Fema Situation Updates

18 Aug 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Plaquemines Parish
Disaster Number: 
1603-DR-LA
DSR: 
18811 and 18826
Date Signed: 
Friday, August 15, 2014
PA ID: 
075-99075-00
Summary/Brief: 

Conclusion:  On second appeal, the Applicant has shown that the Empire and Buras Boat Harbors are eligible, improved and maintained natural features.  As such, the removal of sediment and debris deposited by Hurricane Katrina from the harbors is eligible for funding, based on the pre-disaster navigational draft depth levels.

Authorities and Second Appeals

  • Stafford Act § 406(a)(1)
  • 44 C.F.R. § 206.201(c), Definitions—Facility.
  • 44 C.F.R. § 206.223(a), General Work Eligibility.

Headnotes

  • Stafford Act § 406(a)(1) authorizes FEMA to make contributions to a local government  to restore eligible facilities on the basis of the design of such facilities as they existed immediately prior to the disaster.
  • Under 44 C.F.R. § 206.201(c), provides that a facility means, “an improved and maintained natural feature.”
    • FEMA reviewed design plans submitted by the Applicant and determined that the harbors are “improved” natural features.
    • FEMA also determined that the Applicant’s assertion that it designed the harbors to be maintenance free is reasonable based on: (1) the Applicants constructed bulkheads at both harbors to restrict the tidal flow of the river from entering the harbor, and (2) the Applicant maintained the functional depth of the harbors through “prop wash,” a documented, valid, and effective maintenance technique.
    • According to 44 C.F.R. § 206.223(a), an eligible item of work must be required as the result of the disaster event.
    • The Applicant was unable to pre-disaster provide maintenance records.  However, it provided a 2008 survey of estimated storm-related damage to the harbors.
    • PA funding is contingent upon the Applicant’s ability to provide sufficient documentation, such as the navigational drafts of vessels which used the facility, nautical charts, Local Notices to Mariners, Coast Pilots, or other documents demonstrating the pre-Katrina depth of the harbors.

 


Summary Paragraph

On August 29, 2005, as a result of Hurricane Katrina, a tidal surge of up to 20 feet of water with accompanying silt, mud, and debris inundated Plaquemines Parish’s (Applicant) four boat harbors, including the Empire Boat Harbor and Marina and the Buras Boat Harbor (harbors).   The Applicant requested Public Assistance funding to remove the excess silt and debris from the harbors.  FEMA initially denied Category A Project Worksheets (PWs) to the Applicant for both harbors.  FEMA agreed to obligate PWs for Category G work if the Applicant could show prior maintenance to the harbors.  In August 2011, FEMA obligated PWs 18811 (Empire Boat Harbor) and 18826 (Buras Boat Harbor) for $0.00 because the Applicant failed to show the pre-disaster level of sedimentation; therefore, an eligible scope of work could not be developed.  In the first appeals, the Applicant asserted that routine dredging was unnecessary because the harbors are designed to be maintenance free.  Accompanying the first appeals, the Applicant submitted a Hydrographic and Topographic survey, dated March 31, 2008, demonstrating pre-disaster levels.  The Regional Administrator (RA) determined that the Applicant failed to demonstrate the harbors were designed to not require routine maintenance and that the survey, conducted by the Applicant’s contractor after the disaster, was subjective and did not conclusively establish any disaster-related sediment.  In the second appeal, the Applicant asserts that the harbors were actively maintained, the harbor floors did not require regular dredging to maintain the functional depth of harbors, the floors of the harbors were maintained through “prop wash,” and post-disaster surveys are reliable sources to determine and establish the amount of disaster-related sediment. 


 

Letter: 

August 15, 2014

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

Re: Second Appeals–Plaquemines Parish, PA ID 075-99075-00, FEMA-1603-DR-LA, Project Worksheets (PWs) 18811 and 18826 – Debris Removal- Waterways

Dear Mr. Davis:

This is in response to your letter dated August 5, 2013, which transmitted the referenced second appeals on behalf of Plaquemines Parish (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $700,000 (PW 18811) and $1,000,000 (PW 18826) for funding associated with removing sediment from two of its harbors.

As explained in the enclosed analysis, I have determined that both harbors are eligible facilities and the removal of sediment from them is required as the result of the declared event.  To validate the survey submitted with the appeal and assertion that the facility’s depth is essentially maintained through use, these appeals are approved contingent upon the Applicant’s provision of sufficient documentation demonstrating the drafts of vessels which used the facilities prior to Hurricane Katrina.  The documentation must specifically demonstrate the navigable depth of the entry channels and the pier-side depth where vessels moored.  The Applicant must submit this documentation to FEMA Region VI within 30 days of this decision.  Failure to submit the required documentation within 30 days will result in a denial of this appeal. 

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc: George A. Robinson
      Regional Administrator
      FEMA Region VI



 

Analysis: 

Background

In 2005, during Hurricane Katrina, a tidal surge of up to 20 feet with accompanying silt, mud, and debris inundated four boat harbors in Plaquemines Parish (Applicant), including the Empire Boat Harbor and Marina and the Buras Boat Harbor.  In June 2008, FEMA prepared Category A Project Worksheets (PW) 18142 and 18143 to remove disaster related silt and debris from the harbors.  FEMA found both PWs to be ineligible because silt deposits in navigable waterways did not pose an immediate threat to public health and safety.  The Applicant appealed this determination requesting FEMA approval of $700,000 and $1,000,000 for the removal of an estimated 21,000 cubic yards (CY) and 60,000 CY of silt deposited as the result of Hurricane Katrina to restore the pre-disaster function and capacity of the Empire Boat Harbor and Marina and the Buras Boat Harbor, respectively.[1]  The Applicant submitted a post-disaster Hydrographic and Topographic survey (Survey), dated March 31, 2008, completed by its consultant, which established the estimated quantity of sediment to be removed.  However, the Applicant provided no maintenance records or documentation demonstrating the pre-disaster capacity of its harbors. 

The FEMA Region VI Acting Regional Administrator (RA) granted the appeal on March 18, 2009, approving the sediment removal as permanent work “contingent upon the applicant’s ability to produce maintenance records and surveys to demonstrate the pre-disaster capacity of its harbors and supporting the estimate of eligible sediment to be removed.[2]”   In late 2009, FEMA prepared Category G PWs 18811 and 18826 for the removal of sediment from the Empire Boat Harbor and Buras Boat Harbor, respectively, and held them pending the Applicant’s submission of additional documentation.  The Applicant submitted budget documents to support it actively maintained the harbors.  FEMA determined that documentation to be insufficient, and in June 2011, found PWs 18811 and 18826 to be ineligible, because the Applicant did not provide documentation demonstrating the “pre-disaster level of sedimentation or provide a history of previous sediment removal as required” by the first appeal response of PWs 18142 and 18143.[3]   

First Appeal

The Applicant submitted a first appeal of both PWs to the Grantee on November 22, 2011 and reiterated that the records supplied to FEMA demonstrated that the harbors are eligible for FEMA funding.  Those records included photographs, construction records, financial records, and budgets.  In addition, the Applicant asserted that the Survey establishes that Hurricane Katrina caused the silt build-up in each of the harbors as well as the pre-disaster level of silt build-up.  Further, the Applicant explained that they did not have maintenance records for dredging because the harbors were designed to avoid silt build-up and the depth of the waterway was maintained through the “prop wash” of transiting vessels. 

In a letter, dated March 19, 2013, the FEMA Region VI RA denied the appeals because the Applicant did not produce the pre-disaster records and surveys that FEMA required in response to the first appeals of PWs 18142 and 18143 and found that the Applicant’s assertion that the harbors were designed to be maintenance-free was not supported by any corresponding technical design criteria or specifications.  In addition, the RA stated that “operating budget expenditures submitted by the applicant for routine, day-to-day operations of the harbors… does not support prior maintenance of the natural feature.”  Therefore, the Applicant could not conclusively establish any disaster-related sediment.  Consequently, the RA determined that sediment removal from the Applicant’s harbors was not eligible for Public Assistance funding.

Second Appeal

The Applicant submitted a second appeal for each PW on June 5, 2013, which the Grantee transmitted to FEMA on August 9, 2013.  In the second appeal, the Applicant requests reimbursement of the cost required to remove Hurricane Katrina storm-generated silt and sediment, reasserting that it is permanent work that will restore the harbors’ pre-disaster capacities and is, thus, an eligible cost.  The Applicant claims that the harbors were actively maintained.  In addition, the harbor bottoms did not require regular dredging to maintain the functional depth because it designed the harbors to not permit Mississippi River water tidal flow, which is the typical cause of silt build-up.  Prior to Hurricane Katrina, the harbors had never “silted up” to the point of needing dredging and its depth was maintained through “prop wash.”  Finally, the Applicant asserts that the March 2008 Survey is a reliable source to determine and establish the amount of sediment deposited as the result of the disaster.    

Discussion

Facility Eligibility

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) Section 406(a)(1) authorizes FEMA to make contributions to a local government  to restore eligible facilities on the basis of the design of such facilities as they existed immediately prior to the disaster. [4]  Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.201(c), Definitions—Facility, provides that a facility means, “an improved and maintained natural feature.”  The improvement of the natural feature should be based on a documented design that changes and improves natural characteristics of the feature.[5]  In addition, routine maintenance must be done to ensure the improvement performs as designed.[6]

The Applicant has consistently asserted that the harbors were actively maintained before the disaster.  As evidence, the Applicant provided photographs showing boats and cargo ships accessing the harbors.  The Applicant asserts that if the harbors were not maintained, this would not be possible.  In addition, the Applicant states that the harbor bottoms did not require regular dredging to maintain a functional depth because both were designed to inhibit Mississippi River water tidal flow, which is normally the cause of silt build up in facilities along the Mississippi River.  The Applicant submitted design plans demonstrating that it improved upon the natural features through excavation and dredging as part of the design of the harbors.  Finally, the Applicant states that the harbor floors are maintained through “prop wash,” a process that involves the hydrodynamics of the vessels transiting the harbor to create a pushing effect that moves excess silt and sediment from reducing the depth of navigated waterways.   

Based on a review of the design plans submitted by the Applicant, the harbors are “improved” natural features, as required by 44 C.F.R. § 206.201(c).  Moreover, the Applicant’s assertion that it designed the harbors to be maintenance free is reasonable as the Applicant constructed bulkheads at both harbors to restrict tidal flow from entering the harbor.  Further, the Applicant’s assertion that the functional depth of both harbors could be maintained through “prop wash” is valid.  Prop wash agitation dredging is a documented, valid maintenance technique that is effective under very specific conditions.[7]  This is a cost-effective method of maintaining a harbor and one, if used, would not necessarily be documented by the operator of the facility.  Based on the design of the harbors, the location along the Mississippi River, the type of soil that exists at that location, and the fact that the harbors were fully operational prior to the event, it is reasonable to conclude that the Applicant both improved and maintained them, and as such, the harbors are eligible facilities. 

