Fema Situation Updates

8 Sep 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
City of Athens
Disaster Number: 
4077-DR-OH
DSR: 
1033
Date Signed: 
Thursday, September 4, 2014
PA ID: 
009-02736-00
Summary/Brief: 

Conclusion:  The City of Athens’ permanently mounted generator costs are eligible; however, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible work.

Summary Paragraph

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage, causing downed utility lines and widespread power outages for multiple days.  The City of Athens (Applicant) utilized two temporary and five permanently mounted generators during the event to support emergency protective measures at the Law Administration Building and four pump stations.  FEMA prepared Project Worksheet (PW) 1033 for $33,212.88 to fund usage of the temporary generators, force account labor costs, and fuel for the permanently mounted generators.  FEMA did not reimburse the usage of the five permanently mounted generators based on FEMA’s schedule of equipment rates.  The Applicant submitted a first appeal for $6,542.01 requesting that FEMA use equipment rates for the permanently mounted generators to determine eligible funding, because its insurer does not provide coverage for maintenance or depreciation of permanently mounted generators.  The Regional Administrator denied the first appeal, explaining that the ownership costs of permanently mounted generators are viewed as components of the cost of operating the facility.  The Applicant reiterates its position in its second appeal.

Authorities and Previous Appeals Discussed

  • Stafford Act §403,  42 U.S.C. § 5170b(3)
  • 44 C.F.R. § 206.226
  • Public Assistance Guide, FEMA 322 (June 2007), pages 54-55, 85
  • Public Assistance Digest, FEMA 321 (Jan. 2008), page 135
  • FEMA-DR-4077-OH, Trimble Township Wastewater Treatment District (Jan. 17, 2014)

Headnotes

  • 42 U.S.C. § 5170b(3) and 44 CFR § 206.225(a)(3) provide that generally, those prudent actions taken by an Applicant to ensure the continuation of essential public services and protect lives and public health are eligible for assistance.
  • FEMA 322, Public Assistance Guide (June 2007), at 54-55 provides that the cost of obtaining power from alternate sources is considered an increased operating expense and is not eligible.  The guidance does provide an exception for increased operating costs constituting “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”
    • Application of this guidance necessitates a distinction between temporary and permanently mounted generators.
    • FEMA reimburses the use of temporary generators based on FEMA equipment rates or similar set rates. 
    • FEMA does not reimburse the use of permanently mounted generators based on equipment rates.  However, if permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.


 

Letter: 

September 4, 2014

Nancy J. Dragani
Executive Director
Ohio Emergency Management Agency
2855 West Dublin-Granville Road
Columbus, Ohio 43235-2206

Re: Second Appeal – City of Athens, PA ID 009-02736-00, Operation of Permanently Mounted Generators, FEMA-4077-DR-OH, Project Worksheet (PW) 1033

Dear Ms. Dragani:

This is in response to your letter dated July 3, 2013, which transmitted the referenced second appeal on behalf of the City of Athens (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $6,542.01 for reimbursement of the operation of permanently mounted generators based on FEMA’s schedule of equipment rates.

As explained in the enclosed analysis, I have determined that the Applicant’s use of permanently mounted generators is eligible.  However, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible emergency work.  Therefore, I am denying the appeal.

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

Sincerely,

/s/

Brad J. Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

cc: Janet Odeshoo
      Acting Regional Administrator
      FEMA Region V

Analysis: 

Background

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage throughout Athens County, causing downed utility lines and widespread power outages for multiple days.  The City of Athens (Applicant) utilized two temporary and five permanently mounted generators during the event to support emergency protective measures at the Law Administration Building and four pump stations.  FEMA prepared Project Worksheet (PW) 1033 for $33,212.88 to fund the force account labor costs associated with emergency protective measures, fuel for the permanently mounted generators, and usage of the temporary generators based on FEMA’s schedule of equipment rates.  Because five of the generators were permanently mounted, FEMA did not reimburse the use of the those generators based on FEMA’s schedule of equipment rates, but rather for fuel costs only ($1,650.00). 

First Appeal

The Applicant submitted a first appeal for $6,542.01 in a letter dated March 25, 2013, asserting that reimbursement for the permanently mounted generator usage should be based on FEMA’s schedule of equipment rates because its insurer does not provide coverage for maintenance or depreciation of permanently mounted generators.  The FEMA Region V Regional Administrator denied the first appeal in a letter dated May 7, 2013, explaining that the depreciation and ownership costs of permanently mounted generators are viewed as components of the cost of operating the facility.

Second Appeal

The Applicant submitted a second appeal for $6,542.01 in a letter dated June 6, 2013, reiterating its request for FEMA to apply equipment rates in reimbursing the permanently mounted generator usage.  The Applicant’s second appeal letter states that the Applicant’s insurance covers the generators but contains a clause that excludes maintenance and depreciation.  The Grantee supports the Applicant’s second appeal, and its transmittal letter also cites a second appeal under FEMA-3288-EM-FL, dated January 17, 2012, involving a Miami-Dade County, Florida, project for which FEMA funded permanently mounted generator costs using FEMA’s schedule of equipment rates.

Discussion

FEMA policy specifically provides that the cost of obtaining power from alternate sources, with a few exceptions, is considered an increased operating expense and is generally not eligible for Public Assistance.[1]  FEMA’s policy provides exceptions, however, for “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”[2]  A specific example of such an exception is the “increased utility costs of a permanently mounted generator at a hospital or police station.”[3]   The FEMA Public Assistance Guide also lists the use of “temporary generators for facilities that provide health and safety activities” as an example of an emergency protective measure that can be undertaken by a community before, during, and following a disaster.[4]

Recent appeals and appeal decisions have highlighted confusion with regard to distinguishing between the eligible costs associated with the use of permanently mounted generators compared to temporary generators and the underlying rationale for such distinctions.[5]  Use of the terms “portable” and “fixed” as interchangeable with “temporary” and “permanently mounted” has created additional ambiguity by primarily focusing on the physical placement of the generator rather than the duration, intent and purpose of the placement.  

As such, it is important to reinforce the distinction between temporary and permanently mounted generators.  FEMA reimburses the use of temporary generators based on FEMA equipment rates or similar set rates in large part because the purpose of the placement of those items at the facility is related to the disaster in question and temporary in nature.  FEMA equipment rates include such costs as operation of equipment, depreciation, overhead, maintenance, field repairs, fuel, lubricants, tires, Occupational Safety and Health Administration equipment, and other costs incidental to operation.  In contrast to temporary generators, permanently mounted generators, whether a fixture as described within OMB Circular A-87, mounted on a pad within a shed servicing a building, or affixed or otherwise bolted down to a slab adjacent to a building, typically have been placed in their locations for reasons that preceded the disaster and with an intent that they remain there afterward.  Hence, the fundamental purpose, nature, and duration of the placement of a permanent generator differ from a temporary generator that is brought in to provide temporary emergency power during the time of the disaster in question.  The purpose of permanently mounted generators is to provide backup power whenever necessary, and not only as a consequence of a disaster.  Recognizing such a purpose, it is reasonable to assume the associated overhead costs for permanently mounted generators is covered by the applicant’s operating budget and that the only out-of-pocket expense for operating them is the increased operating expense of fuel used.  Accordingly, FEMA will reimburse fuel costs for permanently mounted generators if they are used to perform eligible emergency work because those are the only increased costs incurred by the applicant as a direct result of the event.  This policy distinction applies to permanently mounted generators as a matter of principle, regardless of circumstances associated with an individual applicant’s insurance coverage, the placement of a permanently mounted generator in a leased facility, or whether maintenance costs for a permanently mounted generator are included in an applicant’s operating budget.

With regard to the fundamental issue of this appeal, the basic facts are analogous to those in the January 2014 Trimble Township Wastewater Treatment District second appeal decision.  The Trimble second appeal decision reinforced existing policy in finding that when permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work, but will not reimburse the usage based on equipment rates. 

Conclusion

FEMA does not reimburse the use of permanently mounted generators based on equipment rates.  However, if permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.  In this case, FEMA has provided all of the eligible funding available for the permanently mounted generator usage in PW 1033.


[1] See FEMA 322, Public Assistance Guide (June 2007), at 54-55.

[2] Id.at 55.

[3] Id.

[4] Id. at 72.

[5] See FEMA-DR-4077-OH, Trimble Township Wastewater Treatment District (January 17, 2014) (noting unclear direction provided by prior second appeal decisions as to eligible costs associated with permanently mounted generator usage).  The Trimble decision also found that the Miami-Dade second appeal decision, referenced by the Grantee, accurately reflected FEMA policy regarding reimbursement of permanently mounted generator usage but provided ambiguous direction to the Regional Administrator and consequently was misapplied.  

 

8 Sep 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Paulding County Emergency Management Agency
Disaster Number: 
4077-DR-OH
DSR: 
510
Date Signed: 
Thursday, September 4, 2014
PA ID: 
125-08399-00
Summary/Brief: 

Conclusion:  The Paulding County’s permanently mounted generator costs are eligible; however, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible work.

Summary Paragraph

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage, causing downed utility lines and widespread power outages for multiple days.  The Paulding County Emergency Management Agency (Applicant) utilized two permanently mounted generators during the event to support emergency protective measures at its Emergency Operations Center and communications tower.  FEMA prepared Project Worksheet (PW) 510 for $3,803.32 to fund the fuel for the permanently mounted generators.  Because both of the generators were permanently mounted, FEMA did not reimburse the cost of operating those generators based on FEMA’s schedule of equipment rates.  The Applicant submitted a first appeal for $2,125.00 requesting that FEMA use equipment rates for the permanently mounted generators to determine eligible funding, because its permanently mounted generator was housed in a rented facility.  The Regional Administrator denied the first appeal, explaining that the ownership costs of permanently mounted generators viewed as components of the cost of operating the facility.  The Applicant reiterates its position in its second appeal.

Authorities and Previous Appeals Discussed

  • Stafford Act §403,  42 U.S.C. § 5170b(3)
  • 44 CFR § 206.226
  • Public Assistance Guide, FEMA 322 (June 2007), pages 54-55, 85
  • Public Assistance Digest, FEMA 321 (Jan. 2008), page 135
  • FEMA-DR-4077-OH, Trimble Township Wastewater Treatment District (Jan. 17, 2014)

Headnotes

  • 42 U.S.C. § 5170b(3) and 44 CFR § 206.225(a)(3) provide that generally, those prudent actions taken by an Applicant to ensure the continuation of essential public services and protect lives and public health are eligible for assistance.
  • FEMA 322, Public Assistance Guide (June 2007), at 54-55 provides that the cost of obtaining power from alternate sources is considered an increased operating expense and is not eligible.  The guidance does provide an exception for increased operating costs constituting “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”
    • Application of this guidance necessitates a distinction between temporary and permanently mounted generators.
    • FEMA reimburses the use of temporary generators based on FEMA equipment rates or similar set rates. 
    • FEMA does not reimburse the use of permanently mounted generators based on equipment rates.  However, if permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.


 

 


 

Letter: 

September 4, 2014

Nancy J. Dragani
Executive Director
Ohio Emergency Management Agency
2855 West Dublin-Granville Road
Columbus, Ohio 43235-2206

Re: Second Appeal – Paulding County Emergency Management Agency, PA ID 125-08399-00, Operation of Permanently Mounted Generators, FEMA-4077-DR-OH, Project Worksheet (PW) 510

Dear Ms. Dragani:

This is in response to your letter dated July 3, 2013, which transmitted the referenced second appeal on behalf of the Paulding County Emergency Management Agency (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $2,125.00 for reimbursement of the operation of permanently mounted generators based on FEMA’s schedule of equipment rates.

As explained in the enclosed analysis, I have determined that the Applicant’s use of permanently mounted generators is eligible. However, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible emergency work.  Therefore, I am denying the appeal.

