Fema Situation Updates

22 Oct 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Lewis and Clark Rural Water System
Disaster Number: 
1984-DR-SD
DSR: 
2373
Date Signed: 
Tuesday, October 21, 2014
PA ID: 
000-UMD4Z-00
Summary/Brief: 

Conclusion: The bank stabilization system at Mulberry Point is a single facility with multiple location reference points, including Sites B and C.  Notification of new damage in a previously inspected facility is required pursuant to 44 C.F.R. § 206.204(e).  The Applicant adequately documented that the newly discovered damage at Site C was disaster-related; therefore, the change in the scope of work is eligible.

Summary Paragraph

During the declared flooding event, rising floodwaters and high river flow caused extensive erosion to the Applicant’s engineered bank stabilization system.  FEMA conducted a site visit while the water flow was still high, and observed disaster-related damage at Site B of the bank stabilization system.  After the water flow dropped, the Applicant discovered additional damage at Sites B and C of the bank stabilization system, and proceeded with the repairs.  The Applicant requested a change in the scope of work to include additional funding for the repair of the newly discovered damage at Sites B and C, as well as hazard mitigation funding.  FEMA denied the requests and obligated PW 2373 Version 0 for $459,744.00 to repair the original damage inspected at Site B.  In its first appeal, the Applicant claimed that additional damage at Sites B and C were under high river flows and not visible during the FEMA site visit.  The Applicant also argued that hazard mitigation was necessary to prevent future embankment erosion. Upon review, the Regional Administrator partially approved the first appeal and obligated an additional $393,940.35 for the additional damage at Site B.  In its second appeal, the Applicant requests $402,641.52 associated with Site C, arguing additional notification for the new damage at Site C should not have been required because the entire bank stabilization system is a single facility. 

Authorities and Second Appeals

  • 44 C.F.R. § 206.201(c).
  • 44 C.F.R. § 206.201(i).
  • 44 C.F.R. § 206.202(d)(ii).
  • 44 C.F.R. § 206.204(e).
  • PA Guide, at 96.
  • PA Guide, at 140.

Headnotes

  • 44 C.F.R. § 206.201(c) defines facility as any publicly or privately owned building, works, system, or equipment, built or manufactured, or an improved and maintained natural feature. 
  • The bank stabilization system at Mulberry Point is a single continuous system; therefore, it is a single facility with multiple location reference points. 
  • 44 C.F.R. § 206.202(d)(ii) requires an applicant to identify and report all damage within 60 days following its first substantive meeting with FEMA.  Public Assistance Guide further clarifies that this requirement applies to any newly discovered damaged facilities.  44 C.F.R. § 206.204(e) requires an applicant to evaluate and report cost overruns for reasons including a change in the scope of eligible work.
    • As a single facility already reported as damaged, the 60-day timeframe does not apply to any newly discovered damage. 
    • However, the Applicant is still required to report new damage within a timely manner pursuant to 44 C.F.R. § 206.204(e).

 

Letter: 

October 21, 2014

Kristi Turman
Director
South Dakota Office of Emergency Management
118 West Capitol Avenue
Pierre, South Dakota 57501

Re:  Second Appeal – Lewis and Clark Rural Water System, PA ID 000-UMD4Z-00, FEMA-1984-DR-SD, Project Worksheet (PW) 2373, Scope of Work

Dear Ms. Turman:

This is in response to your letter dated August 2, 2013, which transmitted the referenced second appeal on behalf of Lewis and Clark Rural Water System (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of additional funding of $402,641.52 associated with a change in scope of work request for PW 2373. 

As explained in the enclosed analysis, I have determined that the bank stabilization system (facility) is a single facility, and the requirement to report new damaged facilities within a 60-day timeframe is not applicable.  Although not reported until after the repair, the Applicant did document that the newly identified damage at Site C was caused by the disaster.  Therefore, I am granting this appeal for $402,641.52, contingent upon a formal FEMA environmental and historic review.  By this letter, I am requesting that the Regional Administrator take appropriate action to implement my determination.

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

Sincerely,

/s/

Brad J. Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

cc:  Tony Russell
       Acting Regional Administrator
       FEMA Region VIII

Analysis: 

Background

An above-normal level of snow fall in South Dakota during the winter of 2010–2011 resulted in significant water run-off and flooding as the temperatures warmed up in March 2011.  A major disaster for flooding was declared on May 13, 2011 with the incident period of March 11, 2011 to July 22, 2011.  Along Mulberry Point on the Missouri River, rising floodwaters with high velocity river flow redirected the main river channel and caused extensive erosion to portions of the engineered bank stabilization system, owned and operated by Lewis and Clark Rural Water System (Applicant).[1]  Flood damage included partial to complete washout of portions of the bank stabilization system comprised of various engineered components—a combination of a stone toe base, bank stabilization material, locked logs, and planted vegetation.  Completed in 2008, the bank stabilization system was designed to stabilize and strengthen the embankment, which in turn protects the Applicant’s water system that provides potable water to over 300,000 people in three states along the Missouri River.     

The Applicant provided documentation to show that the normal high water level (NHW) at this site was set as being equal to the Construction Reference Plane (CRP) for the bank stabilization system site design, which was determined by the U.S. Army Corp of Engineers (USACE) to be 29,000 cubic feet per second (cfs). The ordinary high water level (OHW) was set two feet above the NHW, corresponding to the start of willow plantings on the bank stabilization system.  The 100-year flood level corresponded to the top of the bank stabilization system, equivalent to a river flow of about 100,000 cfs.  During the flood event of 2011, the maximum river flow exceeded 160,000 cfs.

The upper (north) end of the embankment failure was noted only after the river flow had dropped to approximately 90,000 cfs around September 2011.  The river flow then dropped to 40,000 cfs around the beginning of October 2011 and maintained that level until mid-December 2011.

On October 4, 2011,[2] FEMA conducted a site visit to observe the area of the bank stabilization system failure and identified extensive embankment damage at a location identified by the Applicant as Site B at Mulberry Point[3].  Due to the above-average water flows covering the entire shoreline, the full extent of the damage to the embankment was not visible at this time.  FEMA prepared Project Worksheet (PW) 2373 with an estimated cost of $459,744.00 to repair the visible damage.  The PW scope of work (SOW) included in-kind replacement of the engineered embankment material eroded by floodwaters and high velocity river flow along 877 linear feet (LF) of the bank stabilization system at Site B.  The recent completion of the construction of the bank stabilization system (less than three years prior to the flooding disaster) allowed for the use of the original engineering plans as a baseline for takeoff measurements for estimating lost quantities of material necessary for the repair.

After the river flows decreased and the water level receded closer to the NHW, the Applicant conducted a full evaluation of all flood damage to the bank stabilization system on December 27, 2011.  During this evaluation, the Applicant identified additional damage at Site B, increasing the total length of the damaged section from 877 feet to 1,500 feet.  The Applicant also discovered another damaged section about 410 feet in length located approximately 200 feet downstream at Site C; this damaged section was under water at the time of the previous FEMA site visit due to it being further downstream at a lower elevation.

In early 2012, the Applicant made several inquiries regarding the status of its PW.  During the spring of 2012, the Applicant proceeded with the repair of all damages at the bank stabilization system in consideration of past environmental restrictions that limited construction activity to winter and early spring, as well as relatively low river flows which aided in the construction.[4]

The Applicant reported the newly identified damage to the South Dakota Department of Public Safety (Grantee) on June 11, 2012; the Grantee notified FEMA immediately.  On June 20, 2012, FEMA conducted a second site visit to view the additional damage.  On July 26, 2012, the Applicant submitted two requests for additional funding for the work required to repair the bank stabilization system: 1) a change in SOW to include additional embankment material needed to repair the damage previously unseen under the high water level ($393,940.45) and hazard mitigation completed ($264,544.43) at Site B; and 2) a new PW to address the newly identified damage ($402,641.52) at Site C.

On August 10, 2012, FEMA obligated PW 2373 Version 0 for $459,744.00 for the original SOW.  The PW noted the additional costs associated with newly discovered damage and hazard mitigation requested by the Applicant were not included.  Regarding the Applicant’s funding request for the repair of the newly identified damaged section, FEMA indicated the PW repair estimate based on the bank stabilization system’s original design specification did not deduct for any undamaged useable material, which should provide the Applicant with a surplus of materials.  On August 20, 2012, FEMA issued responses to the Applicant’s July 26, 2012 requests, denying both requests.  Hazard mitigation funding for Site B was denied because the Applicant completed work beyond the pre-disaster configuration without FEMA approval prior to construction.  Funding for Site C was denied because the Applicant did not identify nor report the new damage within the 60-day period following the Kickoff Meeting, which FEMA considered to have taken place on the same date as the site visit on the October 4, 2011.

First Appeal

On October 17, 2012, the Applicant sent its first appeal to the Grantee, requesting that FEMA obligate an additional $1,061.126.40.  The Grantee transmitted the Applicant’s first appeal to FEMA Region VIII, indicating its partial support of the appeal, on December 7, 2012. 

First, the Applicant claimed that the additional quantities of engineered embankment material were necessary to fully repair the flood damage at Site B.  The Applicant reasoned that FEMA’s initial estimate was based on only a part of the entire damaged section visible above the high river level at the time of the site inspection. 

Second, the Applicant argued that hazard mitigation was necessary and designed in cooperation with a USACE river bank restoration expert to prevent further embankment erosion and future damage to the well fields.  The Grantee did not support this portion of the appeal.

Finally, the Applicant asserted that the damage at Site C could not be assessed during FEMA’s initial site visit as it was underwater below the continued high flows in the Missouri River.  The Applicant further contended that it was not aware of the requirement to report additional damage within 60 days of the Kickoff Meeting, because this was not explained by FEMA during the October 4, 2011 site inspection that also served as the Kickoff Meeting.  The Applicant indicated that it would have reported the newly identified damage as soon as it could after the discovery in late December 2011, had it understood the damage reporting requirement.

The FEMA Region VIII Regional Administrator (RA) partially granted the first appeal on May 13, 2013.  The RA determined that the Applicant adequately demonstrated the additional embankment material required at Site B was needed to repair the damage that was a direct result of the disaster, and approved an additional $393,940.35.  However, the RA denied funding for the damage at Site C due to the Applicant’s failure to report the additional damage in a timely manner.  The RA also denied funding for Section 406 mitigation because the Applicant consulted with neither the Grantee nor FEMA prior to completing the mitigation measures for the bank stabilization system beyond the pre-disaster footprint.  On June 3, 2013, FEMA approved PW2373 Version 1 for an additional $393,940.35.

Second Appeal

On August 2, 2013, the Grantee transmitted the Applicant’s second appeal letter dated July 11, 2013, indicating its support of the appeal.  In its second appeal, the Applicant requests reconsideration of the unreported cost of $402,641.52 associated with Site C.  The Applicant indicates that it accepts FEMA’s ineligibility determination for the Section 406 mitigation. 

The Applicant contends that additional notification for the newly identified damage at Site C should not have been required because the entire bank stabilization system at Mulberry Point is a single continuous system; it provides detailed descriptions and technical drawings[5] to demonstrate this point.  The Applicant also reiterates its first appeal argument that the notification requirement of 60 days could not be met because the newly identified damage was under the continued high river flows and not visible well beyond the 60-day deadline to report additional damage.

Discussion

Mulberry Point Bank Stabilization System as a Single Facility

Title 44 Code of Federal Regulations (C.F.R.) § 206.201(c) defines facility as any publicly or privately owned building, works, system, or equipment, built or manufactured, or an improved and maintained natural feature.[6]  Regulations further define project as a logical grouping of work required as a result of the declared major disaster or emergency, whereby the SOW and cost estimate for a project are documented on a PW; a project may include eligible work at several sites.[7]  The Applicant asserted that the bank stabilization system at Mulberry Point is a single continuous system, and therefore, a single facility with multiple sites including Sites B and C.  As a single facility, the Applicant argued that an additional notification for the newly identified damage at Site C should not have been required.

The Applicant provided extensive details regarding its genesis as a Private Nonprofit organization with a mission to provide safe and reliable drinking water to its member municipalities and rural water systems.  The water delivery system consists of many components including: a traditional lime treatment facility, along with multiple pump stations and reservoirs; a series of well fields located on the Missouri River, including a site known as Mulberry Point; and a bank stabilization system to protect the embankment from erosion, which in turn protects the Mulberry Point well field.  The Applicant explained that the Mulberry Point well field consists of well locations referred to as Sites A through E, lettered from north to south.

Near the Mulberry Point well field, the bank stabilization system in question was constructed as a single continuous system over 5,000 feet in length.  There are no separate and distinct sections of the bank stabilization system, the Applicant explained, as it was constructed as a single system to protect the entire well field at Mulberry Point.  The Applicant clarified that the reference to a location of the bank stabilization system, such as Site B, refers to the closest Mulberry well field site location.  This naming convention is easier to use, rather than referring to a specific location along the bank stabilization system by its original station designation, ranging from station 0+00 at the south end of the bank stabilization system to station 52+20 at the north end.  The Applicant stated that the new damage discovered at Site C is located about 200 feet downstream (south) of Site B.  As the elevation of the bank stabilization system decreased from north to south due to the river gradient, it is logical that most of the embankment at Site C was still under the high water flows when some of the damage at Site B was visible during the initial FEMA site visit.