Eligibility of the Debris Removal

Pursuant to 44 C.F.R. § 206.223(a), General Work Eligibility, an eligible item of work must be required as the result of the disaster event.  The March 2008 Survey, reports the findings of post-event field surveys and related analysis conducted by the Applicant’s consultant.  To determine storm-related debris and sediment, the consultant took soil samples from the harbor floors, analyzed the samples for varying sediment characteristics, and estimated the profile of the pre-storm harbor floors using a linear interpolation of the sediment characteristics found at each sample location.[8]  Based on the Survey results, the consultant estimated that Hurricane Katrina deposited 21,000 CY of sediment at Empire Boat Harbor and 60,000 CY of sediment at Buras Boat Harbor.  As stated in the RA’s decision, FEMA cannot rely on surveys conducted after the disaster without pre-disaster records.  The Acting RA made the same determination in response to the appeals of PWs 18142 and 18143, by requiring that the Applicant “produce maintenance records and surveys to demonstrate the pre-disaster capacity of its harbors and supporting the estimate of eligible sediment to be removed.” (emphasis added.)  The Applicant continues to maintain that it has no records to demonstrate the pre-disaster level of sediment in the harbors but should be able to produce documentation which establishes the depth of the waterways and maximum draft of ships which used each facility prior to the event.  Such documentation, applied in conjunction with the data presented in the Survey, can be used to estimate the quantity of sediment deposited in each harbor as a result of the event.  Accordingly, FEMA will provide funding to restore the harbors to its pre-Katrina navigational depth, contingent upon the Applicant’s ability to provide FEMA Region VI with sufficient documentation, such as the navigational drafts of vessels which used the facility, nautical charts, Local Notices to Mariners, Coast Pilots, or other documents demonstrating the pre-Katrina depth of the harbors.[9]

Conclusion

The Applicant has shown that the Empire and Buras Boat Harbors are eligible, improved and maintained natural features.  The removal of sediment and debris deposited by Hurricane Katrina from the harbors is eligible for funding, contingent upon the Applicant’s ability to provide FEMA Region VI with sufficient documentation to demonstrate the depth of the harbors prior to Hurricane Katrina.  In delineating the scopes of work for PWs 18811 and 18826, the documentation must specifically demonstrate the navigable depth of the channels and the pier-side depth where vessels moored within six months of the disaster.  The documentation must demonstrate depth levels consistent with the standards prescribed in RP 9523.5.


[1] See First Appeal Letter, Plaquemines Parish, FEMA-1603-DR-LA (Nov. 10, 2008).

[2] FEMA First Appeal Analysis, Plaquemines Parish, FEMA-1603-DR-LA, at 2 (Mar. 18, 2009).

[3] See Plaquemines Parish, Project Worksheet (PW) 18811, Version 0 at 3 (May 25, 2011); see also Plaquemines Parish, PW 18826, Version 0 at 3 (May 25, 2011).

[4] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406, 42 U.S.C. § 5172 (2000).

[5] See Public Assistance Guide, FEMA 322 at 16 (Oct. 1999) [hereinafter PA Guide].

[6] Id.

[7] See Engineering and Design: Dredging and Dredged Material Disposal, Engineer Manual 1110-2-5025, at §3-12(d) (Mar. 25, 1983), http://planning.usace.army.mil/toolbox/library/ERs/ER1110.2.5025.pdf. 

[8] See Hydrographic and Topographic Surveys for Repairs to Boat Harbor Facilities, Plaquemines Parish, LA, at 6-7 (Mar. 31, 2008).

[9] At the time of the incident, there was no FEMA policy that specifically addressed Public Assistance reimbursement for removal of debris from waterways.  However, FEMA has subsequently issued Recovery Policy (RP) 9523.5, Debris Removal from Waterways, at 6 (Mar. 29, 2010) (stating FEMA may reimburse the removal of debris from a navigable waterway to a depth equal to the maximum draft of the largest vessel that utilized the waterway prior to the storm plus two feet).

 

 

12 Aug 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Erie County
Disaster Number: 
1857-DR-NY
DSR: 
963, 964, 966, 967 and 968
Date Signed: 
Tuesday, August 12, 2014
PA ID: 
029-99029-00
Summary/Brief: 

Conclusion: On second appeal, Erie County (Applicant) demonstrated that it was legally responsible for repairs to the Buffalo Southern Railway Line 1246 (facility) at the time of the disaster.
 

ParagraphSummary                  

  • 44 C.F.R. § 206.223(a)(3)
  • PA Guide, at 23, 30, 31.

Headnotes

  • Pursuant to 44 C.F.R. § 206.223 (a)(3), in order to be eligible for PA funding, an item of work must be the legal responsibility of an eligible applicant. 
  • According to the PA Guide, ownership of a facility is generally sufficient to establish legal responsibility.  This holds true even if the owner leases out an eligible facility, except when the controlling lease states that the lessee is responsible for repairs to the facility or maintains insurance for repairs. The lease usually contains general repair and maintenance language; however, responsibility for damage resulting from a disaster may not be established.   In the absence of any mention in the lease, the owner of the facility will be assumed responsible for the repair.    
  • The Applicant owned the facility at the time of the disaster.
  • The two controlling leases do not clearly establish that ECIDA or BSR were responsible for the level of repairs resulting from disaster damage.
  • Pursuant to FEMA policy, absent a clear delegation of legal responsibility for disaster-related repairs, the Applicant, as the owner of the facility, is legally responsible for such repairs.

 Authorities Discussed

From August 8 to August 10, 2009, severe storms and flooding damaged sections of the Buffalo Southern Railway Line 1246 (facility) owned by the Applicant.  However, the facility is leased to the Erie County Industrial Development Agency (ECIDA), and sub-leased to the Buffalo Southern Railroad, Inc. (BSR)—a private company.  Culverts were plugged, and ballast

alongside and underneath the railway ties were damaged in different sections along the track from track mile markers 10.8 to 32.6.  A total of five PWs—963, 964, 966, 967 and 968—were drafted to address the damage along this stretch of the facility.  Upon review of the two controlling leases, FEMA field personnel determined the repair work for the facility was ineligible because the Applicant was not legally responsible for the facility at the time of the disaster event.  In the first appeal, the Applicant asserted that it and ECIDA both understood that major capital repair was the responsibility of the Applicant.  The Region II Acting Regional Administrator (RA) denied the first appeal because she determined that the Applicant—although owner of the facility—was not legally responsible for repairs to the facility because the leases in effect at the time of the disaster explicitly state BSR was responsible for all repair work. 

 

 

 

 

Letter: 

August 12, 2014

William R. Davis Jr.
Acting Director
New York State Office of Emergency Management
1220 Washington Avenue
Building 22, Suite 101
Albany, New York 12226-2251

Re: Second Appeal – Erie County, FEMA-1857-DR-NY, PA ID 029-99029-00, Project Worksheets (PWs) 963, 964, 966, 967 and 968 – Legal Responsibility

Dear Mr. Davis:

This is in response to your letter dated February 24, 2014, which transmitted the referenced second appeal on behalf of Erie County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $293,805.03 in Public Assistance funding resulting from a determination that the Applicant was not legally responsible for the facility at the time of the disaster. 

As explained in the enclosed analysis, I have determined that the leases at issue demonstrate that the Applicant had legal responsibility of the facility at the time of the disaster.  Therefore, I am approving the appeal.  By copy of this letter, I am requesting the Regional Administrator take appropriate action to implement this determination. 

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc: Jerome Hatfield
     Regional Administrator
     FEMA Region II

 

Analysis: 

Background

From August 8 to August 10, 2009, severe storms and flooding damaged sections of the Buffalo Southern Railway Line 1246 (facility).  The facility is owned by the County of Erie (Applicant), leased to the Erie County Industrial Development Agency (ECIDA), and sub-leased to the Buffalo Southern Railroad, Inc. (BSR)—a private company.  FEMA prepared PWs 963, 964, 966, 967 and 968 to address repairs necessary to restore the facility to pre-disaster condition.  Upon review of the two controlling leases, FEMA field personnel determined the repair work for the facility was ineligible because the Applicant did not have legal responsibility for the facility at the time of the disaster event. 

First Appeal

In its first appeal, dated May 4, 2011, the Applicant asserted that it and ECIDA both understood that major capital repair was the responsibility of the Applicant.  Further, the type of repairs necessary to restore the facility to pre-disaster condition is major, not routine maintenance.  The Applicant asserted that evidence was submitted showing the Applicant—through ECIDA—hired a contractor to perform major repair projects since 1998.

The Region II Acting Regional Administrator (RA) denied the first appeal because she determined that the Applicant—although owner of the facility—was not legally responsible for repairs to the facility.  She determined that the lease between Erie County and ECIDA and the lease between ECIDA and BSR were in effect at the time of the disaster.  Moreover, the leases spell out who was legally responsible for repairs to the facility—BSR.  Finally, the Acting RA stated that the Applicant had provided no examples where it previously stepped in and made repairs in a similar non-federally declared event, and did not charge those repairs back to BSR.  Accordingly, there was no evidence that the Applicant was legally responsible for repairs and maintenance of the facility. 

Second Appeal

The Applicant’s second appeal, dated November 6, 2013, was transmitted to FEMA by the Grantee on February 24, 2014.  In the second appeal, the Applicant asserts that as the leases have been administered by ECIDA, the Applicant has held BSR responsible for normal maintenance; however, the Applicant has assumed responsibility for major repairs to the facility.  The Applicant states that the new documentation it provides on second appeal should be sufficient proof of ECIDA’s undertaking and managing of major repairs to the facility. 

Discussion

Legal Responsibility

Pursuant to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.223 (a)(3), in order to be eligible for PA funding, an item of work must be the legal responsibility of an eligible applicant.  FEMA interprets this provision to mean “at the time of the disaster.”[1]  Ownership of a facility is generally sufficient to establish legal responsibility even if the owner leases out an eligible facility.[2]  This is true except when the controlling lease states that the lessee is responsible for repairs to the facility or maintains insurance for repairs.[3]  The lease usually contains general repair and maintenance language; however, responsibility for damage resulting from a disaster may not be established.[4]  In the absence of any mention in the lease, the owner of the facility will be assumed responsible for the repair.[5]

As stated in the first appeal determination, there are two leases that control in this appeal.  However, there is no clear delegation of legal responsibility for major or disaster-related repairs in either lease.  In fact, the lease between ECIDA and BSR creates a limitation for responsibility of maintenance of not less than $20,000, meaning BSR is not legally required to spend more than that amount for maintenance.[6]  In addition, the lease between ECIDA and BSR defines “maintenance” and “rehabilitation”, and neither definition includes major repair work or repairs resulting from disaster damage.[7] Lastly, the lease authorizes BSR to terminate the agreement if performance was rendered impossible due to Force Majeure. [8]

Regarding maintenance, the lease between the Applicant and ECIDA only stipulates that ECIDA must return the facility to the Applicant in as good condition as received, reasonable wear and tear excepted, when the lease expires.[9]  The lease does not speak to legal responsibility regarding repairs resulting from disaster damage or catastrophic events.  However, the lease does explicitly provide that ECIDA may terminate the lease without repairing the facility if an event or occurrence renders the facility inoperable as a railroad without major reconstruction.[10]  In addition, ECIDA was permitted to terminate the lease in the event that it was unable to continue railroad operations because rail service was suspended due to substantial faults with the railbed, tracks, ties, bridges, crossings, or right-of-way “for which funding to cure such faults” was not available.[11]  When these clauses are read together, the Applicant’s argument that the parties understood that the Applicant was legally responsible for all major repairs is logical.

Notwithstanding the Applicant’s assertion that it is responsible for all major repairs, FEMA policy stipulates that the owner of a facility is legally responsible for disaster-related repairs absent a clear delegation to a lessee.[12]  Here, the Applicant owned the facility at the time of the disaster.  Accordingly, since neither lease delegates responsibility for major repairs resulting from disaster damage, legal responsibility lies with the Applicant.