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

Sincerely,

/s/

Brad J. Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

cc: Janet Odeshoo
     Acting Regional Administrator
     FEMA Region V

Analysis: 

Background

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage throughout Paulding County, causing downed utility lines and widespread power outages for multiple days.  The Paulding County Emergency Management Agency (Applicant) utilized two permanently mounted generators during the event to support emergency protective measures at its Emergency Operations Center and communications tower.  FEMA prepared Project Worksheet (PW) 510 for $3,803.32 to fund the fuel for the permanently mounted generators.  Because both of the generators were permanently mounted, FEMA did not reimburse the use of those generators based on FEMA’s equipment rates, but rather for fuel costs only. 

First Appeal

The Applicant submitted a first appeal for $2,125.00 in a letter dated March 11, 2013, asserting that reimbursement for the permanently mounted generator usage should be based on FEMA’s schedule of equipment rates because its permanently mounted generator was housed in a rented facility.  The FEMA Region V Regional Administrator denied the first appeal in a letter dated May 7, 2013, explaining that the depreciation and ownership costs of permanently mounted generators are viewed as components of the cost of operating the facility.

Second Appeal

The Applicant submitted a second appeal for $2,125.00 in a letter dated June 27, 2013, reiterating its request for FEMA to apply equipment rates in reimbursing the permanently mounted generator usage.  The Applicant’s second appeal letter states that the Applicant rents the facility that houses the generators and it has the responsibility of operating and maintaining the generators, not the facility owner. The Grantee supports the Applicant’s appeal and its transmittal letter also cites a second appeal under FEMA-3288-EM-FL, dated January 17, 2012, involving a Miami-Dade County, Florida, project for which FEMA funded permanently mounted generator costs using FEMA’s schedule of equipment rates.

Discussion

FEMA policy specifically provides that the cost of obtaining power from alternate sources, with a few exceptions, is considered an increased operating expense and is generally not eligible for Public Assistance.[1]  FEMA’s policy provides exceptions, however, for “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”[2]  A specific example of such an exception is the “increased utility costs of a permanently mounted generator at a hospital or police station.”[3]   The FEMA Public Assistance Guide also lists the use of “temporary generators for facilities that provide health and safety activities” as an example of an emergency protective measure that can be undertaken by a community before, during, and following a disaster.[4]

Recent appeals and appeal decisions have highlighted confusion with regard to distinguishing between the eligible costs associated with the use of permanently mounted generators compared to temporary generators and the underlying rationale for such distinctions.[5]  Use of the terms “portable” and “fixed” as interchangeable with “temporary” and “permanently mounted” has created additional ambiguity by primarily focusing on the physical placement of the generator rather than the duration, intent and purpose of the placement.  

As such, it is important to reinforce the distinction between temporary and permanently mounted generators.  FEMA reimburses the use of temporary generators based on FEMA equipment rates or similar set rates in large part because the purpose of the placement of those items at the facility is related to the disaster in question and temporary in nature.  FEMA equipment rates include such costs as operation of equipment, depreciation, overhead, maintenance, field repairs, fuel, lubricants, tires, Occupational Safety and Health Administration equipment, and other costs incidental to operation.  In contrast to temporary generators, permanently mounted generators, whether a fixture as described within OMB Circular A-87, mounted on a pad within a shed servicing a building, or affixed or otherwise bolted down to a slab adjacent to a building, typically have been placed in their locations for reasons that preceded the disaster and with an intent that they remain there afterward.  Hence, the fundamental purpose, nature, and duration of the placement of a permanent generator differ from a temporary generator that is brought in to provide temporary emergency power during the time of the disaster in question.  The purpose of permanently mounted generators is to provide backup power whenever necessary, and not only as a consequence of a disaster.  Recognizing such a purpose, it is reasonable to assume the associated overhead costs for permanently mounted generators is covered by the applicant’s operating budget and that the only out-of-pocket expense for operating them is the increased operating expense of fuel used.  Accordingly, FEMA will reimburse fuel costs for permanently mounted generators if they are used to perform eligible emergency work because those are the only increased costs incurred by the applicant as a direct result of the event.  This policy distinction applies to permanently mounted generators as a matter of principle, regardless of circumstances associated with an individual applicant’s insurance coverage, the placement of a permanently mounted generator in a leased facility, or whether maintenance costs for a permanently mounted generator are included in an applicant’s operating budget.

With regard to the fundamental issue of this appeal, the basic facts are analogous to those in the January 2014 Trimble Township Wastewater Treatment District second appeal decision.  The Trimble second appeal decision reinforced existing policy in finding that when permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work, but will not reimburse the usage based on equipment rates. 

Conclusion

FEMA does not reimburse the use of permanently mounted generators based on equipment rates.  However, if permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.  In this case, FEMA has provided all of the eligible funding available for the permanently mounted generator usage in PW 510.


[1] See FEMA 322, Public Assistance Guide (June 2007), at 54-55.

[2] Id.at 55.

[3] Id.

[4] Id. at 72.

[5] See FEMA-DR-4077-OH, Trimble Township Wastewater Treatment District (January 17, 2014) (noting unclear direction provided by prior second appeal decisions as to eligible costs associated with permanently mounted generator usage).  The Trimble decision also found that the Miami-Dade second appeal decision, referenced by the Grantee, accurately reflected FEMA policy regarding reimbursement of permanently mounted generator usage but provided ambiguous direction to the Regional Administrator and consequently was misapplied.  

 

8 Sep 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Putnam County Emergency Management Agency
Disaster Number: 
4077-DR-OH
DSR: 
872
Date Signed: 
Thursday, September 4, 2014
PA ID: 
137-U7CM9-00
Summary/Brief: 

Conclusion:  The Putnam County Emergency Management Agency’s permanently mounted generator costs are eligible; however, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible work.

Summary Paragraph

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage, causing downed utility lines and widespread power outages for multiple days.  The Putnam County Emergency Management Agency (Applicant) utilized two temporary generators and one permanently mounted generator during the event to support emergency protective measures at a telephone company, St. Rita’s Medical Center, and the EMS/EMA station.  FEMA prepared Project Worksheet (PW) 872 for $7,631.00 to fund the temporary generators and fuel for the permanently mounted generator.  FEMA did not reimburse the usage of that generator based on FEMA’s schedule of equipment rates.  The Applicant submitted a first appeal for $2,152.05 requesting that FEMA use equipment rates for the permanently mounted generators to determine eligible funding, because its permanently mounted generator was housed in a leased facility.  The Regional Administrator denied the first appeal, explaining that the ownership costs of permanently mounted generators are built in to the cost of operating the facility.  The Applicant maintains that it leases the facility where the permanently mounted generator is located and it owns the generator.

Authorities and Previous Appeals Discussed

  • Stafford Act §403,  42 U.S.C. § 5170b(3)
  • 44 C.F.R. § 206.226
  • Public Assistance Guide, FEMA 322 (June 2007), pages 54-55, 85
  • Public Assistance Digest, FEMA 321 (Jan. 2008), page 135
  • FEMA-DR-4077-OH, Trimble Township Wastewater Treatment District (Jan. 17, 2014)

Headnotes

  • 42 U.S.C. § 5170b(3) and 44 CFR § 206.225(a)(3) provide that generally, those prudent actions taken by an Applicant to ensure the continuation of essential public services and protect lives and public health are eligible for assistance.
  • FEMA 322, Public Assistance Guide (June 2007), at 54-55 provides that the cost of obtaining power from alternate sources is considered an increased operating expense and is not eligible.  The guidance does provide an exception for increased operating costs constituting “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”
    • Application of this guidance necessitates a distinction between temporary and permanently mounted generators.
    • FEMA reimburses the use of temporary generators based on FEMA equipment rates or similar set rates. 
    • FEMA does not reimburse the use of permanently mounted generators based on equipment rates.  However, if permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.


 

Letter: 

September 4, 2014

Nancy J. Dragani
Executive Director
Ohio Emergency Management Agency
2855 West Dublin-Granville Road
Columbus, Ohio 43235-2206

Re: Second Appeal – Putnam County Emergency Management Agency, PA ID 137-U7CM9-00, Operation of Permanently Mounted Generator, FEMA-4077-DR-OH, Project Worksheet (PW) 872

Dear Ms. Dragani:

This is in response to your letter dated July 3, 2013, which transmitted the referenced second appeal on behalf of the Putnam County Emergency Management Agency (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $2,152.05 for reimbursement of the operation of a permanently mounted generator based on FEMA’s schedule of equipment rates.

As explained in the enclosed analysis, I have determined that the Applicant’s use of a permanently mounted generator is eligible.  However, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible emergency work.  Therefore, I am denying the appeal.

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

Sincerely,

/s/

Brad J. Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

cc: Janet Odeshoo
     Acting Regional Administrator
     FEMA Region V

Analysis: 

Background

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage throughout Putnam County causing downed utility lines and widespread power outages for multiple days.  The Putnam County Emergency Management Agency (Applicant) utilized two temporary generators and one permanently mounted generator during the event to support emergency protective measures at a telephone company, St. Rita’s Medical Center, and the EMS/EMA station.  FEMA prepared Project Worksheet (PW) 872 for $7,631.00 to fund the force account labor costs associated with emergency protective measures, fuel for the permanently mounted generator, and usage of the temporary generators based on FEMA’s schedule of equipment rates.  Because one of the generators was permanently mounted, FEMA did not reimburse the use of that generator based on FEMA’s equipment rates, but rather for fuel costs only. 

First Appeal

The Applicant submitted a first appeal for $2,152.05 in a letter dated March 5, 2013, asserting that reimbursement for the permanently mounted generator usage should be based on FEMA’s schedule of equipment rates because its permanently mounted generator was housed in a leased facility.  The FEMA Region V Regional Administrator denied the first appeal in a letter dated May 7, 2013, explaining that the depreciation and ownership costs of permanently mounted generators are viewed as components of the cost of operating the facility.

Second Appeal

The Applicant submitted a second appeal for $2,152.00 in a letter dated May 22, 2013, reiterating its request for FEMA to apply equipment rates in reimbursing the permanently mounted generator usage.  The Applicant’s second appeal letter states that the Applicant owns the generator in question but leases the facility in which the generator is housed.  The Grantee supports the Applicant’s second appeal, and the Grantee’s transmittal letter also cites a second appeal under FEMA-3288-EM-FL, dated January 17, 2012, involving a Miami-Dade County, Florida, project for which FEMA funded permanently mounted generator costs using FEMA’s schedule of equipment rates.

Discussion

FEMA policy specifically provides that the cost of obtaining power from alternate sources, with a few exceptions, is considered an increased operating expense and is generally not eligible for Public Assistance.[1]  FEMA’s policy provides exceptions, however, for “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”[2]  A specific example of such an exception is the “increased utility costs of a permanently mounted generator at a hospital or police station.”[3]   The FEMA Public Assistance Guide also lists the use of “temporary generators for facilities that provide health and safety activities” as an example of an emergency protective measure that can be undertaken by a community before, during, and following a disaster.[4]

Recent appeals and appeal decisions have highlighted confusion with regard to distinguishing between the eligible costs associated with the use of permanently mounted generators compared to temporary generators and the underlying rationale for such distinctions.[5]  Use of the terms “portable” and “fixed” as interchangeable with “temporary” and “permanently mounted” has created additional ambiguity by primarily focusing on the physical placement of the generator rather than the duration, intent and purpose of the placement.  

