change.  Accordingly, the HMP must be reconsidered in light of the changes to PW 3629, as it may no longer exceed 100 percent of the project cost.

Conclusion

The Applicant provided sufficient documentation to demonstrate that a change in the scope of work of PW 3629 is warranted.  Accordingly, Region II must develop an appropriate scope of work to fully address the work necessary to restore the culvert to pre-disaster condition, determine eligible costs associated with repair of the culvert, and, based on the revised scope, reconsider the HMP submitted by the Applicant.  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 and reconsidering the HMP.


[1] See Project Worksheet 4103, Ulster County Department of Public Works, Version 0 (June 14, 2012); see also Project Worksheet 5276, Ulster County Department of Public Works, Version 1 (Sept. 19, 2013).

[2] The Acting RA cited to the Public Assistance Guide, FEMA 322 at 113 (June 2007) [hereinafter PA Guide] in her discussion of requests for net small project overruns.

[3] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988 § 406, 42 U.S.C. § 5170b (2007). 

[4] See 44 C.F.R. § 206.202(d)(1)(i) (2011).

[5] PA Guide, at 101.

[6] Id.

[7] Id. at 95.

[8] Id. at 109 (noting a request for a net cost overrun concerns additional funding for small projects, but not mentioning changes to the scope of work).

[9] See Second Appeal, Ulster County Public Works Department, PA ID 111-99111-02, FEMA-4020-DR-NY, at Appendices B and D (Oct. 18, 2013).  

[10] Id. at Appendix D (stating the replacement of the culvert would include excavation in or around the stream, installation of two cofferdams, removal of the existing culvert pipes, installation of a corrugated aluminum box culvert, installation of corrugated aluminum headwalls, backfill with suitable well graded material, and removal of the cofferdams).

[11] 44 C.F.R. § 206.226(e).

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

 

 

3 Jul 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
University of Iowa
Disaster Number: 
1763-DR-IA
DSR: 
3702
Date Signed: 
Tuesday, June 24, 2014
PA ID: 
103-03027-00
Summary/Brief: 

Conclusion: The building contents are eligible for funding because they are necessary to make the temporary facility functional.  The parking lot repair is maintenance and such repairs are not eligible for funding.  Although the additional plumbing work was outside of the scope of the work of the contract, if it is eligible under the Public Assistance program, FEMA may fund reasonable costs for the work. 

Summary Paragraph

From May 25 through August 13, 2008, severe storms caused flooding at two buildings on the University of Iowa (Applicant) campus.   The Applicant had to lease a temporary facility while it completed the repairs to the two buildings.  The Applicant made improvements to the leased facility and purchased items for art instruction.  The Applicant submitted a request for cost overruns.  FEMA found some items related to the improvements ineligible, indicating that certain costs were related to maintenance, captured on more than one invoice, and costs that are normally considered part of general contractor overhead and profit.  The Applicant submitted a first appeal for some of the funding found ineligible, and the FEMA Region VII Regional Administrator partially approved the first appeal.  In its second appeal, the Applicant argues that costs associated with three items should be found eligible: (1) building contents; (2) parking lot repair; and (3) additional plumbing contract work.

Authorities and Second Appeals

  • 44 C.F.R. §13.43(a)(3).
  • OMB Circular A-87, 2 C.F.R. § 225.
  • DAP 9523.3, Provision of Temporary Relocation Facilities at 2-5.

Headnotes

  • Disaster Assistance Policy 9523.3, Provision of Temporary Relocation Facilities states that reasonable alterations of the temporary facility are allowable costs, if they are required to make the space functional and meet the pre-disaster needs of the applicant; and FEMA will not fund utilities (power, water, heat, etc.), maintenance, or operating costs at temporary facilities.
    • The building contents were necessary to make the facility functional.
    • The parking lot repair was maintenance and is ineligible. 
  • 44 C.F.R. §13.43(a)(3) and OMB Circular A-87 allow FEMA to look at the reasonableness of costs and make an eligibility determination even when an applicant fails to follow procurement procedures.
    • With regard to the additional plumbing work, although the additional work was outside of the scope of the work of the contract, if the work itself is eligible under the Public Assistance program, FEMA can fund reasonable costs for the work.


 

Letter: 

June 24, 2014

Mark Schouten
Administrator
Iowa Homeland Security and Emergency Management Division
7105 NW 70th Avenue
Camp Dodge, Bldg. W-4
Johnston, Iowa 50131-1824

Re: Second Appeal – University of Iowa, PA ID 103-03027-00, FEMA-1763-DR-IA, Project Worksheet (PW) 3702 – Reasonable Costs     

Dear Mr. Schouten:

This is in response your letter dated July 23, 2013, which transmitted the referenced second appeal on behalf of University of Iowa (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of its request for $201,233.16 for cost overruns for establishing a temporary facility.

As explained in the enclosed analysis, I have determined that the building contents for an amount of $26,795.56 and at least a portion of the additional plumbing work, up to $141,607.60, are eligible for reimbursement because the items were necessary to make the temporary facility functional.  At project closeout, the Applicant must submit documentation with regard to the eligibility of the additional plumbing work that demonstrates:

  • The work was necessary to make the facility functional, and
  • The cost to do so was reasonable.

The parking lot repair is considered maintenance and is ineligible for funding.  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:  Beth Freeman
      Regional Administrator
      FEMA Region VII

Analysis: 

Background

From May 25 through August 13, 2008, severe storms caused flooding to Art Building East and Art Building West, two buildings on the University of Iowa (Applicant) campus.  The flood waters inundated the two buildings to a depth of 10 feet, damaging walls, flooring, ceilings and building contents.  After the flooding, the buildings could not be occupied until repairs were made.  As an emergency measure to continue essential educational activities, the Applicant leased a temporary facility from a retail store and, in the lease, agreed that it would pay the building’s owner to make improvements to the facility to accommodate art studio classrooms.  In October 2008, FEMA obligated Project Worksheet (PW) 3702 for $57,500 to lease the facility for six months and $2,000,000 to complete leasehold improvements.  FEMA obligated additional funding to cover several extensions to the lease.  The Applicant performed the leasehold improvements for $5,889,269.60 and submitted a request for $3,889,269.60 in additional funding for cost overruns.  On February 8, 2012, FEMA obligated Version 5 of PW 3702, finding $663,914.69 for leasehold improvements to be ineligible, indicating that certain costs were related to maintenance, captured on more than one invoice, and costs that are normally considered part of general contractor overhead and profit.    

First Appeal

In a first appeal letter submitted April 16, 2012, the Applicant agreed that some costs are ineligible but challenged FEMA’s determination regarding $405,164.44.  The Applicant argued that these costs were either direct expenses incurred by the contractor or expenses generally related to construction.  The Applicant provided its lease agreement, an affidavit, and other documents in support of its appeal. 

The FEMA Region VII Regional Administrator (RA) partially granted the first appeal on March 19, 2013.  The RA determined that the building’s owner sold the property to a general contractor after a “cost plus structure” contract was signed, and that the same general contractor did not follow the bid process stipulated in the lease agreement because there was no evidence of competitive bidding.  The RA indicated, that as a result of the sale, FEMA, in the initial analysis of the cost overrun, questioned items that exceeded the bid contract and determined those items ineligible.  As it relates to the Applicant’s request for costs associated with replacing certain building contents[1], the RA determined that those purchases were not required for the leasehold improvements but were to replace those contents/supplies lost at the damaged facilities.  As such, the RA indicated that those costs should be presented at project closeout for building contents project worksheets for the damaged facilities.  With regard to parking lot repairs, the RA determined that a parking lot repair made on November 18, 2008 was eligible but a repair made in July 2009 was not.  The RA considered the latter repair to be routine maintenance.  The RA also found that the Applicant’s request for costs associated with additional plumbing contract work were ineligible because the additional work was not agreed upon in the original contract and was not competitively bid in accordance with lease contract terms.[2]  Based on documentation provided with the appeal, the RA found $171,154.05 eligible and obligated funding in that amount; the RA found $234,010.39 ineligible.

Second Appeal

The Applicant maintains in a second appeal letter dated May 24, 2013, that it is entitled to reimbursement for three costs found ineligible on first appeal: (1) building contents; (2) parking lot repairs; and (3) contractor plumbing expenses.  The Applicant asserts that it purchased the building contents for use in the temporary facility not as permanent replacement items for those lost in the flooded buildings.  As such, the Applicant states that these contents were necessary to make the temporary facility functional and requests $26,812.65 in reimbursement.  Further, the Applicant asserts that the parking lot repair ($32,830) was not maintenance, as the RA concluded, but an essential repair to enable bus service to continue at the temporary facility.  The Applicant stated that the first two parking lot repairs, which FEMA found eligible, were to repair pavement damage and that the most recent repair involved removing and replacing pavement, which would allow the parking lot to handle the new weight and traffic volume at the temporary facility.  The Applicant also states that the contracted plumbing work was necessary to make the temporary facility functional and operational.  The Applicant attached the plumbing invoices, totaling $141,607.60, and a plumbing plan outlining the work.   

Discussion

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) Section 403 authorizes FEMA to “provide assistance essential to meeting immediate threats to life and property resulting from a major disaster” and allows for temporary facilities for schools, which includes higher education facilities.[3]  Disaster Assistance Policy DAP9523.3 Provision of Temporary Relocation Facilities, which was in effect at the time of the disaster, states that the capacity of the temporary facility must be comparable to the pre-disaster capacity of the facility that housed the displaced services.[4]  The policy also indicates that FEMA will not fund certain costs associated with temporary facilities, including utilities (power, water, heat, etc.), maintenance, or operating costs, nor will FEMA fund the differential should these costs increase.[5]  FEMA considers reasonable alterations of the temporary facility to be eligible work if they are required to make the space functional and meet the pre-disaster needs of the applicant.[6]  

Building Contents

In accordance with DAP9523.3 § (F)(1), relocation costs are costs associated with the transfer of the eligible pre-disaster service and costs for rent, purchase or construction of the temporary facility itself.  One allowable cost is reasonable alterations of the temporary facility that are required to make the space functional and meet the pre-disaster needs of the applicant.[7]  While the Applicant may have to permanently replace these same items in the two damaged art buildings, these items were also necessary to make the temporary facility functional for art instruction and the cost of the items ($26,795.56) [8]is eligible for reimbursement.  After the temporary facility closes, the Applicant must follow Disaster Assistance Policy DAP9525.12 Disposition of Equipment, Supplies and Salvageable Materials to dispose of equipment and residual unused supplies and, if required, compensate FEMA with the fair market value of the cost of the items no longer being used at the temporary facility.   

Parking Lot Repair

The lease between the Applicant and the building owner lists “repair and resurfacing of the existing parking lot” as one of the leasehold improvements for the temporary facility.  FEMA provided funding for two parking lot repairs: one in August 2008 consisting of temporary repairs and the second in November of 2008 to cover 4660 square feet of the parking lot with eight inches of asphalt.  The third repair, which is the subject of this appeal, occurred in July 2009 and consisted of placing rocks in a trench and patching two parts of the parking lot.  Due to the nature of the repair, FEMA finds that this repair was maintenance and not a full resurfacing of the parking lot.  Pursuant to DAP9523.3, FEMA does not fund maintenance at temporary facilities.   Since this third repair is maintenance, the work is not eligible for public assistance funding.

Contract Plumbing Work

The RA determined that the Applicant did not comply with competitive bidding regulations found in Title 44 Code of Federal Regulations (CFR) §13.36(c); the Applicant did not provide a reason or explanation for noncompliance.  44 CFR §13.43(a)(3) states that when an applicant for federal funding fails to comply with procurement procedures, FEMA may “wholly or partly suspend or terminate the current award.”  The Public Assistance Guide explains that FEMA implements this provision by evaluating project costs to determine reasonableness, and FEMA may reimburse reasonable costs for eligible work.[9]  In accordance with OMB Circular A-87, FEMA evaluates reasonable costs based on the standard “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.”[10]  Upon review of the invoices the Applicant provided with its second appeal, it appears as though at least a portion of the $141,607.60[11] of additional contract plumbing work was necessary to make the temporary facility functional for art instruction.  Although the additional work was outside of the scope of the work of the contract, if the work itself is eligible under the Public Assistance program, FEMA can fund reasonable costs for the work.  At project closeout, the Applicant must demonstrate that the actual costs of the work performed were necessary to make the temporary facility functional and will analyze the reasonableness of the actual costs claimed.  

Conclusion

The building contents are eligible for public assistance funding because the building contents were necessary to make the temporary facility functional.  With regard to the additional plumbing work, the Applicant should submit documentation with its request for project closeout to support the eligibility of the plumbing work performed as it relates to the necessity of making the facility functional and the reasonableness of the costs.  The third parking lot repair is ineligible for funding as that repair was maintenance, which is ineligible for temporary facilities.     


[1] The RA indicated that the Applicant submitted sixty nine invoices for the purchase of fire extinguishers, first aid items, eye wash stations, a spray booth, refrigerator, shelving, display cases, wire, and other miscellaneous items.