Based on a thorough review of the documentation, including technical drawings and photographs, FEMA agrees with the Applicant that the bank stabilization system should be considered a single facility.  However, FEMA disputes the Applicant’s claim that additional notification for the newly identified damage at Site C is not required because Site C is part of the same facility as Site B.  FEMA guidance specifies that when additional damage to a facility is found after the PW is completed, the Applicant must document the damage, show that it is disaster-related, and request a re-inspection by FEMA.[8]

Timeliness of Reporting New Damage

Regulations provide that an applicant has 60 days following its first substantive meeting with FEMA to identify and to report damage to FEMA.[9]  The Public Assistance Guide further clarifies that an applicant must request assistance for any newly discovered damaged facilities within 60 days of the first substantive meeting, which is typically the Kickoff Meeting.[10]  However, there is a distinction between newly discovered damaged facility versus newly discovered damage at a facility already reported as damaged (i.e., hidden damage).

Here, the newly discovered damage at Site C is located at a facility already reported as damaged.  FEMA previously inspected the disaster-caused damage at Site B within the same facility (i.e., the bank stabilization system).  As Site C damage is not considered damage at a newly discovered damaged facility, the 60-day requirement to report newly discovered damaged facilities as outlined in FEMA regulations and guidance[11] does not apply.

Notwithstanding the inapplicability of the above-mentioned 60-day requirement, the Applicant is still required to report any newly discovered damage in a timely manner, even at a facility previously identified as damaged and already inspected by FEMA, pursuant to requirements outlined in regulations.[12]  Although regulations do not establish a specific deadline to report newly discovered damage at an already-inspected facility, FEMA guidance clearly states that to determine eligibility of any additional damage, FEMA may conduct another site visit, which should be timed to allow an inspection of the newly discovered damage before it is covered up or repaired.[13]

In this case, the Applicant completed all repair work at the bank stabilization system facility at both Sites B and C, before it reported the additional damage to the State and FEMA.  The Applicant and the Grantee both claimed the Applicant was not aware of any requirement to report additional damage to FEMA, and that it would have done so in a timelier manner otherwise. 

The Applicant’s limited level of awareness or knowledge of the federal requirements and guidelines for Public Assistance funding is not a justification for FEMA to grant time extensions or exceptions for reporting new damage.  Nevertheless, FEMA recognizes the time frame of the Applicant’s construction activities at the bank stabilization facility was limited by various environmental requirements and restrictions, and the original version of PW 2373 (which included specific language regarding the requirement to report any additional damage) was not processed and approved until ten months after the initial site inspection.  The Applicant also presented information (e.g., summary of site inspection notes and photographs) to document the newly identified damage at Site C was disaster-related.

In partially granting the first appeal, the RA approved extra funding to repair additional disaster-related damage at Site B, which was not reported to FEMA until after the project completion.  Under the circumstances discussed above, FEMA finds that the RA was correct to grant funding to repair the newly discovered disaster-caused damage at Site B.  Accordingly, additional funding for the disaster-caused damage at Site C of the same facility should also be eligible.

The Applicant stated that all construction activities at Sites B and C were conducted in accordance with previous environmental requirements, and the approval of PW 2373 Versions 0 and 1 did not modify any of the environmental requirements.  During the review of the Applicant’s second appeal, FEMA conducted a preliminary environmental and historic preservation (EHP) compliance review of the project at Site C.  FEMA anticipates that the formal EHP review will find the project compliant with applicable law, regulation, and policy, as long as the SOW completed at Site C is in line with the SOW submitted in the environmental consultation documents and the Applicant complied with all the conditions outlined in the agency responses. For a complete EHP review, the Applicant will need to submit any necessary documentation to verify compliance with project conditions when PW 2373 Version 2 is prepared to fund the work already completed at Site C.

Conclusion

The Applicant has adequately demonstrated that the bank stabilization system is a single continuous system, and hence, a single facility.  As a single facility that was already identified as disaster-damaged (at Site B) and inspected by FEMA, the newly identified damage at Site C of the same facility is not subject to the 60-day requirement after the first substantive meeting with FEMA to report new damaged facilities.  However, the Applicant is still required to report any new damage to facilities already identified as damaged.  Although the Applicant did not report the newly identified damage at Site C until after it was repaired, the Applicant documented that it was disaster-related.  Therefore, the request for a change in SOW to include its repair is approved, contingent upon successful completion of a formal EHP review.  FEMA will prepare PW 2373 Version 2 to obligate an additional $402,641.52.


[1] The Applicant’s Request for Public Assistance (RPA) was approved under the name Lewis and Clark Rural Water System, Inc.  However, it appears that the Applicant is also referred to as Lewis and Clark Regional Water System, Inc, according to its current letterhead and website.  For the purposes of this second appeal analysis, the two names are interchangeable and refer to the same Applicant.

[2] The Applicant’s second appeal states the FEMA inspection occurred on October 4, 2011.  PW 2373 incorrectly states it occurred on October 7, 2011.

[3] The Applicant explained that the water well fields are known as Sites A through E—collectively referred to as Mulberry Point well fields.  The different locations along the bank stabilization system are also commonly referred to as Sites A through E, corresponding to the closest water well field Site marker.

[4] The Applicant stated all of the work done at the Mulberry Point well field was subject to several environmental restrictions.  The preferred unrestricted time for construction was from September through December, followed by the period from January through April.  The most restrictive time is from mid-April through August due to nesting birds and presence of raptors.

[5] Much of the documentation was also previously submitted with the SOW change request and the first appeal request.

[6] 44 C.F.R. § 206.201(c) (2010).

[7] See 44 C.F.R. § 206.201(i).

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

[9] See 44 C.F.R. § 206.202 (d)(ii).

[10] See PA Guide, at  96 and at 140.

[11] See 44 C.F.R. § 206.202 (d)(ii); see also id.

[12] See 44 C.F.R. § 206.204(e) (discussing the Applicant requirement to evaluate and report cost overruns for reasons including a change in the scope of eligible work).

[13] See PA Guide, at 140.

 

20 Oct 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5595
Date Signed: 
Tuesday, October 14, 2014
PA ID: 
037-52004-00
Summary/Brief: 

Conclusion:  Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5595 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $1,455,739.93 in additional PA funding.

Summary Paragraph

In May 2010, extensive flooding throughout Nashville-Davidson County caused damage to the Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA prepared Project Worksheet (PW) 5595 to document disaster-related damage to various electrical, mechanical, and building infrastructure components in the Filter Building of the Facility.  FEMA obligated PW 5595 for $64,895.81 based on a Cost Estimating Format (CEF).  In the first appeal, the Applicant asserted that FEMA failed to include funding for replacement of wiring and cables throughout the Filter Building and labor and other materials associated with the restoration of the building.  The Regional Administrator (RA) partially approved PW 5595 for $139,766.59 for resident engineering costs, pipe insulation, metal door replacement, and associated construction management costs.  However, the RA determined that the first appeal did not provide the level of information necessary to make eligibility determinations on the other excluded items.  In addition, the RA concluded that the Applicant failed to demonstrate that some of the excluded work items were the result of the disaster.  In the second appeal, the Applicant again asserts that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its pre-disaster condition for PW 5595. 

Authorities and Second Appeals

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

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a), an eligible item of work must be required as the result of the disaster event.
    • Based on FEMA P-348, FEMA 543, FEMA P-936, and FEMA P-942, and substantiated by analysis from a Professional Engineer, FEMA determined that the work items excluded from the original version of PW 5595 are eligible under the PA Program as they were required as a result of the disaster.   
  • Pursuant to OMB Circular A-87, allowable procurement costs must, among other things, be adequately documented.
    • The Applicant provided adequate documentation, such as bid documents, invoices, and cancelled checks, to demonstrate actual costs for the requested work items. 
Letter: 

October 14, 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) 5595 – Scope of Work

Dear Mr. Purkey:

This is in response to a letter from your office dated February 20, 2014, which transmitted the referenced second appeal on behalf of the Metropolitan Government of Nashville and Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $1,455,739.93 in Public Assistance (PA) funding for various items excluded from PW 5595.

As explained in the enclosed analysis, I have determined that, pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5595 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $1,455,739.93 in additional PA funding.  Therefore, I am granting the appeal contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  By copy of this letter, I am requesting the Acting Regional Administrator take appropriate action to implement this determination. 

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  Andrew Velasquez, III
      Regional Administrator
      FEMA Region IV

Analysis: 

Background

In May 2010, extensive flooding throughout Nashville and Davidson County caused damage to the Metropolitan Government of Nashville and Davidson County’s (Nashville-Davidson or Applicant) Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA prepared Project Worksheet (PW) 5595 to document disaster-related damage to various electrical, mechanical, and building infrastructure components in the Filter Building of the Facility.  FEMA obligated PW 5595 for $64,895.81 based on a Cost Estimating Format (CEF).

First Appeal

In the first appeal letter, dated June 8, 2011, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its predisaster condition for PW 5595.  In that appeal the Applicant presented six distinct issues.  First, the Applicant disagreed with FEMA’s decision to reclassify the Direct Administrative Costs (DAC) as indirect costs, thereby reducing the eligible amount in PW 5595.  Second, the Applicant requested that FEMA revise PW 5595 to reflect the actual effort expended for on-site resident engineering tasks associated with the recovery of the Facility.  Third, the Applicant asserted that it should be reimbursed for removal, disposal, and replacement of contaminated pipe insulation because such action complied with FEMA policy and guidance regarding mold remediation.  Fourth, the Applicant asserted that FEMA should authorize the replacement of all metal doors at the Filter Building because the doors were inundated with contaminated waters.  Fifth, pursuant to FEMA Publication 348, Protecting Building Utilities from Flood Damage (FEMA P-348), FEMA should authorize the complete replacement of all electrical wires and cables because the Facility was submerged in nine feet of contaminated floodwaters and the electrical equipment was not salvageable.[1]   Finally, the Applicant asserted that a Technical Memorandum, prepared by Brown and Caldwell Engineers (Consulting Engineers), identified several areas where damaged items were missed and should have been included in PW 5595.[2]    

In a letter dated December 6, 2013, the Region IV Regional Administrator (RA) partially granted the appeal, approving $139,766.59 for the second, third, and fourth issues presented by the Applicant (i.e., resident engineering costs, pipe insulation, replacement of metal doors, and associated construction management costs).  However, the RA determined that Nashville-Davidson had not provided sufficient information to substantiate additional direct administrative costs, complete replacement of all electrical wires and cables, or the costs for other items that were excluded from the PW (first, fifth, and sixth issues, respectively). With specific regard to issue five, the RA determined that the format in which the Applicant documented costs made no distinction between existing line item costs included in PW 5595 (i.e., the FEMA generated CEF) and the appealed scope addition or cost increases.  Regarding issue six, the RA concurred with the Applicant that accidental damage caused by one of its contractors was a consequence of emergency response efforts.  Therefore, the RA agreed with a scope increase to address the damage; however, he could not determine eligible costs.  The RA determined that these costs would be captured during the final reconciliation of PW 5595. 

Second Appeal

In the second appeal, dated February 12, 2014, the Applicant requests reimbursement for issue five (i.e., excluded work described above), in the amount of $1,455,739.93.  The second appeal  includes $415,739.35 for wire and conduit replacement, $76,855.58 for lighting and receptacle replacement, and $963,145.00 for replacement of damaged instrumentation—all of which the applicant claims were excluded in the original PW.  The Applicant raises no issue with regard to the Direct Administrative Costs.

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

Discussion

Work Eligibility

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

As stated earlier, in the first appeal determination, the RA noted that the items excluded from the scope of work may be eligible for Public Assistance (PA) funding.  However, the RA could neither determine whether all items were damaged by the disaster nor distinguish between line item costs already included in PW 5595 and additional scope or cost increases not previously included in PW 5595.

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

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

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

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

Based upon the Applicant’s supporting documents, and FEMA policy and guidance, FEMA has determined that contaminated floodwater inundated the Facility and, therefore, likely had detrimental impacts on its electrical components.[24]  As such, the items excluded from the original scope of work in PW 5595 are eligible for Public Assistance funding.

Allowable Costs

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

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

Conclusion

Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5595 are eligible under the PA Program.  In addition, pursuant to OMB Circular A-87, the Applicant provided sufficient documentation to substantiate its request for additional PA funding.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  Final costs for PW 5595 will be reconciled by FEMA during the closeout process. 


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

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

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

[4] 44 C.F.R. § 206.223(a) (2009).

[5] See generally Technical Memorandum 1.

[6] Id.

[7] Id.

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

[9] Id.

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

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

[12] FEMA P-348, at 2-27. 