Conclusion

At the time of the disaster, the Applicant owned the facility.  While the facility was leased to a quasi-governmental entity and sub-leased to a private company, neither lease delegated legal responsibility for major repairs resulting from disaster damage to the Lessee or sub-Lessee.  Pursuant to FEMA policy, in the absence of such delegation, the owner is legally responsible for such repair work.  Accordingly, the Applicant is responsible for the repair work addressed in PWs 963, 964, 966, 967 and 968.


[1] See Public Assistance Guide, FEMA 322 at 30 (June 2007) [hereinafter PA Guide].

[2] Id. at 23.

[3] Id.

[4] Id. at 31. 

[5] Id.

[6] See Lease Agreement between Erie County Industrial Development Agency and Buffalo Southern Railroad, Inc. at Section 6.01, Maintenance in Lieu of Rent, (Nov. 22, 1991) (on file with FEMA).

[7] Id. at Section 1.01, Definition of Terms, (defining “maintenance” as “normal and regular work required to keep the Railroad Properties in minimum safe condition…” and “rehabilitation” as “the work required, in addition to maintenance, including capital improvements, to improve or upgrade the condition of the Railroad Properties…”).

[8] See Lease Agreement between Erie County Industrial Development Agency and Buffalo Southern Railroad, Article Seven§7.01(c). Termination of Agreement (November 22, 1991) (on file with FEMA). See also, definitions in § 1.01 which defines Force Majeure as an act of God, including, among other things  lightening; earthquakes; fire; and flood so long as such causes or events are not reasonably in control of the Lessee.

[9] See Lease Agreement between Erie County and Erie County Industrial Development Agency at Section 10(a) and (b), Maintenance, (June 1, 1985)(on file with FEMA).

[10] Id. at Section 11, Inoperability.

[11] Id. at Section 13(a)(4), Termination.

[12] PA Guide, at 31.

 

 

12 Aug 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
New Creation Christian Church
Disaster Number: 
1603-DR-LA
DSR: 
20454
Date Signed: 
Tuesday, August 12, 2014
PA ID: 
071-UGADM-00
Summary/Brief: 

Conclusion: The Applicant did not provide sufficient documentation to demonstrate that it has an eligible Private Nonprofit (PNP) facility or legal responsibility for disaster-related repairs to the facility.

Summary Paragraph

The Applicant’s facility sustained over 8 feet of floodwaters during Hurricane Katrina in August 2005.  FEMA provisionally approved the Applicant’s Request for Public Assistance (RPA) in December 2011, based on the Applicant’s claim that it operated a community center, a shelter for the homeless, and a feeding program.  The Applicant did not provide sufficient documentation to support its RPA claim, and FEMA obligated PW 20454 for zero-dollars in January 2013.  In its first appeal, the Applicant requested funding without providing adequate supporting documentation.  The Regional Administrator denied the appeal because the Applicant did not demonstrate that its facility was primarily used for eligible PNP activities or that it had legal responsibility for disaster-related repairs to the facility.  In its second appeal, the Applicant again requested FEMA funding and stated that it could not provide any documentation because everything was lost during Hurricane Katrina.  FEMA upheld the Regional Administrator’s determination that the Applicant did not provide sufficient documentation to demonstrate that it has an eligible PNP facility or legal responsibility for disaster-related repairs to the facility. 

Authorities and Second Appeals

  • 44 C.F.R. § 206.206(a)
  • 44 C.F.R. § 206.222(b)
  • 44 C.F.R. § 206.223(a)(3)
  • RDP 9521.3, Private Nonprofit Facility (PNP) Eligibility (May 23, 2003), at 2.

Headnotes

  • 44 C.F.R. § 206.222(b) specifies that a PNP organization or institution which owns or operates an eligible PNP facility is eligible to apply for Public Assistance (PA).
  • There is insufficient documentation demonstrating that the Applicant owns or operates an eligible facility.  Accordingly, the Applicant is not eligible to apply for PA funding.  
  • 44 C.F.R. § 206.223(a)(3) requires that an item of work must be the legal responsibility of an eligible applicant in order to be eligible for financial assistance.
  • The Applicant did not provide any documentation showing that it owned or leased the facility and has legal responsibility for any disaster-related repairs.  Without legal responsibility, the Applicant is not eligible for financial assistance. 
  • RDP 9521.3, Private Nonprofit Facility (PNP) Eligibility explains that an eligible applicant must meet requirements as listed in 44 C.F.R. § 206.221 – 44 C.F.R. § 206.226 , including the need to own or operate an eligible facility and to be legally responsible for disaster-related repairs.   The policy also states that the facility must be primarily used for one of the services or facilities listed in 44 C.F.R. § 206.221(e).
  • Without meeting the requirements to own or operate an eligible facility and have legal responsibility for disaster-related repairs, the Applicant is not eligible for PA funding.
Letter: 

August 12, 2014

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

Re: Second Appeal – New Creation Christian Church, PA ID 071-UGADM-00, FEMA-1603-DR-LA, Project Worksheet (PW) 20454, Request for Public Assistance – Private Nonprofit

Dear Mr. Davis:

This is in response a letter from your office dated June 10, 2014, which transmitted the referenced second appeal on behalf of New Creation Christian Church (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of its Request for Public Assistance as a private nonprofit (PNP) applicant and zero-dollar obligation of PW 20454. 

As explained in the enclosed analysis, I have determined that the Applicant did not provide sufficient documentation to demonstrate that it has an eligible PNP facility or legal responsibility for disaster-related repairs to its facility.  Therefore, I am denying this appeal.

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc: George A. Robinson
      Regional Administrator
      FEMA Region VI

Analysis: 

Background

On August 29, 2005, heavy rains and flooding from Hurricane Katrina resulted in extensive damages to the New Creation Christian Church’s (Applicant) two story brick building (Facility).  The Facility also sustained over eight feet of floodwaters for several weeks.  Prior to any opportunity for FEMA’s inspection, the Facility was demolished and its contents were destroyed.

From November 16, 2010 to October 7, 2011, FEMA accepted new Requests for Public Assistance (RPA) from faith-based private nonprofit (PNP) organizations that had not previously applied for Public Assistance (PA) due to extenuating circumstances in the aftermath of Hurricane Katrina.  The Applicant applied for Public Assistance (PA) under this program.

On December 7, 2011, FEMA provisionally approved the Applicant’s RPA, based on the Applicant’s claim that it operated a food bank facility at the time of the disaster.  During the Kick-Off Meeting on January 19, 2012, the Applicant stated that the Facility housed a church upstairs and a community center downstairs, in addition to a shelter for the homeless and a feeding program. Despite FEMA’s multiple requests for documentation between January and July 2012, the Applicant did not provide sufficient documentation to support its facility eligibility claims.

On January 17, 2013, FEMA obligated PW 20454 for zero-dollars.  FEMA’s determination was based on the Applicant not providing sufficient documentation to demonstrate that the Facility was primarily used for eligible PNP purposes or that it had legal responsibility for disaster-related damages to the Facility.

First Appeal

In an undated first appeal letter received by the Grantee on March 21, 2013, the Applicant appealed FEMA’s denial of its RPA and zero-dollar obligation of PW 20454.  On May 20, 2013, the Grantee transmitted the Applicant’s first appeal to the Region, indicating its support of the appeal. 

On March 6, 2014, the FEMA Region VI Regional Administrator (RA) denied the first appeal.  The RA found the Applicant failed to sufficiently demonstrate that it had an eligible facility primarily used for eligible PNP activities at the time of the disaster, and that it was legally responsible for disaster-related repairs to the facility.

Second Appeal

In an undated second appeal letter received by the Grantee on May 21, 2014 and transmitted to FEMA by the Grantee on June 10, 2014, the Applicant again appealed FEMA’s denial of its RPA and zero-dollar obligation of PW 20454.  The Applicant did not make any arguments regarding its PNP eligibility, but claimed that it lost everything, including any documents or pictures, during Hurricane Katrina, and stated that it was not possible to present any supporting documentation of the lost building contents.  The Applicant listed, from memory, 32 lost building content items worth $240,608.00, plus rebuilding cost of $733,000.00, for a total requested funding amount of $973,608.00.

Discussion

Pursuant to 44 C.F.R. § 206.222(b) and § 206.223(a)(3), to be eligible for PA funding, a PNP applicant must own or operate an eligible PNP facility, and it must have legal responsibility for disaster-related damages.[1]  Furthermore, per 44 C.F.R. § 206.206(a), it is the Applicant’s responsibility to provide sufficient documentation to support its appeal.[2]

Eligible PNP facilities are defined in 44 C.F.R. § 206.221(e) and include facilities providing essential governmental type services such as community centers and homeless shelters.[3]  PNP facility eligibility requirements are further clarified in RDP 9521.3, Private Nonprofit Facility (PNP) Eligibility, which provides that a PNP facility must be primarily used for one of the eligible PNP services to be eligible for PA funding.[4]  Primary use is determined by first considering the space that a facility is used for eligible services, whereby over 50 percent of a facility’s space must be dedicated to an eligible purpose.[5]  For mixed-use facilities, primary use is determined by the amount of time that the facility is used for eligible services.[6]

FEMA provisionally approved the Applicant’s RPA based on the claim that it operated a food bank at the time of the disaster.  During the Kick-Off Meeting, the Applicant also claimed that it operated a community center, a homeless shelter, and a feeding program, in addition to a regular church, all within the same building.  Previously submitted documentation consists of letters of support written by church congregants and a summary of activities the Applicant claims to have provided at the Facility. However, this information does not demonstrate that the Facility was primarily used for one of the eligible PNP activities in accordance with requirements outlined in regulation[7] and policy.[8]

Additionally, the Applicant provided a court document dated August 29, 2007, naming the Applicant’s church pastor, Marie Galatas, as the Administrator with legal authority to make any decisions regarding the Facility.  However, legal authority is not synonymous with legal responsibility, and any legal authority granted to the Applicant’s church pastor does not automatically extend to the Applicant.  Even if, arguendo, it could, this court document is dated post-disaster and was not in effect at the time of the disaster. As the RA correctly determined, this document does not establish ownership of the Facility by the Applicant, nor the Applicant’s legal responsibility for disaster-related repairs at the Facility at the time of the disaster.  Pursuant to regulation, any work that is not the legal responsibility of an eligible applicant is not eligible for PA funding.[9]

Moreover, RDP 9521.3 states that “[c]ontents that are the responsibility of an ineligible occupant are not eligible for reimbursement if damaged.”[10]  Without an eligible facility or documentation of legal responsibility for an eligible facility, the Applicant is effectively considered an ineligible occupant of the damaged Facility for the purposes of PA funding.  Accordingly, the Applicant is not eligible to receive PA funding for any contents within the Facility damaged during the disaster.

Conclusion

The Applicant failed to provide sufficient documentation to demonstrate that its Facility was used primarily for eligible PNP activities and that it is legally responsible for disaster-related repairs.  Therefore, the Applicant’s Facility is not eligible for PA funding.  Furthermore, without an eligible facility, any contents therein are also ineligible for PA funding. 


[1] See 44 C.F.R. §§ 206.222(b), 206.223(a)(3) (2005).

[2] See 44 C.F.R. § 206.206(a).

[3] See 44 C.F.R. §206.221(e).

[4] See Recovery Directorate Policy RDP9521.3, Private Nonprofit Facility (PNP) Eligibility, at 2 (May 23, 2003).

[5] See Id. at 3.

[6] See Id.

[7] See 44 C.F.R., supra note 2.

[8] See RDP 9521.3, supra note 3.