[2] The ineligible costs noted here are not the only costs found ineligible in the first appeal response.  These are the only costs discussed because they are the only costs the Applicant is appealing on second appeal.

[3] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, §403 (a), 42 U.S.C. § 5170b (a) (2006); 44 C.F.R. § 206.221(a)(3) & (e)(1) (2001).

[4] Disaster Assistance Policy DAP9523.3, Provision of Temporary Relocation Facilities at 2 (July 16, 1998).

[5] Id at 4.

[6] Id at 5.

[7] Id.

[8] The Applicant states that it is appealing contents costs in the amount of “$26,795.56 and $17.09,” but the Applicant did not provide any documentation to support the $17.09.  FEMA will not find the $17.09 to be eligible as it is not linked to the building contents costs.

[9] Public Assistance Guide, FEMA 322 at 53 (June 2007).

[10] Office of Mgmt. & Budget, Exec. Office of the President OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments (2013) (codified at 2 C.F.R. § 225).

[11] Invoices 6963 ($12,907.51), 6971 ($30,364.75), 6984 ($22,254.30), 6987 (25,464.45), 6993 ($14,499.04), 6995 ($5,800.00), 7004 ($13,717.55), 7027 ($1,500.00), 7029 ($12,000.00), and 7032 ($3,100.00).  

 

10 Jun 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Los Angeles County
Disaster Number: 
1884-DR-CA
DSR: 
444
Date Signed: 
Monday, June 9, 2014
PA ID: 
037-99037-00
Summary/Brief: 

Conclusion:  The Applicant’s first appeal was not submitted in accordance with the substantive and procedural requirements.  While the Applicant did provide some photos showing potential eligible work, without a detailed scope of work, eligible costs cannot be determined. 

Summary Paragraph

From January 17 through February 6, 2010, rainstorms deposited vegetative debris, mud, and rock onto roads and blocked 453 culvert drains in Los Angeles County (Applicant) Road District 518.  FEMA prepared PW 444 for $353,730.13 to remove 120 cubic yards of debris, but it was never obligated.  FEMA determined that the debris removal costs were ineligible because photographs submitted showed minimal debris on public and maintained property and there was a general lack of documentation supporting the work.  In a first appeal letter, the Applicant appealed FEMA’s denial of debris removal without specifying a monetary figure or including any additional information. The Applicant stated that additional information and documentation would follow shortly.  In a subsequent letter submitted after the appeal deadline, the Applicant appealed $191,500.00 for debris removal and provided information to supplement the original appeal letter.  The Regional Administrator denied the first appeal because the Applicant did not timely submit a complete appeal, photos submitted showed debris on natural, unmaintained areas, and private property, and minimal debris on public property, and there was no documentation supporting the work.  On second appeal, the Applicant submitted more photos with captions and more detailed documentation.

Authorities and Second Appeals

  • 44 C.F.R. § 206.206(c)(1).
  • PA Guide, at 67, 69, 101.

Headnotes

  • 44 C.F.R. § 206.206(c)(1) states that “Appellants must file appeals within 60 days after receipt of a notice of the action that is being appealed.”
    • The Applicant did file an appeal within the 60-day period.  When additional information is required after the filing of an appeal, FEMA may issue a Request for Information (RFI) to which the Applicant has a specific date to respond.  The Applicant’s February 13th letter is equivalent to an RFI response from an appeal applicant.
  • The FEMA PA Guide states that debris removal must eliminate immediate threats of significant damage to improved property, and that debris on private property rarely affects the public at large and may not be the legal responsibility of a State or local government.
    • The Applicant did not provide sufficient evidence to show that all debris removal activities were due to immediate threats to improved property.
  • The PA Guide states that in the PW scope of work, work should be specified as an action with quantifiable and descriptive terms.
    • The Applicant did not provide sufficient information to determine an adequate scope of work.  Therefore, FEMA cannot determine eligible costs.
Letter: 

June 9, 2014

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

Re: Second Appeal – Los Angeles County, PA ID 037-99037-00, Debris Removal, FEMA-1884-DR-CA, Project Worksheet (PW) 444

Dear Mr. Ghilarducci:

This is in response to your letter dated September 9, 2013, which transmitted the referenced second appeal on behalf of Los Angeles County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $191,500.00 in debris removal costs in Road District 518.

As explained in the enclosed analysis, the Applicant’s first appeal was not submitted in accordance with the substantive and procedural requirements established in 44 C.F.R. § 206.206.  Even if the appeal had met these requirements, the documentation submitted did not adequately substantiate the eligibility of the work.  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:  Karen Armes
      Acting Regional Administrator
      FEMA Region IX

Analysis: 

Background

From January 17 through February 6, 2010, rainstorms deposited vegetative debris, mud, and rock onto roads and blocked 453 culvert drains in Los Angeles County (Applicant) Road District 518.  On September 8, 2011, FEMA prepared Project Worksheet (PW) 444 for $353,730.13 to remove 120 cubic yards of debris, but it was never obligated.  On October 5, 2011, FEMA notified the State of California (Grantee) that the PW was ineligible because the “photographs supplied [did] not substantiate the work as eligible.”[1]  On October 27, 2011, the Grantee notified the Applicant that the PW was determined to be ineligible.[2]  The letter noted that the “photographs show minimal amounts of debris on public and maintained property which, according to the PW scope of work, has not been quantified or substantiated by supporting documentation.”[3]

First Appeal

In a first appeal letter submitted December 28, 2011, the Applicant appealed FEMA’s denial of debris removal in Road District 518.  There was no monetary figure or any other information included with the appeal letter, but the Applicant stated it would provide additional information and documentation.

In a February 13, 2012, letter submitted after the appeal deadline, the Applicant claimed $191,500.00 as the amount in dispute for debris removal in Road District 518 and provided supplemental information to augment the original appeal letter.  The Applicant asserted that debris removal was not performed on private or unmaintained property.  In addition, the Applicant provided photos and spreadsheets listing employee names, dates worked, hours worked, labor rates, fringe benefit rates, rental equipment, and other miscellaneous costs.  The Grantee supported the appeal and forwarded it to FEMA on March 12, 2012. 

On May 8, 2013, the FEMA Region IX Regional Administrator (RA) denied the first appeal stating that the Applicant “did not submit their appeal complete with documentation justifying their position within the time period allowed.”  The RA found that the photographs submitted show “natural, unmaintained areas, and some debris from private property, and minimal debris from public property.”  The RA provided the following reasons as to why the submitted documentation was insufficient:

  • Equipment and operator costs were not matched to verify the operated equipment time and the standby equipment time. 
  • Labor and equipment costs require job descriptions, dates, and the work location to determine eligibility for disaster-related work. 
  • A breakdown of fringe benefits with supporting documents has not been submitted.
  • Rental equipment invoices and daily work tickets have not been submitted.
  • Load tickets for quantity verification of the amount of debris and the dump site location have not been submitted.
  • Maintenance records for the cleaning of the inlet structures and road ditches have not been submitted.

Second Appeal

In the second appeal letter submitted July 22, 2013, the Applicant is appealing $191,500.00 in debris removal costs in Road District 518.  With the second appeal, the Applicant provided additional information, including:

  • Department of Public Works (DPW) ad hoc FEMA reports which provide summaries of force account labor overtime costs, force account equipment costs, rental equipment costs, and contract payments.
  • Samples of rental equipment tickets and daily work tickets.
  • Samples of daily haul truck tickets.
  • Samples of refuse disposal tickets.
  • A maintenance policy for the cleaning of inlet structures and road ditches.
  • Pictures with individual narratives to clarify what is being depicted.

The Applicant states that a breakdown of fringe benefits with supporting documentation will be submitted at closeout.  The Applicant notes that it has always been its practice to provide FEMA with summaries of records and then to provide actual documentation at closeout.  The Applicant reiterates that “at no time [has it] requested reimbursement for debris removal activities on private property or provided pictures … that depict such efforts on private property or unmaintained forest property.”  The Grantee forwarded the second appeal reiterating the Applicant’s position. 

Discussion

Appeal Time Limits

FEMA notified the Applicant of its decision that PW 444 was ineligible on November 2, 2011.  The 60-day deadline for the Applicant to file an appeal was January 1, 2012.  The Applicant submitted a letter on December 28, 2011, indicating its intent to appeal and stated that additional information would follow.  The Applicant sent the additional information in a letter on February 13, 2012.

Pursuant to 44 C.F.R. § 206.206(c)(1), “[a]ppellants must file appeals within 60 days after receipt of a notice of the action that is being appealed.”[4]  In this case, the Applicant filed an appeal but not the necessary documentation to support it within the 60-day period.  When additional information is required after the filing of an appeal, FEMA may issue a Request for Information (RFI) pursuant to 44 C.F.R. § 206.206(c)(3) to which the Applicant has a specific date to respond.  The Applicant’s February 13, 2012, letter is essentially equivalent to an RFI response from an appeal applicant.  Although an RFI was not issued by the RA in his case, it is within the RA’s discretion to consider the supplemental submission.  Noting such, the RA’s finding that the appeal submission was procedurally and substantively defective was correct.

Debris Removal on Private and Unmaintained Property

Assuming arguendo the first appeal was not defective, the second appeal does not adequately address the substantive issues raised in the RA’s first appeal denial.  The Public Assistance Guide states that, “[t]o be eligible for Public Assistance, debris removal must be in the public interest, which is when removal is necessary to:  eliminate immediate threats to lives, public health and safety; [and] eliminate immediate threats of significant damage to improved public or private property.”[5]  It further states that, “[d]ebris on private property rarely meets the public interest standard because it does not affect the public at large and may not be the legal responsibility of a State or local government.”[6]  FEMA initially denied PW 444 because the “photographs supplied [did] not substantiate the work as eligible.”[7]  The RA upheld this decision on first appeal stating that “the submitted photographs show mostly natural, unmaintained areas and some debris from private property and minimal debris from public property.”  The Applicant submitted additional photographs and descriptions with the second appeal: 

  • In several photos, there is not sufficient evidence to determine if debris is located in a maintained area that is the Applicant’s responsibility, or if the debris is on private property.[8]  One photo does not display sufficient evidence to determine if an immediate threat exists.[9]
  • Photos show roads that were not listed in the PW scope of work and therefore, are not part of this project.[10]  Some photos do not state what road they are showing, so it is not known if they are included in the PW scope of work.[11]
  • Some photos claim to show plugged culverts.  Although the Applicant provided a policy stating that it is required to inspect the culverts and follow up with maintenance if required, it has not provided maintenance records demonstrating that the culverts were clear before the disaster.  Without maintenance records, there is no way to determine if the plugged inlet is a direct result of the disaster.[12]
  • When photos do show eligible work, the documentation provided does not show what work was completed at the location, who worked there, for how many hours, and what equipment was used.  Therefore, the costs for this debris removal cannot be determined.[13]

The PA Guide states that in the PW scope of work, “work should be specified as an action with quantifiable (length, width, depth, capacity) and descriptive (brick, wood, asphalt, timber deck bridge) terms.”[14]  Without this information, an item of work cannot be determined to be eligible.

Conclusion

The Applicant’s first appeal was not submitted in accordance with the substantive and procedural requirements established in 44 C.F.R. § 206.206.  Even if it had been, the documentation submitted did not adequately substantiate the eligibility of the work.                                                                                                       

[1] E-mail from Federal Emergency Management Agency to State Public Assistance Officer, California Emergency Management Agency (Oct. 5, 2011, 10:04am) [hereinafter Email].

[2] Letter from State Public Assistance Officer, California Emergency Management Agency to Chief Executive Officer, Los Angeles County (Oct. 27, 2011).

[3] Id.

[4] 44 C.F.R. § 206.206(c)(1) (2009).

[5] Public Assistance Guide, FEMA 322 at 67 (June 2007) [hereinafter PA Guide].

[6] PA Guide, supra note 5, at 69.

[7] Email, supra note 1.

[8] For instance, the Applicant claims that several photos show a slope failure with debris covering a quarter of Glendora Ridge Road, but the relationship of the debris to the roadway is not evident.

[9] For instance, a photo claims to show damage from a plugged inlet on Covina Hills Road, but the location of the roadway is not evident.

[10] The following roads are not listed in the PW scope of work:  Queenside Drive, Queenside Road, Kirkwall Road, Kingside Drive, and Galanto Avenue.

[11] For instance, two photos claim to show unnamed county roads.

[12] For instance, a photo shows a plugged culvert inlet on Crystal Lake Road.

[13] For instance, a photo shows a slope failure with debris covering almost half of Glendora Mountain Road.

[14] PA Guide, supra note 5, at 101.

 

10 Jun 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
City of Sergeant Bluff
Disaster Number: 
1998-DR-IA
DSR: 
617
Date Signed: 
Monday, June 9, 2014
PA ID: 
193-71625-00
Summary/Brief: 

Conclusion:  The Applicant did not provide sufficient documentation to show the extent of the damages to a sewer pipe that it claimed were a result of a disaster and that those same damages necessitated sewer pipe replacement rather than repair.