[13] Id., at 2-28.

[14] Id., at 3.3-2.

[15] Id., at 2-28. 

[16] FEMA 543, at 2-50.

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

[18] FEMA 543, at 2-50.

[19] Id.

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

[21] Id.

[22] Id.

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

[24]During evaluation of the second appeal, FEMA consulted a professional engineer (PE) regarding the validity of the Applicant’s assertions regarding the excluded work items.  The PE reviewed the Applicant’s appeal documentation submitted on first and second appeal, FEMA policy, and FEMA guidance to form a professional opinion regarding the eligibility of work items the Applicant claims were improperly excluded in PW 5595.  The PE concluded that the Applicant’s documentation was sufficient to establish that the excluded items were damaged by the flood.  See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Aug. 15, 2014, 5:24 pm) (on file with FEMA).

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

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

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

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

 

20 Oct 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5591
Date Signed: 
Tuesday, October 14, 2014
PA ID: 
037-52004-00
Summary/Brief: 

Conclusion:  Pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5591 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $196,315.79 in additional PA funding.

Summary Paragraph

In May 2010, extensive flooding throughout Nashville-Davidson County caused damage to the Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted PW 5591 to address damage to the Main Blower Building of the Facility.  FEMA obligated PW 5591 for $78,883.38. The Applicant prepared, and attached to the PW, a statement explaining that they were “signing this PW without proper review of scope and/or damage description elements due to FEMA’s self-imposed February 25, 2011 deadline for closing the Joint Field Office.”  In the first appeal, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its pre-disaster condition for PW 5591.  The Regional Administrator (RA) partially approved PW 5591 for $64,218.72 for resident engineering costs, pipe insulation, metal door replacement, and associated construction management costs.  However, the RA determined that the first appeal did not provide the level of information necessary to make eligibility determinations on the other excluded items.  In the second appeal, the Applicant asserts that FEMA failed to include funding for lighting and receptacle replacements, HVAC replacement, and other miscellaneous electrical and mechanical work items.

Authorities and Second Appeals

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

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a), an eligible item of work must be required as the result of the disaster event.
    • Based on FEMA P-348, FEMA 543, FEMA P-936, and FEMA P-942, and substantiated by analysis from a Professional Engineer, FEMA determined that the work items excluded from the original version of PW 5591 are eligible under the PA Program as they were required as a result of the disaster.   
  • Pursuant to OMB Circular A-87, allowable procurement costs must, among other things, be adequately documented.
    • The Applicant provided adequate documentation, such as bid documents, invoices, and cancelled checks, to demonstrate actual costs for the requested work items. 
Letter: 

October 14, 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) 5591 – Scope of Work

Dear Mr. Purkey:

This is in response to a letter from your office dated February 20, 2014, which transmitted the referenced second appeal on behalf of the Metropolitan Government of Nashville and Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $196,315.79 in Public Assistance (PA) funding for various items excluded from PW 5591.

As explained in the enclosed analysis, I have determined that, pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5591 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $196,315.79 in additional PA funding.  Therefore, I am granting the appeal contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  By copy of this letter, I am requesting the Acting Regional Administrator take appropriate action to implement this determination. 

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc: Andrew Velasquez, III
     Regional Administrator
     FEMA Region IV

Analysis: 

Background

In May 2010, extensive flooding throughout Nashville and Davidson County caused damage to the Metropolitan Government of Nashville and Davidson County’s (Nashville-Davidson or Applicant) Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA prepared PW 5591 to address damage to the Main Blower Building of the Facility.  FEMA obligated PW 5591 for $78,883.38 based on a Cost Estimating Format (CEF). 

First Appeal

In the first appeal letter, dated June 8, 2011, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its predisaster condition for PW 5591.  In that appeal the Applicant presented six distinct issues.  First, the Applicant disagreed with FEMA’s decision to reclassify the Direct Administrative Costs (DAC) as indirect costs, thereby reducing the eligible amount in PW 5591.  Second, the Applicant requested that FEMA revise PW 5591 to reflect the actual effort expended for on-site resident engineering tasks associated with the recovery of the Facility.  Third, the Applicant asserted that it should be reimbursed for removal, disposal, and replacement of contaminated pipe insulation because such action complied with FEMA policy and guidance regarding mold remediation.  Fourth, the Applicant asserted that FEMA should authorize the replacement of all metal doors at the Main Blower Building because the doors were inundated with contaminated waters.  Fifth, the Applicant asserted that pursuant to FEMA Publication 348, Protecting Building Utilities from Flood Damage (FEMA P-348), FEMA should authorize the complete replacement of all electrical wires and cables because the Facility was submerged in nine feet of contaminated floodwaters and the electrical equipment was not salvageable.[1]  Finally, the Applicant asserted that a Technical Memorandum, prepared by Brown and Caldwell Engineers (Consulting Engineers), identified several areas where damaged items were missed and should have been included in PW 5591.[2]    

In a letter dated November 25, 2013, the Region IV Regional Administrator (RA) partially granted the appeal, approving $64,218.72 for the second, third, and fourth issues presented by the Applicant (i.e., resident engineering costs, pipe insulation, replacement of metal doors, and associated construction management costs).  However, the RA determined that Nashville-Davidson had not provided sufficient information to substantiate additional direct administrative costs, complete replacement of all electrical wires and cables, or the costs for other items that were excluded from the PW (first, fifth, and sixth issues, respectively). With specific regard to issues five and six, the RA determined that the format in which the Applicant documented costs made no distinction between existing line item costs included in PW 5591 (i.e., the FEMA generated CEF) and the appealed scope addition or cost increases.

Second Appeal

In the second appeal, dated February 12, 2014, the Applicant requests reimbursement for issues five and six (i.e., excluded work described above), in the amount of $196,315.79.  The second appeal includes $141,346.85 for lighting and receptacle replacement and $54,968.94 for the actual costs of a HVAC system and other miscellaneous electrical and mechanical equipment—all of which the applicant claims were excluded in the original PW.  The Applicant raises no issue with regard to the Direct Administrative Costs.

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

Discussion

Work Eligibility

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

As stated earlier, in the first appeal determination, the RA noted that the items excluded from the scope of work may be eligible for Public Assistance (PA) funding.  However, the RA could neither determine whether all items were damaged by the disaster nor distinguish between line item costs already included in PW 5591 and additional scope or cost increases not previously included in PW 5591.

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

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

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

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

Based upon the Applicant’s supporting documents, and FEMA policy and guidance, FEMA has determined that contaminated floodwater inundated the Facility and, therefore, likely had detrimental impacts on its electrical components.[24]  As such, the items excluded from the original scope of work in PW 5591 are eligible for Public Assistance funding.

Allowable Costs

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

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

Conclusion

Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5591 are eligible under the PA Program.  In addition, pursuant to OMB Circular A-87, the Applicant provided sufficient documentation to substantiate its request for additional PA funding.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  Final costs for PW 5591 will be reconciled by FEMA during the closeout process.


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

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

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

[4] 44 C.F.R. § 206.223(a) (2009).

[5] See generally Technical Memorandum 1.

[6] Id.

[7] Id.

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

[9] Id.

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

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

[12] FEMA P-348, at 2-27. 

[13] Id., at 2-28.

[14] Id., at 3.3-2.

[15] Id., at 2-28. 

[16] FEMA 543, at 2-50.

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

[18] FEMA 543, at 2-50.

[19] Id.

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

[21] Id.

[22] Id.

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

[24]During evaluation of the second appeal, FEMA consulted a professional engineer (PE) regarding the validity of the Applicant’s assertions regarding the excluded work items.  The PE reviewed the Applicant’s appeal documentation submitted on first and second appeal, FEMA policy, and FEMA guidance to form a professional opinion regarding the eligibility of work items the Applicant claims were improperly excluded in PW 5591.  The PE concluded that the Applicant’s documentation was sufficient to establish that the excluded items were damaged by the flood.  See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Aug. 15, 2014, 5:24 pm) (on file with FEMA).

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

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

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

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

 

20 Oct 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5590
Date Signed: 
Tuesday, October 14, 2014
PA ID: 
037-52004-00
Summary/Brief: 

Conclusion:  Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5590 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $503,424.04 in additional PA funding.

Summary Paragraph

In May 2010, extensive flooding throughout Nashville-Davidson County caused damage to the Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted PW 5590 to address damage to the Primary Treatment System building of the Facility.  FEMA obligated PW 5590 for $83,699.09. The Applicant prepared, and attached to the PW, a statement explaining that they were “signing this PW without proper review of scope and/or damage description elements due to FEMA’s self-imposed February 25, 2011 deadline for closing the Joint Field Office.”  In the first appeal, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its pre-disaster condition for PW 5590.  The Regional Administrator (RA) partially approved PW 5590 for $56,828.48 for resident engineering costs, pipe insulation, and associated construction management costs.  However, the RA determined that the first appeal did not provide the level of information necessary to make eligibility determinations on the other excluded items.  In the second appeal, the Applicant asserts that FEMA failed to include funding for electrical wiring and cable replacement and various electrical system components that were inundated by contaminated floodwaters. 

Authorities and Second Appeals

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

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a), an eligible item of work must be required as the result of the disaster event.
    • Based on FEMA P-348, FEMA 543, FEMA P-936, and FEMA P-942, and substantiated by analysis from a Professional Engineer, FEMA determined that the work items excluded from the original version of PW 5590 are eligible under the PA Program as they were required as a result of the disaster.   
  • Pursuant to OMB Circular A-87, allowable procurement costs must, among other things, be adequately documented.
    • The Applicant provided adequate documentation, such as bid documents, invoices, and cancelled checks, to demonstrate actual costs for the requested work items. 


 

Letter: 

October 14, 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) 5590 – Scope of Work

Dear Mr. Purkey:

This is in response to a letter from your office dated January 22, 2014, which transmitted the referenced second appeal on behalf of the Metropolitan Government of Nashville and Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $503,424.04 in Public Assistance (PA) funding for various items excluded from PW 5590.

As explained in the enclosed analysis, I have determined that, pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5590 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $503,424.04 in additional PA funding.  Therefore, I am approving the appeal contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  By copy of this letter, I am requesting the Acting Regional Administrator take appropriate action to implement this determination. 

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  Andrew Velasquez, III
      Regional Administrator
      FEMA Region IV

Analysis: 

Background

In May 2010, extensive flooding throughout Nashville and Davidson County caused damage to the Metropolitan Government of Nashville and Davidson County’s (Nashville-Davidson or Applicant) Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted PW 5590 to address damage to the Primary Treatment System building of the Facility, including below grade equipment galleries and tunnels.  FEMA obligated PW 5590 for $83,699.09 based on a Cost Estimating Format (CEF). 

First Appeal

In the first appeal letter, dated June 8, 2011, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its predisaster condition for PW 5590.  In that appeal the Applicant presented five distinct issues.  First, the Applicant disagreed with FEMA’s decision to reclassify the Direct Administrative Costs (DAC) as indirect costs, thereby reducing the eligible amount in PW 5590.  Second, the Applicant requested that FEMA revise PW 5590 to reflect the actual effort expended for on-site resident engineering tasks associated with the recovery of the Facility.  Third, the Applicant asserted that it should be reimbursed for removal, disposal, and replacement of contaminated pipe insulation because such action complied with FEMA policy and guidance regarding mold remediation.  Fourth, the Applicant asserted that, pursuant to FEMA Publication 348, Protecting Building Utilities from Flood Damage (FEMA P-348), FEMA should authorize the complete replacement of all electrical wires and cables because the Facility was submerged in nine feet of contaminated floodwaters and the electrical equipment was not salvageable.[1]  Finally, the Applicant asserted that a Technical Memorandum, prepared by Brown and Caldwell Engineers (Consulting Engineers), identified several areas where damaged items were missed and should have been included in PW 5590.[2]   

In a letter dated November 8, 2013, the Region IV Regional Administrator (RA) partially granted the appeal, approving $56,828.48 for the second and third issues presented by the Applicant (i.e., resident engineering costs, pipe insulation, and associated construction management costs).  In addition, the RA approved an amendment to the scope of PW 5590 to include below-grade electrical testing and replacement and associated construction management costs.  However, the RA determined that Nashville-Davidson had not provided sufficient information to substantiate additional direct administrative costs, complete replacement of all electrical wires and cables, or other items that were excluded from the PW (first, fourth, and fifth issues, respectively). With specific regard to issues four and five, the RA determined that the format in which the Applicant documented costs made no distinction between existing line item costs included in PW 5590 (i.e., the FEMA generated CEF) and the appealed scope addition or cost increases.

Second Appeal

In the second appeal, dated January 17, 2014, the Applicant requests reimbursement for issues four and five (i.e., excluded work described above), in the amount of $503,424.04.  The second appeal includes $101,602.50 for damaged electrical wire and cable replacement, and $401,821.54 for replacement of electrical system components inundated by floodwaters, including switches, fuse boxes, control panels, and lighting receptacles—all of which the applicant claims were excluded in the original PW.  The Applicant raises no issue with regard to the Direct Administrative Costs.