[9] See 44 C.F.R. § 206.223(a)(3).

[10] See RDP 9521.3, supra note 4.

 

12 Aug 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
North Carolina Department of Transportation
Disaster Number: 
1553-DR-NC
DSR: 
652, 756, 758, 783, 978, 998, 1013, 1089, 1100, 1125, 1151, 1158, 1201, 1234, 1237, 1246, 1263, 1280, 1293, 1299, 1325, and 1335
Date Signed: 
Monday, August 11, 2014
PA ID: 
000-UZZTS-00
Summary/Brief: 

Conclusion: On second appeal, the Applicant provided sufficient additional documentation to demonstrate that all fringe benefit charges were accurately calculated and claimed.

Summary Paragraph

The Office of Inspector General (OIG) conducted an audit of the Applicant’s projects related to Hurricane Ivan and recommended disallowing $202,984 from 22 Project Worksheets (PWs), due to ineligible overtime fringe benefit charges.  FEMA concurred and de-obligated $202,984 from the 22 PWs.  In its first appeal, the Applicant asserted that its project systems team conducted an internal audit of its SAP financial accounting system and confirmed that the system accurately calculated the payroll overtime additives.  The Applicant argued that the OIG’s misunderstanding of its financial accounting system led to the misinterpretation of the accounting data.  The Regional Administrator denied the first appeal because the Applicant offered no additional documentation on which to base a challenge to the OIG’s conclusion.  In its second appeal, the Applicant reiterated its argument and provided additional documentation addressing the ineligible overtime fringe benefit costs identified by the OIG audit.

Authorities and Second Appeals

  • 44 C.F.R. § 206.228(a)(4).
  • PA Guide, at 37.

Headnotes

  • 44 C.F.R. § 206.228(a)(4) states that for the performance of eligible permanent work, straight-time salaries and benefits of a subgrantee’s permanent employees are eligible for reimbursement.
  • Fringe benefits are calculated differently between straight-time and overtime labor.  The OIG audit found that the Applicant incorrectly claimed some fringe benefits applicable to regular time on overtime labor.  The Applicant disagreed and provided additional documentation to demonstrate that its SAP financial accounting system accurately calculated all fringe benefits on both regular and overtime labor.
  • PA Guide provides that fringe benefits actually paid as part of an established policy are eligible.  The fringe benefit rates are different for regular and overtime hours, because certain items in a benefits package, such as health insurance, are not dependent on hours worked. 
  • The Applicant argued that the OIG misunderstood its financial accounting system and disallowed certain fringe benefits that should be allowed on overtime hours.  The Applicant provided sufficient documentation to show that its SAP financial accounting system accurately calculated fringe benefit rates that are appropriately different for regular and overtime hours.
Letter: 

August 11, 2014

Michael Sprayberry
Director
North Carolina Division of Emergency Management
4713 Mail Service Center
Raleigh, North Carolina 27699-4713

Re:       Second Appeal – North Carolina Department of Transportation, PA ID 000-UZZTS-00, FEMA-1553-DR-NC, Project Worksheets (PWs) 652, 756, 758, 783, 978, 998, 1013, 1089, 1100, 1125, 1151, 1158, 1201, 1234, 1237, 1246, 1263, 1280, 1293, 1299, 1325, and 1335 – OIG Audit – Fringe Benefits

Dear Mr. Sprayberry:

This is in response to your office’s letter dated April 11, 2014, which transmitted the referenced second appeal on behalf of North Carolina Department of Transportation (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) de-obligation of $202,984 in ineligible overtime fringe benefits claimed on 22 PWs, based on the result of an Office of Inspector General (OIG) audit.

As explained in the enclosed analysis, I have determined that the Applicant provided sufficient additional documentation with the second appeal to demonstrate that all overtime fringe benefits were correctly calculated and claimed on the 22 PWs.  Accordingly, I am granting this appeal in the amount of $202,984.  By copy of this letter, I am requesting that the Regional Administrator take appropriate action to implement this determination. 

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

Sincerely,

/s/

Brad J. Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

cc:  Andrew Velasquez, III
      Acting Regional Administrator
      FEMA Region IV

Analysis: 

Background 

During the Hurricane Ivan incident period from September 16 to September 23, 2004, facilities operated by the North Carolina Department of Transportation (Applicant) sustained a variety of storm-related damages.  The Applicant received approximately $27.1 million in Public Assistance (PA) funding for eligible work related to debris removal, emergency protective measures, road repairs and replacement of bridges. FEMA prepared and obligated a total of 86 large projects and 634 small projects.[1]

On April 15, 2011, the Department of Homeland Security Office of Inspector General (OIG) issued Audit Report Number DA-11-15 (Audit Report) based on an audit of large project totaling $11.4 million.[2]  The OIG initially reviewed 10 large projects totaling $6.3 million and then selected 18 additional large projects totaling $5.2 million, after it determined that some of the Applicant’s projects contained excessive overtime fringe benefit charges.[3]  The OIG audit found that the Applicant claimed $1,346,890 in force account overtime labor and fringe benefits under Project Worksheets (PWs) 652, 756, 758, 783, 978, 998, 1013, 1089, 1100, 1125, 1151, 1158, 1201, 1234, 1237, 1246, 1263, 1280, 1293, 1299, 1325, and 1335, including $202,984[4] in fringe benefits that should be applicable to only regular time, not overtime, labor.[5] The OIG recommended disallowing $202,984 from those 22 PWs as ineligible overtime fringe benefit charges.[6]  Prior to the issuance of the Audit Report, the OIG provided written summaries of its findings and recommendations to the Applicant and discussed them at an exit conference on January 20, 2011, where the Applicant concurred with its findings.[7]

On August 8, 2011, the Applicant submitted a written response to the Audit Report, refuting the OIG audit findings.  The Applicant stated that although it initially agreed with the audit results based upon the assumption that the OIG audit team had met with its project systems team and that its SAP financial accounting system was in error, it subsequently tested the accounting system and found no errors and that all payroll overtime additives (i.e., fringe benefit charges) were calculated correctly.  The Grantee notified the Applicant on January 11, 2013 of FEMA’s de-obligation of $202,984 from 22 PWs based upon the OIG audit findings.  

First Appeal

On February 15, 2013, the Applicant sent its first appeal request to the Grantee, appealing FEMA’s de-obligation based on the OIG audit findings.  The Grantee transmitted the Applicant’s first appeal to Region IV on February 18, 2013, indicating its support of the appeal.

The Applicant asserted its project systems team conducted an internal audit of the SAP financial accounting system and confirmed that the system accurately calculated the payroll overtime additives.  The Applicant stated that the OIG audit team was familiar with the previous legacy accounting system, but not the SAP financial accounting system newly introduced in 2003, and opined that the lack of understanding of the new system’s report format led to OIG’s misinterpretation of its accounting data. 

The FEMA Region IV Regional Administrator (RA) denied the first appeal on January 17, 2014.  The RA stated that while the Applicant made clear its disagreement with the OIG audit conclusions, it offered no additional data, documentation, or detailed methodology to explain the audit differences with its own findings to support its position.  The RA determined that there was no information provided by the Applicant to merit a challenge to the OIG’s conclusions and FEMA’s de-obligation based upon it.

Second Appeal

On April 11, 2014, the Grantee transmitted and positively endorsed the Applicant’s second appeal letter dated March 27, 2014.  The second appeal reiterated the Applicant’s first appeal argument.  Additionally, the Applicant stated that it conducted a detailed review of individual line items of questioned costs in the Audit Report, provided spreadsheets with its comments disputing the OIG finding on each cost item, and addressed the following issues found in the Audit Report:

  • Misinterpretation of account titles
  • Inconsistencies in questioned costs:
    • Disallowed fringe benefits associated with regular hours
    • Questioned costs that were not claimed on the projects
    • Inconsistency in the type of fringe benefits disallowed among projects
    • Key-punch and/or transposition errors in the Audit Report

The Applicant explained that “Cost Element Account Titles” detailed in the labor reports are used to describe the status of employees who charge time to disaster projects, as opposed to identifying a work hour as regular or overtime.  The Applicant acknowledged that the Account Titles, as currently displayed in its SAP accounting system, are not intuitive and could be misleading without an understanding of the FEMA Payroll Master document, which details the payroll additives calculated for each FEMA activity type.

The Applicant also stated that it found two fringe benefit labeling errors during the internal review of its accounting system.

Discussion

Title 44 Code of Federal Regulations (44 C.F.R.) § 206.206 requires that the Applicant’s appeal “contain documented justification supporting the [applicant’s] position...”[8]  The Applicant disputed the OIG audit findings regarding ineligible fringe benefits, and provided annotated spreadsheets as additional documentation to support its position.

The Applicant attributed some of the OIG audit findings to a potential misunderstanding of Account Titles used by its SAP accounting system, which could have led to the misinterpretation of the accounting data.  As an example, the Applicant explained that the FEMA Labor Secondary Cost Element “920000011 Perm Labor Subject: Allow Ovtime/Compt” means the employee is eligible to make overtime but has not yet reached his/her regular 40 hours worked for the week.  If the same employee has reached 40 work hours for the week, he or she would charge to “920000014 Perm Labor Subject: Overtime.”

Along with this explanation, the Applicant provided a copy of the FEMA Payroll Master (Payroll Master) document detailing the payroll additives applicable to each labor type.  This Payroll Master document provided helpful information to understand the difference between regular and overtime labor types in the Applicant’s accounting data.  The details in this Payroll Master document, along with the Applicant’s comments in the backup spreadsheets, enabled FEMA to verify the Applicant’s claim that the majority of the disallowed ineligible overtime fringe benefits were actually eligible fringe benefits applicable to regular time labor.

FEMA regulations provide that “[f]or the performance of eligible permanent restoration under section 406 of the Act, 42.U.S.C. 5172, straight-time salaries and benefits of a subgrantee’s permanently employed personnel are eligible.[9]  Public Assistance guidance further explains that “[f]ringe benefits that are actually paid as part of an established policy are eligible.  Because certain items in a benefit package are not dependent on hours worked, such as health insurance, the fringe benefit rate will be different for regular and overtime hours.  The overtime fringe benefit rate is usually significantly lower.”[10]

The Applicant agreed that some fringe benefits, such as Holiday, Sick Leave, Annual Leave, and Hospital Medical, should not be calculated on overtime labor.  The Payroll Master document confirmed that the Applicant’s accounting system does not calculate these fringe benefits on overtime labor.  The Applicant also explained that the cost of Public Liability, Disability Insurance, Compensatory Leave, and Retirement calculations are related to the number of hours worked and should be eligible for overtime hours, even though they were identified as ineligible overtime fringe benefits by the OIG.  The Payroll Master document showed that these fringe benefits are indeed applicable to both regular and overtime labor.  Therefore, FEMA agrees with the Applicant that these fringe benefits should be considered eligible for overtime labor.

The Applicant also contended that some of the costs questioned in the Audit Report were not claimed on the related PWs, and marked them accordingly in the supporting spreadsheet.  FEMA confirmed this and agrees that these costs should not be disallowed.

Furthermore, the Applicant claimed that it identified several types of inconsistencies and errors in the Audit Report, and noted them in a separate comments column in the supporting spreadsheets.[11]  Based on the supporting documentation submitted, FEMA agrees with the Applicant that all of these fringe benefits identified by the OIG as ineligible should be eligible.