As such, it is important to reinforce the distinction between temporary and permanently mounted generators.  FEMA reimburses the use of temporary generators based on FEMA equipment rates or similar set rates in large part because the purpose of the placement of those items at the facility is related to the disaster in question and temporary in nature.  FEMA equipment rates include such costs as operation of equipment, depreciation, overhead, maintenance, field repairs, fuel, lubricants, tires, Occupational Safety and Health Administration equipment, and other costs incidental to operation.  In contrast to temporary generators, permanently mounted generators, whether a fixture as described within OMB Circular A-87, mounted on a pad within a shed servicing a building, or affixed or otherwise bolted down to a slab adjacent to a building, typically have been placed in their locations for reasons that preceded the disaster and with an intent that they remain there afterward.  Hence, the fundamental purpose, nature, and duration of the placement of a permanent generator differ from a temporary generator that is brought in to provide temporary emergency power during the time of the disaster in question.  The purpose of permanently mounted generators is to provide backup power whenever necessary, and not only as a consequence of a disaster.  Recognizing such a purpose, it is reasonable to assume the associated overhead costs for permanently mounted generators is covered by the applicant’s operating budget and that the only out-of-pocket expense for operating them is the increased operating expense of fuel used.  Accordingly, FEMA will reimburse fuel costs for permanently mounted generators if they are used to perform eligible emergency work because those are the only increased costs incurred by the applicant as a direct result of the event.  This policy distinction applies to permanently mounted generators as a matter of principle, regardless of circumstances associated with an individual applicant’s insurance coverage, the placement of a permanently mounted generator in a leased facility, or whether maintenance costs for a permanently mounted generator are included in an applicant’s operating budget.

With regard to the fundamental issue of this appeal, the basic facts are analogous to those in the January 2014 Trimble Township Wastewater Treatment District second appeal decision.  The Trimble second appeal decision reinforced existing policy in finding that when permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work, but will not reimburse the usage based on equipment rates. 

Conclusion

FEMA does not reimburse the use of permanently mounted generators based on equipment rates.  However, if permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.  In this case, FEMA has provided all of the eligible funding available for the permanently mounted generator usage in PW 872.


[1] See FEMA 322, Public Assistance Guide (June 2007), at 54-55.

[2] Id.at 55.

[3] Id.

[4] Id. at 72.

[5] See FEMA-DR-4077-OH, Trimble Township Wastewater Treatment District (January 17, 2014) (noting unclear direction provided by prior second appeal decisions as to eligible costs associated with permanently mounted generator usage).  The Trimble decision also found that the Miami-Dade second appeal decision, referenced by the Grantee, accurately reflected FEMA policy regarding reimbursement of permanently mounted generator usage but provided ambiguous direction to the Regional Administrator and consequently was misapplied.

 

 

8 Sep 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Van Wert County Emergency Management Agency
Disaster Number: 
4077-DR-OH
DSR: 
322
Date Signed: 
Thursday, September 4, 2014
PA ID: 
121-U1HKY-00
Summary/Brief: 

Conclusion:  Van Wert County’s permanently mounted generator costs are eligible; however, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible work.

Summary Paragraph

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage, causing downed utility lines and widespread power outages for multiple days.  The Van Wert County Emergency Management Agency (Applicant) utilized two temporary generators and one permanently mounted generator during the event to support emergency protective measures at its Emergency Operations Center and a shelter at its middle school. FEMA prepared Project Worksheet (PW) 322 for $11,883.60 to fund the temporary generators and fuel for the permanently mounted generator.  FEMA did not reimburse the usage of the permanently mounted generator based on FEMA’s schedule of equipment rates.  The Applicant submitted a first appeal for $1,404.43 requesting that FEMA use equipment rates for the permanently mounted generators to determine eligible funding, because its permanently mounted generator was housed in a leased facility.  The Regional Administrator denied the first appeal, explaining that the ownership costs of permanently mounted generators are viewed as components of the cost of operating the facility.  The Applicant reiterates its position in its second appeal.

Authorities and Previous Appeals Discussed

  • Stafford Act §403,  42 U.S.C. § 5170b(3)
  • 44 CFR § 206.226
  • Public Assistance Guide, FEMA 322 (June 2007), pages 54-55, 85
  • Public Assistance Digest, FEMA 321 (Jan. 2008), page 135
  • FEMA-DR-4077-OH, Trimble Township Wastewater Treatment District (Jan. 17, 2014)

Headnotes

  • 42 U.S.C. § 5170b(3) and 44 CFR § 206.225(a)(3) provide that generally, those prudent actions taken by an Applicant to ensure the continuation of essential public services and protect lives and public health are eligible for assistance.
  • FEMA 322, Public Assistance Guide (June 2007), at 54-55 provides that the cost of obtaining power from alternate sources is considered an increased operating expense and is not eligible.  The guidance does provide an exception for increased operating costs constituting “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”
    • Application of this guidance necessitates a distinction between temporary and permanently mounted generators.
    • FEMA reimburses the use of temporary generators based on FEMA equipment rates or similar set rates. 
    • FEMA does not reimburse the use of permanently mounted generators based on equipment rates.  However, if permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.


 

Letter: 

September 4, 2014

Nancy J. Dragani
Executive Director
Ohio Emergency Management Agency
2855 West Dublin-Granville Road
Columbus, Ohio 43235-2206

Re: Second Appeal – Van Wert County Emergency Management Agency, PA ID 121-U1HKY-00, Operation of Permanently Mounted Generator, FEMA-4077-DR-OH, Project Worksheet (PW) 322

Dear Ms. Dragani:

This is in response to your letter dated July 3, 2013, which transmitted the referenced second appeal on behalf of the Van Wert County Emergency Management Agency (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $1,404.43 for reimbursement of the operation of a permanently mounted generator based on FEMA’s schedule of equipment rates.

As explained in the enclosed analysis, I have determined that the Applicant’s use of a permanently mounted generator is eligible.  However, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible emergency work.  Therefore, I am denying the appeal.

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

Sincerely,

/s/

Brad J. Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

cc: Janet Odeshoo
     Acting Regional Administrator
     FEMA Region V

Analysis: 

Background

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage throughout Van Wert County, causing downed utility lines and widespread power outages for multiple days.  The Van Wert County Emergency Management Agency (Applicant) utilized two temporary generators and one permanently mounted generator during the event to support emergency protective measures at its Emergency Operations Center and a shelter at its middle school shelter.  FEMA prepared Project Worksheet (PW) 322 for $11,883.60 to fund usage of the temporary generators based on FEMA’s schedule of equipment rates and fuel for the permanently mounted generator.  Because one of the generators was permanently mounted, FEMA did not reimburse the use of that generator based on FEMA’s equipment rates, but rather for fuel costs only. 

First Appeal

The Applicant submitted a first appeal for $1,404.43 in a letter dated March 26, 2013, asserting that reimbursement for the permanently mounted generator usage should be based on FEMA’s schedule of equipment rates because its permanently mounted generator was housed in a leased facility.  The FEMA Region V Regional Administrator denied the first appeal in a letter dated May 7, 2013, explaining that the depreciation and ownership costs of permanently mounted generators already are viewed as components of the cost of operating the facility.

Second Appeal

The Applicant submitted a second appeal for $1,404.43 in a letter dated June 13, 2013, reiterating its request for FEMA to apply equipment rates in reimbursing the permanently mounted generator usage.  The Applicant’s second appeal letter states that the Applicant leases the facility that houses the generator and in its first appeal letter, it maintains that it is responsible for the operation and maintenance of the generator.  The Applicant submitted its lease for the facility with its second appeal.  The Grantee supports the Applicant’s appeal, and its transmittal letter also cites a second appeal under FEMA-3288-EM-FL, dated January 17, 2012, involving a Miami-Dade County, Florida, project for which FEMA funded permanently mounted generator costs using FEMA’s schedule of equipment rates.

Discussion

FEMA policy specifically provides that the cost of obtaining power from alternate sources, with a few exceptions, is considered an increased operating expense and is generally not eligible for Public Assistance.[1]  FEMA’s policy provides exceptions, however, for “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”[2]  A specific example of such an exception is the “increased utility costs of a permanently mounted generator at a hospital or police station.”[3]   The FEMA Public Assistance Guide also lists the use of “temporary generators for facilities that provide health and safety activities” as an example of an emergency protective measure that can be undertaken by a community before, during, and following a disaster.[4]

Recent appeals and appeal decisions have highlighted confusion with regard to distinguishing between the eligible costs associated with the use of permanently mounted generators compared to temporary generators and the underlying rationale for such distinctions.[5]  Use of the terms “portable” and “fixed” as interchangeable with “temporary” and “permanently mounted” has created additional ambiguity by primarily focusing on the physical placement of the generator rather than the duration, intent and purpose of the placement. 

As such, it is important to reinforce the distinction between temporary and permanently mounted generators.  FEMA reimburses the use of temporary generators based on FEMA equipment rates or similar set rates in large part because the purpose of the placement of those items at the facility is related to the disaster in question and temporary in nature.  FEMA equipment rates include such costs as operation of equipment, depreciation, overhead, maintenance, field repairs, fuel, lubricants, tires, Occupational Safety and Health Administration equipment, and other costs incidental to operation.  In contrast to temporary generators, permanently mounted generators, whether a fixture as described within OMB Circular A-87, mounted on a pad within a shed servicing a building, or affixed or otherwise bolted down to a slab adjacent to a building, typically have been placed in their locations for reasons that preceded the disaster and with an intent that they remain there afterward.  Hence, the fundamental purpose, nature, and duration of the placement of a permanent generator differ from a temporary generator that is brought in to provide temporary emergency power during the time of the disaster in question.  The purpose of permanently mounted generators is to provide backup power whenever necessary, and not only as a consequence of a disaster.  Recognizing such a purpose, it is reasonable to assume the associated overhead costs for permanently mounted generators is covered by the applicant’s operating budget and that the only out-of-pocket expense for operating them is the increased operating expense of fuel used.  Accordingly, FEMA will reimburse fuel costs for permanently mounted generators if they are used to perform eligible emergency work because those are the only increased costs incurred by the applicant as a direct result of the event.  This policy distinction applies to permanently mounted generators as a matter of principle, regardless of circumstances associated with an individual applicant’s insurance coverage, the placement of a permanently mounted generator in a leased facility, or whether maintenance costs for a permanently mounted generator are included in an applicant’s operating budget.

With regard to the fundamental issue of this appeal, the basic facts are analogous to those in the January 2014 Trimble Township Wastewater Treatment District second appeal decision.  The Trimble second appeal decision reinforced existing policy in finding that when permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work, but will not reimburse the usage based on equipment rates.

Conclusion

FEMA does not reimburse the use of permanently mounted generators based on equipment rates.  However, if permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.  In this case, FEMA has provided all of the eligible funding available for the permanently mounted generator usage in PW 322.


[1] See FEMA 322, Public Assistance Guide (June 2007), at 54-55.

[2] Id.at 55.

[3] Id.

[4] Id. at 72.

[5] See FEMA-DR-4077-OH, Trimble Township Wastewater Treatment District (January 17, 2014) (noting unclear direction provided by prior second appeal decisions as to eligible costs associated with permanently mounted generator usage).  The Trimble decision also found that the Miami-Dade second appeal decision, referenced by the Grantee, accurately reflected FEMA policy regarding reimbursement of permanently mounted generator usage but provided ambiguous direction to the Regional Administrator and consequently was misapplied.

 

8 Sep 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5522
Date Signed: 
Thursday, September 4, 2014
PA ID: 
037-52004-00
Summary/Brief: 

Conclusion:  The Applicant provided sufficient documentation to support the need for replacement of pipe insulation due to mold contamination.

Summary Paragraph

During the incident period of April 30 to May 18, 2010, severe storms and flooding caused the Cumberland River to overflow, submerging the Applicant’s K. R. Water Treatment Plant.  The Plant’s Filter/Chemical Building was inundated and its below-grade rooms flooded.  FEMA prepared PW 5522 in the amount of $3,128,178.01 for repairs to the building.  FEMA initially determined that the costs of the replacement of the pipe insulation due to mold contamination were ineligible because either the repairs were needed due to deferred maintenance or the contamination could not be verified.  The Applicant submitted a first appeal in the amount of $3,047,519.38 for several items, including $141,577.00 for the replacement of the pipe insulation.  The Regional Administrator (RA) found that there was limited contamination and not enough to merit full pipe insulation replacement; that the Applicant’s technical memorandum did not specify the precise facility location or dimensions of the tested pipes; and their unit linear costs.  Finally, the RA stated that the Applicant did not refute the original determination of deferred maintenance.  On second appeal, the Applicant argued that the damage was disaster-related, that it was necessary to replace the pipe insulation, and claimed that maintenance was not deferred.  The Applicant provided a survey report supporting the claim of adequate maintenance. 