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

Discussion

Work Eligibility

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

As stated earlier, in the first appeal determination, the RA noted that the items excluded from the scope of work may be eligible for Public Assistance (PA) funding.  However, the RA could neither determine whether all items were damaged by the disaster nor distinguish between line item costs already included in PW 5590 and additional scope or cost increases not previously included in PW 5590.

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

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

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

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

Based upon the Applicant’s supporting documents, and FEMA policy and guidance, FEMA has determined that contaminated floodwater inundated the Facility and, therefore, likely had detrimental impacts on its electrical components.[24]  As such, the items excluded from the original scope of work in PW 5590 are eligible for Public Assistance funding.

Allowable Costs

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

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

Conclusion

Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5590 are eligible under the PA Program.  In addition, pursuant to OMB Circular A-87, the Applicant provided sufficient documentation to substantiate its request for additional PA funding.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  Final costs for PW 5590 will be reconciled by FEMA during the closeout process.  


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

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

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

[4] 44 C.F.R. § 206.223(a) (2009).

[5] See generally Technical Memorandum 1.

[6] Id.

[7] Id.

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

[9] Id.

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

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

[12] FEMA P-348, at 2-27. 

[13] Id., at 2-28.

[14] Id., at 3.3-2.

[15] Id., at 2-28. 

[16] FEMA 543, at 2-50.

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

[18] FEMA 543, at 2-50.

[19] Id.

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

[21] Id.

[22] Id.

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

[24]During evaluation of the second appeal, FEMA consulted a professional engineer (PE) regarding the validity of the Applicant’s assertions regarding the excluded work items.  The PE reviewed the Applicant’s appeal documentation submitted on first and second appeal, FEMA policy, and FEMA guidance to form a professional opinion regarding the eligibility of work items the Applicant claims were improperly excluded in PW 5590.  The PE concluded that the Applicant’s documentation was sufficient to establish that the excluded items were damaged by the flood.  See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Aug. 15, 2014, 5:24 pm) (on file with FEMA).

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

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

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

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

 

20 Oct 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5533
Date Signed: 
Tuesday, October 14, 2014
PA ID: 
037-52004-00
Summary/Brief: 

Conclusion:  Pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5533 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $189,355.06 in additional PA funding.

Summary Paragraph

In May 2010, extensive flooding throughout Nashville-Davidson County caused damage to the Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted PW 5533 to address damage to the Digester Building of the Facility.  FEMA obligated PW 5533 for $45,644.11.  In the first appeal, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its pre-disaster condition for PW 5533.  The Regional Administrator (RA) partially approved PW 5533 for $33,689.67 for resident engineering costs, pipe insulation, and associated construction management costs.  However, the RA determined that the first appeal did not provide the level of information necessary to make eligibility determinations on the other excluded items.  In the second appeal, the Applicant asserts that FEMA failed to include funding for pumps and motors, lighting instrumentation, an air compressor, actuators, and wiring throughout the building. 

Authorities and Second Appeals

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

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a), an eligible item of work must be required as the result of the disaster event.
    • Based on FEMA P-348, FEMA 543, FEMA P-936, and FEMA P-942, and substantiated by analysis from a Professional Engineer, FEMA determined that the work items excluded from the original version of PW 5533 are eligible under the PA Program as they were required as a result of the disaster.   
  • Pursuant to OMB Circular A-87, allowable procurement costs must, among other things, be adequately documented. 

The Applicant provided adequate documentation, such as bid documents, invoices, and cancelled checks, to demonstrate actual costs for the requested work items. 

Letter: 

October 14, 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) 5533 – Scope of Work

Dear Mr. Purkey:

This is in response to a letter from your office dated December 11, 2013, which transmitted the referenced second appeal on behalf of the Metropolitan Government of Nashville and Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $189,355.06 in Public Assistance (PA) funding for various items excluded from PW 5533.

As explained in the enclosed analysis, I have determined that, pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5533 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $189,355.06 in additional PA funding.  Therefore, I am granting the appeal contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  By copy of this letter, I am requesting the Acting Regional Administrator take appropriate action to implement this determination. 

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  Andrew Velasquez, III
      Regional Administrator
      FEMA Region IV

Analysis: 

Background

In May 2010, extensive flooding throughout Nashville and Davidson County caused damage to the Metropolitan Government of Nashville and Davidson County’s (Nashville-Davidson or Applicant) Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted PW 5533 to address damage to the Digester Building of the Facility, including the building’s Accumulator Room, Equipment Gallery, and a stairwell leading to the basement.  FEMA obligated PW 5533 for $45,644.11 based on a project cost estimate using RS Means and other sources.   

First Appeal

In the first appeal letter, dated June 8, 2011, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its predisaster condition for PW 5533.  In that appeal the Applicant presented five distinct issues.  First, the Applicant disagreed with FEMA’s decision to reclassify the Direct Administrative Costs (DAC) as indirect costs, thereby reducing the eligible amount in PW 5533.  Second, the Applicant requested that FEMA revise PW 5533 to reflect the actual effort expended for on-site resident engineering tasks associated with the recovery of the Facility.  Third, the Applicant asserted that it should be reimbursed for removal, disposal, and replacement of contaminated pipe insulation because such action complied with FEMA policy and guidance regarding mold remediation.  Fourth, the Applicant asserted that, pursuant to FEMA Publication 348, Protecting Building Utilities from Flood Damage (FEMA P-348), FEMA should authorize the complete replacement of all electrical wires and cables because the Facility was submerged in nine feet of contaminated floodwaters and the electrical equipment was not salvageable.[1]  Finally, the Applicant asserted that a Technical Memorandum, prepared by Brown and Caldwell Engineers (Consulting Engineers), identified several areas where damaged items were missed and should have been included in PW 5533.[2]    

In a letter dated September 27, 2013, the Region IV Regional Administrator (RA) partially granted the appeal, approving $33,689.67 for the second and third issues presented by the Applicant (i.e., resident engineering costs, pipe insulation, and associated construction management costs).  However, the RA determined that Nashville-Davidson had not provided sufficient information to substantiate additional direct administrative costs, complete replacement of all electrical wires and cables, or other items that were excluded from the PW (first, fourth, and fifth issues, respectively). With specific regard to issues four and five, the RA determined that the format in which the Applicant documented costs made no distinction between existing line item costs included in PW 5533 and the appealed scope addition or cost increases.

Second Appeal

In the second appeal, dated December 5, 2013, the Applicant requests reimbursement for issues four and five (i.e., excluded work described above), in the amount of $189,355.06.  The second appeal  includes $80,973.69 for replacement of wires, conduits, flow tubes, sump pump panels, and other mechanical items, $15,426.67 for lighting and receptacle replacement, $69,583.60 for other lighting instrumentation, and $23,317.10 for an air compressor, actuators, and wiring—all of which the applicant claims were excluded in the original PW.  The Applicant raises no issue with regard to the Direct Administrative Costs.

The Applicant also asserts that the original PW only includes sensing or primary elements while the bid documents provided to FEMA list all damaged components.  In addition, the Applicant explains it used these bid documents to establish the cost to restore the Facility to predisaster condition.  In the Applicant’s second appeal, it contends that, had FEMA used its bid documents during the preparation of PW 5533, the excluded work items that were damaged as the result of the disaster would have otherwise qualified for PA funding.  

Discussion

Work Eligibility

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

As stated earlier, in the first appeal determination, the RA noted that the items excluded from the scope of work may be eligible for Public Assistance (PA) funding.  However, the RA could neither determine whether all items were damaged by the disaster nor distinguish between line item costs already included in PW 5533 and additional scope or cost increases not previously included in PW 5533.

It must be noted that, among other things, the Applicant’s Consulting Engineers conducted a detailed flood damage assessment of the Facility.[5]  The assessment included high water mark locations and an inventory of equipment that was reviewed by a licensed Professional Engineer.[6]  The inventory list is a detailed record that accounts for all of the Facility’s electrical equipment

and distinguishes between disaster-damaged and non-damaged equipment.[7]  The inventory list was the basis for the scope of work in bid documents.[8]  In addition to the water mark locations and inventory list, the assessment asserts that the floodwater was contaminated and, therefore, likely had harmful impacts on electrical components.[9]  The Consulting Engineers substantiate this claim by providing laboratory reports that indicated the presence of contaminating factors, including pH and corrosivity levels above the Environmental Protection Agency’s recommended levels.[10]

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

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

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

Based upon the Applicant’s supporting documents, and FEMA policy and guidance, FEMA has determined that contaminated floodwater inundated the Facility and, therefore, likely had detrimental impacts on its electrical components.[24]  As such, the items excluded from the original scope of work in PW 5533 are eligible for Public Assistance funding.

Allowable Costs

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

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

Conclusion

Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5533 are eligible under the PA Program.  In addition, pursuant to OMB Circular A-87, the Applicant provided sufficient documentation to substantiate its request for additional PA funding.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  Final costs for PW 5533 will be reconciled by FEMA during the closeout process. 


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

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

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

[4] 44 C.F.R. § 206.223(a) (2009).

[5] See generally Technical Memorandum 1.

[6] Id.

[7] Id.

[8] Second Appeal, Nashville-Davidson County, FEMA-1909-DR-TN, at 3-4 (Dec. 5, 2013).

[9] Id.

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

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

[12] FEMA P-348, at 2-27. 

[13] Id., at 2-28.

[14] Id., at 3.3-2.

[15] Id., at 2-28. 

[16] FEMA 543, at 2-50.

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

[18] FEMA 543, at 2-50.

[19] Id.

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

[21] Id.

[22] Id.

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

[24]During evaluation of the second appeal, FEMA consulted a professional engineer (PE) regarding the validity of the Applicant’s assertions regarding the excluded work items.  The PE reviewed the Applicant’s appeal documentation submitted on first and second appeal, FEMA policy, and FEMA guidance to form a professional opinion regarding the eligibility of work items the Applicant claims were improperly excluded in PW 5533.  The PE concluded that the Applicant’s documentation was sufficient to establish that the excluded items were damaged by the flood.  See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Aug. 15, 2014, 5:24 pm) (on file with FEMA).

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

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

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

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

 

20 Oct 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Napa County
Disaster Number: 
1628-DR-CA
DSR: 
3538
Date Signed: 
Tuesday, September 30, 2014
PA ID: 
055-99055-00
Summary/Brief: 

Conclusion: Additional work due to encountering unforeseen soil conditions during the performance of approved work is eligible for a change in scope of work request; it is also the legal responsibility of the Applicant.  The Applicant properly exercised its emergency procurement authority to award a single source contract.  The final completed work is not considered an Improved Project.

Summary Paragraph

During the declared event, rain-saturated soils caused a landslide resulting in the loss of the outer lane of Spring Mountain Road.  FEMA obligated PW 3538 Versions 0 and 1 for total estimated costs of $344,548.43 to repair the landslide with a steel viaduct.  A second soil failure occurred during the construction of the temporary shoring system for the repair work.  The Applicant issued a single source contract to remove the failed shoring system and to replace it with a tieback soldier pile wall to complete the repair work.  The Applicant requested a SOW change with an additional funding level of $1,437,507.21; FEMA denied this request at Large Project Closeout.  In its first appeal, the Applicant asserted that the original contract was properly procured through a competitive bidding process, and the single source supplemental contract was procured through its emergency contracting authority.  The Applicant argued the second soil failure occurred due to unforeseen soil conditions, and therefore, the additional work required was directly related to the disaster and its legal responsibility.  The Applicant also disputed FEMA’s finding that the final completed project was an Improved Project.  Upon review, the Regional Administrator partially approved the first appeal and obligated an additional $255,311.57 for the properly procured original contract.  In its second appeal, the Applicant requested the remaining $1,182,195.65 associated with the SOW change and reiterated its first appeal arguments. 

Authorities and Second Appeals

  • 44 C.F.R. § 13.36(d)(4)(i)(B).
  • 44 C.F.R. § 206.223(a)(1).
  • 44 C.F.R. § 206.223(a)(3).
  • 44 C.F.R. § 206.203(d)(1).
  • PA Guide, at 85.

Headnotes

  • 44 C.F.R. § 206.223(a)(1) specifies that work must be required as the result of a major disaster event to be eligible for financial assistance.
  • The second soil failure occurred as a result of encountering unforeseen soil conditions during the performance of approved work required to repair an eligible facility damaged by a declared disaster.  As such, the change in the scope of work after the second soil failure is eligible.
  • 44 C.F.R. § 206.223(a)(3) requires an item of work to be the legal responsibility of an eligible applicant.
    • The Applicant demonstrated that it had legal responsibility for any additional costs associated with unforeseen soil conditions encountered during construction work.
  • 44 C.F.R. § 13.36(d)(4)(i)(B) limits the procurement of noncompetitive contracts to situations where a public emergency for the requirement will not permit a delay resulting from competitive solicitation.
    • The Applicant showed that a public emergency existed whereby construction must proceed quickly before the onset of the upcoming rainy season.  Procurement through normal competitive bidding process would have resulted in delays the Applicant could not afford.  Therefore, the Applicant’s awarding of a single source contract complied with regulatory requirements for noncompetitive procurement.
Letter: 

September 30, 2014

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

Re: Second Appeal – Napa County, PA ID 055-99055-00, FEMA-1628-DR-CA, Project Worksheet (PW) 3538

Dear Mr. Ghilarducci:

This is in response to your letter dated August 15, 2013, which transmitted the referenced second appeal on behalf of Napa County (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of additional funding of $1,182,195.65 associated with a change in scope of work request for PW 3538. 