Additionally, the Applicant identified a few key-punch and transposition errors in the Audit Report.  It appears that such errors were made in the Audit Report.  However, these errors are limited to the Audit Report text regarding the claimed labor, and do not actually impact the dollar amount that the OIG recommended for disallowance.

Lastly, the Applicant acknowledged the discovery of its accounting system mislabeling the following two items: 1) the calculation for “Comp Leave Fringe (920000081)” for a permanent employee working Comp Time was mislabeled as “CL Perm Not Subj: Holiday Wktime” when it should read “CL Perm Subject: Comp Time”; and 2) the calculation for “Comp Leave Fringe (920000166)” for a permanent employee earning Comp Time was mislabeled as “CL Perm Exempt: Holiday Wktime” when it should read “CL Perm Subject: Overtime.”  The Applicant maintained that the fringe benefit calculations for these mislabeled labor hours are correct, despite the incorrect labels.  Although the Applicant did not provide any explanation for the cause of this labeling error, FEMA confirmed that the associated fringe benefits were calculated correctly.

Conclusion

The Applicant submitted sufficient additional documentation with the second appeal to support its assertion that all overtime fringe benefits were calculated and claimed correctly.  Based on this new information, the previous de-obligation of $202,984 from 22 PWs should be restored.


[1] See 68 FR 59414 (Oct 15, 2003), which set the large project threshold at $54,100 for FY2003.

[2] All dollar amounts referenced in the second appeal analysis are from the OIG Audit Report Memo and the Applicant’s second appeal letter.  Any rounding of the amounts  was performed by the OIG, and used in the second appeal analysis for consistency.

[3] Memorandum from OIG to FEMA regarding Audit Report Number DA-11-15 (April 15, 2011).

[4] $202,984  is a rounded amount used by the OIG throughout the Audit Report, and also by the Applicant throughout its first and second appeal requests.  For consistency, this rounded amount is also used in the second appeal analysis.

[5] Id.

[6] Id.

[7] Id.

[8] 44 C.F.R. § 206.206(a)(2004).

[9] 44 C.F.R. § 206.228(a)(4).

[10] Public Assistance Guide, FEMA 322, at 37 (October 1999).

[11] Specifically, the Applicant identified the following inconsistencies: Public Liability was disallowed on 20 of 22 PWs; Retirement was disallowed on 4 of 22 PWs; and Unemployment and Workers Comp line items were disallowed on 1 of 22 PWs.

 

12 Aug 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
North Carolina Department of Transportation
Disaster Number: 
1546-DR-NC
DSR: 
720, 755, 799, 803, 825, 843, 845, 846, 867, and 874
Date Signed: 
Monday, August 11, 2014
PA ID: 
000-UZZTS-00
Summary/Brief: 

Conclusion: On second appeal, the Applicant provided sufficient additional documentation to demonstrate that all fringe benefit charges were accurately calculated and claimed.

Summary Paragraph

The Office of Inspector General (OIG) conducted an audit of the Applicant’s projects related to Tropical Storm Frances and recommended disallowing $63,095 from ten Project Worksheets (PWs), due to ineligible overtime fringe benefit charges.  FEMA concurred and de-obligated $63,095 from the ten PWs.  In its first appeal, the Applicant asserted that its project systems team conducted an internal audit of its SAP financial accounting system and confirmed that the payroll overtime additives were accurately calculated.  The Applicant argued that the OIG’s misunderstanding of its financial accounting system led to the misinterpretation of the accounting data.  The Regional Administrator denied the first appeal because the Applicant offered no additional documentation on which to base a challenge to the OIG’s conclusion.  In its second appeal, the Applicant reiterated its argument and provided additional documentation addressing the ineligible overtime fringe benefit costs identified by the OIG audit. 

Authorities and Second Appeals

  • 44 C.F.R. § 206.228(a)(4).
  • PA Guide, at 37.

Headnotes

  • 44 C.F.R. § 206.228(a)(4) states that for the performance of eligible permanent work, straight-time salaries and benefits of a subgrantee’s permanent employees are eligible for reimbursement.
  • Fringe benefits are calculated differently between straight-time and overtime labor.  The OIG audit found that the Applicant incorrectly claimed some fringe benefits applicable to regular time on overtime labor.  The Applicant disagreed and provided additional documentation to demonstrate that its SAP financial accounting system accurately calculated all fringe benefits on both regular and overtime labor.
  • PA Guide provides that fringe benefits actually paid as part of an established policy are eligible.  The fringe benefit rates are different for regular and overtime hours because certain items in a benefits package, such as health insurance, are not dependent on hours worked. 
  • The Applicant argued that the OIG misunderstood its financial accounting system and disallowed certain fringe benefits that should be allowed on overtime hours.  The Applicant provided sufficient documentation to show that its SAP financial accounting system accurately calculated fringe benefit rates that are appropriately different for regular and overtime hours.
Letter: 

August 11, 2014

Michael Sprayberry
Director
North Carolina Division of Emergency Management
4713 Mail Service Center
Raleigh, North Carolina 27699-4713

Re:       Second Appeal – North Carolina Department of Transportation, PA ID 000-UZZTS-00, FEMA-1546-DR-NC, Project Worksheets (PWs) 720, 755, 799, 803, 825, 843, 845, 846, 867, and 874 – OIG Audit – Fringe Benefits

Dear Mr. Sprayberry:

This is in response to your office’s letter dated July 3, 2013, which transmitted the referenced second appeal on behalf of North Carolina Department of Transportation (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) de-obligation of $63,095 in ineligible overtime fringe benefits claimed on ten PWs, based on the result of an Office of Inspector General (OIG) audit.

As explained in the enclosed analysis, I have determined that the Applicant provided sufficient additional documentation with the second appeal to demonstrate that all overtime fringe benefits were correctly calculated and claimed on the ten PWs.  Accordingly, I am granting this appeal in the amount of $63,095.  By copy of this letter, I am requesting that the Regional Administrator take appropriate action to implement this determination.

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

Sincerely,

/s/

Brad J. Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

Andrew Velasquez, III
Acting Regional Administrator
FEMA Region IV

Analysis: 

Background

During the Tropical Storm Frances incident period from September 7 to September 12, 2004, facilities operated by the North Carolina Department of Transportation (Applicant) sustained a variety of storm-related damages.  The Applicant received approximately $12.2 million in Public Assistance (PA) funding for eligible work related to debris removal, emergency protective measures, road repairs and replacement of bridges.  FEMA prepared and obligated a total of 81 large projects and 337 small projects.[1]

On April 15, 2011, the Department of Homeland Security Office of Inspector General (OIG) issued Audit Report Number DA-11-14 (Audit Report) based on an audit of twelve of the Applicant’s large projects totaling approximately $5.4 million.  The OIG audit found that the Applicant claimed $378,732 in force account overtime labor and fringe benefit under Project Worksheets (PWs) 720, 755, 799, 803, 825, 843, 845, 846, 867, and 874, including $63,095[2] in fringe benefits that should be applicable to only regular time, not overtime, labor.[3] The OIG recommended disallowing $63,095 from those ten PWs as ineligible overtime fringe benefit charges.[4]  Prior to the issuance of the Audit Report, the OIG provided written summaries of its findings and recommendations to the Applicant and discussed them at an exit conference on January 20, 2011, where the Applicant concurred with its findings.[5]

On August 8, 2011, the Applicant submitted a written response to the Audit Report, refuting the OIG audit findings.  The Applicant stated that although it initially agreed with the audit results based upon the assumption that the OIG audit team had met with its project systems team and that its SAP financial accounting system was in error, it subsequently tested the accounting system and found no errors and that all payroll overtime additives (i.e., fringe benefit charges) were calculated correctly.  The Grantee notified the Applicant on June 28, 2012 of FEMA’s de-obligation of $63,095 from ten PWs based upon the OIG audit findings.

First Appeal

On August 17, 2012, the Applicant sent its first appeal request to the Grantee, appealing FEMA’s de-obligation based on the OIG audit findings.  The Grantee transmitted the Applicant’s first appeal to Region IV on September 14, 2012, indicating its support of the appeal. 

The Applicant asserted its project systems team conducted an internal audit of the SAP financial accounting system and confirmed that the system accurately calculated the payroll overtime additives.  The Applicant stated that the OIG audit team was familiar with the previous legacy accounting system, but not the SAP financial accounting system newly introduced in 2003, and opined that the lack of understanding of the new system’s report format led to OIG’s misinterpretation of its accounting data. 

The FEMA Region IV Regional Administrator (RA) denied the first appeal on April 12, 2013.  The RA stated that while the Applicant made clear its disagreement with the OIG audit conclusions, it offered no additional data, documentation, or detailed methodology to explain the audit differences with its own findings to support its position.  The RA determined that there was no information provided by the Applicant to merit a challenge to the OIG’s conclusions and FEMA’s de-obligation based upon it.

Second Appeal

On July 3, 2013, the Grantee transmitted and positively endorsed the Applicant’s second appeal letter dated June 25, 2013.  The second appeal reiterated the Applicant’s first appeal argument.  Additionally, the Applicant conducted a detailed review of individual line items of questioned costs in the Audit Report, provided spreadsheets with its comments disputing the OIG finding on each cost item, and addressed the following issues found in the Audit Report:

  • Misunderstanding of account titles
  • Inconsistencies in questioned costs:
    • Inconsistency in the type of fringe benefits disallowed among projects
    • Allowable overtime fringes disallowed
    • Disallowed fringe benefits associated with regular hours
    • Questioned costs that were not claimed on the projects
    • Key-punch and/or transposition errors in the Audit Report and OIG Working Documents

The Applicant explained that “Cost Element Account Titles” detailed in the labor reports are used to describe the status of employees who charge time to disaster projects, as opposed to identifying a work hour as regular or overtime.  The Applicant acknowledged that the Account Titles, as currently displayed in its SAP accounting system, are not intuitive and could be misleading without an understanding of the FEMA Payroll Master document, which details the payroll additives calculated for each FEMA activity type.

The Applicant also stated that it found two fringe benefit labeling errors during the internal review of its accounting system.

Discussion

Title 44 Code of Federal Regulations (44 C.F.R.) § 206.206 requires that the Applicant’s appeal “contain documented justification supporting the [applicant’s] position...”[6]  The Applicant disputed the OIG audit findings regarding ineligible fringe benefits, and provided annotated spreadsheets as additional documentation to support its position.

The Applicant attributed some of the OIG audit findings to a potential misunderstanding of Account Titles used by its SAP accounting system, which could have led to the misinterpretation of the accounting data.  As an example, the Applicant explained that the FEMA Labor Secondary Cost Element “920000011 Perm Labor Subject: Allow Ovtime/Compt” means the employee is eligible to make overtime but has not yet reached his/her regular 40 hours worked for the week.  If the same employee has reached 40 work hours for the week, he or she would charge to “920000014 Perm Labor Subject: Overtime.”

Along with this explanation, the Applicant provided a copy of the FEMA Payroll Master (Payroll Master) document detailing the payroll additives applicable to each labor type.  This Payroll Master document provided helpful information to understand the difference between regular and overtime labor types in the Applicant’s accounting data.  The details in this Payroll Master document, along with the Applicant’s comments in the backup spreadsheets, enabled FEMA to verify the Applicant’s claim that the majority of the disallowed ineligible overtime fringe benefits were actually eligible fringe benefits applicable to regular time labor.