Authorities and Second Appeals

  • 44 C.F.R. § 206.223(a)(1)
  • Recovery Division Fact Sheet 9580.100, Mold Remediation at 4 (Nov. 7, 2006)
  • PA Guide, at 32
  • City of Port Arthur, FEMA-1606-DR-TX, at 3.

Headnotes

  • 44 C.F.R. § 206.223(a)(1) provides that to be eligible for reimbursement, an item of work must “[b]e required as the result of the emergency or major disaster event.”
    • The pipe insulation was in an area that was completely submerged with floodwaters resulting from the disaster.
  • Recovery Division Fact Sheet 9580.100, Mold Remediation provides that “It is the responsibility of the applicant to show evidence of mold contamination or damage during the inspection.”
    • The Applicant conducted testing; 45 percent of the samples contained mold at that time. 
  • The PA Guide at 32 states that for “mold remediation to be eligible, the mold must not be a result of poor facility maintenance or failure to take protective measures in a reasonable time after the event.”
  • The Applicant took prompt action to drain and dry the plant immediately following the flood waters receding.
    • The Applicant provided a 2009 survey report to demonstrate proper maintenance.
  • City of Port Arthur, FEMA-1606-DR-TX, at 3, states that under FEMA’s mold remediation policy, “soft surfaces such as ceiling tiles, cellulose and fiberglass insulation, and wallboards should be replaced after being contaminated with mold.”
    • The Applicant’s paper-backed pipe insulation should be considered a soft surface.


 

 

Letter: 

September 4, 2014

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

Re:  Second Appeal – Nashville-Davidson County, PA ID 037-52004-00, FEMA-1909-DR-TN, Project Worksheet (PW) 5522 – Pipe Insulation Replacement – Mold Contamination

Dear Mr. Purkey:

This is in response to your letter dated February 20, 2014, which transmitted the referenced second appeal on behalf of Nashville-Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $141,577.00 for the replacement of mold contaminated pipe insulation.

As explained in the enclosed analysis, I have determined that the Applicant has demonstrated that the damage to the pipe insulation was caused by the flooding, that there was adequate maintenance, and that the pipe insulation replacement was necessary.  Accordingly, I am granting the appeal.  By copy of this letter, I am requesting the Acting Regional Administrator take appropriate action to implement this determination.

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division                                         

Enclosure

cc: Andrew Velasquez, III
     Regional Administrator
     FEMA Region IV

Analysis: 

Background

During the incident period of April 30, 2010, to May 18, 2010, severe storms and flooding caused the Cumberland River to overflow.  The Nashville-Davidson County’s (Applicant) K.R. Harrington Water Treatment Plant was submerged.  The Filter/Chemical Building System of the water treatment plant was inundated and the below-grade rooms flooded.  The Applicant’s equipment, which had pipes with paper-backed piping insulation, was submerged.  The Applicant contracted to pump out, clean, and dry the facility immediately after the floodwaters receded.  On October 29, 2010, the Applicant had a bacteria and mold assessment conducted, which confirmed the presence of mold.  FEMA obligated Project Worksheet (PW) 5522 to address restoration of the Filter Building System for $3,128,178.01 on March 13, 2011.  The cost of the pipe insulation replacement was not obligated because the Applicant did not verify the contamination at the time and the damage was thought to be the result of deferred maintenance.

First Appeal

In a letter submitted June 1, 2011, the Applicant appealed a total of $3,047,519.38 in denied funding for direct administrative costs, resident engineering, mold on pipe insulation, metal door replacement, repairs to damaged flumes, repairs to damaged electrical wiring and cable, replacement of lime feed and fluoride feed equipment, replacement of a distributive control unit, replacement of butterfly valves in filter building clearwells, rebuilding pumps, and replacement of air compressors.  On December 6, 2013, the FEMA Region IV Regional Administrator (RA) issued a partial approval for $1,853,767.32, subject to insurance review and anticipated insurance proceeds.  The rest of the costs, including the replacement of the pipe insulation, were denied because, while the work may have been eligible, the documentation provided was not sufficient to prove that the damages were disaster-related. 

In FEMA’s first appeal response, the RA stated that the technical memorandum and report provided by the Applicant showed only limited mold contamination, findings which did not merit complete replacement. The RA also stated that the reports did not identify the facility location or dimensions of the tested pipes, and did not provide a unit cost per linear foot for pipe insulation removal and replacement.  Finally, the Applicant did not refute FEMA’s finding that the insulation damage resulted from deferred maintenance.  Therefore, the RA found that the Applicant provided insufficient documentation to show that the degradation of pipe insulation resulted from the flooding.  However, the Applicant used the same technical memorandum in six other appeals with this issue, and relief was granted in all of them.[1]

Second Appeal

On February 12, 2014, the Applicant submitted a second appeal letter to the State of Tennessee (Grantee).  The Grantee transmitted the Applicant’s second appeal to FEMA Region IV in a letter dated February 20, 2014, supporting the appeal.  The Grantee argues that the documentation submitted with the second appeal should be sufficient to allow reimbursement for the pipe insulation.  The Applicant limited its second appeal to the removal of the pipe insulation for $9,577.00 and the replacement of the pipe insulation for $132,000.00, totaling $141,577.00.

Discussion

Need for Removal and Replacement of Pipe Insulation

According to 44 C.F.R. § 206.223(a)(1), in order to be eligible, work must be required as the result of the disaster. The floodwaters reached two feet above grade on the outside building walls and completely submerged the interior, below-grade rooms for two to three days.[2]  On October 29, 2010, the Applicant had a bacteria and mold assessment conducted, which confirmed the presence of mold.  In a letter dated May 18, 2011, the Applicant’s consultant explained that their observation and assessment of the impacted facility led them to the conclusion that the insulation was damaged by a major water intrusion event and that all of insulation in the flood zone was impacted.  FEMA’s Fact Sheet on mold remediation incorporates guidance from the Environmental Protection Agency stating that fiberglass and cellulose insulation should be replaced following mold contamination.[3]  It does not reference a threshold for contamination remediation eligibility; rather it only instructs that water damaged fiberglass and cellulose installation should be discarded and replaced.   

Dimensions, Locations, and Cost

FEMA’s Public Assistance (PA) Guide provides that in a 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.”[4]  The RA found that the technical memorandum and report provided by the Applicant did not identify which pipes were tested, their location in the facility, or the pipe dimensions.  On second appeal, the Applicant provided the locations and dimensions of the pipes in question, which correlate to PW line items numbered 3, 4, 9-14, and 16-19 from the PW’s damage description and scope of work.[5]  While the Applicant did not provide a unit cost per linear foot for pipe insulation removal and replacement, FEMA calculated the cost per linear foot by adding the totals requested for removal and replacement and dividing by the total linear feet of pipe insulation.  The resulting cost per linear foot was reasonable and comparable to the cost allowed on first appeal for the same applicant on PWs 5533, 5585, 5596, 5591, 5595, and 5597. 

Maintenance

The PA Guide states that for mold remediation to be eligible, “the mold must not be the result of poor facility maintenance or failure to take protective measures in a reasonable time after the event.”[6]  That the Applicant acted appropriately by hiring a contractor to pump out, clean, and dry the facility as soon as the floodwaters receded is not in dispute.  However, on first appeal, the RA found that the Applicant did not refute FEMA’s initial finding that the insulation damage resulted from deferred maintenance. 

In its second appeal submission, the Applicant states that the State of Tennessee’s Department of Environment and Conservation conducts routine sanitary surveys under its Drinking Water Program to ensure that water treatment facilities are compliant with the Safe Drinking Water Act.  The State’s 2009 survey did not make note of or deduct from the survey for any indication of the presence of mold.  In response to a specific request from FEMA, the Applicant provided a copy of the survey conducted on February 11-13 and 17, 2009.  The survey provided some recommendations but stated that “all other operations of the water system were of a superior nature.”  None of the recommendations applied to maintenance of the pipe insulation.  Furthermore, the survey included specific categories of equipment and associated scoring regarding maintenance.  Specifically, line items “4L.  Maintenance of Equipment, Buildings and (1) Grounds 1200-5-1-.02, .17(3), (17); and (19)”; “6B.  Inspection and Maintenance of Reservoirs, Tanks and Clearwell 1200-5-1-.17(16), (17), (33) and (34)”; and “7B.  Maintenance of Pumping Equipment 1200-5- (1-3) 1-.17(13)” were marked as “OK”, indicative of good maintenance practices.  These survey results sufficiently demonstrate that the pipes were properly maintained prior to the incident and that the damage was caused by the disaster.

Conclusion

The Applicant has provided documentation which identifies where the pipes were located, pipe dimensions, and unit costs for the insulation replacement.  The Applicant has also provided sufficient documentation to demonstrate that the insulation damage was a result of the flood event.  Therefore, the replacement of the mold contaminated pipe insulation is eligible.  A version to PW 5522 will be written to reflect this eligibility, subject to insurance review and anticipated insurance proceeds. 


[1] See first appeal responses for Nashville-Davidson County, PWs 5533 (Sept. 27, 2013); 5585 (Sept. 27, 2013); 5591 (Nov. 25, 2013); 5595 (Dec. 6, 2013); 5596 (Sept. 27, 2013); and 5597 (Nov. 25, 2013).

[2] Project Worksheet 5522, Nashville-Davidson County, Version 0 (Sept. 15, 2010).

[3] See Recovery Division Fact Sheet 9580.100, Mold Remediation at 4 (Nov. 7, 2006); see also FEMA Second Appeal Analysis, City of Port Arthur, FEMA-1606-DR-TX, (October 14, 2008) at 3.

[4] Public Assistance Guide, FEMA 322 at 101 (June 2007) (hereinafter PA Guide].

[5] PW 5522, Nashville-Davidson County, Version 0.

[6] PA Guide, at 32.

 

8 Sep 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5405
Date Signed: 
Thursday, September 4, 2014
PA ID: 
037-52004-00
Summary/Brief: 

.Conclusion:  On second appeal, Nashville-Davidson County (Applicant) provided sufficient documentation to demonstrate that the replacement of two water heaters in the mechanical rooms of its Market House (facility) is eligible for Public Assistance funding. 

Summary Paragraph

From April 30 through May 18, 2010, severe storms caused major flooding throughout Nashville-Davidson County.  The Applicant’s Market House, within its Farmer’s Market, was partially submerged when the Cumberland River overflowed.  FEMA prepared PW 5405 to address repairs necessary to restore the facility to pre-disaster condition.  In its first appeal, the Applicant presented four issues.  One of the issues raised by the Applicant involved water heaters in mechanical rooms located on the main level of the facility.  The water heaters were replaced per local codes.  In the first appeal, the Applicant argued that FEMA failed to include the water heaters in PW 5405, but the Applicant was not aware of this “until after the deadline…”  The Region IV Regional Administrator (RA) denied the water heaters because the Applicant failed to identify the number of water heaters it replaced and the cost for replacement.  However, the RA determined the water heaters may be eligible for PA funding.  In its second appeal, the Applicant provides the number of water heaters (2) and the total cost ($1,000).  The Applicant argues that this information was available in the original cost overrun documentation that it submitted.

Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172
  • 44 C.F.R. § 206.226(h)

Headnotes

  • Pursuant to the Stafford Act § 406, FEMA funding may be available to a state or local government for the repair, restoration, and replacement of damaged or destroyed facilities under a major disaster.
  • In addition, 44 C.F.R. § 206.226 states that “work to restore eligible facilities on the basis of the design of such facilities as they existed immediately prior to the disaster” may be eligible for assistance.  If equipment and furnishings are damaged beyond repair, comparable items are eligible as replacement items.
    • In the second appeal, the Applicant provided the number of water heaters replaced, the total cost for their replacement, and additional documentation to substantiate its claim.
    • Replacement of the water heaters is eligible for PA funding.