As explained in the enclosed analysis, I have determined that the change in scope of work request was warranted after encountering unforeseen soil conditions during the performance of approved work required to repair an eligible facility damaged by the declared event.  Therefore, I am granting this appeal for $1,182,195.65.  By this letter, I am requesting that the Regional Administrator take appropriate action to implement my determination.

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  Karen Armes
       Acting Regional Administrator
       FEMA Region IX

Analysis: 

Background

As a result of severe winter storms and flooding from December 17, 2005 to January 3, 2006, a landslide occurred that caused the loss of the outer lane of Spring Mountain Road, a two-lane roadway.  On July 12, 2006, FEMA approved PW 3538 Version 0 for estimated costs of $201,611.69 to construct a steel viaduct to span the landslide area and restore the damaged Spring Mountain Road. 

On December 13, 2007, Napa County (Applicant) requested additional funding of $148,702.31 for a change in the scope of work (SOW) to construct a mechanically stabilized earth (MSE) wall and a permanent tieback shoring system, along with increased geotechnical, engineering, and design services.  On May 2, 2008, FEMA denied the primary SOW change request, but approved additional funding for increased geotechnical, engineering, and design services, as well as additional rock drilling identified as necessary by the Applicant’s geotechnical report.  On May 14, 2008, FEMA obligated Version 1 for an additional $142,936.74, for a PW funding total of $344,548.43.

The Applicant entered into a construction contract on July 22, 2008.  Construction work began on August 25, 2008.  Spring Mountain Road remained accessible to traffic as a single-lane roadway.

On September 4, 2008, a second soil failure occurred during the excavation and installation of the temporary shoring system for the approved repair work.  The Applicant’s contractor had already installed approximately 20 feet of temporary shoring, but the soil in the lower part of the trench section where additional sheets of temporary shoring were placed lost static stability and fell against that section of shoring, displacing it to the nearest tie rod.  The Applicant’s onsite representative directed the contractor to immediately fill the caved-in portion of the trench with drain rock to temporarily stabilize the remaining single lane of the roadway.

The Applicant subsequently determined that the design of the temporary shoring system did not account for unforeseen soil conditions.[1]  On September 5, 2008, the Applicant’s contractor notified the Applicant that site conditions differed from those identified in the contract documents.  The Applicant reviewed all documents and determined that moving forward with the original construction design involving deep vertical cuts for the temporary shoring system could not be done safely. 

On September 8, 2008, the Applicant notified the California Governor’s Office of Emergency Services (Grantee) and FEMA of the site condition changes and requested an emergency site visit.  The Grantee and FEMA visited the site on September 16, 2008.

Additionally, on September 16, 2008, the Applicant requested a SOW change to remove the failed temporary shoring system and to construct a soldier pile tieback wall.  This request was forwarded to FEMA on November 5, 2009.  Work to repair the facility was completed ten months earlier, on January 23, 2009.  For this reason, FEMA declined to take action on this request, pending receipt of the Final Inspection Report (FIR) and Project Completion and Certification Report (P.4).

On September 23, 2008, the Applicant’s Board of Supervisors utilized its emergency contracting authority to approve additional work through a single source supplemental contract to remove the failed shoring system and to replace it with a soldier pile tieback wall to quickly complete the road repair work before the upcoming winter weather.  The modified project was completed on January 23, 2009.

On December 22, 2011, the Grantee requested a Large Project Closeout by submitting the FIR and P.4, including a new request for a SOW change with additional funding amount of $1,437,507.21, for a PW total of $1,782,055.64. 

On July 23, 2012, FEMA denied the request for the SOW change and additional funding, based on the following four findings:

  1. The Applicant did not demonstrate that the initial contract was properly procured, nor provide proper documentation to support cost reasonableness of the initial contract amount of $599,860.00.
  2. The Applicant awarded a second, single source contract for $500,000.00 for costs associated with repairs after the second soil failure, even though the original contract relegated this responsibility to the original contractor.   The Applicant did not show that the second soil failure was a result of the declared event or the legal responsibility of the Applicant.
  3. The Applicant approved a declaration of local emergency and associated ancillary costs and overtime, based on new circumstances two and a half years after the declared event.  The emergency work was not required as a direct result of the event. 
  4. The Applicant completed improvements to the facility without prior FEMA approval; therefore, FEMA considered the final project to be an Improved Project. 

On August 8, 2012, FEMA obligated Version 2 for the closeout, without additional funding.

First Appeal

On October 11, 2012, the Applicant sent its first appeal to the Grantee, requesting that FEMA obligate the additional $1,437,507.21.  On November 26, 2012, the Grantee transmitted the Applicant’s first appeal to the Region, indicating its support of the appeal. 

In response to FEMA’s concern regarding proper procurement and cost reasonableness of the original contract amount, the Applicant’s appeal described and explained the bid process of the original contract procurement.  It also provided cost comparisons to justify the contract cost reasonableness.

Regarding the cause of the second soil failure and legal responsibility for its consequences, the Applicant claimed that the failure occurred due to unforeseen soil conditions, and the costs for the associated repairs were necessary and directly attributable to the declared event.  The Applicant asserted that the consequences of such unforeseen conditions were beyond the scope of the contractor’s original contractual obligations.

The Applicant also disputed FEMA’s finding that it approved a local emergency more than two and a half years after the declared event to utilize its emergency contracting authority, with the argument that the emergency in question (i.e., the second soil failure) was a direct result of the declared event, and not a new event.  The Applicant also asserted that exercising its emergency contracting authority to expedite contract procurement was necessary to quickly remove the failed shoring system and restore the already-disturbed construction site within a narrow timeframe before the onset of winter weather.   

Lastly, the Applicant claimed that the final project was not an Improved Project, because the damaged facility (Spring Mountain Road) was restored to its pre-disaster function and capacity without any improvements.

The FEMA Region IX Regional Administrator (RA) partially granted the first appeal on April 22, 2013.  The RA determined that the Applicant’s original construction contract for $599,860.00 was properly procured at a reasonable cost.  However, the RA disputed the Applicant’s arguments on the remaining three first appeal issues based on the following findings: 1) the language of the contract between the Applicant and its contractor lays legal responsibility related to unforeseen soil conditions with the contractor; 2) although the Applicant claimed an emergency situation after the second soil failure, the single-lane operation on Spring Mountain Road remained unchanged before and after the second soil failure; and 3) the wing walls and the tieback wall were added to the final project without prior approval from FEMA.  Because the project was determined to be an Improved Project, funding was capped at the initial contract amount.

On July 12, 2013, FEMA obligated Version 3 for an additional $255,311.57, representing the difference between $344,548.43 obligated prior to this date, and the Applicant’s original contract amount of $599,860.00.

Second Appeal

On August 15, 2013, the Grantee transmitted the Applicant’s second appeal letter dated July 25, 2013, indicating its support of the appeal.  In its second appeal, the Applicant requested the remaining $1,182,195.65 associated with the SOW change, reiterating three of its arguments from the first appeal.

First, the Applicant disputed what it considered FEMA’s suggestion that “the unforeseen soil conditions were not in existence at the conclusion of [disaster] incident period.”  The Applicant asserted that no one had knowledge of the soil conditions at the specific location where the soil failure occurred, because no soil borings were previously completed at this particular location.  The Applicant repeated its first appeal claim that additional costs resulting from such unforeseen soil conditions are the legal obligation of the owner (i.e, Applicant), not its contractor.

Second, the Applicant argued that the impending winter weather would have washed out the remaining single lane on Spring Mountain Road if it had not exercised its emergency contracting authority to immediately issue a single source contract to the existing contractor to remove the failed temporary shoring system, to replace it with a newly-designed tieback wall, and to complete the viaduct construction to restore the road to its pre-disaster condition.

Third, the Applicant disagreed with FEMA’s Improved Project determination based on the construction of the wing walls and the tieback wall.  The Applicant considered the wing walls to be an integral part of the viaduct repair method approved in the original SOW, because the PW mentioned that the estimated unit prices for all work associated with the viaduct construction were based on the Sonoma County Standard Steel Viaduct, which included wing walls.  The Applicant also claimed that the tieback wall was not an intended improvement, but a necessary alternative to the failed shoring system to continue the viaduct construction after the second soil failure.

Discussion

Direct Result of Disaster

Regulations specify that to be eligible for financial assistance, an item of work must be required as the result of the major disaster event.[2]  The Applicant claimed that the unforeseen soil conditions that caused the second soil failure were in existence at the end of the declared event.  The Applicant provided extensive details of the events leading up to and after the second soil failure, and asserted that it, its construction contractor, and the contractor’s consultant who designed the temporary shoring system had no knowledge of the unforeseen soil conditions at the specific location where the second soil failure occurred.  Although a pre-design geotechnical investigation with soil borings was completed, the exact location of the second soil failure was between two of the soil boring locations.

During evaluation of the second appeal, FEMA consulted multiple professional engineers to review the documentation submitted with the Applicant’s first and second appeals to assess the situation regarding unforeseen soil conditions.  Based upon those consultations, the Applicant’s documentation, and industry guidelines,[3] FEMA finds the pre-design geotechnical study was conducted in accordance with applicable industry standards and guidelines and that the soil conditions between the two soil boring locations closest to the exact location of the second soil failure could have been different from those at the two soil boring locations, resulting in unforeseen soil conditions that rendered the original construction design unsuitable.[4]

As the second soil failure occurred due to unforeseen soil conditions that could not be reasonably anticipated, it is reasonable to attribute the second soil failure to the performance of eligible work required as the direct result of the declared disaster.  Since making the deep vertical cuts required for the temporary shoring system was no longer feasible with the discovery of the unforeseen soil conditions, the only viable solution at this location was to construct a tieback wall to proceed with the repair of the eligible facility (i.e., Spring Mountain Road).  As such, reasonable costs[5] associated with the necessary SOW change to address damages from the second soil failure and complete the original approved work to restore the eligible facility back to pre-disaster conditions would be eligible.

Legal Responsibility

In addition to being required as a result of a disaster, regulations also mandate that an item of work must be the legal responsibility of an eligible applicant.[6]  The Applicant asserted that its contractors had no financial responsibilities related to any consequences of the second soil failure caused by unforeseen soil conditions.  The Applicant referenced its contract language to support this assertion, arguing that the contract language regarding “underground obstructions,” which applies to known obstructions, is inapplicable to “unforeseen conditions,” such as the soil conditions discovered after the second soil failure and not identified in a geological report.  However, the actual contract language states:

The Contractor shall anticipate underground obstructions such as utility lines, concrete water tables, soil conditions, and debris.  No extra payment will be allowed for the removal, replacement, repair or possible increased cost caused by underground obstructions.  Any such lines or obstructions indicated on the map show only the approximate location and must be verified in the field by the Contractor.  The County and Engineer will endeavor to familiarize the Contractor with all known underground obstructions, but this will not relieve the Contractor from full responsibility in anticipating and locating all underground obstructions.

This language appears to contradict the Applicant’s assertion by indicating the contractor has full responsibility for anticipating underground obstructions.  Such obstructions include unforeseen soil conditions, and any resulting consequences would be the legal responsibility of the contractor, not the Applicant.

However, the Applicant noted that the original repair contract incorporated by reference Section 5-1.116 of the May 2006 California Department of Transportation Standard Specifications, entitled “Differing Site Conditions.[7]  This section stipulates that in a situation involving unknown physical conditions that cause an increase or decrease in the cost or time required for the performance of work under the contract, the Engineer (i.e., the Applicant) may decide to adjust the original contract cost and modify the contract in writing accordingly.[8]

The provision in question is consistent with the language required by California state law.[9]  Consequently, FEMA agrees with the Applicant that it has legal responsibility for any additional costs associated with the damages related to the second soil failure. 

Applicant’s Emergency Contracting Authority

In accordance with procurement regulations, noncompetitive, single source contracts are only allowed under limited circumstances.[10]  Specifically, 44 C.F.R. §13.36(d)(4)(i)(B) provides that procurement by noncompetitive proposals may be used only when a situation exists in which the public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation.[11]

Immediately after the second soil failure, the Applicant determined it was critical to quickly proceed with construction before the onset of the impending 2008-2009 winter rainy season.  While unforeseen circumstances encountered during construction can frequently be addressed with a change order, the size of the change order necessitated by the particular unforeseen soil conditions at this site required the Applicant to either rebid the additional work, or utilize its emergency contracting authority afforded by California state law.[12]  The Applicant used its expedited procurement authority to award a single source contract to the same contractor who was awarded the original contract, to remove the failed temporary shoring system and to construct a permanent tieback wall required to construct the viaduct as planned. 