Summary Paragraph

From May 25, 2011 through September 30, 2011, Iowa experienced heavy rainfall and flooding which resulted in pavement failures and damages to an underground sewer pipe.  The Applicant could not determine the total damage until after the deadline for reporting damages to FEMA.  The Applicant requested that it be able to submit a project worksheet beyond the deadline. FEMA denied the request because the Applicant made the request after the deadline.  In its first appeal, the Applicant asserted that it had difficulty in determining if the damages were related to the disaster and again requested to submit a project worksheet for emergency and permanent work.  The FEMA Region VII Regional Administrator partially approved the appeal, funding costs associated with emergency work but not permanent work.  The Applicant did not verify that an entire section of a sewer pipe was damaged as a result of the disaster or that the damage was so severe that the pipe had to be replaced instead of repaired at a lesser cost.  In addition, the RA was unsure as to whether the Applicant followed proper procurement procedures when hiring a contractor.  In its second appeal, the Applicant indicates that it is not able to determine the extent of the damage to the sewer pipe and that it followed proper bidding procedures for hiring a contractor.

Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • 44 C.F.R. § 206.223(a)(1).
  • 44 C.F.R. § 13.36(a)(3), (c) & (b).
  • PA Guide, at 85.

Headnotes

  • Stafford Act § 406 authorizes FEMA to make contributions to a “local government for the repair, restoration, reconstruction, or replacement of a public facility damaged or destroyed by a major disaster.”
  • Under 44 C.F.R. § 206.223(a)(1), to be eligible, an item of work must be required as the result of the emergency or major disaster event.  The applicant is responsible for determining the extent of the damage to a facility in order to make a determination about the measures that need to be taken to either repair or replace the facility. (PA Guide, at 85)
    • The Applicant could not verify the extent of damage to the sewer pipe, whether the damage was so severe that replacement rather than repairs was necessary, nor if the damage was a result of the disaster.
    • Because the Applicant is responsible for determining the extent of the damage, FEMA will de-obligate $7,873.20 for ineligible costs associated with video inspection the Applicant used to determine sewer line damage. 
  • According to 44 C.F.R. § 13.36(c), all procurement transactions have to be conducted in a way that provides “full and open competition.”  However, when procurement procedures are not followed, FEMA can analyze the costs to determine if the costs are reasonable.
    • The Applicant did not properly procure the contract for the sewer pipe replacement or the emergency repairs. FEMA found the actual cost of the emergency repairs reasonable. 

 

Letter: 

June 9, 2014

Mark Schouten
Administrator
Iowa Homeland Security and Emergency Management Division
7105 NW 70th Avenue
Camp Dodge, Bldg. W-4
Johnston, Iowa 50131-1824

Re: Second Appeal – City of Sergeant Bluff, PA ID 193-71625-00, FEMA-1998-DR-IA, Project Worksheet (PW) 617 – Direct Result of Disaster

Dear Mr. Schouten:

This is in response to your letter dated July 15, 2013, which transmitted the referenced second appeal on behalf of the City of Sergeant Bluff (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of its request for funding to replace a sewer pipe.

As explained in the enclosed analysis, I have determined that the work is not eligible because the Applicant cannot verify that the pipe replacement was required as the result of the disaster or the extent of the sewer pipe damage.  Accordingly, I am denying the appeal.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

FEMA’s review of this appeal revealed that in response to the Applicant’s first appeal the FEMA Regional Administrator approved $7,873.20 for ineligible video inspection of the sewer.  By this letter, I am requesting the Regional Administrator de-obligate that funding from PW 617.  In accordance with 44 C.F.R. § 206.206 (b)(1), Appeals, Levels of Appeal, the Applicant may appeal the video inspection determination to the Regional Administrator. 

Please inform the Applicant of my decision. 

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  Beth Freeman
      Regional Administrator
      FEMA Region VII

Analysis: 

Background

From May 25, 2011 through September 30, 2011, Iowa experienced heavy rainfall and flooding, resulting in declaration FEMA-1998-DR-IA.  In the fall of 2011, two pavement failures occurred along Warrior Road, and the City of Sergeant Bluff (Applicant) completed the necessary repairs to the road by February 2012.  On both April 3 and 17, 2012, two sewer pipe collapses occurred in a sewer line running beneath the same street, and the Applicant completed emergency repairs of the damage.  After another pavement failure occurred in the same vicinity and based on information gained during an attempt at a video inspection of the pipe, the Applicant decided to replace a 1,323-foot long section of the pipe.  It awarded a change order for this work to its contractor, Minger Construction, which was completing another sewer project very close to the sewer pipe collapses.  Minger Construction also completed the emergency pavement and sewer repairs. 

On April 27, 2012, the Applicant requested that the Iowa Homeland Security and Emergency Management Division (Grantee) allow it to submit a project worksheet to apply for public assistance funding for the repairs to the pipe.  It acknowledged that the request was untimely and explained that it was not able to predict that the disaster would cause the ground to become unstable and affect the underground piping systems.  The Applicant indicated that it could complete the necessary repairs for $500,000 utilizing micro-tunneling technology.  On May 30, 2012, FEMA denied the request, finding that the Applicant submitted its request beyond the required timeline for identifying damages.[1]

First Appeal

In a first appeal letter submitted on September 6, 2012, the Applicant maintained that it should be able to submit a PW because it had difficulty in determining the cause of the street collapse.  The Applicant explained that after the rain stopped and the flooding receded, the declining water table caused unseen mass movement events underground.  The Applicant requested $107,065.26 for the emergency repair of the pavement failures and sewer repairs and $608,726.95 for replacement of a 1,325-foot long section of sewer pipe.  In support of its appeal, the Applicant submitted groundwater level readings collected before the disaster and invoices for the repair of the pavement failures and pipe collapses. 

FEMA conducted a technical review of the first appeal, which reset the timeframe for response to the Applicant’s appeal.  The FEMA Region VII Regional Administrator (RA) partially granted the first appeal on March 21, 2013. The RA determined that, based on the technical review, it is reasonable that the damages could have been caused by the event at such a late date and approved $102,676.14 for emergency repair of the two pavement failures and sewer pipe collapses.  The RA denied $4,389.12 for emergency repairs to a private residence.  The RA also denied the Applicant’s request for $608,726.95 for the replacement of a 1,323-foot[2] long section of sewer pipe under Warrior Road between D Street and Port Neal Road.  Based on the documentation submitted and the lack of a FEMA site inspection, the RA could not verify that the entire section of the sewer pipe replaced was damaged as the result of the disaster and that the damage was so severe that the pipe had to be replaced and could not be repaired at a lesser cost.  The RA was also unsure as to whether the Applicant followed proper procurement procedures when hiring Minger Construction to complete the permanent work. 

Second Appeal

The Applicant argues in a second appeal letter dated May 20, 2013, that it should be reimbursed $608,726.95 for the replacement of a 1,323-foot long section of sewer pipe under Warrior Road between D Street and Port Neal Road.   The Applicant explains that it followed the correct procedures for securing a contract with Minger Construction, the company who performed the sewer pipe replacement.  Before the disaster, the Applicant initiated and completed a bidding process for another city project entitled, “First Street Lift Station Elimination and Gravity Piping.”  The project did not involve federal or state funds, only funds from the Applicant’s general fund and sanitary sewer utility fund.  The Applicant asserts that it followed the state’s standard public improvements bidding process and provided documents showing that three companies submitted bids on the original project.  The Applicant selected Minger Construction for the original project which had begun in the vicinity of the April 3rd collapse.  The Applicant approved a change order to the original contract to replace the damaged sewer line and states the costs under the change order were “in line with the established bid prices for the project.” 

The Applicant argues that it determined the extent of the damage to the sewer pipe by reviewing the places where the pavement failures occurred, through hydro-jetting and video inspection of the sewer line, and by analyzing groundwater monitoring data.  The Applicant provides the following timeline for the pavement failures and pipe collapses:

  • Pavement Failure – noticed and corrected in Fall 2011
  • Pipe Collapse – occurred April 3, 2012
  • Pipe Collapse – occurred April 17, 2012
  • Pavement Failure – noticed in May 2012

The Applicant states that, based on the location of the various pavement failures and pipe collapses, the sewer system failure occurred along an 866.5-foot section of the sewer pipe.  The Applicant indicates that based on the video inspections, the experience of the contractor on site, and an engineering review of the repairs, “it was determined that the overall condition of the pipe between the first two emergency repairs was in a failed state.”  The Applicant admits it was not possible to know the full extent of the damage to that section of the sewer pipe, and states that it was estimated that additional collapses and failures would occur over time.  The Applicant also submitted groundwater monitoring data to support its position that the damage was caused by the event. 

The Applicant recognizes that it cannot provide visual evidence of the total sewer system failure and provides the following four reimbursement options for FEMA’s consideration: 

  • $608,726.95 for the full 1,323-foot long section of the pipe, as requested in the first appeal;
  • $544,810.62 for replacement of 1,184 feet of the sewer pipe as documented in one of the groundwater data charts;
  • $398,716.15 for replacement of 866.5 feet of the sewer pipe from the location of the April 17th collapse east to Port Neal Road;
  • $102,676.14 for estimated costs for the emergency repair of two additional pavement failures that it would have had to complete if it had not replaced the 1,323-foot long section of the sewer pipe. 

Discussion

Extent of Damage to Sewer Pipe

The Robert T. Stafford Disaster Relief and Emergency Assistance Act Section 406 authorizes FEMA to make contributions to a “local government for the repair, restoration, reconstruction, or replacement of a public facility damaged or destroyed by a major disaster.”[3]  Implementing such authority, Title 44 of the Code of Federal Regulations (C.F.R.) § 206.223 (a)(1) provides that to be eligible, an item of work must be required as the result of the emergency or major disaster event.[4]  The owner of a facility is responsible for determining the extent of the damage to a facility in order to make a determination about the measures that need to be taken to either repair or replace the facility.[5]

In its second appeal, the Applicant makes a connection between receding flood waters and the cause of the damage but failed to provide information about the extent of the damage to the sewer pipe.  The Applicant reviewed the damaged areas and hired a company to conduct inspections of the pipe to determine the full extent of damage; however, the Applicant concluded it was not possible to do so.  Considering the pavement failures and pipe collapses that did occur and the determination that at least an 866.5-foot long section of the pipeline from the location of the April 17th collapse east to Port Neal Road failed, the Applicant determined a prudent approach to avoiding the risk of future damage to the pipe was to replace 1,323 linear feet of pipe.  Notwithstanding the decision made by the Applicant to replace 1,323 linear feet of pipeline, the Applicant has not provided the documentation necessary to support that any length of pipe replacement was required by the event. 

Consistent with the Regional Administrator’s finding in the first appeal, the documentation does support that the emergency repairs were required by the event and those repairs remain eligible for funding.  However, contrary to FEMA policy, the funding approved by the RA in PW 617 includes $7,873.20 for video inspection of the sewer lines.  The Public Assistance Guide provides that “the owner of a facility is responsible for determining the extent of damage; as with any facility, FEMA does not provide funds for general surveys to look for damage, such as video inspection of sewer lines.”[6]

Procurement Procedures

Pursuant to 44 C.F.R. § 13.36 (b)(1), when procuring services under a federal grant, subgrantees (also referred to as applicants) “will use their own procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this section.”[7]  Moreover, all procurement transactions must “be conducted in a manner providing full and open competition.”[8]

The Applicant did not follow the procurement procedures required by 44 C.F.R. § 13.36 when hiring Minger Construction to replace the sewer pipe.  While the Applicant competitively procured its original contract with Minger Construction, the Applicant did not competitively procure the sewer pipe replacement project or the emergency repair work.  44 C.F.R. § 13.43(a)(3) states that when an applicant for federal funding fails to comply with procurement procedures, FEMA may “wholly or partly suspend or terminate the current award.”[9]  The Public Assistance Guide explains that FEMA implements this provision by evaluating project costs to determine reasonableness, and FEMA may reimburse reasonable costs for eligible work.[10]  In accordance with OMB Circular A-87, FEMA evaluates reasonable costs based on the standard “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.”[11] In this case, FEMA considers the cost incurred for the emergency repairs reasonable.  The reasonableness of the cost to replace the pipe is not an issue, because the work itself is ineligible as described above.

Reimbursement Options

The first three options suggested by the Applicant involve replacing varying lengths of the sewer pipeline.  The Applicant has not shown that any length of pipeline replacement was required as the result of the event, as discussed above.  The fourth option suggested is for emergency work that was never performed, and it is based on the actual costs already approved in PW 617, $102,676.14.  FEMA has no authority to fund emergency work that was never performed.

Conclusion

The Applicant has not shown that the entire 1,323-foot long section, or 866.5-foot long section, of the sewer pipe was damaged by the disaster or that the damage was so severe that it warranted replacement rather than repair of the sewer pipe.  As such, the replacement of the pipe was not required as the result of the event and is not eligible for public assistance funding.    Further, in partially approving the first appeal, the RA inadvertently provided $7,873.20 for ineligible video inspection of the sewer line.  FEMA will de-obligate the ineligible funding.