FEMA regulations provide that “[f]or the performance of eligible permanent restoration under section 406 of the Act, 42.U.S.C. 5172, straight-time salaries and benefits of a subgrantee’s permanently employed personnel are eligible.”[7]  Public Assistance guidance further explains that “[f]ringe benefits that are actually paid as part of an established policy are eligible.  Because certain items in a benefit package are not dependent on hours worked, such as health insurance, the fringe benefit rate will be different for regular and overtime hours.  The overtime fringe benefit rate is usually significantly lower.”[8]

The Applicant agreed that some fringe benefits, such as Holiday, Sick Leave, Annual Leave, and Hospital Medical, should not be calculated on overtime labor.  The Payroll Master document confirmed that the Applicant’s accounting system does not calculate these fringe benefits on overtime labor.  The Applicant also explained that the cost of Public Liability, Disability Insurance, Compensatory Leave, and Retirement calculations are related to the number of hours worked and should be eligible for overtime hours, even though they were identified as ineligible overtime fringe benefits by the OIG.  The Payroll Master document showed that these fringe benefits are indeed applicable to both regular and overtime labor.  Therefore, FEMA agrees with the Applicant that these fringe benefits should be considered eligible for overtime labor.

Furthermore, the Applicant claimed that it identified several types of inconsistencies and errors in the Audit Report, and noted them in a separate comments column in the supporting spreadsheets.[9]  Based on the supporting documentation submitted, FEMA agrees with the Applicant that all of these fringe benefits identified by the OIG as ineligible should be eligible.                                                                                                                         

The Applicant also contended that some of the costs questioned in the Audit Report were not claimed on the related PWs, and marked them accordingly in the supporting spreadsheets.  FEMA confirmed this and agrees that these costs should not be disallowed.

Additionally, the Applicant identified some key-punch and transposition errors in the Audit Report.  The Applicant indicated that a questioned amount was listed as $132.80 instead of $132.08 (PW 845) as shown in its accounting system, and $36.36 instead of $39.36 (PW 867).  FEMA verified these errors on the Applicant’s backup spreadsheets.

Lastly, the Applicant acknowledged the discovery of its accounting system mislabeling the following two items: 1) the calculation for “Comp Leave Fringe (920000081)” for a permanent employee working Comp Time was mislabeled as “CL Perm Not Subj: Holiday Wktime” when it should read “CL Perm Subject: Comp Time”; and 2) the calculation for “Comp Leave Fringe (920000166)” for a permanent employee earning Comp Time was mislabeled as “CL Perm Exempt: Holiday Wktime” when it should read “CL Perm Subject: Overtime.”  The Applicant maintained that the fringe benefit calculations for these mislabeled labor hours are correct, despite the incorrect labels.  Although the Applicant did not provide any explanation for the cause of this labeling error, FEMA confirmed that the associated fringe benefits were calculated correctly.

Conclusion

The Applicant submitted sufficient additional documentation with the second appeal to support its assertion that all overtime fringe benefits were calculated and claimed correctly.  Based on this new information, the previous de-obligation of $63,095 from ten PWs should be restored.


[1] See 68 FR 59414 (Oct 15, 2003), which set the large project threshold at $54,100 for FY2003.

[2] $63,095 is a rounded amount used by the OIG throughout the Audit Report, and also by the Applicant throughout its first and second appeal requests.  For consistency, this rounded amount is also used in the second appeal analysis.

[3] Memorandum from OIG to FEMA regarding Audit Report Number DA-11-14 (April 15, 2011).

[4] Id.                                                                                                                                                                                                        

[5] Id.

[6] 44 C.F.R. § 206.206(a)(2004).

[7] 44 C.F.R. § 206.228(a)(4).

[8] Public Assistance Guide, FEMA 322, at 37 (October 1999).

[9] One type of error involved the OIG’s inconsistent disallowance of some fringe benefits (e.g., Public Liability, Worker’s Compensation, and Unemployment Compensation).  FEMA was able to verify this by cross-referencing the Applicant-commented spreadsheets with the OIG’s working document spreadsheets.  The Applicant also identified an error where the OIG included an “Emergency Callback” labor line item, which is not a fringe benefit, as part of ineligible overtime fringe benefits. 

 

7 Aug 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Linn County
Disaster Number: 
1763-DR-IA
DSR: 
10549
Date Signed: 
Wednesday, August 6, 2014
PA ID: 
113-99113-00
Summary/Brief: 

Conclusion:  The Applicant has not provided sufficient evidence to show that the five foundations were a threat to public health and safety, but the Applicant has provided sufficient documentation demonstrating the costs associated with the removal of eligible non-concrete demolition material.

Summary Paragraph

From May 25 through August 13, 2008, floodwaters damaged five structures located on private property in Linn County (Applicant).  During project closeout, FEMA denied costs for the demolition and disposal of five foundations.  In a first appeal letter, the Applicant referred to a State of Iowa Department of Natural Resources authorization that waived the requirement for an asbestos inspection prior to demolition if the structure was structurally unsound and in danger of imminent collapse.  The Grantee forwarded the appeal, citing 40 C.F.R. § 61.145(a)(3), which they interpreted to provide an exception for the testing of asbestos in a structure to be demolished under an order of a State or local government agency.  The FEMA Region VII Regional Administrator denied the first appeal and de-obligated all costs, stating that the Applicant did not provide documentation, such as testing reports, demonstrating that the concrete posed an immediate threat to public health and safety.  Furthermore, the Applicant did not sufficiently document the amount of eligible demolition material removed.  On second appeal, the Applicant is contesting FEMA’s denial of all demolition and removal costs.  The Applicant emphasizes that it was not able to test for asbestos because the structures were deemed unsafe to enter.

Authorities and Second Appeals

  • DAP 9523.4, Demolition of Private Structures at 4.
  • 40 C.F.R. § 61.145(a)(3).
  • 44 C.F.R. § 13.36(f)(3).

Headnotes

  • DAP 9523.4 states that “Ineligible costs associated with demolition of private structures may include removal of slabs or foundations, except in very unusual circumstances, such as … an immediate public health and safety threat.”
    • The Applicant was not able to demonstrate an immediate public health and safety threat.
  • 40 C.F.R. § 61.145(a)(3) excepts the Applicant from certain notification requirements if the facility is being demolished under a State or local government order due to the facility being structurally unsound and in danger of imminent collapse, but does not relieve the Applicant from taking some action to inspect the facility for asbestos.
    • The Applicant has not provided the results of an asbestos inspection.
  • 44 C.F.R. § 13.36(f)(3) allows for FEMA to reimburse contract costs based on estimates as long as they are consistent with federal cost principles as established in 44 C.F.R. § 13.22 and OMB Circular A-87.
    • The Applicant has provided sufficient documentation demonstrating that costs are consistent with federal cost principles.
Letter: 

August 6, 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 – Linn County, PA ID 113-99113-00, FEMA-1763-DR-IA, Project Worksheet (PW) 10549, Debris Removal – Private Property

Dear Mr. Schouten:

This is in response to your letter dated December 13, 2013, which transmitted the referenced second appeal on behalf of Linn County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $202,085.15 in private property debris removal.

As explained in the enclosed analysis, I have determined that the Applicant has not sufficiently demonstrated that the removed foundations were an immediate threat to public health and safety.  However, the Applicant has provided adequate documentation supporting the amount of eligible non-concrete demolition material removed.  Accordingly, I am partially granting the appeal in the amount of $156,769.15.  By copy of this letter, I am requesting the Regional Administrator take appropriate action to implement this determination.

Please inform the Applicant of my decision.  This determination 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: Beth Freeman
     Regional Administrator
     FEMA Region VII

Analysis: 

Background

From May 25 through August 13, 2008, floodwaters damaged five structures located on private property in Linn County (Applicant).  On December 8, 2011, FEMA obligated PW 10549 Version 0 for $150,368.40 for the demolition and removal of these five structures.  The Applicant requested a large project closeout for $215,970.15 in actual costs.  The Grantee, noticing an error in the Applicant’s calculations, forwarded a large project closeout request to FEMA for $202,085.15 in actual costs.  During project closeout, FEMA obligated Version 1 for $156,769.15, which did not include $45,316.00 for the demolition and disposal of the five foundations because the Applicant failed to demonstrate that they posed an immediate threat to public health and safety.

First Appeal

In a first appeal letter submitted September 13, 2012, the Applicant challenged the denial of $45,316.00 in concrete demolition expenses.  The Applicant referenced a first appeal (which was later overturned) for the City of Cedar Rapids which states, “A limited number of previously identified structures built prior to 1979 would most likely contain asbestos, and the slabs and basement wall removal would be eligible for structures built prior to 1979.”  The Applicant argued that since their buildings were constructed prior to 1979, foundation removal should be eligible.  The Applicant also referred to a State of Iowa Department of Natural Resources authorization (“Iowa Authorization”) that waived the requirement for an asbestos inspection prior to demolition if the structure was structurally unsound and in danger of imminent collapse.  The authorization allows the Applicant to treat the entire structure as regulated asbestos containing material (RACM) regardless of whether the structure contains asbestos.  The Grantee forwarded the appeal, citing Title 40 Code of Federal Regulations (C.F.R.) § 61.145(a)(3), which they interpreted to provide an exception for the testing of asbestos in a structure to be demolished under an order of a State or local government agency if the facility is structurally unsound and in danger of imminent collapse.

FEMA Region VII issued a Request for Information (RFI) on December 5, 2012 for a detailed breakdown of the quantity and cost for demolition and removal of concrete separate from other construction debris.  The Applicant responded on January 21, 2013 noting that the $45,316.00 included the removal of all rock/stone material, including flooring materials, and was not solely foundation materials.  The Applicant reiterated that the buildings could not be tested for asbestos because they were deemed unsafe to enter and provided a breakdown of the composition of each structure.  The information provided was not detailed enough to separate the foundation removal quantities or costs.

The FEMA Region VII Regional Administrator (RA) denied the first appeal on August 9, 2013 and de-obligated all costs ($156,769.15).  The RA determined that the Applicant did not provide documentation, such as testing reports, demonstrating that the concrete posed an immediate threat to public health and safety as required by Disaster Assistance Policy DAP9523.4, Demolition of Private Structures[1] or that an unusual circumstance dictated removal of the foundations.  Furthermore, the Applicant did not sufficiently document the actual amount of eligible demolition material removed since all costs were based on estimates. 

Second Appeal

In the second appeal letter submitted December 4, 2013, the Applicant is appealing $215,970.15 in costs associated with debris removal.  This amount includes $45,316.00 from the first appeal as well as $156,769.15, which was de-obligated on first appeal.[2]  The Applicant emphasizes that it followed all FEMA instructions given at the time of the demolition for handling RACM structures and that FEMA later reversed its stance on RACM concrete.  The Applicant states that it was not able to test for asbestos because the structures were deemed unsafe to enter; therefore, the demolition had to be treated as containing RACM.  The Applicant further states that it let the contract as a lump-sum, unit-price contract with a not-to-exceed amount as stipulated in FEMA’s Debris Management Guide.[3]  The Applicant indicates that it maintained load and landfill tickets and daily haul records for each structure and presented a sample to FEMA at closeout.  The Applicant also argues that costs related to the National Historic Preservation Act Memorandum of Agreement (MOA)[4] should be eligible since those costs have nothing to do with the physical demolition of the five structures.  The Grantee forwarded the second appeal, noting that the Applicant complied with all State and federal regulations and policies in place at the time of the disaster.