The Applicant provided adequate details to demonstrate that a local public emergency existed immediately following the second soil failure that could not permit a delay resulting from competitive solicitation of bids for the necessary additional work.  In particular, the Applicant became aware that the two-foot wide and twenty-foot deep rock trench dug and filled with drainage rock as an emergency measure to protect the second soil failure site from collapsing would also act as a drain gallery bringing rain water to the bottom of an already disturbed site, thereby threatening the site over the impending winter rainy season. According to the Applicant, if it followed the typical procurement and bidding method of selecting a contractor through a regular competitive bidding process, there would have been a minimum of 30-plus day delay in construction, which would have put the site and the remaining single-lane road under the risk of washout during the rainy season.  Upon reviewing the Applicant-provided details regarding the situation, FEMA finds that the Applicant awarding a noncompetitive, single source contract for the necessary additional work after the second soil failure met the regulatory requirements for noncompetitive contract procurement.

Improved Project Determination

Pursuant to 44 C.F.R. § 206.203(d)(1), “If a subgrantee desires to make improvements, but still restore the pre-disaster function of a damaged facility… Federal funding for such improved projects shall be limited to the Federal share of the approved estimate of eligible costs.”[13]  FEMA considers a project to be an Improved Project if an applicant incorporates improvements to a facility while performing eligible restoration work on a disaster-damaged facility, while maintaining the same function and at least the equivalent pre-disaster capacity of the facility.[14]

Here, the Applicant argued that the construction of the tieback wall was the only viable method of stabilizing the integral ground to proceed with the viaduct construction after the second soil failure.  Although the tieback wall is now buried in the site since it was not cost-effective to remove, the Applicant claimed that it was not an intended improvement because it does not provide any improvement to the pre-disaster function or capacity of the facility (i.e., Spring Mountain Road)—the sole purpose of the tieback wall was to serve as the engineered replacement of the integral ground lost during the first and second soil failures.  Based on this information and FEMA guidance, [15] FEMA agrees with the Applicant that changing the temporary shoring system to a tieback wall after encountering unforeseen soil conditions does not meet the definition of an Improved Project.

Moreover, the Applicant asserted that the wing walls are an essential standard part of viaduct construction, such as the Sonoma County Standard Steel Viaduct referenced in the PW 3538 SOW.  The Applicant explained that the wing walls are not only an associated but a required component of the viaduct, providing support for the integral ground cut for the viaduct that was previously held together by adjacent soil prior to the declared disaster.  The Applicant provided the final geotechnical report showing the calculations for the loads that the wing walls need to support as an essential part of the viaduct.

Based on the information provided, FEMA agrees with the Applicant that it did not complete an Improved Project by incorporating a tieback wall and wing walls.  Although the Applicant’s final completed project included modifications to the approved SOW, FEMA recognizes the Applicant’s effort to notify it of the change in the site conditions (i.e., the second soil failure) and prompt request for a change in the SOW on September 16, 2008.  FEMA also notes that the request was not transmitted to it until November 5, 2009, 10 months after the project had already been completed.

Conclusion

The Applicant has provided sufficient documentation to demonstrate that 1) the request to change the SOW from a temporary shoring system to a tieback soldier pile wall after encountering unforeseen soil conditions during performance of eligible work required by the declared disaster is valid; 2) the Applicant, not its contractor, has legal responsibility for any additional costs associated with the damages related to the unforeseen soil conditions; 3) the Applicant’s award of a noncompetitive, single source contract for the necessary additional work after the second soil failure met the regulatory requirement for noncompetitive procurement; and 4) the Applicant’s final project is not considered an Improved Project.  Therefore, any additional reasonable costs associated with the request for a SOW change after the second soil failure is eligible for PA funding.  FEMA will prepare PW 3538 Version 4 to obligate an additional $1,182,195.65.


[1] The pre-design geological analysis did not include any soil borings at the exact location of the second soil failure–the second soil failure occurred between two of the soil boring locations.

[2] 44 C.F.R. §206.223(a)(1) (2005).

[3] See Checklist and Guidelines for Review of Geotechnical Reports and Preliminary Plans and Specifications, FHWA ED-88-053 (1988) (discussing minimum guidelines for number and placement of borings for landslides) and Subsurface Investigations – Geotechnical Site Characterization Reference Manual for NHI 132031, FHWA NHI-01-031 (2001) (discussing recommended boring depths for embankments).

[4] See generally Email from Professional Engineer, FEMA to PA Appeal Analyst, FEMA (Sept. 4, 2014, 18:49)(on file with FEMA).

[5] The Department of Homeland Security Office of Inspector General (OIG) conducted an audit of the Applicant’s PWs, including PW 3538, and issued Audit Report Number DS-12-04 (Audit Report) in March 2012.   The audited project cost on PW 3538 totaled $1,807,856, which represented total project charges the Applicant accumulated at the time of the audit field work, prior to Large Project Closeout.  Of this amount, the OIG recommended that FEMA disallow $178,681 in excessive and unreasonable project management costs and $11,547 in ineligible indirect administrative costs.  In response, FEMA Region IX informed the OIG that PW 3538 was to be capped at the original estimated amount of $344,548.43, and therefore, the OIG’s recommendations were not applicable.  As part of the second appeal evaluation, FEMA reviewed and cross-referenced all project costs with FEMA guidelines.  It appears that the Applicant’s actual (final) project management cost requested is lower than the amount the OIG audited at the time of the audit field work.  Using the Applicant’s values, the project management cost calculates out to approximately 11 percent of the construction cost.  While this is well outside the recommended value of 3 percent (PA Guide) or 4 percent (CEF Instructional Guide), it is reasonably close to the upper limit of 10 percent in RS Means.  The special circumstances in this situation involving a mid-construction failure which caused major delays and necessitated the design of unanticipated project components likely justify increased project management oversight and associated costs.  Therefore, the higher-than-average project management cost is considered reasonable and eligible.  The Applicant did not claim any indirect administrative costs at closeout.

[6] 44 C.F.R. §206.223(a)(3) .

[7] See State of California Department of Transportation Standard Specifications, Section 5-1.116 “Differing Site Conditions” (May 2006).

[8] See id.

[9] See Cal. Pub. Cont. Code § 7104(b)(2006)(stating “the local public entity shall promptly investigate [any unforeseen site conditions], and if it finds that the conditions do materially so differ, or do involve hazardous waste, and cause a decrease or increase in the contractor’s cost of, or the time required for, performance of any part of the work shall issue a change order under the procedures described in the contract.”).                                                              

[10] See 44 C.F.R. § 13.36(d)(4)(i).

[11] Id. § 13.36(d)(4)(i)(B).

[12] See Cal. Pub. Cont. Code § 20395.

[13] 44 C.F.R. § 206.203(d)(1) .

[14] Public Assistance Guide, FEMA 322, at 85 (Oct 1999).

[15] See id.

 

20 Oct 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
City of Kenner
Disaster Number: 
1603-DR-LA
DSR: 
11755
Date Signed: 
Tuesday, October 14, 2014
PA ID: 
051-39475-00
Summary/Brief: 

Conclusion: Placing fill in one specific area in Laketown Park (the 1.7 acre area identified as the future location of a dog park) rather than throughout the entire 15-acre park is eligible as an improved project, contingent upon a formal FEMA environmental and historic review.    

Summary Paragraph

Flooding from Hurricane Katrina caused damage to the City of Kenner’s (Applicant’s) 15-acre Laketown Park facility.  FEMA obligated Project Worksheet (PW) 11755 for $323,304.55 to fund the restoration of the Laketown Park facility, which included the replacement of riprap along the shoreline of the park, the replacement of 11,033 cubic yards (cy) of eroded fill and grass reseeding over the entire surface area of the park.  The Applicant completed repairs to the damaged shoreline riprap, but decided not to restore the eroded soil throughout the 15-acre park at the same time.  The Applicant requested approval for an improved project to use $277,897.80 in unused funding approved in PW 11755 to place fill and raise the elevation of a 1.7 acre section of the park to allow construction of a dog park rather than replacing the eroded soil throughout the entire 15-acre park to raise the entire facility to its pre-disaster elevation. FEMA denied the request, because the Applicant had restored the facility to its pre-disaster function and capacity and unused funds for the eligible scope of work could not be approved to build a new dog park.

In the first appeal, the Applicant asserted that it had not restored Laketown Park as it had not replaced the soil eroded by the event.  Instead, the Applicant preferred to improve the facility by constructing a dog park. The FEMA Region VI Regional Administrator denied the first appeal stating that the function of a dog park had not existed at Laketown Park prior to the disaster and that funding can only be used for eligible work relative to the function and capacity of the facility at the time of the event.  In its second appeal, the Applicant reiterates its position from the first appeal.

Authorities and Second Appeals

  • 44 C.F.R. §206.203 (d)(1).

Headnotes

  • 44 C.F.R. §206.203 (d)(1) states if a subgrantee (applicant) desires to make improvements, but still restore the pre-disaster function of a damaged facility, the Grantee’s approval must be obtained.  Federal funding for such improved projects shall be limited to the Federal share of the approved estimate of eligible costs.
    • The damaged facility is the Laketown Park, and the Applicant wishes to improve upon the facility by replacing the fill that washed away at one specific location and at varying elevations, rather than replace the fill to the pre-disaster grade of the entire 15-acre park, and ultimately adding a dog park.  The Grantee approved the Applicant’s initial request, and the pre-disaster function of the facility, recreation, will not be changed.



 

Letter: 

October 14, 2014

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

Re:  Second Appeal– City of Kenner, PA ID 051-39475-00, Laketown Park-Improved Project, FEMA-1603-DR-LA, Project Worksheet (PW) 11755

Dear Mr. Davis:

This letter is in response to a letter from your office dated July 22, 2013, which transmitted the referenced second appeal on behalf of City of Kenner (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of an improved project request for Project Worksheet (PW) 11755.

As explained in the enclosed analysis, placing fill in one specific area in Laketown Park (the 1.7 acre area identified as the future location of a dog park) rather than throughout the entire 15-acre park is eligible as an improved project, contingent upon a formal FEMA environmental and historic review.  Accordingly, I am approving this appeal.  By copy of this letter, I am requesting the Regional Administrator take appropriate action to implement this determination.

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  George A. Robinson
       Regional Administrator
       FEMA Region VI

Analysis: 

Background

On August 29, 2005 flooding from Hurricane Katrina caused damage to the City of Kenner’s (Applicant’s) 15-acre Laketown Park facility located on the shores of Lake Pontchartrain.  The Department of Homeland Security’s Federal Emergency Management Agency (FEMA) obligated Project Worksheet (PW) 11755 for $323,304.55 to fund the restoration of the Laketown Park facility, which included the replacement of riprap along the shoreline of the park, the replacement of 11,033 cubic yards (cy) of eroded fill and grass reseeding over the entire surface area of the park, and associated engineering and project management services.  The Applicant completed repairs to the damaged shoreline riprap, but decided not to restore the eroded soil throughout the 15-acre park at the same time.  Grass had grown back over the surface areas of the park and replacing the eroded soil would interfere with ongoing public use for an extended period.

On December 28, 2009, the Applicant requested approval for an improved project to use $277,897.80 in unused funding approved in PW 11755 to place fill and raise the elevation of a 1.7 acre section of the park to allow construction of a dog park in accordance with the Kenner Laketown Feasibility Study (the master plan for the park) rather than replacing the eroded soil throughout the entire 15-acre park to raise the entire facility to its pre-disaster elevation.  The Applicant stated that it intends to rebuild the eroded surface of the park in phases to allow the community to continue to use the majority of the facility while it undertakes the construction of the dog park in a small area.  The Governor’s Office of Homeland Security and Emergency Preparedness (Grantee) approved the Applicant’s request on March 2, 2010. 

On November 16, 2010, the Applicant submitted a revised request to use the funding to construct the dog park at the nearby North Kenner Park, outside of the Coastal High Hazard Area (V zone.)  According to the Applicant, FEMA objected to constructing the dog park in Laketown Park because it was located within a V zone.  The Grantee approved the Applicant’s revised request on March 7, 2011.  On December 12, 2011, FEMA denied the Applicant’s request on the basis that the Applicant had restored Laketown Park to its pre-disaster function and capacity and unused funds for the eligible scope of work could not be approved to build a new dog park at another location.

First Appeal

On February 10, 2012, the Applicant submitted its first appeal of the denial of its request for an improved project for PW 11755 and requested approval to use excess funding from PW 11755 toward the construction of a new dog park in North Kenner Park.  The Applicant asserted that it had not restored Laketown Park as it had not replaced the soil eroded by the event.  Instead, the Applicant preferred to improve the facility by constructing a dog park and to relocate it outside of the V zone.