[1] Pursuant to 44 C.F.R. § 206.202(d)(ii), applicants have sixty (60) days following its first substantive meeting with FEMA to identify and report damages.  On September 12, 2011, the Federal Coordinating Officer extended the deadline to November 1, 2011 for all eligible applicants.  The Applicant submitted its request for a project worksheet on April 27, 2012.

[2] In the Applicant’s September 6, 2012 First Appeal letter, it makes reference to a 1,325-foot sewer pipe not a 1,323-foot sewer pipe.  There’s no basis as to why this number was lowered based on the information in the administrative record.   In its second appeal, the Applicant appeals FEMA’s denial of funding for a 1,323-foot sewer pipe. 

[3] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406 (a)(1)(A), 42 U.S.C. § 5172 (a)(1)(A) (2013). 

[4] 44 C.F.R. § 206.223 (a)(1) (2013).

[5] Public Assistance Guide, FEMA 322 at 85 (June 2007) [hereinafter PA Guide].

[6] Id.

[7] 44 C.F.R. § 13.36 (b)(1) (2013).

[8] Id. at § 13.36 (c).

[9] Id. at § 13.43(a)(3)

[10] PA Guide, supra note 5, at 53.

[11] Office of Mgmt. & Budget, Exec. Office of the President, OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments (2013) (codified at 2 C.F.R. § 225).

 

 

10 Jun 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Indian River County
Disaster Number: 
1561-DR-FL
DSR: 
6495
Date Signed: 
Monday, June 9, 2014
PA ID: 
061-99061-00
Summary/Brief: 

Conclusion:   The Applicant’s Hazard Mitigation Proposal (HMP) is not eligible under the Public Assistance Program because it addressed non-disaster-related damage, and Section 705(c) of the Stafford Act does not bar deobligation of the funding provided for the HMP because the funding was provided contrary to the Act and implementing regulations and policy.

Summary Paragraph           

In 2004, power outages from Hurricane Jeanne caused the sewer system in the Rockridge subdivision in Indian River County (Applicant) to fail.  FEMA prepared Project Worksheet (PW) 6495 to address the costs of restoring damaged drainage facilities throughout the subdivision. PW 6495 included $2,827,524 for a Hazard Mitigation Proposal (HMP) to replace the existing sewer system with a vacuum-based sewage collection system.  After a subsequent review of the project, FEMA determined that the HMP was not cost-effective and deobligated the funding.  In its first appeal, the Applicant primarily asserted that FEMA’s benefit-cost analysis was flawed.  The Regional Administrator denied the Applicant’s first appeal, determining that the HMP to replace the sewer system was not an eligible mitigation measure because it applied largely to elements of the facility that were undamaged by the event.  In its second appeal, the Applicant does not dispute FEMA’s position that the HMP applies to undamaged elements of the facility, but instead argues that Section 705(c) of the Stafford Act prevents the deobligation of funding for the project.

Authorities    

  • Stafford Act § 705(c), 42 U.S.C. § 5205(c)
  • 44 C.F.R. § 206.434(c)(4)
  • Response and Recovery Policy 9526.1, Hazard Mitigation Under Section 406 (Stafford Act) (Aug. 13, 1998)

Headnotes

  • Under Recovery Policy 9526.1, Hazard Mitigation Under Section 406 (Stafford Act), mitigation measures must be related to eligible disaster-related damages and must directly reduce the potential of future, similar disaster damages to the eligible facility.  Because the Applicant’s HMP included the replacement of the entire sewer system and addressed non-damaged elements of the system as well as damaged elements, the HMP was not eligible under the Public Assistance Program.
  • Under Stafford Act § 705(c), an applicant is not required to reimburse FEMA for any payment made under the Stafford Act if “(1) the payment was authorized by an approved agreement specifying the costs; (2) the costs were reasonable; and (3) the purpose of the grant was accomplished.”    Because the Applicant’s HMP addressed non-damaged elements of the subdivision’s collection system, the inclusion of funding for the HMP was contrary to Stafford Act implementing policy, and de-obligation of that funding does not fall within the scope of Section 705(c) of the Act.
Letter: 

June 9, 2014

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

Re: Second Appeal – Indian River County, PA ID 061-99061-00, Hazard Mitigation Proposal (HMP) – Rockridge Sewer System, FEMA-1561-DR-FL, Project Worksheet (PW) 6495

Dear Mr. Koon:

This is in response to a letter from your office dated March 8, 2013, which transmitted the referenced second appeal on behalf of Indian River County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) deobligation of $2,827,524 for a Hazard Mitigation Proposal (HMP) for the replacement of a damaged sewer system.

As explained in the enclosed analysis, I have determined that the HMP addressed non-damaged elements of the collection system and is not eligible under Section 406 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act.  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 CFR §206.206, Appeals.

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  Major Phil May
      Regional Administrator
      FEMA Region IV

Analysis: 

Background

In 2004, power outages from Hurricane Jeanne caused the sewer system in the Rockridge subdivision in Indian River County (Applicant) to fail.  Without power, the system’s pumps were inoperable and sewage backed up into homes in the already inundated subdivision.  The flooding also damaged various drainage facilities located throughout the subdivision, including culverts, storm water pipes and inlets, drainage swales, and a drainage channel.  The Applicant replaced ninety destroyed grinder pumps to restore the damaged sewer system and supplied temporary generators and portable toilets while the repair was being completed. The Applicant also restored the damaged drainage facilities throughout the subdivision.  FEMA prepared PW 6494 for $161,202 for the replacement of the grinder pumps and the use of the temporary generators and portable toilets.  FEMA also approved PW 6495 for the restoration of the drainage facilities (with a project cost of $350,000) and a Hazard Mitigation Proposal (HMP) to replace the existing sewer system with a vacuum-based sewage collection system ($2,827,524).  After a subsequent review of the project, FEMA determined that the HMP was not cost-effective and, therefore, not eligible for funding.  FEMA prepared a version to PW 6495 deobligating $2,827,524.

First Appeal

The Applicant submitted a first appeal of FEMA’s determination on October 21, 2010, primarily asserting that FEMA’s benefit-cost analysis (BCA) was flawed.  The Applicant stated that while FEMA used damage costs totaling $350,000 in its BCA, the total amount of public damage associated with the sewer system failure was $2,067,831.  The Applicant also stated that it is responsible for $10,437,840 in damage to private homes and asserted that the private home damage should be included in the BCA.  The Applicant concluded that a BCA including the public damage costs ($2,067,831) and using a recurrence interval of 7.7 years, instead of the 10 years used by FEMA, yields a benefit-cost ratio greater than 1.  Lastly, the Applicant stated that while initially applying for funding for the HMP via the Hazard Mitigation Grant Program (HMGP) under Section 404 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), it only proceeded with applying for funding through the Public Assistance (PA) Program under 406 of the Stafford Act on the advice of FEMA personnel.

The Florida Division of Emergency Management (Grantee) forwarded the Applicant’s appeal to FEMA on December 30, 2010.  While the Grantee did not support the Applicant’s position that the more than $10 million in private property damage should be included in the BCA, the Grantee asserted that public damage totaling $575,952 should be included.  Further, the Grantee stated that a recurrence interval of 2.5 years is the appropriate interval to use in the analysis, given that the storms took place between 2001 and 2010.  According to the Grantee, based on its analysis, the benefit-cost ratio is 1.09.

On October 15, 2012, the FEMA Region IV Regional Administrator denied the Applicant’s first appeal, determining that the HMP to replace the sewer system was not eligible because it applied largely to elements of the facility that were undamaged by the event.  The Regional Administrator did not address the cost-effectiveness of the HMP in the appeal response.

Second Appeal

The Applicant submitted a second appeal on January 3, 2013 and a supplement to the appeal on February 12, 2013.  In its appeal, the Applicant reiterates its first appeal position regarding the BCA.  Further, in response to Regional Administrator’s determination that the HMP is not eligible because it applies largely to elements of the facility that were undamaged by the event, the Applicant states that it initially submitted the project for HMGP funding under Section 404, worked with FEMA for more than 3 years on the HMGP application, and only submitted an HMP under Section 406 based on direction provided by FEMA.  The Applicant asserts it should not be penalized for taking action based on a recommendation made by FEMA personnel and requests that, if the HMP cannot be funded under the PA Program, FEMA should consider the project for funding under Section 404’s HMGP.  Lastly, the applicant also states that Section 705(c) of the Stafford Act prevents the deobligation of funding for this project, arguing that the section “mandatorily prohibits deobligation of the County’s grant.”

Discussion

FEMA policy establishes specific eligibility criteria for HMPs.[1]  Pursuant to the policy in effect at the time of the disaster, mitigation measures must be related to eligible disaster-related damage and must directly reduce the potential of future, similar disaster damage to the eligible facility.[2]  In this case, the damage was limited to 90 out of more than 400 grinder pumps; the vast majority of the system was undamaged by the event.  The HMP included the replacement of the entire system and, thus, addressed non-damaged elements of the collection system.  Therefore, the HMP is not eligible under Section 406 of the Stafford Act.  Because the HMP addressed non-damaged elements, the cost-effectiveness of the HMP is not relevant, as cost-effectiveness applies only to eligible mitigation efforts.[3]   

The Applicant asserts in its appeal that, according to Section 705(c) of the Stafford Act, FEMA cannot de-obligate the funding provided in PW 6495. Section 705(c) prohibits FEMA from de-obligating grant funds provided to a state or local government under the Stafford Act when three statutory preconditions are met.  Specifically, the law provides:

A State or local government shall not be liable for reimbursement or any other penalty for any payment made under this Act if – (1) the payment was authorized by an approved agreement specifying the costs; (2) the costs were reasonable; and (3) the purpose of the grant was accomplished.[4]

The Applicant asserts that the HMP funding included in PW 6495 meets these preconditions.  This conclusion is incorrect.  As the provision is written, it only applies to payments made “under this Act,” meaning payments authorized under the Stafford Act and its implementing regulations and policies.  In order for the first precondition to be met, the payment must be “authorized by an approved agreement.”  Accordingly, for the agreement to be the authorized act of an agency official, the approval must have been for an authorized use of the federally appropriated funds, consistent with applicable legal authorities and implementing policy guidance.  Consequently, if the approval is not consistent with applicable legal authorities, it follows that the approval was outside the scope of the authority of the official and does not constitute a binding agreement.

In this instance, any funding provided for the Applicant’s HMP was not authorized under the Stafford Act and its implementing regulations and policies.  FEMA policy requires that mitigation measures must be related to eligible disaster-related damage and must directly reduce the potential of future, similar disaster damage.  The Applicant’s HMP, however, addressed non-damaged elements of the subdivision’s collection system.  Therefore, inclusion of funding for the HMP in PW 6495 was contrary to Stafford Act implementing policy, and de-obligation of that funding does not fall within the scope of Section 705(c) of the Act.

Conclusion

The HMP originally funded in PW 6495 was the replacement of an entire sewage collection system, even though the event only damaged a portion of the existing system.  The HMP addressed undamaged elements of the collection system and, therefore, is not eligible under Section 406 of the Stafford Act.  Section 705(c) of the Stafford Act does not bar the de-obligation of the HMP funding from PW 6495.

[1]  See generally Response and Recovery Policy 9526.1, Hazard Mitigation Under Section 406 (Stafford Act) (Aug.. 13, 1998).

[2]  Id. at 2.

[3] In this appeal, the Applicant urges FEMA to consider the project for funding under Section 404’s HMGP.  FEMA already considered and took action on the Applicant’s HMGP application.  FEMA denied the HMPG application on October 30, 2007 because the Applicant began construction prior to FEMA completing its environmental review.  The Applicant thereafter submitted an appeal, which FEMA denied on April 28, 2008, citing the early construction commencement and further stating that, under 44 C.F.R. § 206.434(c)(4), the project “must solve a problem independently.”  In this case, the chief problem identified was the power loss.  As the project addressed the sewage backup problem, not the issue of the power, it was not eligible for funding under Section 404’s HMGP.

[4]  Stafford Act § 705(c), 42 U.S.C. § 5205(c).

 

 

10 Jun 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Erwinville Fire Department Sub District 5
Disaster Number: 
1786-DR-LA
DSR: 
4837
Date Signed: 
Monday, June 9, 2014
PA ID: 
121-UJIIS-00
Summary/Brief: 

Conclusion: The Erwinville Fire Department Sub District 5 (Applicant) failed to demonstrate the eligible building repair cost exceeds 50 percent of the building replacement cost.  Therefore, the funding for the building replacement is not eligible under the Public Assistance program. 

Summary Paragraph

In August 2008, Hurricane Gustav caused damage to the metal roof and interior of the Erwinville Fire Department Sub District 5’s (Applicant) training hall facility.  FEMA prepared Project Worksheet (PW) 4837 for $13,329 for the repair of the facility.  The Applicant submitted a request for additional funding for the replacement of the facility claiming that the scope of work in PW 4837 did not include the repair of all disaster damage.  FEMA denied the Applicant’s request because the Applicant demolished the facility and did not provide documentation to support the amount of damage claimed.  In the first appeal, the Applicant asserted that FEMA did not include the repair of all disaster damage and that FEMA personnel stated the training hall qualified for replacement.  The FEMA Region VI Regional Administrator denied the Applicant’s first appeal because the cost estimate of the repair of the documented damage was less than 50 percent of the replacement cost.  In the second appeal, the Applicant reiterates its position that Hurricane Gustav damaged its facility beyond repair.  In addition, the Applicant asserts that the facility presented an “attractive nuisance” and was demolished for safety reasons and to reduce the Applicant’s liability. 