 

Letter: 

September 4, 2014

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

Re: Second Appeal – Nashville-Davidson County, PA ID 037-52004-00, FEMA-1909-DR-TN, Project Worksheet (PW) 5405 – Building Contents

Dear Mr. Purkey:

This is in response to your letter, dated May 20, 2014, which transmitted the referenced second appeal on behalf of Nashville-Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $1,000 in Public Assistance funding for replacement of two water heaters in the mechanical rooms of its Market House.

As explained in the enclosed analysis, I have determined that the Applicant provided sufficient documentation to demonstrate that replacement of the water heaters is eligible for Public Assistance funding.  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: Andrew Velasquez, III
     Regional Administrator
     FEMA Region IV

Analysis: 

Background

From April 30 through May 18, 2010, severe storms caused major flooding throughout the Metropolitan Government of Nashville and Davidson County (hereinafter Nashville-Davidson County).  The Nashville-Davidson County’s (Applicant) Market House (facility), within its Farmer’s Market, was partially submerged after the Cumberland River overflowed.  FEMA prepared PW 5405 to address repairs necessary to restore the facility to pre-disaster condition.  Repairs included cleaning and painting various rooms, replacing drywall in common areas and bathrooms, replacing the HVAC, plumbing and electrical units, and removing, disposing of, and replacing a freight elevator and all associated components.

First Appeal

In its first appeal, dated February 8, 2013, the Applicant presented four issues for appeal.  The first issue involved tenant spaces.  The Applicant asserted that it was legally responsible for repairing damage to the electrical unit, walls, floors, and other aspects of the tenant spaces on the main level of the facility.  The second issue involved FEMA’s denial of a Hazard Mitigation Proposal (HMP) for an emergency generator.  The third issue involved FEMA’s denial of $4,245 in repairs to the Employee Break Room on the main floor.  Finally, the fourth issue involved water heaters in mechanical rooms located on the main level of the facility.  The water heaters were replaced per local codes.  The Applicant argued that FEMA failed to include the water heaters in PW 5405, but the Applicant was not aware of this “until after the deadline…”

In a letter dated February 28, 2014, the Region IV Regional Administrator (RA) denied the first appeal with respect to the first, second, and fourth issues.  The RA denied the tenant spaces because the Applicant agreed the spaces were ineligible and requested that FEMA de-obligate them in an earlier Version of PW 5405.  The RA denied the HMP for the generator because it was not a reasonable mitigation measure or an appropriate use of hazard mitigation discretionary funding under section 406 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988 (Stafford Act).[1]  The RA denied the water heaters because the Applicant failed to identify the number of water heaters that it replaced and the cost of replacement, but noted the water heaters may be eligible for PA funding.  With respect to the third issue, the RA approved funding for repairs to the employee break room.

Second Appeal

In its second appeal, dated May 14, 2014, the Applicant is only appealing the fourth issue involving the water heaters.  The Applicant asserts it replaced two water heaters, for a total of $1,000, in the mechanical rooms of the facility.  In addition, the Applicant contends that this information was included in the original cost overrun documentation it submitted.

Discussion

Section 406(e) of the Stafford Act authorizes FEMA to provide Public Assistance (PA) funding to a state or local government for the repair, restoration, and replacement of damaged or destroyed facilities under a major disaster.[2]  Title 44 of the Code of Federal Regulations (C.F.R.) § 206.226 provides that “work to restore eligible facilities on the basis of the design of such facilities as they existed immediately prior to the disaster” may be eligible for assistance.[3]  In addition, if equipment and furnishings are damaged beyond repair, comparable items are eligible as replacement items.[4]

The only issue in this appeal is the eligibility of replacement of two water heaters in the Applicant’s facility.  In the first appeal, the RA stated that the water heaters in the mechanical rooms may be eligible, but denied funding for them because the Applicant did not provide an exact quantity or price.  Through its second appeal, the Applicant has provided this information and additional documentation to support its claim.[5]  Although the Applicant did not submit invoices, receipts, or other documentation that states the cost of the two water heaters, FEMA researched the average cost of water heaters[6] and determined that the cost requested by the Applicant is reasonable.[7]  Accordingly, the cost to replace the water heaters in the Applicant’s facility is eligible for PA funding.

Conclusion

The Applicant provided sufficient documentation to demonstrate that the replacement of two water heaters in the mechanical rooms of its facility are eligible for PA funding.  The cost associated with such is reasonable.    


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

[2] Stafford Act § 102, 42 U.S.C. § 5172.

[3] 44 C.F.R. § 206.226 (2010).

[4] See 44 C.F.R. § 206.226(h).

[5] See Second Appeal, Nashville-Davidson County, FEMA-1909-DR-TN, (May 14, 2014) (including additional information such as floor plans, a service contract, and a Continuation Sheet (application and certificate for payment)).

[6] See Cost to Replace a Water Heater, http://www.homewyse.com/services/cost_to_replace_hot_water_heater.html , (June 18, 2014, 4:22 PM).

[7] See Public Assistance Guide, FEMA 322 at 41 (June 2007) (explaining that FEMA will generally analyze cost reasonableness by use of historical documentation for similar work, average costs for similar work in the area, published unit costs from national estimating databases, and FEMA cost codes).

 

8 Sep 2014
Appeal Type: 
2nd
Report Type: 
PW
Applicant Name: 
Village of Waterford
Disaster Number: 
4020-DR-NY
DSR: 
7604
Date Signed: 
Thursday, September 4, 2014
PA ID: 
091-78520-00
Summary/Brief: 

Conclusion: The Village of Waterford (Applicant) did not provide sufficient documentation to demonstrate that Hurricane Irene, not pre-existing damage, was the cause of damage to several of its streets. 

Summary Paragraph

Hurricane Irene caused the Applicant’s streets to become inundated with flood water.  The Applicant asserted that the inundation of flood waters, along with the use of heavy vehicles and equipment during cleanup activities, caused major damage to the pavement and sub-base of several of its streets.  FEMA determined that the damage to the impacted streets was due to deferred maintenance, not Hurricane Irene, and found the repair work ineligible.  In the first appeal, the Applicant disputed FEMA’s determination that the majority of damage to the roads was caused by the lack of maintenance and pre-existing condition of the roads, not Hurricane Irene.  The Applicant asserted that Hurricane Irene severely undermined the subsurface of the roadways.  The Region II Acting Regional Administrator (RA) denied the first appeal, determining that the Applicant’s documentation regarding the condition of the sub-base, a letter from its excavation and paving contractor, was insufficient in demonstrating that the sub-base of the roadway system was compromised as a result of Hurricane Irene, nor did it refute FEMA’s initial determination that the damage may have been a pre-existing condition.  In the second appeal, the Applicant, again, asserts that the damage to its streets was the result of Hurricane Irene, not deferred maintenance.  

Authorities and Second Appeals

• 44 C.F.R. § 206.223(a)(1)
• PA Guide, at 33

Headnotes

• Pursuant to 44 C.F.R. § 206.223(a)(1), “to be eligible for financial assistance, an item of work must be required as the result of an emergency or major disaster event.” 

• According to the PA Guide, FEMA staff should review pre-disaster maintenance or inspection reports to verify pre-disaster condition and to assess eligible disaster damage for facilities that require routine maintenance to maintain their designed function.

o FEMA staff determined that the damage to the Applicant’s roads was the result of deferred maintenance based on visual observation, resident interviews, public records, the lack of maintenance records, and satellite images.

o The Applicant failed to demonstrate, through maintenance records or other documentation, its network of roads was damaged as the result of Hurricane Irene.

 


 

 

 

Letter: 

September 4, 2014

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

Re: Second Appeal – Village of Waterford, FEMA-4020-DR-NY, PA ID 091-78520-00, Project Worksheet (PW) 7604 – Pre-disaster Conditions

Dear Mr. Feeney:

This is in response to your letter dated February 7, 2014, which transmitted the referenced second appeal on behalf of the Village of Waterford (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $335,178.24 in Public Assistance funding for road repair. 

As explained in the enclosed analysis, I have determined that the Applicant has failed to demonstrate that the damage to its network of roads was caused by Hurricane Irene, not pre-existing damage.  Therefore, I am denying 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 26 to September 5, 2011, Hurricane Irene impacted the Village of Waterford (Applicant).  Several of the Applicant’s roads were inundated with floodwater for multiple days.  The specific streets at issue in this appeal are Front, Parker, First, Second, Third, Pearl, Middle, and South Streets; Tug Boat Alley; and an unnamed alley traveling in a north/south direction.  FEMA field staff conducted an onsite visit, took photos of the damage, and noted that the streets were “uneven with dips, sloughs and poor design radius from center.”  As a result, the FEMA staff member concluded that “any damages caused by the flood would be considered minimal compared to the overall conditions of the road prior to the event.”  In Project Worksheet (PW) 7604, FEMA determined that repair work for the network of roads was ineligible due to deferred maintenance.  FEMA based its determination on (1) an examination of satellite images, dated July 11, 2011, that revealed prior damage and deterioration that was evident prior to the disaster, such as alligator cracks, uplift, and ‘pot-holes;’ (2) the Applicant’s failure to produce maintenance records after repeated requests by FEMA; (3) the local government’s failure to certify to FEMA by letter that the damage is a direct result of the event; and (4) interviews of residents in the immediate vicinity that reported a lack of pre-disaster maintenance.[1]

First Appeal

The Applicant submitted its first appeal, dated January 18, 2013, regarding FEMA’s eligibility determination.  With the appeal, the Applicant disputed FEMA’s determination that the majority of damage to the roads was caused by lack of maintenance and pre-existing condition of the roads, not Hurricane Irene.  The Applicant asserted that, while there was normal wear-and-tear visible, Hurricane Irene severely undermined the subsurface of the roadways.  This required a level of repair above normal routine maintenance.  The Applicant refuted FEMA’s determination that it did not provide maintenance records by referencing PW 7604, which states, “the applicant has provided historical maintenance records for the impacted area” and provides years in which maintenance was performed for each street listed in PW 7604.  Finally, the Applicant asserted that $446,013.50 was spent on street maintenance during the five years prior to the disaster.  In addition, a major streetscape project, costing $341,729.12, included resetting and replacing curbs, paving, installation of period lighting, and planting trees and grass strips on First, Third, and Fourth streets.

The Applicant submitted a letter from Bob Talham, Inc., the Applicant’s excavation and paving contractor, dated January 17, 2013.  The letter is signed by the contractor’s Operations Manager.  In the letter, the contractor states that the Applicant performed “Streetscape Projects” in 2010, 2011, and 2012.  These projects involved installing new sidewalks, widening the streets, and installing curbs.  In addition, the contractor states he is not an engineer and did not provide core samples.  He states, “in lieu of core samples I offer this post Irene observation.  I have observed the sub base to contain voids in place and in many areas a lack of structural gradation of sub base.”  The contractor recommends excavating the streets in question and installing proper sub-base “if in fact the entire sub base has been contaminated by waters from Hurricane Irene.”  

In a letter, dated October 28, 2013, the FEMA Region II Acting Regional Administrator (RA) denied the appeal because she determined that the only evidence of the condition of the sub-base that the Applicant provided was a letter from the Applicant’s excavation and paving contractor, who performed road work for the Applicant prior to Hurricane Irene.  The Acting RA determined that this letter, alone, did not constitute sufficient documentation to demonstrate that the sub-base of the roadway system was compromised as a result of Hurricane Irene, nor did it refute FEMA’s finding that the damage to the sub-base may have been a pre-existing condition. 

Second Appeal

The New York State Division of Homeland Security and Emergency Services (Grantee) transmitted the Applicant’s second appeal, dated January 28, 2014, to FEMA on February 7, 2014.  In the second appeal, the Applicant again, asserts that the roads experienced normal wear-and-tear before Hurricane Irene, and the disaster severely undermined the subsurface of the roadways.  The Applicant contends that the letter from its excavation and paving contractor referenced in the first appeal determination is correct.  In addition, the Applicant states that it consulted with an Engineering firm and was advised that core samples would cost tens of thousands of dollars which the Applicant cannot afford.  In an accompanying letter, dated February 7, 2014, the Grantee asserts that FEMA erred in its finding that the Applicant did not provide maintenance record because the PW references these records.