On March 14, 2013, the FEMA Region VI Regional Administrator denied the first appeal stating that the function of a dog park had not existed at Laketown Park or at North Kenner Park prior to the disaster and that funding can only be used for eligible work relative to the function and capacity of the facility at the time of the event.

Second Appeal

The Applicant submitted its second appeal on May 21, 2013 reiterating its position that FEMA misunderstood the facts as they pertain to the restoration of the eroded soils at Laketown Park.  The Applicant contends that it met FEMA’s improved project requirements by gaining approval from the Grantee to construct the new dog park at Laketown Park.  The funding, the Applicant argues, was to facilitate an improvement to the Laketown Park facility, while still restoring the park to it pre-disaster function and capacity.  Finally, the Applicant further asserts that there is no prohibition against changing the location of an improved project provided the function remains the same. The Applicant requests that FEMA reverse its determination to deny the improved project request and allow the unused portion of the eligible funding from PW 11755 to be used to construct a new dog park at the nearby North Kenner Park or at the original location.[1]

Discussion

In accordance with Title 44 Code of Federal Regulations (44 C.F.R) §206.203 (d)(1), Funding Options, Improved Projects, if a subgrantee (applicant) desires to make improvements, but still restore the pre-disaster function of a damaged facility, the Grantee’s approval must be obtained.  Federal funding for such improved projects shall be limited to the Federal share of the approved estimate of eligible costs.  In this case, the damaged facility is the Laketown Park, and the Applicant wishes to improve upon the facility by replacing the fill that washed away at one specific location and at varying elevations, rather than replace the fill to the pre-disaster grade of the entire 15-acre park, and ultimately adding a dog park.  The Grantee approved the Applicant’s initial request, and the pre-disaster function of the facility, recreation, will not be changed by replacing fill in a different location to prepare the site for the construction of a dog park; therefore, placing the 11,033 cy of engineered fill in the 1.7 acre area identified as the future location of a dog park in Laketown Park is eligible as an improved project.  The regulations, however, do not provide an option to use improved project funding to improve upon a distinctly different facility, such as North Kenner Park.

During the review of the Applicant’s second appeal FEMA conducted a preliminary environmental review of the project as initially proposed in December 2009.  As the proposed project location is in a V zone any FEMA funded new construction must meet FEMA’s definition of functionally dependent or facilitate open space use.  Placing fill in preparation for the construction of a dog park is allowable as it will facilitate open space use.  FEMA anticipates that the formal environmental review will find the project compliant with applicable law, regulation and policy if the Applicant adheres to the following conditions:

  • The project will be limited to the placement of non-structural fill.
  • All utility services in the Coastal High Hazard Area need to be reasonably safe from the base flood to achieve minimum National Flood Insurance Program requirements.

Conclusion

Placing 11,033 cy of engineered fill in the 1.7 acre area identified as the future location of a dog park in Laketown Park as the Applicant originally requested in its December 28, 2009 letter is eligible as an improved project, contingent upon a formal FEMA environmental and historic review. 


[1] On April 30, 2014, FEMA held a meeting with the Applicant representative (Michael Gaffney, Partner, Law Offices of Hurndon & Gaffney) and the Grantee.  The Applicant reiterated several assertions it made in its second appeal, including that it has not completed the restoration of Laketown Park.  The Applicant explained that, simply put, its request was to replace the engineered fill that had washed away in one specific location within the park at varying elevations.  The Applicant also indicated that it has no preference between Laketown Park and North Kenner Park for the location of the dog park.

 

1 Oct 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5596
Date Signed: 
Tuesday, September 30, 2014
PA ID: 
037-52004-00
Summary/Brief: 

Conclusion:  Pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5596 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $147,214.93 in additional PA funding.

Summary Paragraph

In May 2010, extensive flooding throughout Nashville-Davidson County caused damage to the Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted PW 5596 to address damage to two buildings on the Facility—the Grit Room, consisting of three below grade concrete tunnel sections, and the Grit Sampling Room.  FEMA obligated PW 5596 for $102,080.02.  In the first appeal, the Applicant asserted that FEMA made several errors concerning the scope of work necessary to restore the Facility to pre-disaster condition and associated funding for PW 5596.  The Regional Administrator (RA) partially approved PW 5596 for $14,354.34 for resident engineering costs, pipe insulation, and associated construction management costs.  However, the RA determined that the first appeal did not provide the level of information necessary to make eligibility determinations on the other excluded items.  In the second appeal, the Applicant asserts that FEMA failed to include funding for instrumentation, lighting, and labor and materials.   

Authorities and Second Appeals

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

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a), an eligible item of work must be required as the result of the disaster event.
    • Based on FEMA P-348, FEMA 543, FEMA P-936, and FEMA P-942, and substantiated by analysis from a Professional Engineer, FEMA determined that the work items excluded from the original version of PW 5596 are eligible under the PA Program as they were required as a result of the disaster.  
  • Pursuant to OMB Circular A-87, allowable procurement costs must, among other things, be adequately documented.
    • The Applicant provided adequate documentation, such as bid documents, invoices, and cancelled checks, to demonstrate actual costs for the requested work items. 
Letter: 

September 30, 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) 5596 – Scope of Work

Dear Mr. Purkey:

This is in response to a letter from your office dated December 11, 2013, which transmitted the referenced second appeal on behalf of the Metropolitan Government of Nashville and Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $147,214.93 in Public Assistance (PA) funding for various items excluded from PW 5596.

As explained in the enclosed analysis, I have determined that, pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5596 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $147,214.93 in additional PA funding.  Therefore, I am granting the appeal contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  By copy of this letter, I am requesting the Acting Regional Administrator to take appropriate action to implement this determination. 

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  Andrew Velasquez, III
      Regional Administrator
      FEMA Region IV

Analysis: 

Background

In May 2010, extensive flooding throughout Nashville-Davidson County caused damage to the Metropolitan Government of Nashville and Davidson County’s (Nashville-Davidson or Applicant) Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted Project Worksheet (PW) 5596 to address damage to two buildings on the Facility—the Grit Room, consisting of three below grade concrete tunnel sections, which were adjacent to the bottom edges of the grit basins, and the Grit Sampling Room.  FEMA obligated PW 5596 for $102,080.02 based on a Cost Estimating Format (CEF). 

First Appeal

In the first appeal letter, dated June 8, 2011, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its predisaster condition for PW 5596.  In that appeal the Applicant presented five distinct issues.  First, the Applicant disagreed with FEMA’s decision to reclassify the Direct Administrative Costs (DAC) as indirect costs, thereby reducing the eligible amount in PW 5596.  Second, the Applicant requested that FEMA revise PW 5596 to reflect the actual effort expended for on-site resident engineering tasks associated with the recovery of the Facility.  Third, the Applicant asserted that it should be reimbursed for removal, disposal, and replacement of contaminated pipe insulation because it complied with FEMA policy and guidance regarding mold remediation.  Fourth, the Applicant asserted that, pursuant to FEMA Publication 348, Protecting Building Utilities from Flood Damage (FEMA P-348), FEMA should authorize the complete replacement of all electrical wires and cables because the Facility was submerged in nine feet of contaminated floodwaters and the electrical equipment was not salvageable.[1]  Finally, the Applicant asserts that a Technical Memorandum, prepared by Brown and Caldwell Engineers (Consulting Engineers), identified several areas where damaged items were missed and should have been included in PW 5596.[2]   

In a letter dated September 27, 2013, the Region IV Regional Administrator (RA) partially granted the appeal, approving $14,354.34 for the second and third issues presented by the Applicant (i.e., resident engineering costs, pipe insulation, and associated construction management costs).  However, the RA determined that Nashville-Davidson had not provided sufficient information to substantiate additional direct administrative costs, complete replacement of all electrical wires and cables, or other items that were excluded from the PW (first, fourth, and fifth issues, respectively). With specific regard to issues four and five, the RA determined that the format in which the Applicant documented costs made no distinction between existing line item costs included in PW 5596 (i.e., the FEMA generated CEF) and the appealed scope addition or cost increases.

Second Appeal

In the second appeal, dated December 5, 2013, the Applicant requests reimbursement for issues four and five (i.e., excluded work described above), in the amount of $147,214.93.  The second appeal  includes $64,413.35 for materials and labor associated with wire, conduit, and cable installation, $37,461.00 for electrical and mechanical recovery, and $45,340.58 for work to supply, install, rewire, test, calibrate replace non-repairable instrumentation—all of which the applicant claims were excluded in the original PW.  The Applicant raises no issue with regard to the Direct Administrative Costs.

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

Discussion

Work Eligibility

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

As stated earlier, in the first appeal determination, the RA noted that the items excluded from the scope of work may be eligible for Public Assistance (PA) funding.  However, the RA could neither determine whether all items were damaged by the disaster nor distinguish between line item costs already included in PW 5596 and additional scope or cost increases not previously included in PW 5596.

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

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

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

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

Based upon the Applicant’s supporting documents, and FEMA policy and guidance, FEMA has determined that contaminated floodwater inundated the Facility and, therefore, likely had detrimental impacts on its electrical components.[24]  As such, the items excluded from the original scope of work in PW 5596 are eligible for Public Assistance funding.

Allowable Costs

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

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

Conclusion

Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5596 are eligible under the PA Program.  In addition, pursuant to OMB Circular A-87, the Applicant provided sufficient documentation to substantiate its request for additional PA funding.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  Final costs for PW 5596 will be reconciled by FEMA during the closeout process. 


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

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

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

[4] 44 C.F.R. § 206.223(a) (2009).

[5] See generally Technical Memorandum 1.

[6] Id.

[7] Id.

[8] Second Appeal, Nashville-Davidson County, FEMA-1909-DR-TN, at 4 (Dec. 5, 2013).

[9] Id.

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

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

[12] FEMA P-348, at 2-27. 

[13] Id., at 2-28.

[14] Id., at 3.3-2.

[15] Id., at 2-28. 

[16] FEMA 543, at 2-50.

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

[18] FEMA 543, at 2-50.

[19] Id.

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

[21] Id.

[22] Id.

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

[24]During evaluation of the second appeal, FEMA consulted a professional engineer (PE) regarding the validity of the Applicant’s assertions regarding the excluded work items.  The PE reviewed the Applicant’s appeal documentation submitted on first and second appeal, FEMA policy, and FEMA guidance to form a professional opinion regarding the eligibility of work items the Applicant claims were improperly excluded in PW 5596.  The PE concluded that the Applicant’s documentation was sufficient to establish that the excluded items were damaged by the flood.  See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Aug. 15, 2014, 5:24 pm) (on file with FEMA).

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

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

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

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

 

1 Oct 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Nashville-Davidson County
Disaster Number: 
1909-DR-TN
DSR: 
5585
Date Signed: 
Tuesday, September 30, 2014
PA ID: 
037-52004-00
Summary/Brief: 

Conclusion:  Pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5585 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to obligate $317,860.13 in additional PA funding.

Summary Paragraph

In May 2010, extensive flooding throughout Nashville-Davidson County caused damage to the Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted PW 5585 to address damage to the overall plant site including the below grade steel reinforced cast concrete tunnels, plant perimeter gates and fencing, materials stocked in the open yard, and other miscellaneous items.  FEMA obligated PW 5585 for $61,684.19. In the first appeal, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its pre-disaster condition for PW 5585.  The Regional Administrator (RA) partially approved PW 5585 for $88,149.56 for resident engineering costs, pipe insulation, and associated construction management costs.  However, the RA determined that the first appeal did not provide the level of information necessary to make eligibility determinations on the other excluded items.  In the second appeal, the Applicant asserts that FEMA failed to include funding for wire and conduit replacements, lighting, and receptacles. 

Authorities and Second Appeals

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

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a), an eligible item of work must be required as the result of the disaster event.
    • Based on FEMA P-348, FEMA 543, FEMA P-936, and FEMA P-942, and substantiated by analysis from a Professional Engineer, FEMA determined that the work items excluded from the original version of PW 5585 are eligible under the PA Program as they were required as a result of the disaster.   
  • Pursuant to OMB Circular A-87, allowable procurement costs must, among other things, be adequately documented.
    • The Applicant provided adequate documentation, such as bid documents, invoices, and cancelled checks, to demonstrate actual costs for the requested work items. 
Letter: 

September 30, 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) 5585 – Scope of Work

Dear Mr. Purkey:

This is in response to a letter from your office dated December 11, 2013, which transmitted the referenced second appeal on behalf of the Metropolitan Government of Nashville and Davidson County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $317,860.13 in Public Assistance (PA) funding for various items excluded from PW 5585.

As explained in the enclosed analysis, I have determined that, pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5585 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $317,860.13 in additional PA funding.  Therefore, I am approving the appeal contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  By copy of this letter, I am requesting the Acting Regional Administrator take appropriate action to implement this determination. 