Authorities Discussed

  • 44 C.F.R. § 206.226(f)
  • 44 C.F.R. § 206.225
  • PA Guide, at 33

Headnotes

  • 44 C.F.R. § 206.226(f) states that a facility is considered repairable when disaster damages do not exceed 50 percent of the cost of replacing a facility to its predisaster condition, and it is feasible to repair the facility so that it can perform the function for which it was being used as well as it did immediately prior to the disaster.
    • The repair cost is 25 percent of the replacement cost and does not meet the 50 percent requirement.
  • 44 C.F.R. §206.225 states that emergency protective measures to save lives, to protect public health and safety, and to protect improved property are eligible if the measures eliminate or lessen immediate threats and are cost effective.
    • Here, the Applicant did not provide documentation to support that the facility posed an immediate threat to the general public.

 

                       

 


 

 


 

Letter: 

June 9, 2014

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

Re:  Second Appeal - Erwinville Fire Department Sub District 5, PA ID 121-UJIIS-00, Training Hall, FEMA-1786-DR-LA, Project Worksheet (PW) 4837

Dear Mr. Davis:

This is in response to your letter dated July 22, 2013, which transmitted the referenced second appeal on behalf of the Erwinville Fire Department Sub-District 5 (Applicant). The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $42,004 in additional funding for the replacement of its training hall.

As explained in the enclosed analysis, I have determined that the replacement of the facility is not eligible, because the cost estimate of the repair is less than 50 percent of the replacement cost.   Further, the demolition of the facility was not required to reduce or eliminate an immediate threat to life, safety, or property.  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 CFR §206.206, Appeals.

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  George A. Robinson
      Regional Administrator
      FEMA Region VI

Analysis: 

Background

In September 2008, wind and rain from Hurricane Gustav caused damage to the metal roof and interior of the Erwinville Fire Department Sub District 5’s (Applicant) training hall facility.  A FEMA representative conducted a site visit in November 2008 to inspect the damage but did not prepare a Project Worksheet (PW) at that time.  The Applicant demolished the training hall in April 2009 because it determined the facility was an attractive nuisance, a safety hazard, and a liability.  In September 2009, FEMA conducted a follow-up site visit and prepared PW 4837 for $13,329 for the repair of disaster damage based on a contractor’s cost estimate dated September 22, 2009[1] the Applicant submitted to FEMA.   

In May 2011, the Applicant requested a version to the PW to fund the replacement of the facility.  FEMA found the replacement ineligible because the cost estimate of the repair was less than 50 percent of the cost estimate to replace the facility and prepared Version 1 to PW 4837 to document the request and determination.  FEMA did not approve additional funding. 

First Appeal

The Applicant submitted a first appeal on December 19, 2011, requesting additional funding for the replacement of the training hall based on a cost estimate of $55,211.  The Applicant asserted that FEMA did not include the repair of all disaster damage in PW 4837 and that FEMA personnel indicated in November 2008 that the training hall qualified for replacement. The Applicant maintained that FEMA should have considered the pictures taken during the initial site visit in developing a damage description and scope of work for repair and not the information in the contractor cost estimate.  The Applicant stated that it obtained that cost estimate for initial insurance purposes and the estimate did not account for the cost of the repair of all interior damage, including electrical repairs, mold remediation, and structural repair to load bearing walls.  The Applicant concluded that if FEMA had considered the repair costs of all disaster damage shown in the photographs in its repair versus replacement calculation, the facility would qualify for replacement.  

The FEMA Region VI Regional Administrator denied the appeal on November 14, 2012, because the Applicant had not provided documentation quantifying the additional damage claimed to support its assertion that the repair cost estimate exceeded 50 percent of the cost of replacement.   The Regional Administrator also indicated that FEMA personnel did not make an eligibility determination regarding the facility replacement at the initial site visit.

Second Appeal

The Applicant’s May 17, 2013, second appeal reiterates its position that Hurricane Gustav damaged the training hall beyond repair; the facility should be eligible for replacement; and a FEMA representative stated the facility would be eligible for replacement.  The Applicant objects to FEMA’s determination in Version 1 to PW 4837 that the Applicant demolished the facility without notifying FEMA.  The Applicant states that prior to proceeding with the demolition it contacted the FEMA representative who conducted the initial site visit and he reiterated that the building replacement would be eligible for funding.  The Applicant also notes that it demolished the training hall for safety reasons and to reduce liability to the fire department, not for “convenience” as stated in Version 1 to PW 4837.  The Applicant requests that if FEMA still finds that the building repair cost is less than 50 percent of the replacement cost, FEMA consider the eligibility of the demolition and replacement of the facility for safety reasons.  Further, the Applicant objects to the following statements made in the Regional Administrator’s response to its first appeal:

“On October 16, 2009, a draft PW was written and was limited to repairs.  No objection was made to the PW at this time or at the exit briefing in December 2009.  The applicant also signified their acceptance of the repair PW and exit briefing indicated by their signatories of these documents.”

The Applicant states by signing the documents it never intended to indicate it agreed with the funding approved in PW 4837 and maintains that FEMA policy and procedure support that while signatures on these documents are required procedurally, the signatures do not necessarily indicate concurrence.

The State of Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Grantee) transmitted the Applicant’s appeal to FEMA, supporting the appeal and stating that FEMA has the responsibility to develop a scope of work for repair based on its own photographic evidence and not by relying solely on the contractor’s cost estimate.  With the appeal, the Grantee submits a new repair cost estimate ($27,881) based on the damage it asserts is supported by the photographs, which is greater than 50 percent of the replacement cost estimate ($55,212).  The Grantee’s cost estimate includes removing and replacing all damaged elements (including 100 percent of the roof and ceiling, the wall paneling and insulation, and electrical outlets, switches and wiring), painting, and mold remediation. 

Discussion

Repair versus Replacement

“A facility is considered repairable when disaster damages do not exceed 50 percent of the cost of replacing a facility to its predisaster condition, and it is feasible to repair the facility so that it can perform the function for which it was being used as well as it did immediately prior to the disaster.”[2]  In reviewing the Applicant’s initial request for a version to PW 4837, FEMA escalated the value of the contractor quote provided by the Applicant to $14,334 to account for inflation.  This increased repair cost equates to 25 percent of the replacement cost ($55,211).  As such, the replacement of the facility is not eligible for funding.

The Applicant contends that FEMA did not account for all disaster damage in PW 4837.  FEMA based its repair cost estimate on the September 2008 contractor estimate which indicates that 600 square feet (SF) of roof requires replacement.  The Applicant and Grantee maintain that additional damage is documented in the photographs taken during the initial site visit, including mold and electrical damage. Although mold and other damage can be seen in these photographs, the photographs do not provide adequate information needed to quantify all of the damage.  The alternative repair estimate provided by the Grantee includes the removal and replacement of the entire roof and ceiling, all wall paneling and insulation, and all outlets, switches, and wiring.  Neither the Applicant nor the Grantee provide a sufficient explanation as to the significant difference in damage quantities shown in the contractor estimate and the Grantee’s cost estimate submitted with the second appeal.  Specifically, neither the Applicant nor the Grantee explain why the contractor’s estimate references 600 SF of roof damage, but the Grantee asserts that the entire 1200 SF roof was damaged.  Further, the pictures do not support the Grantee’s assertion that 100 percent of the roof and walls were damaged by the event. 

The Applicant has not provided sufficient documentation of damage caused by the event.  While informative, the photographs alone cannot be used to develop a detailed damage description. Notwithstanding the Applicant’s assertion that FEMA informed it that the replacement would be eligible for funding, the Applicant demolished the facility without obtaining clear evidence from which to base a revised scope of work and repair cost estimate. 

Eligibility of Demolition as Emergency Work

Emergency protective measures to save lives, to protect public health and safety, and to protect improved property are eligible if the measures eliminate or lessen immediate threats to life, public health or safety, or significant additional damage to improved public or private property through measures which are cost effective.[3]  For demolition of structures posing an immediate public safety threat to be eligible as an emergency protective measure, “the threat must be identified by local officials according to established local ordinances and verified by State and Federal officials. In some instances, securing a damaged building from access is sufficient to alleviate the threat and demolition is not necessary.”[4]  The Applicant indicates the facility was demolished because it was a safety hazard and an attractive nuisance. The Applicant maintains that the structural damage to the walls prevented the door from closing, and the Applicant was not able to secure the facility so that children would not enter.  Further, as a section of the damaged roof blew into a neighbor’s yard, the Applicant asserts that the damaged training hall posed a threat to the neighboring property. 

Based on the documentation and information provided by the Applicant, it is not clear that the damaged training hall, located in an open field, posed an immediate threat to the general public.  Even if an immediate threat was present, the attractive nuisance doctrine is reliant upon a standard of reasonableness.[5]  The Applicant could have taken more reasonable measures other than demolishing the facility, such as boarding up the door and frame and installing a fence around the perimeter of the facility, to eliminate the threat.  While the Applicant states that its Board of Directors agreed to condemn and demolish the building, it has not provided documentation supporting that a local official verified the threat nor that it was verified by a state or federal official.  Therefore, the demolition of the facility is not eligible as an emergency protective measure.

Conclusion

The Applicant has not demonstrated the eligible building repair cost exceeds 50 percent of the building replacement cost and, therefore, the funding for the building replacement is not eligible under the Public Assistance program.  Furthermore, the Applicant has not provided sufficient documentation to support its claim that the damaged building posed an immediate threat to the general public and, therefore, its demolition is not eligible as emergency work.

[1] The Applicant originally obtained a cost estimate prior to demolishing the facility.  The contractor updated its original estimate, dated December 1, 2008, in September 2009 to reflect current costs.

[2] Title 44 of the Code of Federal Regulations (44 CFR) §206.226(f).

[3] See 44 C.F.R. § 206.225(a).

[4] Public Assistance Guide, FEMA 322 at 73 (June 2007).

[5] See Black's Law Dictionary 130 (6th ed. 1991).

 

 

4 Jun 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Hancock County Amateur Radio Association
Disaster Number: 
4081-DR-MS
DSR: 
N/A
Date Signed: 
Tuesday, June 3, 2014
PA ID: 
N/A
Summary/Brief: 

Conclusion:  The Applicant’s radio station constitutes an “other essential governmental service facility” because it provides “health and safety services of a governmental nature” and, therefore, the Applicant, a private nonprofit organization, is an eligible PNP Public Assistance Program applicant.

Summary Paragraph

The Hancock County Amateur Radio Association (Applicant) operates a low-power FM radio station.  The Applicant is a 501(c)(3) private, nonprofit (PNP) organization. In 2005, in response to Hurricane Katrina, the Applicant moved its operations to the Hancock County Emergency Operations Center (EOC) and enabled the EOC and other organizations to broadcast vital information during the event.  Following Hurricane Isaac in 2012, the Applicant submitted a Request for Public Assistance. In a letter dated October 30, 2012, FEMA denied the Applicant’s RPA, stating that the Applicant did not operate a facility falling within the six categories of facilities set forth in applicable Public Assistance (PA) Program regulations and, therefore, that the Applicant was not an eligible PNP applicant under the program.  On first appeal, the Applicant argued that it is an eligible PNP applicant because it operates “a critical facility that serves citizens in the local community and surrounding areas” by providing “essential emergency information for the safety of life, health and property.”  The FEMA Regional Administrator denied the first appeal, concluding that the Applicant’s emergency public service transmissions were infrequent and that the Applicant typically engages in more varied activities. On second appeal, the Applicant explained in more detail its emergency response role and highlighted its connection with the Hancock County EOC and Emergency Alert System responsibilities.

Authorities Discussed

  • Internal Revenue Code, 26 U.S.C. § 501(c)(3)
  • Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), Sections 102 (42 U.S.C. § 5122) & 406 (42 U.S.C. § 5172)
  • 44 C.F.R. § 206.221; 44 C.F.R. § 206.222; 44 C.F.R. § 206.223

Headnotes

  • Under the PA Program, PNP organizations or institutions that own or operate a PNP facility (as legally defined) are eligible to apply for assistance.
  • Eligible PNP facilities include those considered an “essential governmental service facility,” which includes, among other things, zoos, community centers, libraries, and homeless shelters, and “facilities which provide health and safety services of a governmental nature.”
  • The Applicant’s radio station qualifies as an “essential governmental service facility”:
  • Under Hancock County Emergency Management Agency (EMA) guidelines, the Applicant’s radio station is to operate out of Hancock County’s Emergency Operations Center during hurricanes and tropical storms and other catastrophic events.
  • The Applicant’s radio station is the only Emergency Alert System-licensed station in the county. 
Letter: 

June 3, 2014

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

Re:     Second Appeal—Hancock County Amateur Radio Association, Request for Public Assistance, FEMA-4081-DR-MS

Dear Mr. Latham:

This is in response to your letter dated August 30, 2013, appealing the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) denial of the Request for Public Assistance (RPA) submitted by the Hancock Amateur Radio Association (Applicant).