Discussion

Foundation Demolition and Removal

The Iowa Authorization that waives the requirement to test for asbestos specifically states that it “does not provide relief from the requirements of other federal, State and local agencies.”[5]  While the authorization allowed the Applicant to treat all demolition debris in PW 10549 as RACM, it did not waive the FEMA requirement for the Applicant to show that the foundations are an “immediate public health and safety threat” as stated in Disaster Assistance Policy DAP9523.4, Demolition of Private Structures.[6]

Title 40 Code of Federal Regulation § 61.145 provides federal standards applicable to the owner or operator of a demolition or renovation activity prior to commencement of the action.[7]  A sequential reading of 40 C.F.R § 61.145 requires a facility to be thoroughly inspected for asbestos to determine the applicability of subsequent subsections of the regulation.[8]  While 40 C.F.R. § 61.145(a)(3) excepts the Applicant from certain notification requirements if the facility is being demolished under a State or local government order due to the facility being structurally unsound and in danger of imminent collapse, it does not relieve the Applicant from taking some action to inspect the facility for asbestos.  The extent of the inspection may vary depending on the condition of a facility.  In a situation where the facility is structurally deficient, a lesser standard of inspection may be adequate.  For instance, even if a facility is structurally unsound and cannot be entered to test for asbestos, the outside of the facility may still be able to be tested.  If a structure cannot be tested without putting persons in danger, a qualified specialist may perform the inspection from afar.  This inspection must be properly documented to meet the requirements of 40 C.F.R § 61.145.  The Applicant has not provided any inspection results showing the presence of asbestos and therefore has not demonstrated that the five foundations were an “immediate public health and safety threat.”[9]  Consequently, the RA was correct to find that the removal of foundations is not eligible.

As the contracts are lump-sum contracts, the costs for the demolition and removal of the foundations cannot be determined from the invoices.  Moreover, the Applicant has not provided enough information to separate the foundation removal costs from the general concrete removal costs, which total $45,316.00.  Therefore, general concrete removal costs are not eligible because these costs include foundation costs.

Documentation Demonstrating the Amount of Eligible Demolition Material Removed

The RA de-obligated all previous funding on first appeal because all costs were based on estimates, stating that the “applicant has not provided sufficient documentation demonstrating the amount of eligible demolition material removed.”  Pursuant to 44 C.F.R. § 13.36(f)(3), “[c]osts or prices based on estimated costs for contracts under grants will be allowable only to the extent that costs incurred or cost estimates included in negotiated prices are consisted with Federal cost principles” as established in 44 C.F.R. § 13.22 and OMB Circular A-87.[10]  The Applicant submitted bid sheets with estimates of the quantity of demolition material removed as well as lump sum contracts, invoices, and copies of paid checks to account for all incurred costs, all of which are consistent with federal cost principles.  While the Applicant was not able to provide the specific costs for asbestos demolition, FEMA was able to determine the costs for concrete demolition from the bid sheets.  The concrete demolition costs include the ineligible asbestos demolition costs and are therefore ineligible.  However, per federal cost principles, the costs for non-concrete demolition and debris removal are eligible. 

As the RA determined all debris removal was ineligible, all incidental costs were also de-obligated.  Since FEMA is reinstating portions of the debris removal costs, those incidental costs, which include an archaeological survey, demolition monitoring, direct administrative costs, materials costs, and memorandum of agreement costs, are also reinstated.  As a result, the total eligible costs are $156,769.15.

Conclusion

The Applicant has not provided sufficient evidence that the five foundations were a threat to public health and safety.  Therefore, FEMA upholds the Regional Administrator’s determination that concrete demolition removal costs of $45,316.00 are not eligible.  The Applicant has sufficiently demonstrated the eligibility of $156,769.15 in non-concrete related demolition and removal costs. 

 


[1] Disaster Assistance Policy DAP9523.4, Demolition of Private Structures at 2 (July 18, 2007).

[2] The remaining $13,885 is a calculation error by the Applicant where it double counted demolition monitoring contractor costs when it submitted a P.4 on April 27, 2012.  This was later corrected by the Applicant in a revised P.4 submitted on the same day and signed by the Governor’s Authorized Representative on May 29, 2012.

[3] See Debris Management Guide, FEMA 325 at 18 (July 2007).

[4] See DAP 9523.4, supra note 1 at 5, which requires that FEMA comply with the National Historic Preservation Act (NHPA) Section 106.  The NHPA requires FEMA to take into account the effect of demolition on any historic structures.  This MOA between FEMA and the Applicant will provide funding to support other historic structures that the Applicant owns.

[5] State of Iowa Department of Natural Resources, Asbestos Authorization for Storm and Flood Damaged Areas at 3 (July 2, 2008).

[6] DAP 9523.4, supra note 1, at 4.

[7] 40 C.F.R. § 61.145 (2007).

[8] Id.

[9] Disaster Assistance Policy 9523.4, supra note 1, at 4.

[10] 44 C.F.R. §13.36(f)(3) (2007).

 

5 Aug 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
University of Alabama
Disaster Number: 
1971-DR-AL
DSR: 
2201
Date Signed: 
Monday, August 4, 2014
PA ID: 
000-UBZZQ-00
Summary/Brief: 

Conclusion:  The authority the State of Alabama granted to law enforcement officers, including the Applicant’s police officers, established Applicant’s legal responsibility for the work performed.

Summary Paragraph

On April 27, 2011, a tornado destroyed sections of Tuscaloosa County.  The Applicant performed emergency response activities including search and rescue, security in damaged areas, and maintaining access routes for emergency response vehicles.  FEMA prepared Project Worksheet (PW) 2201 for $516,367 to reimburse the Applicant for costs associated with those activities but found the PW ineligible.  FEMA determined that the Applicant performed the work in accordance with a 1994 local mutual aid agreement (MAA) which states that no party to the agreement shall be required to pay compensation for services rendered.  In its first appeal, the Applicant stated it has the legal responsibility to perform search and rescue operations on property not owned or leased by the Applicant as a “Primary Agency” under the Tuscaloosa County Emergency Operations Plan (EOP.)  The FEMA Region IV Regional Administrator denied the first appeal stating that the Applicant derived its legal responsibility from the MAA, and the Applicant was a “Providing Entity” as defined by Disaster Assistance Policy DAP 9523.6, Mutual Aid Agreements for Public Assistance and Fire Management Assistance and is ineligible for FEMA assistance for the mutual aid provided.  The Applicant’s second appeal asserts that FEMA relied on the incorrect agreement as its basis for denying the appeal and that the 1994 MAA was no longer in effect because it was superseded by the EOP. 

Authorities Discussed

  • DAP 9523.6, Mutual Aid Agreements for Public Assistance and Fire Management Assistance (Aug. 13, 2007) at 7.
  • Ala. Code § 16-47-11(a) (2011).
  • Letter from Office of the Attorney General, State of Alabama to Member, Alabama House of Representatives (Apr. 24, 2002).
  • Legal Opinion of the State of Alabama Office of Attorney General (July 16, 2014)

Headnotes

  • In accordance with Disaster Assistance Policy (DAP) 9523.6, generally, only Requesting Entities are eligible applicants under the Public Assistance program.
  • According to a legal opinion from the Office of Attorney General for the State of Alabama, the Attorney General interprets § 16-47-11(a)  to grant authority to the Applicant’s police officers to conduct search, rescue, and recovery operations off-campus on property not owned or leased by the Applicant.
  • Applicant has demonstrated that it had legal authority to perform the work that was independent of both the EOP and the 1994 MAA.

 

 

 

Letter: 

August 4, 2014

Art Faulkner
Director
Alabama Emergency Management Agency
5898 County Road 41
P.O. Box Drawer 2160
Clanton, AL 35046

Re: Second Appeal – University of Alabama, PA ID 000-UBZZQ-00, FEMA-1971-DR-AL, Project Worksheet (PW) 2201- Legal Responsibility

Dear Mr. Abbott:

This is in response to your letter dated October 23, 2012, which transmitted the referenced second appeal on behalf of the University of Alabama (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $516,367 associated with the emergency response activities the Applicant performed following the event.

As explained in the enclosed analysis, according to an Office of Attorney General of the State of Alabama opinion issued in response to a specific question raised by this office, Applicant’s police force had legal authority, independent of any mutual aid agreement, to conduct the search, rescue, and recovery operations that are the subject of this appeal.  Based upon this interpretation of Alabama law, the Applicant has established legal responsibility and is an eligible applicant.  Accordingly, I am granting this 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/

Brad J. Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

cc: Andrew Velasquez, III
     Regional Administrator
     FEMA Region V

Analysis: 

Background

On April 27, 2011, a multiple-vortex tornado devastated portions of Tuscaloosa County.  As the tornado moved through the county, it destroyed buildings in its path including the Tuscaloosa County Emergency Operations Center (EOC).  Tuscaloosa County activated the Tuscaloosa County Emergency Operations Plan (EOP) (hereinafter “2004 EOP”)[1] and the University of Alabama (Applicant) stood up its EOC that day.  After the tornado destroyed the Tuscaloosa County EOC, the Applicant provided services to transport Tuscaloosa County Emergency Management Agency (TCEMA) staff and others to its EOC while the TCEMA worked to establish an EOC at the Alabama Fire College.  Consistent with the 2004 EOP, the Applicant also provided support from its police department to perform search and rescue activities, secure damaged areas, and maintain access for emergency response vehicles.  These search and rescue activities were performed in locations that included property not owned or leased by Applicant.  

FEMA prepared Project Worksheet (PW) 2201 for $516,367.00 to reimburse the Applicant for force account labor overtime, vehicle and equipment usage, materials, and contracted transportation services.  Pursuant to 44 C.F.R. § 206.223(a)(3), in order to be eligible for FEMA assistance, an item of work must be the legal responsibility of an eligible applicant. FEMA determined that the Applicant was eligible and that the legal responsibility for Applicant to perform the work was established by a 1994 mutual aid agreement (1994 MAA) between the Applicant, the City of Tuscaloosa, the City of Northport, the Tuscaloosa County Sherriff’s Office, and Tuscaloosa County for supplemental police service.[2]  Paragraph 5 of the MAA provides that “No party to this agreement shall be required to pay any compensation to any other party to this agreement for services rendered hereunder.”[3]

FEMA Disaster Assistance Policy (DAP) 9523.6, Mutual Aid Agreements for Public Assistance and Fire Management Assistance Section VII(C)(4) specifically provides that “When a pre-event agreement specifies that no reimbursement will be provided for mutual aid assistance, FEMA will not pay for the costs of assistance.”[4]   Based upon such, and without a legal responsibility demonstration from the Applicant that was separate from the 1994 MAA, FEMA denied funding for PW 2201.

First Appeal

The Applicant submitted a first appeal on March 9, 2012, for $516,367.00 for costs associated with search and rescue activities described in PW 2201, stating that it had the legal responsibility to perform search and rescue operations as a “Primary Agency” under the 2004 EOP.  The Applicant also asserted that the 1994 MAA “has been superseded by actions of the parties.”  The Applicant claimed that after the event, the City of Tuscaloosa and the City of Northport entered into a new mutual aid agreement, postdated to April 27, 2011 (2011 MAA), which violated the terms of the 1994 MAA, and that the City of Tuscaloosa received FEMA funding under the terms of the 2011 MAA.  Lastly, the Applicant maintained that even if the actions of the City of Tuscaloosa and the City of Northport did not supersede the 1994 MAA, FEMA should reimburse the Applicant to avoid inconsistent treatment of subgrantees.