Discussion

Pre-existing Damage

Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.223(a)(1) states, “to be eligible for financial assistance, an item of work must be required as the result of an emergency or major disaster event.”[2]  As such, preexisting damage would not be the result of a Stafford Act event.  In addition, damage caused by deferred maintenance is not eligible for PA funding because it does not meet the criterion of being disaster-related.[3]  Further, FEMA policy advises FEMA staff to review pre-disaster maintenance or inspection reports to verify pre-disaster condition and to assess eligible disaster damage for facilities that require routine maintenance to maintain their designed function (i.e. culverts, roads, bridges, and dams).[4]

In support of its eligibility determination in PW 7604, FEMA staff took numerous photographs, researched the condition of the roads prior to the disaster, interviewed residents, wrote detailed inspection notes, and requested maintenance records more than once.  Though the Grantee points to language in the “Damage Description and Dimensions” section in PW 7604 as proof that maintenance records were provided to FEMA, neither the Grantee nor the Applicant provided actual documentation that confirms the language in the “Damage Description and Dimensions” section or otherwise demonstrates that the damage to the roads was, in fact, the result of Hurricane Irene.[5] The PW, then, lists the affected streets and provided the years that these streets were milled and re-surfaced.

With its second appeal, the Applicant resubmitted the January 17, 2013 letter from its contractor.  As the Acting RA stated in her first appeal determination, the contractor’s letter, alone, is not sufficient documentation demonstrating that the damage to its network of roads is the result of Hurricane Irene and not pre-existing damage, because it has limited applicability, does not specify a timeframe for the contractor’s observations, and is an after-the-fact recollection, as opposed to an on-site observation conducted immediately after the disaster.  In addition, the Applicant’s contractor does not refute FEMA’s initial finding that the damage to the network of roads was a pre-existing condition.  The Applicant has the burden of substantiating its claims, and without further evidence, FEMA does not find a basis to conclude the initial determination made in PW 7604 was incorrect.  Accordingly, without maintenance records or other documentation to validate the Applicant’s contractor’s statements, FEMA does not find the repairs in PW 7604 eligible for funding.

Conclusion

In order for an item of work to be eligible for Public Assistance funding, it must be required as the result of a declared disaster. The Applicant failed to demonstrate that the damage to its network of roads resulted from Hurricane Irene.  Accordingly, the repair of the roads is not eligible for Public Assistance funding.


[1] Project Worksheet 7604, Village of Waterford, Version 0 (Oct. 31, 2012).

[2] 44 C.F.R. § 206.223(a)(1) (2011).

[3] Public Assistance Guide, FEMA 322 at 33 (June 2007) [hereinafter PA Guide].

[4] Id.

[5] FEMA sent a Request for Information (RFI) to the Grantee and Applicant on April 10, 2014, requesting “the Applicant submit all pre-disaster maintenance records and any other documentation that supports the Applicant’s assertion that the damage to its roads was caused by Disaster 4020.”  FEMA provided 30 days to the Applicant to submit the applicable documentation.  As of August 11, 2014, FEMA had not received a response to the RFI and proceeded based on the information it possessed.

 

8 Sep 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Broward County School Board of Florida
Disaster Number: 
1609-DR-FL
DSR: 
8296
Date Signed: 
Thursday, September 4, 2014
PA ID: 
011-107C0-00
Summary/Brief: 

Conclusion:  The Applicant failed to demonstrate that the dry runs served to lessen or eliminate an immediate threats to the public or improved property pursuant to 44 C.F.R. § 206.225.  In addition, the cost associated with the dry runs was not necessary or reasonable in accordance with 2 C.F.R. Part 225.      

Summary Paragraph

Hurricane Wilma caused a large amount of debris to be deposited on the roadways throughout Broward County, Florida.  Following the storm, the Applicant conducted dry runs with its buses to survey bus routes and bus stops for debris and unsafe conditions.  FEMA prepared PW 8296 in the amount of $432,153.11 to fund costs associated with the force account labor used to conduct the dry runs.  At final inspection, FEMA determined that the dry bus run activity was ineligible as the work related to damage assessment and was not cost effective.  FEMA de-obligated PW 8296 entirely and denied an additional $9,716.15 in costs claimed at final inspection.  In its first appeal, the Applicant asserted that the dry runs ensured that bus routes and stops were safe.  In addition, the Applicant asserted that the costs associated with its survey of damage were reasonable pursuant to 2 C.F.R. Part 225.  The Region IV Regional Administrator (RA) denied the first appeal based on 44 C.F.R. § 206.225(3)(a)(i)-(ii) because the Applicant did not present information to support its assertion that the dry runs served to eliminate or reduce threats to the public or improved property.  In its second appeal, the Applicant asserts that the costs associated with its dry runs comply with 44 C.F.R. § 206.225.  Additionally, the Grantee asserts in its transmittal that the dry runs were safety inspections, not preliminary damage assessments. 

Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • 2 C.F.R. § 225.
  • 44 C.F.R. § 206.206.
  • 44 C.F.R. § 206.225.
  • PA Guide, at 41, 47-52 and 58.

Headnotes

  • Pursuant to 44 C.F.R. § 206.206, the Grantee must submit appeals from an Applicant, with a written recommendation, to the RA within 60 days of receipt.
    • The Grantee submitted the Applicant’s second appeal nearly two years after the regulatory timeframe, thus, making the second appeal untimely.
  • Pursuant to 44 C.F.R. § 206.225, emergency protective measures that serve to eliminate or lessen immediate threats to life, public health or safety, or eliminate or lessen immediate threats of significant additional damage to improved public or private property are eligible for Public Assistance (PA) funding.
    • The dry runs are not eligible work under the PA Program because the activity is classified as a survey of damage.
  • Pursuant to 2 C.F.R. Part 225, costs must be necessary and reasonable to be eligible for PA funding.  According to the PA Guide, a cost is reasonable if it is both fair and equitable for the type of work being performed.
    • The Applicant failed to demonstrate that the costs associated with the dry runs were reasonable or cost effective.



 

Letter: 

September 4, 2014

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

Re: Second Appeal – Broward County School Board of Florida, PA ID 011-107C0-00, FEMA-1609-DR-FL, Project Worksheet (PW) 8296 – Damage Surveys

Dear Mr. Koon:

This is in response to your letter dated June 17, 2014, which transmitted the referenced second appeal on behalf of the Broward County School Board of Florida (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $441,869.26 in Public Assistance funding for force account labor for dry bus runs.

As explained in the enclosed analysis, the appeal was not submitted within the regulatory timelines established in 44 C.F.R. § 206.206.  Additionally, I have determined that the Applicant failed to demonstrate that the dry runs served to lessen or eliminate an immediate threat to lives or improved property.  Finally, in accordance with 2 C.F.R. Part 225, the cost associated with the dry runs was not necessary or reasonable.  Therefore, I am denying the appeal. 

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  Andrew Velasquez, III
      Regional Administrator
      FEMA Region IV

Analysis: 

Background

In 2005, Hurricane Wilma caused a large amount of debris to be deposited on the roadways throughout Broward County, Florida.  Following the storm, the Broward County School Board (Applicant) conducted dry bus runs to survey its bus routes and bus stops for debris and unsafe conditions.  The dry bus runs were conducted by force account labor in buses owned by the Applicant. The force account labor did not, nor were they expected to, remove, eliminate or lessen the amount of debris found on the roadway. FEMA obligated Project Worksheet (PW) 8296 in the amount of $432,153.11 to fund costs associated with the force account labor used to conduct the dry runs.  At final inspection, FEMA determined that the dry bus run activity was ineligible for Public Assistance (PA) funding as the work related to a damage assessment and was not cost effective.  FEMA de-obligated PW 8296 entirely and denied an additional $9,716.15 in costs claimed at final inspection.

First Appeal

In its first appeal dated June 23, 2011, the Applicant requested $441,869.16[1] for costs associated with dry runs that it conducted after Hurricane Wilma.  The Applicant asserted that the dry runs ensured that the bus routes and stops were safe for driver and student occupation.  In addition, the Applicant asserted that the costs associated with its survey of damage were reasonable pursuant to Title 2 of the Code of Federal Regulations (C.F.R.), Part 225.[2]  The Applicant argued the costs incurred for the dry runs were ordinary and necessary for the operation of the government unit, it ensured that all sound business practices and regulations were met, the costs associated with the work were based on market prices for comparable services, and the costs were the result of reasonable and necessary safety operations.

In his May 11, 2012 first appeal decision, the Region IV Regional Administrator (RA) denied the first appeal based on 44 C.F.R. § 206.225 because the Applicant did not present information to support its assertion that the dry runs served to eliminate or reduce threats to the public or improved property. 

Second Appeal

In its second appeal dated August 9, 2012, the Applicant again requests $441,869.11 for costs it incurred for the dry runs.  The Applicant argues that the costs associated with its dry runs comply with 44 C.F.R. § 206.225.  In addition, the Applicant asserts that the dry runs ensured that the bus routes and stops were clear of hazards so that normal operations could resume and the Applicant could determine threats to school children, the buses, and re-route buses to alternative paths.

In its letter, dated June 17, 2014, the State of Florida Division of Emergency Management (Grantee) argues that the dry runs were safety inspections, not preliminary damage assessments.  The Grantee supports its assertion by citing  FEMA policy guidance which states that a safety inspection can be eligible for Public Assistance funding “if such inspections are directly related to the disaster and are necessary to establish if a damaged structure poses an immediate threat to life, public health, or safety.”  The Grantee asserts that, while safety inspections are most commonly considered eligible for building repair work, FEMA should extend its policy to the dry runs at issue in this appeal.  Finally, the Grantee asserts that the Applicant needed to conduct the dry runs to comply with its lawful duty to protect each student.  

Discussion

Appeal Timeliness

The Robert T. Stafford Act § 423 (Stafford Act) requires an Applicant to appeal a denial regarding eligibility for, from, or amount of Public Assistance within 60 days after the date on which it was notified of the denial.[3]  Pursuant to 44 C.F.R. § 206.206, which implements that provision, the Grantee must submit appeals from an Applicant, with a written recommendation, to the Regional Administrator within 60 days of receipt.[4]  Neither the Stafford Act nor 44 C.F.R. provides FEMA authority to grant time extensions for filing second appeals.[5]

Here, the Applicant submitted a second appeal dated August 9, 2012.  The Grantee submitted its written recommendation, with the Applicant’s second appeal attached, to FEMA in June 2014, two years after FEMA’s first appeal determination.  As such, the Applicant’s second appeal failed to meet the procedural requirements of 44 C.F.R. § 206.206(c)(2) and consequently is denied.  Timeliness aside, as described below, the second appeal also is not compelling on the substantive issues and would otherwise be denied. 

Work Eligibility

According to 44 C.F.R. § 206.225, emergency protective measures to save lives, protect public health and safety, and protect improved property are eligible for FEMA funding if the protective measures eliminate or lessen immediate threats to life, public health or safety, or eliminate or lessen immediate threats of significant additional damage to improved public or private property through measures which are cost effective.[6]  Examples of emergency protective measures include search and rescue, emergency medical care, emergency mass care and shelter, demolition and removal of damaged public and private buildings that pose an immediate threat, construction of temporary levees, berms, or dikes, and removal of health and safety hazards.[7]  Prudent actions taken by a community to ensure the continuation of essential public services are generally eligible for PA funding.[8]  

The Applicant asserts that the dry runs were conducted to ensure that bus routes and bus stops were free of debris and other hazards in order to protect school employees and children as well as the Applicant’s buses.  However, the purpose of the dry runs was to determine the presence of debris and hazardous conditions.  The Applicant used the dry runs to confirm the existence or non-existence of debris and hazardous material, not lessen or eliminate such hazards.  Accordingly, the dry runs cannot be classified as an emergency protective measure.  FEMA classifies the Applicant’s activity as a survey of damage.  Damage surveys are not eligible for Public Assistance because the Applicant’s administrative allowance covers this type of work.[9] While FEMA may pay for inspections to determine the extent of disaster-related damage and method of repair,[10] as with all eligible work, the Applicant must demonstrate that it was legally responsible for the item of work at the time of the disaster.[11]  The Applicant failed to demonstrate that it was legally responsible for removing debris or hazardous material present along the bus routes or restoring the roads to an operable condition. 