As explained in the enclosed analysis, under the facts of this case, the Applicant has demonstrated that it operates a facility that provides health and safety services of a governmental nature and, therefore, it is an eligible private nonprofit (PNP) Public Assistance Program applicant.  Therefore, I am granting the appeal.  Under statutory and regulatory provisions governing PNP applicants, however, the Applicant must first apply for a disaster loan from the U.S. Small Business Administration to cover the costs of any damaged facilities.  If the SBA declines to issue a loan, or the loan amount does not cover all of the Applicant’s eligible costs, the Applicant may then seek assistance from FEMA.

This determination relates to the Applicant’s RPA submitted under Hurricane Isaac only, not Hurricane Katrina.  By copy of this letter, I am requesting that the Regional Administrator take appropriate action to implement this determination.

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

Sincerely,

/s/

Brad Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

cc:  Major P. May
      Regional Administrator
      FEMA Region IV

Analysis: 

Background

The Hancock County Amateur Radio Association (Applicant) operates a low-power FM radio station under the call letters WQRZ out of Bay Saint Louis, Mississippi.  The Applicant is a private, nonprofit (PNP) organization that qualifies as tax-exempt under Section 501(c)(3) of the Internal Revenue Code.[1]

In 2005, in response to Hurricane Katrina, the Applicant moved its operations to the Hancock County Emergency Operations Center (EOC).  The Applicant submitted a Request for Public Assistance (RPA) under the Hurricane Katrina major disaster declaration for the State of Mississippi (FEMA-1604-DR-MS).  FEMA denied the request because the Applicant had failed to provide FEMA with its Internal Revenue Service (IRS) tax-exempt determination letter to demonstrate its status as a 501(c)(3) organization.

On August 28, 2012, Hurricane Isaac made landfall on the Mississippi coast, causing damage in various locations, including Hancock County.  The Applicant submitted an RPA dated September 7, 2012 under the Hurricane Isaac major disaster declaration for the state (FEMA-4081-DR-MS).  In a letter dated October 30, 2012, FEMA denied the Applicant’s RPA, stating that the Applicant did not operate a facility falling within the six categories of facilities set forth in applicable Public Assistance (PA) Program regulations and, therefore, that the Applicant was not an eligible PNP applicant under the program.

First Appeal

The Applicant submitted a first appeal in a letter dated December 31, 2012, maintaining that it is an eligible PNP applicant because it operates “a critical facility that serves citizens in the local community and surrounding areas” by providing “essential emergency information for the safety of life, health and property.”  The Applicant included its November 21, 2002 IRS tax-exempt determination letter, as well as letters addressed to the Applicant sent in 2005 and 2006 from emergency response and other community organizations indicating that they relied on the Applicant’s radio operations for information during Hurricane Katrina and its aftermath. 

The FEMA Region IV Regional Administrator denied the first appeal in a letter dated May 24, 2013.  In his decision, the Regional Administrator acknowledged that Applicant had provided important emergency public service transmissions to residents in its broadcast area but explained that those broadcasts “are dependent upon the infrequent activation of local emergencies” by county authorities.  The Regional Administrator explained that the Applicant’s “normal activities are more varied,” citing the Applicant’s various stated organization objectives, including advancing amateur radio service and promoting self-sustaining radio broadcast stations and repeater towers.  Such activities do not provide “an essential government-type service” under applicable regulations, the Regional Administrator explained.  Because, as the Regional Administrator concluded, the Applicant’s radio station was not used primarily for an eligible purpose, the Applicant was not an eligible PNP applicant.

Second Appeal

The Applicant submitted a second appeal in a letter dated July 29, 2013.  The Applicant asserts that FEMA should consider it eligible under applicable PA Program regulations as an operator of an “educational,” “utility,” “emergency,” and/or “other essential governmental service” facility.  As an educational facility, the Applicant argues, it provides training to volunteer students.  With respect to operating an emergency and essential government service facility, the Applicant asserts, among other things, that:

  • It operates year-round as an all-hazards community warning system.
  • It is the only Federal Communications Commission-licensed Emergency Alert System (EAS) station located within Hancock County with service to local government and the general public.
  • It operates as a public information station in partnership with the Hancock County Emergency Management Agency (EMA) and Hancock County EOC, and serves as the Radio Amateur Civil Emergency Service primary contact for the county.
  • Its services are included in Hancock County’s hurricane/tropical storm standard operating guidelines and its hazard mitigation plan.
  • It provides external affairs/public information officer services, such as “rumor control” and providing “mitigation solutions and real-time situation awareness.”
  • Its staff is always on standby for emergencies and is the “Official Voice” of the Hancock County EOC.

The Mississippi Emergency Management Agency (Grantee) transmitted the second appeal to the FEMA Region IV Regional Administrator in a letter dated August 30, 2013.  The Grantee supports the Applicant’s appeal.

Discussion

Under the PA Program, PNP organizations or institutions that own or operate a PNP facility (as legally defined) are eligible to apply for assistance.[2] Section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) defines “private nonprofit facility” to include a PNP educational, utility, irrigation, emergency, medical, rehabilitational, or custodial care facility.[3]  The term also includes “any private nonprofit facility that provides essential services of a governmental nature to the general public,” including “health and safety services of a governmental nature.”[4]

PA Program regulations reiterate these definitions and further define specific types of PNP facilities.[5]  An “educational” facility “means classrooms plus related supplies, equipment, machinery, and utilities of an educational institution necessary or appropriate for instructional, administrative, and support services.”[6]  A “utility” facility “means buildings, structures, or systems of energy, communication, water supply, sewage collection and treatment, or other similar public service facilities.”[7]  An “emergency” facility “means those buildings, structures, equipment, or systems used to provide emergency services, such as fire protection, ambulance or rescue, to the general public.”[8]  An “other essential governmental service facility” means, among other things, zoos, community centers, libraries, and homeless shelters, as well as “facilities which provide health and safety services of a governmental nature.”[9]

Having provided FEMA with its effective ruling letter from the IRS granting it tax-exempt status, the Applicant has demonstrated that it is a PNP under PA Program regulations.[10]  The Applicant argues that is eligible for assistance as a PNP applicant because it operates a PNP facility as defined in the regulations.  Specifically, the Applicant asserts that it operates an “educational,” “utility,” “emergency,” and/or “other essential governmental service” facility.  Although the Applicant asserts that it provides training to students in broadcast communications, “weather spotting,” principles of emergency management, and related subject areas, FEMA finds that the Applicant’s radio station facility does not constitute an “educational” facility, as it is not an “educational institution” as set forth under the regulations and FEMA guidance.[11]   Nor does the Applicant’s radio station constitute a “utility” facility.  Although the definition of a “utility” facility includes “communication” systems, and the Applicant’s radio station provides broadcast communications, FEMA recognizes PNP “communications” services as applying to “transmission, switching, and distribution of telecommunications traffic”—and not to broadcasting.[12]  The Applicant also does not operate an “emergency” facility; its radio station does not provide emergency response services, such as fire protection or ambulance and rescue services.

Under the facts of this case, however, FEMA recognizes the Applicant’s radio station as an “essential governmental service facility” because it provides “health and safety services of a governmental nature.”[13]  In reaching this conclusion, FEMA has taken into consideration a variety of factors, including the Applicant’s unique relationship with the Hancock County government and the prominent role it has played in providing information to community residents during past disasters and emergencies.  According to documentation provided by the Applicant, the Applicant’s radio station serves as the lead broadcast station for the county for issuing warnings and notifications to the public during hurricanes and tropical storms and other catastrophic events.[14]  Hancock County hurricane and tropical storm operating guidelines reflect that the Applicant’s radio station also operates out of Hancock County’s EOC during all such events.[15]  The county guidelines recognize that the Applicant’s station operates the EAS warning system and is the only Federal Communications Commission-licensed EAS station within the county.  Correspondence from representatives of the Hancock County EMA, Chamber of Commerce, and Chancery Clerk’s office indicates that the Applicant’s radio station, operating out of the EOC, provided the EOC with the only means of communication during Hurricane Katrina and its aftermath, allowing government officials, the American Red Cross, and other organizations to provide vital information regarding food, water, medical, and rescue services to the public.  In light of the role the Applicant’s radio station plays during community disasters and emergencies, FEMA finds that the Applicant operates an “essential governmental service facility” that provides health and safety services.  As such the Applicant is eligible as a PNP to apply for assistance.

The Regional Administrator’s first appeal decision rested on the notion that the Applicant’s radio station provides other services in addition to its emergency broadcast services, such as the promotion of amateur radio service, and, therefore, it is not “primarily” used as an “essential government service facility.”  The first appeal decision applied a FEMA PA policy requiring that, in order to be eligible for assistance, a PNP facility “must be primarily used for eligible services.”[16]  Under DAP 9521.3, the “primary use” determination generally depends on how facility space is used; a facility must have over 50 percent of its space dedicated to eligible uses in order for it to be eligible under the PA Program.[17]  When space is not dedicated to specific activities, or space is used for eligible and ineligible purposes, “primary use” is determined by the amount of time used for eligible services.[18]  Although, as the first appeal decision recognizes, the Applicant is called upon to provide emergency broadcasts relatively infrequently, FEMA recognizes that the Applicant’s radio station is available all of the time to provide EAS broadcasts and to operate out of the Hancock County EOC when necessary.  Under the facts of this case, FEMA concludes that the Applicant’s radio station satisfies the requirements set forth in DAP 9521.3.

In light of the key, official role the Applicant’s radio station plays during community disasters and emergencies, FEMA finds that the Applicant operates an “essential governmental service” facility that is available all of the time to provide health and safety services.  As such, the Applicant is an eligible PNP that may apply for assistance under the PA Program.  In order to obtain assistance, the Applicant must satisfy all aspects of PA eligibility, including the requirement that the work for which it seeks assistance was required as a direct result of the disaster, Hurricane Isaac.[19]  In addition, in accordance with section 406(a)(3)(A)(ii) of the Stafford Act, the Applicant must first apply for a disaster loan from the U.S. Small Business Administration before it can obtain assistance from FEMA.[20]  If the SBA declines the Applicant’s loan application, the Applicant may then seek assistance from FEMA.[21]  If the SBA approves the loan application, but the loan amount does not cover all of the Applicant’s eligible costs, the Applicant may seek assistance from FEMA to cover its remaining costs.[22]

Conclusion

The Applicant’s radio station, as outlined in Hancock County EMA emergency response guidelines, operates out of the county’s EOC and serves as the lead broadcast station during disasters and emergencies.  It also is the only EAS-licensed station in Hancock County.  The radio station constitutes an “essential governmental service facility” because it provides “health and safety services of a governmental nature.”  Therefore, the Applicant is an eligible PNP applicant under the PA Program and may apply for assistance.  However, the Applicant must first apply for a disaster loan from the SBA before it can obtain any assistance from FEMA.  If the SBA declines to issue a loan, or the loan amount does not cover all of the Applicant’s eligible costs, the Applicant may then seek assistance from FEMA.



[1]  26 U.S.C. § 501(c)(3).

[2]  See 42 U.S.C. § 5172(a)(1)(B); 44 C.F.R. § 206.222(b).

[3]  See 42 U.S.C. § 5122(10)(A).

[4]  42 U.S.C. § 5122(10)(B).

[5]  See 44 C.F.R. § 206.221(e).

[6]  See 44 C.F.R. § 206.221(e)(1).

[7]  See 44 C.F.R. § 206.221(e)(2).

[8]  See 44 C.F.R. § 206.221(e)(4).

[9]  See 44 C.F.R. § 206.221(e)(7).

[10]  See 44 C.F.R. §§ 206.221(f)(1) & 206.221(e)(4).

[11]  See 44 C.F.R. § 206.221(e)(1); see also FEMA 322, Public Assistance Guide (July 2007) (“PA Guide”), at 15 (“Educational institutions are defined in terms of primary, secondary, and higher education schools.”).

[12]  See PA Guide at 12; see also FEMA-DR-1603-LA, Greater New Orleans Educational Television Foundation, PNP Eligibility (Nov. 14, 2007) (“FEMA has consistently interpreted “communication utility” to mean telephone services.”).

[13]  44 C.F.R. § 206.221(e)(4).

[14]  See Hancock County Emergency Management Agency Hurricane/Tropical Storm Standard Operating Guidelines, at 97 (“The Hancock County EOC shall use WQRZ 103.5 Radio Station as the lead Broadcast station for Hancock County.”); id. at 23 (stating that evacuation orders should be disseminated to, among other outlets, the Applicant’s radio station); id. at 29 (stating that the public will be notified of evacuation bus pickup points via, among other outlets, the Applicant’s radio station).  See also Hancock County Multijurisdictional Hazard Mitigation Plan Update 2013, at 4-68 (listing Applicant’s radio station as a “Buildings for Operation of Government” critical facility).

[15]  Id. at 97.