The FEMA Region IV Regional Administrator denied the first appeal on July 20, 2012, stating that regardless of which mutual aid agreement was in effect at the time, the Applicant was a “Providing Entity”[5] as defined by DAP 9523.6 and was ineligible for FEMA assistance for the mutual aid provided.  The Regional Administrator also reiterated that the Applicant derived its legal responsibility for the work from the 1994 MAA, which states that no reimbursement to other parties will be provided for mutual aid assistance services rendered pursuant to it.

Second Appeal

The Applicant submitted a second appeal on October 5, 2012, for $516,367.00.  Title 44 Code of Federal Regulations Section 206.206(a) requires an applicant’s appeal to “contain documented justification supporting the appellant’s position.”  The Applicant used its second appeal and the supporting documents to assert the following:

  1. Based on a theory of equity and fairness, and to avoid inconsistent treatment of subgrantees, Applicant should be awarded the requested FEMA funding.
  2. FEMA relied on the incorrect agreement as the basis for denying PW 2201, the 2004 EOP superseded the 1994 MAA, and the 2004 EOP establishes legal responsibility for Applicant to be reimbursed by FEMA for the search and rescue activities that it performed.
  3. Legal responsibility is established by Alabama Code (Code), which authorizes State police officers, including Applicant’s police officers, to conduct search, rescue, and recovery operations off campus on property not owned or leased by the Applicant.

Equity and Fairness

The Applicant alleges that the Cities of Northport and Tuscaloosa entered into a backdated mutual aid agreement and received FEMA funding based upon it.  As a result, the Applicant asserts it should be reimbursed based on a theory of equity and fairness, and that a denial of funding to the Applicant would be inconsistent treatment by FEMA of the parties to the 1994 MAA.

2004 EOP

Reflecting the need for the Applicant to provide further justification, FEMA requested additional information from the Applicant to support its position that the 1994 MAA was not in effect at the time of the event.  Such documentation could have included copies of the written notice from the other parties to the 1994 MAA that they were terminating or withdrawing from it, or that the 2004 EOP, to which those other parties were signatories, superseded it.  The Applicant’s response on this point was limited to restatement of the following arguments:

  • The EOP includes a supersession provision that states “This Emergency Operations Plan supersedes, rescinds, and replaces all previous plans and operational procedures.”
  • The EOP is a “written amendment,” specifically, “ESF #15 is a written termination of the MAA by substitution of a more comprehensive plan.”
  • The City of Tuscaloosa and the City of Northport, by entering into a post-event MAA without notice to the Applicant, violated the terms of the 1994 MAA.
  • “The parties considered the EOP to be the governing document because they followed the procedures in that document in response to the disaster.”

Independent Legal Authority

In addition to requesting from the Applicant information regarding the 1994 MAA and the EOP, FEMA also requested that the Applicant submit documentation demonstrating the locations where the Applicant carried out its search and rescue operations and the legal authority in place permitting the Applicant to carry out such operations.  The Applicant responded to this request and included citations to the Code, as well as a legal opinion from the Office of the Attorney General of the State of Alabama providing the State’s interpretation of the Code as it relates to the activities of the Applicant’s police officers.

Discussion

Equity and Fairness

The Applicant asserts it should be reimbursed based on a theory of equity and fairness because it alleges that the Cities of Northport and Tuscaloosa entered into a backdated mutual aid agreement and received FEMA funding based upon it.  Beyond its assertion, the Applicant has provided no supporting documentation demonstrating a new mutual aid agreement between Northport and Tuscaloosa.  Further, FEMA has not provided funding to either of those parties pursuant to a post-event mutual aid agreement for supplemental police services.  Finally, as a federal agency with limited authority, FEMA is bound to follow its governing laws and policies and is not afforded the ability to provide relief based on theories of equity.   

2004 EOP

The Applicant maintains that the agreement governing its actions is the 2004 EOP and not the 1994 MAA.  The Applicant states that it performed the services described in PW 2201, which include search and rescue operations on property not owned or leased by the Applicant, based on the responsibilities outlined in the 2004 EOP, not in response to a mutual aid request from the City of Tuscaloosa, the City of Northport, or Tuscaloosa County.  Consequently, the Applicant argues that DAP 9523.6, Mutual Aid Agreements for Public Assistance and Fire Management Assistance is not applicable.

On June 30, 2004, four chief elected officials of the municipal and county governing bodies within Tuscaloosa County signed the 2004 EOP, which by its stated purpose, provides “guidance in mitigating, preparing for, responding to and recovering from emergencies and disasters that threaten lives and property within the various jurisdictional boundaries of Tuscaloosa County.”  The Applicant is not one of the four signatories to the 2004 EOP.  The 2004 EOP describes the roles, responsibilities, resources, and methods to be employed to ensure that emergency assistance becomes available as quickly as possible after a natural disaster, attack, or major incident that would or does exceed the daily emergency response requirements.  The 2004 EOP names the Applicant as one of four “Primary Agencies” responsible for law enforcement and security activities under Emergency Support Function (ESF) #15 including maintaining law and order; protecting life and property; guarding essential facilities, utilities and supplies; and traffic and crowd control.  The 2004 EOP does not assign roles and responsibilities to the Applicant specifically.  The 2004 EOP also designates the City of Tuscaloosa Police Department as the ESF Coordinator/Liaison.[6]

The Applicant maintains that the 2004 EOP supersedes the 1994 MAA and cites to its supersession section: 

“This Emergency Operations Plan supersedes, rescinds, and replaces all previous plans and operational procedures.  All holders of copies of any previous EOP must dispose of the entire document in a secure manner.”[7]

This argument would have greater merit if the documents being compared were the same type of agreements, the agreements could not otherwise be harmonized, or the assertion was supported by collaborating evidence from the parties involved.  However, the Applicant’s position falls short for a number of reasons.  First, the quoted section references previous operational plans and procedures, not mutual aid agreements.  The fact the 2004 EOP explicitly defines “Mutual Aid Agreement” in its glossary[8] reflects that these terms are not synonymous, a distinction that supports a conclusion that the supersession language is intended to apply only to operational plans and procedures, not mutual aid agreements.  Second, the 2004 EOP includes explicit provisions that allow for pre-existing and future mutual aid agreements to be harmonized with, rather than superseded by the EOP.  For example,

“Under certain circumstances, when emergency or disaster response and recovery operations exceed the county and/or its municipalities’ capabilities, assistance may be requested from Mutual Aid Agreements with adjoining cities, counties, the state and/or federal government.” [9]

“Should local government resources prove to be inadequate during an emergency operation, a Mutual Aid Request will be made from other local jurisdictions, higher levels of government, and other agencies in accordance with existing or emergency negotiated mutual-aid agreements and understandings.”[10]

“Available law enforcement personnel may be insufficient to respond to life threatening situations following a large-scale emergency or disaster.  Local forces may need to be augmented via mutual aid.”[11]

Finally, while the Applicant asserts that the Annex of the 2004 EOP addressing ESF #15 “is a written termination of the MAA by substitution of a more comprehensive plan,” it contains no explicit language suggesting the 2004 EOP supersedes or terminates existing local mutual aid agreements.  Moreover, even if the 2004 EOP did contain such language, as the Applicant is not a signatory to the 2004 EOP, it would not meet the explicit requirements of section 9 of the 1994 MAA that to amend or terminate the 1994 MAA, that action must be done in writing and “executed by all the parties.” [12]   

Independent Legal Authority

Reflecting the need for the Applicant to provide further demonstration as to its legal responsibility to perform the search and rescue operations, FEMA requested additional information from the Applicant to support its position.  In an email dated March 31, 2014, FEMA requested that the Applicant identify the locations where its police officers carried out the search and rescue operations and the legal authority permitting the police officers to perform these operations. In its April 21, 2014 response, the Applicant provided a map detailing the locations of the search and rescue operations performed by its police officers.  The locations included areas not owned or leased by Applicant.  Applicant cited to various sections of the Alabama Code, including sections 16-47-10, 16-47-11, and 16-47-199, to demonstrate the legal authority for its police officers to have performed these operations off of Applicant’s property.

While the Code sections cited by Applicant provided language on officer authority to keep intruders off and prevent trespass upon and damage to college or university property, or to make arrests of persons who commit disorderly conduct on the property of an institution, the language did not broadly apply to actions off of university or institution property.[13] The limited exception extending “to any place in the state”[14] was the authority of officers to make arrests off-campus for crimes committed within the boundaries of the university owned or leased property, or to pursue an offender who had committed a crime within the boundaries of the university owned or leased property. 

To ensure proper interpretation of Alabama law, in a May 12, 2014 email, FEMA requested that the Applicant submit a legal opinion from the Attorney General of the State of Alabama regarding these provisions of state law as they pertain to the Applicant’s police officers.  The Applicant replied to FEMA’s request with a State of Alabama Attorney General letter dated July 16, 2014 which concluded that “[w]hen responding to an emergency, officers of the University of Alabama Police Department are authorized to conduct search, rescue, and recovery operations off campus on property not owned or leased by the University.” [15]

Conclusion

The Applicant’s legal responsibility for the search and rescue operations performed has been established by the Office of Attorney General of the State of Alabama’s interpretation of Alabama law.  In this case, the Applicant’s police officers provided search and rescue operations on property that Applicant did not own or lease under the authority that is granted to Alabama State officers pursuant to Alabama Code.  Therefore, the Applicant is an eligible applicant with legal responsibility for off-campus property.


[1] Tuscaloosa County Emergency Operations Plan (Jun. 30, 2004).

[2] Local Mutual Aid Agreement for Supplemental Police Services between the City of Tuscaloosa, City of Northport, County of Tuscaloosa, Tuscaloosa County Sheriff’s Office, and University of Alabama (Dec. 19, 1994).

[3] Id.

[4] Disaster Assistance Policy DAP9523.6, Mutual Aid Agreements for Public Assistance and Fire Management Assistance, at 4 (Aug. 13, 2007).

[5] See id. at 7.  The “Providing Entity” would normally make a claim to and be reimbursed by a “Requesting Entity.”  Reflective of such, FEMA’s policy provides, with limited exception not applicable to this case, that “Only Requesting Entities are eligible applicants for FEMA assistance.”   In this case, however, even if the Requesting Entity had applied for Public Assistance grant funding, it would not be eligible because the MAA does not call for reimbursement for services provided under the agreement.  

[6] Tuscaloosa County Emergency Operations Plan at Law Enforcement and Security Annex.

[7] Id. at Basic Plan, Section IX.

[8] See id. at Glossary/Acronyms (defining Mutual Aid Agreement as “A legal document between jurisdictions in which there is agreement to assist each other when a large-scale emergency or disaster surpasses a single jurisdiction’s resources.”).

[9] Id. at Basic Plan, Section II(B)(5).

[10] Id. at Basic Plan, Section VII(B)(1).  Further, Section VII(B)(5) provides that all “Memorandums of Agreement/Understanding, unless otherwise provided, will remain in effect until rescinded or modified and be updated periodically”(Emphasis added).   

[11] Id. at ESF #15 Annex, Section III(B)(3).

[12] Local Mutual Aid Agreement for Supplemental Police Services between the City of Tuscaloosa, City of Northport, County of Tuscaloosa, Tuscaloosa County Sheriff’s Office, and University of Alabama (Dec. 19, 1994) (“This agreement may not be amended, modified, altered, changed, terminated, or waived except by written amendment, properly executed by all the parties.”)(Emphasis added).

[13] Ala. Code §§ 16-47-10, 16-47-11, 16-47-199 (2011).

[14] Id. at § 16-47-11.

[15] Letter from Office of the Attorney General, State of Alabama to Director, Alabama Emergency Management Agency (July 16, 2014).

 

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.