Allowable Costs

Pursuant to 2 C.F.R. Part 225, to be an allowable a cost must meet a two prong test. [12]  First, the cost must be necessary.[13]  As discussed above, FEMA's authority in the proper administration of grant funds is limited to, in this instance, projects that lessen or eliminate an immediate threat to life.[14]  In reading 2 C.F.R. Part 225 together with 44 C.F.R. § 206.225, the cost of covered work must be necessary to lessen or eliminate an immediate threat. 

Regarding PW 8296, lessening or eliminating the immediate threat would have resulted in the removal or movement of the hazard, rather than singularly identifying whether a hazard exists.  The work performed by the Applicant did not result in the removal or movement of the hazard, nor, as it was explained in the Grantee's letter dated June 17, 2014, was it intended to result in such movement or removal.  Because the work was not necessary to remove or lessen the immediate threat, the work fails the first prong of the allowable cost requirement; therefore it is ineligible for PA funding.

The second prong of 2 C.F.R. Part 225 requires the cost to be reasonable.[15]  A cost is reasonable if it is both fair and equitable for the type of work being performed.[16]   In addition, FEMA determines reasonableness of costs.[17]   FEMA considers whether the cost is of a type generally recognized as ordinary and necessary for the subject facility and type of work and whether the individuals concerned acted with prudence in conducting work.[18]

Even if, arguendo, FEMA determined that the work was eligible as an emergency protective measure, the costs associated with the work are not reasonable.  The Applicant used 1,232 buses, carrying two employees each, to survey a total of 123,200 miles of road.[19]  The surveys were conducted during a 72-hour period and each force account laborer was paid an overtime rate.[20]  At final inspection, FEMA determined the costs associated with the dry runs were not reasonable as the extent of the activity was not necessary to accomplish the Applicant’s intended outcome—ensuring the roads and bus routes were free of debris and hazards.  FEMA reaffirmed this determination through its first appeal determination.  As of second appeal, the Applicant has not met its burden to demonstrate that the costs associated with the project were reasonable. 

Conclusion

The Grantee failed to submit the appeal within the timeframe established in 44 C.F.R. § 206.206(c)(2) and consequently the appeal is denied.  Timeliness aside, the dry run activity is not eligible work under the PA program and the costs associated with it are not necessary and reasonable pursuant to FEMA regulations and policy.  As such, the appeal would not otherwise be approved on the substantive issues.   


[1] While the Applicant requested $441,869.16 in relief, when $432,153.11 (the amount originally obligated) and $9,716.15 (overrun costs) are added together, the total is $441,869.26.  FEMA used $441,869.26 as the total amount of relief that could be provided to the Applicant.

[2] 2 C.F.R. Part 225 (2005).

[3] See The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 423, 42 U.S.C. § 5189a (2003); see also 44 C.F.R. § 206.206(c)(1).

[4] 44 C.F.R. § 206.206(c)(2).

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

[6] 44 C.F.R. § 206.225(a)(3).

[7] See PA Guide at 48-49 (emphasis added).

[8] Id. at 47-48.

[9] Id. at 41 (stating the administrative allowance is intended to cover “identifying damage”); see also id. at 58 (stating “FEMA does not provide funds for random surveys to look for damage”).  While not applicable at the time of the disaster, the 2007 version of the PA Guide specifically lists “general surveys for eligible facilities” as ineligible for PA funding. 

[10] Id. at 58.

[11] 44 C.F.R. § 206.223 (a)(3); see also PA Guide, at 25.

[12] See OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, OMB CIRCULAR A-87, COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL GOVERNMENTS (2004) (codified at 2 C.F.R. § 225) (stating that costs are allowable if they are necessary and reasonable for proper and efficient performance and administration of Federal awards); see also 44 C.F.R. § 13.22(b).

[13] See 2 C.F.R. § 225 at Appendix A.

[14] See 44 C.F.R. § 206.225. 

[15] See 2 C.F.R. § 225 at Appendix A.

[16] PA Guide, at 34.

[17] Id.

[18] Id.

[19] See Project Worksheet 8296, Broward County School Board, Version 3 (Dec. 17, 2010).

[20] Id.

 

4 Sep 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
City of Port Jervis
Disaster Number: 
4020-DR-NY
DSR: 
9175
Date Signed: 
Thursday, September 4, 2014
PA ID: 
071-59388-00
Summary/Brief: 

Conclusion: The replacement of damaged drywall and studs with concrete block as part of a Hazard Mitigation Proposal (HMP) in the basement of the Port Jervis (Applicant) City Hall building is ineligible for Public Assistance (PA) funding because the Applicant has not demonstrated that the cost of the proposed replacement material in comparison to the original material is cost effective.

Summary Paragraph

FEMA prepared PW 9175 for repairs to the Applicant’s City Hall basement in the amount of $195,653.18.  The Applicant also requested a Hazard Mitigation Proposal (HMP), which was included as part of PW 9175.  The HMP consisted of 3 items:  (1) installation of a back flow prevention valve, totaling $9,200.00, (2) installation of 4 sump pumps, totaling $1,860.00, and (3) replacement of damaged drywall and studs with concrete block, totaling $124, 545.60.  FEMA determined that the HMP was not cost beneficial, as the cost of the third item exceeded the cost to repair the damaged drywall, and, therefore, denied the HMP.  The Applicant appealed FEMA’s decision, requesting a review of the entire City Hall project.  In its first appeal letter, the Applicant claimed that FEMA had misapplied Response and Recovery Policy 9526.1, Hazard Mitigation Funding Under Section 406 [Stafford Act], by comparing mitigation measures to a particular portion of the project as opposed to the whole project.  The FEMA Region II Regional Administrator (RA) partially granted the appeal, acknowledging that items 1 and 2 were eligible because they reduce the potential of future similar damages to the facility and are less than 15 percent of the eligible repair costs on the facility.  However, the RA denied funding for item 3 because Response and Recovery Policy 9526.1 states that “when the cost of proposed replacement material for a damaged component is more than the original material, the proposed material must be shown to be cost effective.”  In its second appeal, the Applicant again requests an entire re-evaluation and assessment of the project. 

Authorities Discussed

  • 44 C.F.R. § 206.226 (e)
  • Recovery Policy 9526.1 (March 30, 2010)

Headnotes

  • 44 C.F.R. § 206.226(e) provides, the RA “may require cost effective hazard mitigation measures not required by applicable standards. The cost of any requirements for hazard mitigation …will be an eligible cost for FEMA assistance.”
    • The proposed HMP item 3 has not been shown to be cost effective.
  •  Pursuant to Recovery Policy 9526.1, the following determine cost-effectiveness: (1) mitigation measures may amount to up to 15% of the total eligible cost of eligible repair work, (2) certain mitigation measures determined cost effective, as long as mitigation measure does not exceed 100% of the eligible cost of the eligible repair work on the project, and (3) for measures that exceed the above costs, the Grantee or subgrantee must demonstrate through a benefit/cost analysis (BCA) that the measure is cost effective.Further, “when the cost of proposed replacement material for a damaged component is more than the original material, the proposed material must be shown to be cost effective.”
    • The proposed HMP item 3 has not been shown to be cost effective by any one of these designated methods.  Further, the cost of the damaged component is more than the original material by 433%.


 

Letter: 

September 4, 2014

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

Re: Second Appeal – City of Port Jervis, PA ID 071-59388-00, FEMA-4020-DR-NY, Project Worksheet 9175 – Hazard Mitigation

Dear Mr. Feeney:

This is in response to your letter dated March 3, 2014, which transmitted the referenced second appeal on behalf of the City of Port Jervis (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $124,545.60 in funding for the third item of the Applicant’s Hazard Mitigation Proposal, submitted as part of Project Worksheet 9175. 

As explained in the enclosed analysis, I have determined that the third item of the referenced Hazard Mitigation Proposal is ineligible for Public Assistance because it has not been shown to be cost effective.  Therefore, the Applicant’s appeal is denied.

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

During the incident period, from August 26 through September 5, 2011, winds, storm surge and flooding from Hurricane Irene resulted in severe flooding and other storm related damage to the City of Port Jervis (Applicant).  The basement of City Hall was flooded with contaminated water when sanitation pipes back flowed through the bathroom plumbing, resulting in damage to the drywall, doors, flooring, baseboards, heating system, and ceiling tiles. 

The Federal Emergency Management Agency (FEMA) wrote PW 9175 (Category E) for the repairs to the City Hall basement and approved funding for these repairs, in the amount of $195,653.18, on March 25, 2013.  The scope of work included: (1) replacement of damaged drywall (15,376 square feet), (2) replacement of 4-inch vinyl cove base (1,740 linear feet), (3) reset of 38 salvaged doors, (4) replacement of hot water base board (343 linear feet), (5) replacement of 6-inch blanketed insulation (1,941 square feet), (6) replacement of vinyl floor tile (5,988 square feet), and (7) replacement of 2-foot by 2-foot acoustic ceiling tile and grid (5,988 square feet).  The total cost for these eligible repairs, as included in the Cost Estimating Format (CEF), was $166,024.00.  FEMA included an additional $29,629.18 in the PW for water extraction and restoration (completed work).   

The Applicant also requested Hazard Mitigation.  A Hazard Mitigation Proposal (HMP) was prepared and included as part of PW 9175.  The HMP consisted of three items: (1) installation of a back flow prevention valve, totaling $9,200.00, (2) installation of 4 sump pumps, totaling $1,860.00, and (3) replacement of damaged drywall and studs with concrete block, totaling $124,545.60.  The total HMP cost was $135,605.60.

FEMA determined that the HMP was not cost beneficial because the cost of the third item, consisting of replacing the damaged drywall and studs with concrete block, exceeded the cost of repairs to the damaged drywall (by approximately 433 percent), $124,545.60 and $28,753.12, respectively.  The FEMA Mitigation Review comments noted that the first and second items of the HMP, without the third item, would be approvable.[1]  

First Appeal

On May 30, 2013, the Applicant submitted a first appeal to the New York State Office of Emergency Management (Grantee).  In its appeal, which the Grantee supported, the Applicant requested an entire re-evaluation and assessment of the Port Jervis City Hall Project.  Specifically, the Applicant claimed that FEMA erroneously revised the HMP comparison, during review, to compare the cost of the drywall repair only to the cost of the proposed third item in the HMP, consisting of installation of concrete masonry units (CMUs) in lieu of drywall replacement.  The Applicant submitted that the estimated cost of replacement of (in kind) drywall would have been $28,753.12, and the estimated cost of the HMP, which was to substitute the drywall with CMUs, would have been $124,545.60, a difference of an additional $95,792.48.  Further, the Applicant claimed that the FEMA estimated total cost of the project was $194,653.18,[2] the FEMA estimate according to the project specialist totaled 56.6 percent of the repair, and restoration costs of the project fell within the guidelines of FEMA Recovery Policy (RP) 9526.1.[3]

On November 26, 2013, the Regional Administrator (RA) issued a first appeal decision, determining that the HMP was partially eligible for Public Assistance (PA) funding.  The RA found that the first and second items of the HMP, respectively consisting of installation of a back flow valve and four sump pumps, were eligible in the amount of $11,060.00, in accordance with RP 9526.1, because they reduced the potential of future similar damages to the facility and were less than 15 percent of the eligible repair costs on the facility.  The RA found the third item (the CMUs) of the HMP ineligible, citing to RP 9526.1, Section VII, Policy, subsection F, which states:  “When the cost of proposed replacement material for a damaged component is more than the original material, the proposed material must be shown to be cost effective.”[4]  According to the RA, the third item of the HMP did not meet the requirements to be considered cost effective through the first two means listed in RP 9526.1.  Further, the RA noted that since the third way to qualify required a BCA, which was not provided as part of the appeal documentation, item 3 was ineligible.  