[16]  See FEMA Disaster Assistance Policy 9521.3, Private Nonprofit (PNP) Facility Eligibility (July 18, 2007) (“DAP 9521.3”) § VII(D).

[17]  Id.

[18]  Id.

[19]  See 44 C.F.R. § 206.223(a)(1)

[20]  See 42 U.S.C. § 5172(a)(3)(A)(ii); see also 44 C.F.R. § 206.226(c)(2).

[21]  See id.

[22]  See id.

 

2 Jun 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Bluebonnet Electric Cooperative
Disaster Number: 
4029-DR-TX
DSR: 
500, 602, 603, 748, and 789
Date Signed: 
Tuesday, May 20, 2014
PA ID: 
000-UJ7K3-00
Summary/Brief: 

Conclusion:  The Applicant violated federal procurement regulations by using its existing time and equipment contracts that contained no cost ceilings or not-to-exceed clauses for the restoration work. Reflective of such, FEMA’s approach of reducing the eligible funding based on the average cost-per-pole calculation computed from eight other electrical cooperatives that performed work during DR-4029-TX was appropriate.

Summary Paragraph

During the August 30, 2011 to December 31, 2011 incident period, wildfires burned, damaged, or destroyed significant portions of the Applicant’s electrical distribution system.  The Applicant used force account and contract labor to replace poles, transformers, meters, and electrical wire.  Contrary to procurement requirements, the Applicant utilized an existing time and equipment contract without cost ceilings.  Exercising its discretion to develop remedies for the Applicant’s non-compliance with procurement requirements, rather than deobligating all of the projects, FEMA determined reasonable costs by using an average cost for similar work conducted by eight other electrical cooperatives during the same wildfire.  FEMA then deobligated funding from each of the five PWs that are the subject of this appeal, totaling $612,462.93.  In its first appeal, the Applicant requested FEMA fund repairs based on actual, incurred costs and maintained that the higher rate of reimbursement was justified by the emergency nature of the work, hazardous work conditions, and its commitment to the community.  The Regional Administrator (RA) reviewed FEMA’s cost analysis and the analysis provided by the Applicant.  The RA concluded that the Applicant did not follow proper procurement procedures, specifically in regards to the time and equipment contracts, and denied the first appeal.  In the Applicant’s second appeal, the Applicant reiterates its first appeal arguments and did not submit any new documentation.

Authorities Discussed

  • 44 C.F.R. §13.36  
  • 44 C.F.R. §13.43
  • PA Guide, at 40-42, 51-53, 104

Headnotes

  • 44 C.F.R. §13.36(b)(1) provides that contracts and procurements must comply with federal, state, and local procurement standards.  Section 13.36(b)(10) provides that time and material type contracts may be used only after a determination that no other contract is suitable and the contract includes a ceiling price that the contractor exceeds at its own risk.  Finally, §13.36(c) and §13.36(d) provide that a contract should be competitively bid.
  • 44 C.F.R. §13.43 provides remedies for noncompliance, including withholding of cash payments, disallowing or denying all or part of the activity, suspending or partially suspending or terminating the award, withholding of future awards, or other legal remedies.
  • PA Guide, at 51-53, reiterates that “Contracts must be of reasonable cost, generally must be competitively bid, and must comply with Federal, State, and local procurement standards.”  It also states that FEMA may separately evaluate and reimburse costs it finds fair and reasonable.
Letter: 

May 20, 2014

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

Re: Second Appeal – Bluebonnet Electric Cooperative, PA ID 000-UJ7K3-00, Restoration of Power, FEMA-4029-DR-TX, Project Worksheet (PWs) 500, 602, 603, 748, and 789

Dear Chief Kidd:

This is in response to your office’s letter dated July 26, 2013, which transmitted the referenced second appeal on behalf of the Bluebonnet Electric Cooperative (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $612,462.93 in costs associated with the restoration of power after a wildfire.

As explained in the enclosed analysis, I have determined that the Applicant did not follow federal procurement requirements; however, reasonable costs for the work performed are eligible.  The FEMA Regional Administrator’s approach for determining reasonable costs was appropriate.  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:  George A. Robinson
       Regional Administrator
       FEMA Region VI

Analysis: 

Background

During the August 30, 2011 to December 31, 2011 incident period, wildfires burned and substantially damaged or destroyed significant portions of Bluebonnet Electric Cooperative, Inc.’s (Applicant) electrical distribution system. The Applicant used force account and contract labor to replace poles, transformers, meters, hardware, and electrical wire. FEMA obligated 18 Project Worksheets (PWs) for the Applicant to fund actual costs incurred for the repairs, including PW 500 for $79,389.68; PW 602 for $574,351.19; PW 603 for $976,160.67; PW 748 for $246,420.53; and PW 789 for $226,305.97.  Subsequently, FEMA found that the Applicant did not follow proper procurement procedures because it had the work completed under existing time and equipment contracts which did not have required cost ceilings or “not to exceed” provisions. Rather than deobligating the funding for the work performed, FEMA performed an analysis of costs of similar work done during the same disaster by other electrical cooperatives. Based on the analysis, FEMA determined that a reasonable cost of the restoration was approximately $2,429 per pole.  FEMA applied this reasonable cost to the number of poles covered in each of the Applicant’s PWs and deobligated funding, as follows: $7,301.38 from PW 500, $115,667.09 from PW 602; $389,902.98 from PW 603; $37,682.80 from PW 748; and $61,898.68 from PW 789.

First Appeal

The Applicant submitted its first appeal to the Texas Division of Emergency Management (Grantee) in a letter dated November 21, 2012.  The Grantee forwarded the first appeal to FEMA on January 8, 2013.  In its first appeal, the Applicant requested FEMA fund the repair of its electrical distribution system based on its actual, incurred costs and requested re-obligation of the total deobligated amount, $612,463.  The Applicant maintained that the higher rate of reimbursement is justified by the emergency nature of the work and need to act quickly, which did not allow time to competitively bid the contracts.  The Applicant also noted the hazardous work conditions as a result of on-going fires, threat of flare ups, hilly terrain, and deep ash which contributed to the higher per pole cost of the restoration work.  Furthermore, the Applicant explained that the complexity of the labor-intensive work was due to almost a third of the poles being either three-phase poles or meter poles.  Finally, the Applicant claimed that the higher costs are the result of the Applicant’s commitment to community, reliability, and safety, along with the Applicant’s excellent customer service and desire to protect the environment.  The Regional Administrator (RA) reviewed the cost analysis FEMA performed to determine the reasonable rate of reimbursement and compared it to the information provided by the Applicant.  The RA concluded that because the Applicant did not follow proper procurement procedures, FEMA rightfully determined reasonable costs as a way to provide partial reimbursement to the Applicant, and denied the first appeal on March 19, 2013. 

Second Appeal

The Applicant submitted its second appeal to the Grantee on June 17, 2013, and the Grantee forwarded it to FEMA on June 28, 2013.  In its second appeal, the Applicant reiterates its first appeal arguments.  No additional documentation was provided with the second appeal. 

Discussion

Under 44 Code of Federal Regulations (C.F.R.) Part 13, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, contracts and procurements must be of reasonable cost, generally must be competitively bid, and must comply with federal, state, and local procurement standards.[1]  Additionally, federal procurement regulations allow use of time and material type contracts only after a determination that no other contract is suitable and only if “the contract includes a ceiling price that the contractor exceeds at its own risk.”[2]

The Applicant chose to complete the work under existing time and equipment contracts that did not include cost ceilings or “not to exceed” provisions.  After the work was complete, the Applicant modified the contracts to include cost ceilings.  As such, the contracts were not in compliance with procurement requirements.  This finding is not in dispute. 

The Applicant argues that the work was contracted during an emergency response and therefore it could not take the additional time necessary to properly procure contracts; that by the nature of the emergency restorations the work was determined location by location; and since the work was not contiguous in nature it would be best conducted under existing time and equipment contracts.  The Applicant also justifies the higher cost per pole by detailing the hazardous work conditions, the complexity of the work, and the catastrophic nature of the event. 

All procurement transactions must be “conducted in a manner providing full and open competition,” [3] including emergency contracts.  Awarding the contract to the same contractor that was already working for the Applicant without taking additional bids is considered restrictive of competition.  Procurement by noncompetitive proposals may only be used when the award of the contract is not feasible under competitive measures and if the item is available from only one source; when public exigency or emergency will not permit a delay as a result of competitive solicitation; or if competition is determined to be inadequate after solicitation of a number of sources.[4]  FEMA is required to conduct a cost analysis of any noncompetitive proposal.[5]

Per 44 C.F.R. §13.43, remedies for noncompliance with federal procurement requirements include one or more of the following actions, as appropriate in the circumstances: (1) Temporarily withhold cash payments; (2) Disallow or deny all or part of the activity; (3) Wholly or partly suspend or terminate the award; (4) Withhold further awards; (5) Take other legal remedies.[6]  As the Applicant violated federal procurement regulations, FEMA has the authority to disallow all funding for work performed under these contracts, and FEMA also has the authority to fund eligible work based on costs it determines to be reasonable.[7]  A cost is reasonable if 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.  In other words, a reasonable cost is a cost that is both fair and equitable for the type of work being performed.[8]  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, FEMA cost codes, and equipment rates.[9]

FEMA calculated an average per pole cost by computing an average cost for similar work done under seventeen different PWs conducted by eight other electrical cooperatives during the same wildfire disaster.  FEMA examined the costs of 1,321 poles and the average cost per pole was $2,428.81, while the Applicant’s claimed average contract cost per pole was $4,669.81.  The Applicant included its own cost analysis using five electrical cooperatives, including some of the same electrical cooperatives that FEMA used.  The Applicant’s analysis was significantly higher than what was done by FEMA, but also included a higher number of three-phase lines and transformer/meter poles. Additionally, the Applicant’s comparative analysis included 100 percent contract labor, which would increase costs, while its PWs contained force account labor.[10]  

In this case, FEMA’s approach of using similar work performed as the result of the same event to determine reasonableness is appropriate. Moreover, the Applicant’s comparative data is distinguishable and does not provide compelling documentation to support its claim that the RA’s determination of costs was inconsistent with policy or otherwise unreasonable.

Conclusion

The Applicant violated federal procurement regulations using its existing time and equipment contracts that contained no cost ceilings or not-to-exceed clauses for the restoration work.  Because the Applicant violated procurement regulations, FEMA was correct to evaluate the reasonableness of the Applicant’s actual costs and its methodology for doing so was sound.  Because the Applicant was not able to provide sufficient documentation to establish reasonableness, FEMA was correct to reduce the Applicant’s reimbursement to the average cost-per-pole calculation computed from eight other electrical cooperatives that performed work during DR-4029-TX.



[1] 44 C.F.R. § 13.36(b)(1); Public Assistance Guide, FEMA 322 (June 2007), at 51.

[2] 44 C.F.R. § 13.36(b)(10)(i) and (ii).

[3] 44 C.F.R. § 13.36(c).

[4] 44C.F.R.  § 13.36(d)(4)(i)

[5] 44C.F.R.  § 13.36(d)(4)(ii)

[6] 44 C.F.R. § 13.43(a).

[7] 44 C.F.R. § 13.43(a)(2); PA Guide at 53.

[8] PA Guide, at 40-41.

[9] Id.

[10] FEMA First Appeal Response, FEMA-4029-DR-TX, Bluebonnet Electric Cooperative, Inc. PWs 500, 602, 603, 748, and 789, (Mar 19, 2013) at 3.

 

2 Jun 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Hancock County Water & Sewer District
Disaster Number: 
1604-DR-MS
DSR: 
4605
Date Signed: 
Wednesday, May 28, 2014
PA ID: 
045-030A8-00
Summary/Brief: 

Conclusion:  After being granted multiple time extensions to complete alternate projects using funding from a Project Worksheet, the Applicant successfully completed the projects as contemplated in their scopes of work; therefore, the Applicant’s subsequent time extension request, which came more than seven months after the final approved project completion date, was properly denied by the Regional Administrator.

Summary Paragraph

FEMA prepared Project Worksheet (PW) 4605 to document the estimated costs of repairing a Hancock County Water & Sewer District (Applicant) well and associated equipment damaged by Hurricane Katrina in 2005.  Having obtained an alternate potable water source for those affected by the loss of the well, the Applicant decided to apply the funds toward alternate projects and requested and received multiple time extensions in order to complete the projects.  Nearly seven months after the last project completion date approved by FEMA, the Applicant submitted another time extension request, stating that a clerical error caused it to delay seeking a further time extension request on time and that it had not been informed until a month before the final project completion date that additional funds were available.  The Applicant intended to apply the newly discovered funding toward an expansion of one of the completed alternate projects.  The Regional Administrator denied the request, and the Applicant filed a first appeal asserting that its time extension request should be accepted.  The FEMA Region IV Regional Administrator denied the appeals, noting that the Applicant had completed its alternate projects and that the request was not submitted on time. 