Second Appeal

In its second appeal, dated January 16, 2014, the Applicant again requests an entire re-evaluation of FEMA’s assessment of the Port Jervis City Hall project.  The Applicant claims that FEMA incorrectly compared item 3 of the mitigation measure to particular portions of the project as opposed to the project as a whole. 

Discussion

For a project to be considered for Hazard Mitigation under FEMA's PA program, the proposed Hazard Mitigation must be cost effective.[5]  Any one of the following means may be used to determine cost effectiveness:

  1. Mitigation measures may amount to up to 15 percent of the total eligible cost of the eligible repair work on a particular project.
  2. Certain mitigation measures, listed in Appendix A of the Policy, may be determined cost effective as long as the mitigation measure does not exceed 100 percent of the eligible cost of the eligible repair work on the project.
  3. For measures that exceed the above costs, the Grantee or subgrantee must demonstrate through an acceptable benefit/cost analysis methodology that the measure is cost effective. FEMA’s Benefit Cost Analysis (BCA) software provides appropriate benefit/cost analysis methodologies. The benefit/cost analysis will be based on a comparison of the total project cost to the total cost of the following project benefits: 1) damage to the facility and its damaged contents, 2) emergency protective measures required as a result of that damage, 3) temporary facilities required due to the damage, 4) loss of function, 5) casualty (loss of life and injury), and 6) cost avoidance (damages avoided in the future due to mitigation measures).[6]

In addition, “when the cost of proposed replacement material for a damaged component is more than the original material, the proposed material must be shown to be cost effective.”[7]

As the RA indicated in his first appeal decision, since the cost of the proposed replacement material, CMU, for the damaged component is more than the original material, the drywall, the CMU must be shown to be cost effective.  Item 3 of the HMP cannot be determined cost effective by any one of the three designated methods listed above.  First, item 3 of the HMP, totaling $124,546.60, is more than 15% percent of the eligible repair costs on the facility, totaling $195,653.18.  Therefore, item 3 cannot be determined cost effective through the first method used to determine cost effectiveness.  Second, item 3 of the HMP cannot be determined cost effective through the second method used to determine cost effectiveness.  The second method states that certain mitigation measures, listed in Appendix A of the policy, “may be determined cost effective as long as the mitigation measure does not exceed 100 percent of the eligible cost of the eligible repair work on the project.”[8] Appendix A does not include concrete walls in the list of eligible mitigation measures,[9] so this method is not applicable.  The FEMA RA correctly calculated the percent of the proposed HMP item 3 (CMUs) compared to the repair component drywall at 433 percent ($124,545.60/$28,753.12).  Third and finally, as the RA noted in his first appeal decision, the only other means to qualify as cost effective is through a BCA.  As indicated in RP 9526.1, the burden of conducting a BCA is on the Applicant and the Grantee.[10]  Since neither the Applicant nor Grantee provided a BCA as part of the appeal documentation, item 3 of the HMP cannot be found eligible through this method.[11]

Conclusion

Item 3 of the HMP, consisting of replacing the damaged drywall with CMU block wall, is ineligible for FEMA PA funding.  The cost of the proposed replacement material for the damaged component is more than the original replacement material cost, and the Applicant has not demonstrated  that it is cost effective through a BCA.  As the RA determined on first appeal, Items 1 and 2 of the HMP remain eligible for FEMA funding.


[1] Project Worksheet 9175, City of Port Jervis, Version 1 (February 21, 2012).

[2] FEMA estimated the repair costs to be $195,653.18, not $194,653.18.  Regardless, the results of this appeal are the same.

[3] Recovery Policy RP9526.1, Hazard Mitigation,  at 3 (March 30, 2010) (stating that certain mitigation measures are “determined to be cost effective as long as the mitigation measure does not exceed 100% of the eligible cost of the eligible repair work on the project).

[4] Id. at 4.

[5] 44 C.F.R. § 206.226 (e); RP9526.1, Hazard Mitigation.

[6] RP9526.1, Hazard Mitigation, at 3.

[7] Id. at 4.

[8] Id. at 3.

[9] See RP9526.1, Hazard Mitigation, Appendix A: Potential Mitigation Measures that are Pre-determined to be Cost Effective. (March 30, 2010). 

[10] RP9526.1, Hazard Mitigation, at 3.

[11] See Second Appeal Letter from City of Port Jervis to NYSOEM (January 16, 2014) (where the Applicant stated, “It does not take an engineering study to realize flood damage to CMU’s, simply requires a hosing down and minor cleanup as opposed to the flooding of drywall partitions which positively require removal and replacement after every flood event.”  The Applicant did not provide any documentation to support this statement.)

 

4 Sep 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
City of Amsterdam
Disaster Number: 
4020-DR-NY
DSR: 
8601
Date Signed: 
Thursday, September 4, 2014
PA ID: 
057-02066-00
Summary/Brief: 

Conclusion:  The City of Amsterdam’s Riverlink Café Building is within a Special Flood Hazard Area.  As such, the Facility is required by statute and regulation to have flood insurance in force or be subject to the mandatory reductions required.

Summary Paragraph

During the declared event, heavy rainfall and runoff into the Mohawk River resulted in overflowing of the river’s banks, causing widespread flooding in the City of Amsterdam (Applicant).  The Applicant owned and operated the Greater Amsterdam Riverlink Café Building (Facility), which was located in a Special Flood Hazard Area identified as Zone A and damaged by the floodwaters. The Applicant had an insurance policy in effect that provided coverage for flood damages in excess of the maximum coverage available under the National Flood Insurance Program (NFIP).  The Applicant did not have flood insurance coverage under NFIP.  FEMA obligated PW 8601 for costs associated with the repair of eligible damages to the Facility in the amount of $35,502.11.  After review by a FEMA insurance specialist, FEMA reduced the funding by $30,494.43 to reflect the mandatory NFIP deduction and then obligated the PW in the amount of $5,007.68.  In its first appeal, the Applicant asserted that the damaged Facility was not in the 100 year flood zone and should not be subject to the mandatory NFIP reduction.  Upon review, the Regional Administrator denied the appeal, contending that FEMA had made the correct eligibility determination.  In its second appeal, the Applicant provides additional documentation, claiming it demonstrates the Facility is not in the 100 year floodplain.

Authorities and Second Appeals

  • 44 C.F.R. § 206.252(a)
Letter: 

September 4, 2014

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

Re:  Second Appeal – City of Amsterdam, PA ID 057-02066-00, FEMA-4020-DR-NY, Project Worksheet (PW) 8601 - Insurance

Dear Mr. Feeney:

This is in response to your letter dated April 11, 2014, which transmitted the referenced second appeal on behalf of the City of Amsterdam (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of funding in the amount of $30,494.43 for Project Worksheet 8601, which addressed damages to the Riverlink Café Building (Facility).

As explained in the enclosed analysis, the Regional Administrator correctly determined that the Facility is within a Special Flood Hazard Area (SFHA).  As such, the Facility is required by statute and regulation to have flood insurance in force or be subject to mandatory reductions.  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.

With its appeal, the Applicant requested a copy of the preliminary September 30, 2011, Flood Insurance Rate Map (FIRM) Number 36057C0212H.  The requested map is presently not releasable.  Effective FIRM maps can be requested through an email to [email protected].  The website for the Flood Map Service Center is https://msc.fema.gov/portal.  The telephone number is (877) 336-2627.  The location of the Facility in a SFHA was confirmed by the Letter of Map Amendment Determination of January 31, 2013. 

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc: Jerome Hatfield
     Regional Administrator
     FEMA Region II

Analysis: 

Background

During the incident period, from August 26 through September 5, 2011, heavy rainfall and runoff into the Mohawk River resulted in the river overflowing its banks, causing widespread flooding in the City of Amsterdam (Applicant).  The Applicant owned and operated the greater Amsterdam Riverlink Café Building (Facility), which was damaged by floodwaters. 

The Facility was located in a Special Flood Hazard Area (SFHA), identified as zone A.  The Applicant had a commercial insurance policy in effect that provided coverage for flood damages in excess of the maximum coverage available under the National Flood Insurance Program (NFIP).  However, the Applicant did not have flood insurance under the NFIP. 

In August 2012, FEMA prepared Project Worksheet (PW) 8601 for costs associated with the repair of eligible damage in the amount of $35,502.11.  After a FEMA Insurance Specialist reviewed the project, FEMA reduced the PW by $30,494.43 to reflect the mandatory NFIP deduction.  Accordingly, FEMA then obligated the PW, on September 17, 2013 in the amount of $5,007.68. 

First Appeal

On January 4, 2013, the Applicant sent its first appeal to the New York State Office of Emergency Management (Grantee), asserting that the damaged Facility was not in the 100 year flood zone and should not be subject to a mandatory NFIP reduction.  In support of the appeal, the Applicant provided a copy of the current flood map as well as a copy of its engineer’s flood elevation certificate, which indicates the Facility is above the required base flood elevation.  Additionally, the Applicant submitted a Letter of Map Amendment.  Subsequently, FEMA denied the requested amendment and notified the Applicant that the Facility is considered to be in the SFHA zone A12.

On November 5, 2013, the FEMA Region II Regional Administrator (RA) denied the appeal.  The RA determined that the Applicant’s supporting documentation confirmed the Facility is within the SFHA zone A12 and is, therefore, subject to mandatory flood insurance reductions.  Further, the RA concluded that the calculation of the mandatory flood reductions as prepared by the FEMA insurance specialist is correct and appropriate to the Facility.

Second Appeal

On December 27, 2013, the Applicant submitted a second appeal letter to the Grantee. In its second appeal, the Applicant reiterated its first appeal claim.  In support of its appeal, the Applicant also provided a New York State Canal Corporation analysis which it claims demonstrates the flood elevation currently applied to the Facility is not correct.  Moreover, the Applicant asserts this shows that the Facility is not in the 100 year flood plain. 

Discussion

Title 44 of the Code of Federal Regulations (C.F.R.) § 206.252(a) specifies:

Where an insurable building damaged by flood is located in a special flood hazard area identified for more than one year by the Administrator, assistance pursuant to section 406 of the Stafford Act shall be reduced.  The amount of the reduction shall be the maximum amount of the insurance proceeds which would have been received had the building and its contents been fully covered by a standard flood insurance policy.[1]

Although the Applicant asserts that the Facility is incorrectly identified as being located in the SFHA, the current flood map, which was in effect from June 19, 1985 through the time of the declared event, indicates that the Facility is in flood zone A12.  Additionally, on January 31, 2013, FEMA denied the Applicant’s Letter of Map Amendment request, confirming that the Facility is in a SFHA.  As the Facility is within zone A12 of a SFHA and was not covered by an NFIP policy, in accordance with 44 C.F.R. § 206.252(a), the PW should be reduced by the maximum amount of insurance proceeds that would have been received had the Facility been covered by an NFIP policy.

The FEMA insurance specialist correctly performed the following calculations: 

Total Amount of PW                         $35,502.11

Less Direct Administrative Costs           $ 508.30

Net Repair Cost of Covered Loss       $34,993.81

Less Depreciation                              $3,499.38

Less Maximum Deductible__________$ 1,000.00

Net Mandatory Flood Reduction    $30, 494.43

Accordingly, pursuant to 44 C.F.R. § 206.252(a), FEMA correctly reduced PW 8601 by $30,494.43 to reflect the mandatory NFIP reduction.

Conclusion

The Facility is within a SFHA, identified as zone A12.  Since the Applicant does not have flood insurance under NFIP, FEMA correctly reduced the amount of Public Assistance funding to $5,007.68 in accordance with 44 C.F.R. § 206.252(a).  The appeal is denied.


[1] 44 C.F.R. § 206.252(a) (2010).