Authorities and Second Appeals

  • 44 C.F.R. § 206.204(c)
  • 44 C.F.R. § 206.204(d)(2)
  • FEMA-1604-DR-MS, Hancock County Board of Supervisors, Time Extension (June 21, 2012)
  • FEMA-1008-DR-CA, Los Angeles Brotherhood Crusade, African American Unity Center (Aug. 13, 2009)

Headnotes

  • Under 44 C.F.R. § 206.204(c)(2)(ii), a permanent work project must be completed within 18 months of the applicable major disaster or emergency declaration.  A Grantee may extend this deadline for 30 months if warranted by extenuating circumstances or unusual project requirements beyond the subgrantee’s control. 
  • Under 44 C.F.R. § 206.204(d)(2), any time extension requests beyond the Grantee’s authorized extension must be submitted to the Regional Administrator and include a detailed justification for the delay and a projected completion date.  If the Regional Administrator approves a request, the approval letter will reflect the approved completion date and any other requirements necessary to ensure that the new completion date is met.  If the Regional Administrator denies the time extension request, reimbursement for eligible project costs is available for costs incurred only up to the latest approved completion date.


 

Letter: 

May 28, 2014

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

Re: Second Appeals—Hancock County Water & Sewer District, Request for Time Extension, FEMA-1604-DR-MS, Project Worksheet 4605

Dear Mr. Latham:

This is in response to a letter from your office dated December 9, 2013, which transmitted the referenced second appeal on behalf of the Hancock County Water & Sewer District (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) denial of its request for an additional time extension on an alternate project.

As explained in the enclosed analysis, the Applicant requested and was granted multiple time extensions to complete alternate projects using funding from a Project Worksheet (PW) written to document the costs of replacing a well and associated equipment.  The Applicant successfully completed these projects as contemplated in their scopes of work.  Nevertheless, the Applicant submitted another time extension request, more than seven months after the final approved project completion date, after learning that funding remained available in the PW.  In light of the delay and the Applicant’s successful application of funds as originally planned, the Regional Administrator properly exercised his discretion in denying the additional time extension request.  Accordingly, I am denying this appeal.

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc: Major P. May
     Regional Administrator
     FEMA Region IV

Analysis: 

Background

In August 2005, tidal surge from Hurricane Katrina (FEMA-DR-1604-MS) damaged a well and related equipment operated by the Hancock County Water & Sewer District (Applicant) that served a residential development near Bay St. Louis, Mississippi.  FEMA prepared Project Worksheet (PW) 4605 to document the costs of replacing the well and associated equipment.  The Applicant obtained another potable water source and, therefore, decided to apply the funds toward an alternate project.  After a federal cost share adjustment to account for PW 4605 to be applied toward an alternate project, the PW was obligated for $621,656.25.

In a letter dated October 9, 2007, the Mississippi Emergency Management Agency (Grantee) granted a time extension for work under PW 4605, based on the Applicant’s assertion that higher-priority projects required more immediate attention.  The deadline for completion was extended by the Grantee until December 31, 2007.  Later, the Grantee granted another time extension request, extending the deadline for completion until August 28, 2009.

In a letter dated May 29, 2008, FEMA approved a request to combine the alternate project funding from PW 4605 with improved project funding from PW 943 and PW 1514, to be applied toward the improved portion of a project for a new administration and maintenance building, with any remaining funds applied toward other infrastructure improvements within the Applicant’s district.  Version 3 of PW 4605 documents this alternate project and application of funding.

The Applicant requested an additional extension until August 31, 2010 in a letter dated June 29, 2009, stating that construction had not started but that contracts would be awarded on July 10, 2009.  In a letter dated December 1, 2009, the FEMA Region IV Regional Administrator granted a time extension on 270 projects under FEMA-1604-DR-MS, including PW 4605, that encountered delays relating to obtaining approvals for improved, alternate, or permanent relocation projects. 

In early 2010, FEMA revised PW 4605 to account for insurance proceeds, reducing the PW’s total obligated amount to $595,406.25.  PW 4605’s alternative project scope of work also was revised (in Version 5 of the PW) to apply remaining funds toward a force main extension project that would provide sewer service to additional residents.

The Applicant requested an additional extension in a letter dated August 4, 2010, seeking a new project deadline of August 31, 2011.  The Applicant explained that the new alternate project for which PW 4605 funds were to be applied, the sewer extension project, was delayed while other municipalities completed water projects.  With the municipalities’ projects completed, the Applicant stated, it needed time to complete the sewer extension.  The Regional Administrator granted the Applicant’s request in a letter dated September 14, 2010.

In a letter dated March 13, 2012, nearly seven months after expiration of the last approved time extension, the Applicant requested an additional extension until December 31, 2012.  The Applicant asserted that a clerical oversight caused the delay in requesting a further extension prior to the August 31, 2011 project completion deadline.  The Applicant also asserted that it was “not informed that funds were available until July 25, 2011 to complete this project,” citing an email from a Grantee representative forwarding a Grantee PA-9 Summary of Documentation form indicating that $105,746.75 remained available under PW 4605.  The Applicant stated that construction plans had been completed and that “the final step before advertising to bid is for this time extension request to be granted.” 

The Regional Administrator denied the request in a letter dated June 22, 2012, noting that the Applicant’s assertion that a clerical oversight caused it to delay requesting an extension until well beyond the expiration of the last extension was not compelling.  The Regional Administrator also recounted that the Applicant’s alternate project had been approved in 2008 and was thereafter amended for costs and a scope of work change in subsequent years.  The Regional Administrator also explained that, in the Applicant’s previous time extension request, it had stated that work associated with the alternate project would be completed by August 31, 2011.

First Appeal

The Applicant submitted a first appeal in a letter dated July 26, 2012.  The Applicant reiterated its contention that it was not aware funds remained under PW 4605 until approximately 30 days before the projects’ deadline and, therefore, the funds could not have been used before the deadline.  The Applicant again asserted that a clerical oversight caused it to not file a timely request for a further time extension.  It again cited the email from the Grantee and the PA-9 Summary of Documentation form indicating a $105,746.75 balance in available funds under PW 4605.  The Applicant stated that construction plans were complete and that it was prepared to advertise to bid on the expanded project but stopped after the deadline had passed.

The Regional Administrator issued a decision denying the appeal dated August 16, 2013.  According to the decision, the Applicant had completed the work on the administration and maintenance building as well as the sewer extension (as described in the approved scope of work under PW 4605) prior to expiration of the second time extension granted by FEMA.  The decision explained that only after the Summary of Documentation was completed for approved work, showing that additional funds were available, did the Applicant start developing plans to utilize the additional funds to further extend the sewer line.  The Regional Administrator concluded that the Applicant’s final request for a time extension was based simply on a desire to identify new projects for which the funding could be applied.

Second Appeal

The Applicant submitted a second appeal to the Grantee in a letter dated October 16, 2013.  Through it, the Applicant reiterates the assertion that it was not informed that $105,746.75 remained available under PW 4605 “until 35 days before the project deadline.”  The Applicant states that, had it been informed earlier, it would have used the funds to complete the expanded sewer extension project.  The Applicant asserts that it requested, numerous times, to know the balance of funds available under PW 4605, and that it was told incorrect amounts that were below the actual available amount.  The Applicant again requests an extension of six months to complete work that it states is in progress.

The Grantee transmitted the second appeal to the FEMA Region IV Regional Administrator in a letter dated December 9, 2013.  The Grantee supports the appeal, stating that “the Applicant, in good faith, believed that the cost associated with the work it had completed would equal or exceed the funding approved,” and that is why the Applicant failed to make a timely time extension request.  According to the Grantee, when the Applicant “learned its cost[s] incurred were less than the funding approved, it initiated efforts to further the [sewer] expansion project.”  The Grantee asserts that the work the Applicant seeks additional time to complete “is within the stated intent of the alternate project’s previously approved scope of work.”

Discussion

Under Public Assistance Program project performance regulations, a permanent work project must be completed within 18 months of the applicable major disaster or emergency declaration.[1]  A Grantee may extend this deadline for an additional 30 months if warranted by extenuating circumstances or unusual project requirements beyond the control of the subgrantee.[2]  Any time extension requests beyond that point must be submitted to the Regional Administrator and include (1) the dates and provisions of all previous time extensions on the project, and (2) a detailed justification for the delay and a projected completion date.[3]  The Regional Administrator responds in writing.  If the Regional Administrator approves the request, the approval letter will reflect the approved completion date and any other requirements the Regional Administrator determines is necessary to ensure that the new completion date is met.[4]  If the Regional Administrator denies the time extension request, reimbursement for eligible project costs is available for “costs incurred only up to the latest approved completion date.”[5]  Furthermore, “[i]f the project is not completed, no Federal funding will be provided for that project.”[6]

In this case, the Regional Administrator correctly exercised his discretion in denying the Applicant’s request for an additional time extension.  The Applicant has failed to provide adequate justification for its request or an explanation of why it submitted the request nearly seven months beyond the expiration of the last approved project completion date.

The Applicant requested a total of four time extensions for PW 4605, three of which were granted.  In 2009, the Applicant submitted a time extension request just before construction contracts on the administration and maintenance building project were to be bid.  A year later, the Applicant submitted another time extension request related to the sewer extension project, which had been delayed while related projects from other municipalities were being completed.  FEMA granted both of these extensions, and the Applicant was able to complete work on both the administration and maintenance building and the sewer extension as described in the projects’ approved scope of work.  The Applicant, therefore, succeeded in applying alternate project funds from PW 4605 as intended.

The last approved project completion date was August 31, 2011.  The Applicant requested an additional time extension nearly seven months later, seeking to apply $105,746.75 in unexpectedly remaining PW 4605 funds toward further expansion of the sewer beyond what was contemplated in the approved scope of work.  The Regional Administrator properly exercised his discretion in denying this request, given that the Applicant had been granted multiple extensions years after the disaster event,[7] had accomplished its original project goals, and had submitted its request well beyond the final approved project completion date.  Moreover, the Applicant’s assertion that a clerical oversight caused the nearly seven-month delay in submitting the request is not compelling.  The Applicant states that it was informed about additional funds being available on July 25, 2011, more than a month before the final August 31, 2011 deadline.  The Applicant, therefore, had time to submit a time extension request or inquire about the use of those funds before the final deadline.

Conclusion

The Applicant requested and was granted multiple time extensions to complete alternate projects using funding under PW 4605.  The Applicant’s final time extension request came more than seven months after the final approved project completion date and was sought in order to apply additional PW 4605 funding toward an extension of one of the completed alternate projects.  In light of the delay and the Applicant’s successful application of funds as originally planned, the Regional Administrator properly exercised his discretion in denying the additional time extension request.

[1]  See 44 C.F.R. § 206.204(c)(1).

[2]  See 44 C.F.R. § 206.204(c)(2)(ii).

[3]  See 44 C.F.R. § 206.204(d).

[4]  See 44 C.F.R. § 206.204(d)(2).

[5]  Id.

[6]  Id.

[7]  See, e.g., FEMA-1604-DR-MS, Hancock County Board of Supervisors, Time Extension (June 21, 2012) (denying additional request for time extension on three project worksheets, where FEMA had previously granted an extension request); FEMA-1008-DR-CA, Los Angeles Brotherhood Crusade, African American Unity Center (Aug. 13, 2009) (denying additional request for time extension on project, where more than fifteen years had elapsed since disaster event and more than five years had elapsed since last approved extension).

 

12 May 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Carman Township Road District
Disaster Number: 
1771-DR-IL
DSR: 
953
Date Signed: 
Wednesday, May 7, 2014
PA ID: 
071-U9VAW-00
Summary/Brief: 

N/A

Letter: 

May 7, 2014

Jonathon E. Monken, Director
Illinois Emergency Management Agency
1035 Outer Park Drive
Springfield, IL 62701

Re:  Second Appeal–Carman Township Road District, PA ID 071-U9VAW-00, Documentation, FEMA-1771-DR-IL, Project Worksheet (PW) 953

Dear Mr. Monken:

This letter responds to your office’s inquiry regarding the propriety of recouping $12,116 from the Carman Township Road District (Applicant) based upon an August 3, 2012 second appeal decision issued by the Department of Homeland Security’s Federal Emergency Management Agency.  FEMA determined in the second appeal that the Applicant failed to provide documentation to support this cost as part of a project to repair a flood-damaged roadway and directed that the $12,116 be deobligated.

Specifically, FEMA determined in the second appeal decision that the Applicant’s total request for reimbursement of $308,245 for work to repair Carthage Lake Road documented in Project Worksheet (PW) 953 included $12,116 for a “previous payment” for which no supporting documentation was available.  FEMA determined that this amount was erroneously included in the final calculation of project costs at project closeout.  FEMA’s second appeal decision, therefore, instructed the FEMA Region V Regional Administrator to deobligate the $12,116.

Following that decision, FEMA Headquarters staff was advised of documentation, including a cost summary record, voucher, and reimbursement form, that was included within the administrative record at the time of the decision and substantiated the “previous payment” of $12,116.  As such, this amount is eligible for reimbursement.  By this letter, I am requesting the Regional Administrator to reinstate the $12,116.

Sincerely,

/s/

Brad J. Kieserman
Assistant Administrator
Recovery Directorate

cc:   Andrew Velasquez, III
       Regional Administrator
       FEMA Region V