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

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:  Andrew Velasquez, III
      Regional Administrator
      FEMA Region IV

Analysis: 

Background

In May 2010, extensive flooding throughout Nashville and Davidson County caused damage to the Metropolitan Government of Nashville and Davidson County’s (Nashville-Davidson or Applicant) Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA drafted Project Worksheet (PW) 5585 to address damage to the overall plant site including the below grade steel reinforced cast concrete tunnels, plant perimeter gates and fencing, materials stocked in the open yard, and other miscellaneous items.  FEMA obligated PW 5585 for $61,684.19 based on a Cost Estimating Format (CEF). 

First Appeal

In the first appeal letter, dated June 8, 2011, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its predisaster condition for PW 5585.  In that appeal the Applicant presented five distinct issues.  First, the Applicant disagreed with FEMA’s decision to reclassify the Direct Administrative Costs (DAC) as indirect costs, thereby reducing the eligible amount in PW 5585.  Second, the Applicant requested that FEMA revise PW 5585 to reflect the actual effort expended for on-site resident engineering tasks associated with the recovery of the Facility.  Third, the Applicant asserted that it should be reimbursed for removal, disposal, and replacement of contaminated pipe insulation because such action complied with FEMA policy and guidance regarding mold remediation.  Fourth, the Applicant asserted that, pursuant to FEMA Publication 348, Protecting Building Utilities from Flood Damage (FEMA P-348), FEMA should authorize the complete replacement of all electrical wires and cables because the Facility was submerged in nine feet of contaminated floodwaters and the electrical equipment was not salvageable.[1]  Finally, the Applicant asserted that a Technical Memorandum, prepared by Brown and Caldwell Engineers (Consulting Engineers), identified several areas where damaged items were missed and should have been included in PW 5585.[2]    

In a letter dated September 27, 2013, the Region IV Regional Administrator (RA) partially granted the appeal, approving $88,149.56 for the second and third issues presented by the Applicant (i.e., resident engineering costs, pipe insulation, and associated construction management costs).  However, the RA determined that Nashville-Davidson had not provided sufficient information to substantiate additional direct administrative costs, complete replacement of all electrical wires and cables, or other items that were excluded from the PW (first, fourth, and fifth issues, respectively). With specific regard to issues four and five, the RA determined that the format in which the Applicant documented costs made no distinction between existing line item costs included in PW 5585 (i.e., the FEMA generated CEF) and the appealed scope addition or cost increases.

Second Appeal

In the second appeal, dated December 5, 2013, the Applicant requests reimbursement for issues four and five (i.e., excluded work described above), in the amount of $317,860.13.  The second appeal  includes $50,450.40 for wire and conduit replacement, $13,826.00 for lighting and receptacle replacement, $64,513.73 for damaged items in tunnels, and $189,070.00 for replacement of damaged instrumentation—all of which the applicant claims were  excluded in the original PW.  The Applicant raises no issue with regard to the Direct Administrative Costs.

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

Discussion

Work Eligibility

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

As stated earlier, in the first appeal determination, the RA noted that the items excluded from the scope of work may be eligible for Public Assistance (PA) funding.  However, the RA could neither determine whether all items were damaged by the disaster nor distinguish between line item costs already included in PW 5585 and additional scope or cost increases not previously included in PW 5585.

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

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

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

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

Based upon the Applicant’s supporting documents, and FEMA policy and guidance, FEMA has determined that contaminated floodwater inundated the Facility and, therefore, likely had detrimental impacts on its electrical components.[24]  As such, the items excluded from the original scope of work in PW 5585 are eligible for Public Assistance funding.

Allowable Costs

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

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

Conclusion

Pursuant to 44 C.F.R. § 206.223(a), the work items excluded in the original version of PW 5585 are eligible under the PA Program.  In addition, pursuant to OMB Circular A-87, the Applicant provided sufficient documentation to substantiate its request for additional PA funding.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement and actual costs.  Final costs for PW 5585 will be reconciled by FEMA during the closeout process.  


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

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

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

[4] 44 C.F.R. § 206.223(a) (2009).

[5] See generally Technical Memorandum 1.

[6] Id.

[7] Id.

[8] Second Appeal, Nashville-Davidson County, FEMA-1909-DR-TN, at 4 (Dec. 5, 2013).

[9] Id.

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

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

[12] FEMA P-348, at 2-27. 

[13] Id., at 2-28.

[14] Id., at 3.3-2.

[15] Id., at 2-28. 

[16] FEMA 543, at 2-50.

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

[18] FEMA 543, at 2-50.

[19] Id.

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

[21] Id.

[22] Id.

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

[24]During evaluation of the second appeal, FEMA consulted a professional engineer (PE) regarding the validity of the Applicant’s assertions regarding the excluded work items.  The PE reviewed the Applicant’s appeal documentation submitted on first and second appeal, FEMA policy, and FEMA guidance to form a professional opinion regarding the eligibility of work items the Applicant claims were improperly excluded in PW 5585.  The PE concluded that the Applicant’s documentation was sufficient to establish that the excluded items were damaged by the flood.  See generally Email from Professional Engineer, FEMA to PA Appeals Analyst, FEMA (Aug. 15, 2014, 5:24 pm) (on file with FEMA).

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

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

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

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

 

29 Sep 2014
Appeal Type: 
2nd
Report Type: 
PW
Appeal Categories: 
Applicant Name: 
Terrebonne Parish Consolidated Government
Disaster Number: 
1786-DR-LA
DSR: 
6241
Date Signed: 
Friday, September 26, 2014
PA ID: 
109-99109-00
Summary/Brief: 

Conclusion: The Applicant’s insurance policy is a blanket policy that covers the same building that was damaged in a previous disaster and, as a result, any current eligible project costs must be reduced by the amount of funding provided in the previous disaster.    

Summary Paragraph

Hurricane Gustav caused damage to Terrebonne Parish Consolidated Government’s (Applicant’s) civic center.  Hurricane Katrina damaged the same facility before Hurricane Gustav and FEMA provided funding with the condition that the Applicant had to obtain and maintain insurance to cover this facility.  When calculating the eligible project costs, FEMA reduced the amount of eligible costs, $410,415, by the amount of disaster assistance that the Applicant received following Hurricane Katrina, $104,915.  The Applicant submitted a first appeal, arguing that the Grantee’s Insurance Commissioner’s certification after Hurricane Katrina waived the insurance reduction requirements in the federal regulations.  FEMA Region VI Regional Administrator denied the appeal, finding that the reduction was warranted because of the Applicant’s blanket insurance coverage and that the commissioner’s certification cannot waive the reduction.  In its second appeal, the Applicant argues that (1) its coverage is not a blanket policy and therefore the regulations do not apply; and (2) even if the regulation applies, the commissioner’s certification supersedes the regulation.

Authorities and Second Appeals

  • Stafford Act § 311 (a) – (b), 42 U.S.C. § 5154 (a) – (b)

  • 44 C.F.R. §§ 206.252, 206.253.

Headnotes

  • Stafford Act § 311 requires that applicants for assistance under Section 406 must obtain and maintain the type and extent of insurance required by FEMA on the facility to protect against future loss to such property.

    • The Applicant obtained a blanket insurance policy after the previous disaster, Hurricane Katrina.  The insurance policy covered flood events and “other than flood” events.    

  • Pursuant to 44 C.F.R. § 206.253(b)(2), FEMA is required to reduce assistance when an applicant uses a blanket policy to meet its requirement to obtain insurance.  FEMA determines that a policy is a blanket policy when it covers multiple properties to a level less than their full value.

    • The Applicant’s policy covered multiple facilities below full value, so FEMA determined that the proper reduction is the amount of eligible damage sustained on the previous disaster. 

    • The Louisiana Insurance Commissioner’s certifications after Hurricane Katrina do not waive FEMA’s ability to reduce the eligible cost amount and does not supersede federal regulations.    

Letter: 

September 26, 2014

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

Re: Second Appeal – Terrebonne Parish Consolidated Government, PA ID 109-99109-00, FEMA-1786-DR-LA, Project Worksheet (PW) 6241 – Insurance     

Dear Mr. Davis:

This is in response your letter dated June 22, 2012, which transmitted the referenced second appeal on behalf of Terrebonne Parish Consolidated Government (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of its request for $104,415 for repair costs.

As explained in the enclosed analysis, I have determined that the Applicant’s insurance coverage is a blanket policy, which requires FEMA to reduce the eligible costs amount of $410,415 by $104,915, the amount of eligible damage sustained in Hurricane Katrina.  Your Insurance Commissioner’s certifications from Hurricane Katrina do not apply to the current facility or supersede 44 C.F.R. § 206.253(b)(2).  Accordingly, I am denying this appeal.

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

Sincerely,

/s/

Brad J. Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

cc: George A. Robinson
      Regional Administrator
      FEMA Region VI

Analysis: 

Background

Hurricane Gustav’s high winds and wind-driven rain damaged portions of the roof, fascia, and interior of the Applicant’s facility, the Houma-Terrebonne Civic Center (Civic Center).  The Civic Center previously suffered the same type of damage from high winds and wind-driven rain during Hurricane Katrina. 

Prior Disaster—Hurricane Katrina

Following Hurricane Katrina, FEMA provided the Applicant with $104,915 in Federal disaster assistance for the Civic Center under PW 2892 in accordance with Section 406 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (“Stafford Act”),[1] Repair, Restoration, and Replacement of Damaged Facilities.  Section 311 of the Stafford Act, Insurance, establishes that applicants for assistance under section 406 must obtain and maintain the type and extent of insurance required by FEMA on the facility “to protect against future loss to such property.”[2]  FEMA regulations and policy interpret this to mean that an applicant must “obtain and maintain such types and amounts of insurance as are reasonable and necessary to protect against future loss to such property from the types of hazard which caused the major disaster.”[3]

The Stafford Act also prohibits FEMA from requiring greater types and extent of insurance than a state insurance commissioner certifies as reasonable.[4] Following Hurricane Katrina, the Commissioner of the Louisiana Department of Insurance (Commissioner) provided FEMA a certification that:  1) commercial insurance for flood and wind perils was not reasonably available to applicants; and 2) waived for applicants the insurance reduction requirements in 44 C.F.R. § 206.253(b)(2), Insurance requirements for facilities damaged by disasters other than flood, known as a “code 5903 reduction.”[5]  Further, the certification instructed applicants to obtain and maintain insurance if it would be a reasonable expenditure from the applicant’s current annual operating budget.[6]  This certification was non-specific to any particular applicant and issued to apply to all applicants.[7]  The Commissioner also asserted that FEMA would reimburse deductibles in a subsequent disaster.[8]

The Applicant obtained insurance coverage as a condition for receiving assistance in an amount that exceeded the $104,915 in Federal disaster assistance for PW 2892.  The Applicant also received two certifications from the Commissioner: an April 25, 2008 letter certifying that the Applicant obtained reasonable coverage for nine PWs (3342, 3489, 2052, 3442, 4046, 3528, 3431, 231, and 1716),[9]  and a March 12, 2009 letter certifying that for all of its Hurricane Katrina projects, the Applicant “has purchased insurance under a blanket or scheduled policy” for its facilities and that “the [A]pplicant’s request complies with the criteria” he previously established regarding the purchase of insurance.

Subsequent Disaster—Hurricane Gustav

The Civic Center sustained damage again from Hurricane Gustav.  Prior to receiving any Federal disaster assistance for this facility, per Section 311(b) of the Stafford Act, the Applicant had to demonstrate that the Civic Center was still insured when Hurricane Gustav struck the area.[10]  FEMA found the Applicant had satisfied this requirement and, accordingly, prepared PW 6241 to fund the Civic Center’s repairs.  A subsequent version of the PW adjusted the costs to reflect approval of an improved project scope of work. 

FEMA estimated eligible project costs of $410,415 to repair the Civic Center.  This amount fell within the Applicant’s insurance deductible, which, according to its policy, was $420,000.  FEMA then applied 44 C.F.R. § 206.253(b)(2) to reduce the amount of eligible assistance for Hurricane Gustav disaster damage by $104,915—the amount of disaster assistance the Applicant received following Hurricane Katrina—because the Applicant had insured the facility under a blanket insurance policy.

First Appeal

In a letter dated July 15, 2011, the Applicant appealed FEMA’s reduction, arguing that the Insurance Commissioner’s certification criteria precluded such reduction.  The State of Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Grantee) forwarded the appeal to FEMA Region VI in a letter dated September 12, 2011.  The Grantee supported the Applicant’s argument that the Insurance Commissioner’s certification precluded the reduction.  The Grantee also argued that the “deductible represents a level of exposure for which the Insurance Commissioner has determined that insurance coverage is financially not reasonably available.”[11]  On this basis, the Grantee believes FEMA cannot apply a reduction that would result in the Applicant paying a portion of the deductible under application of Section 311(a)(2).[12]  The Regional Administrator denied the first appeal in a letter dated February 2, 2012, stating that, although the Applicant satisfied its obligation to obtain and maintain insurance, the reduction is warranted because the Applicant obtained blanket insurance coverage.  The Regional Administrator also explained that the Insurance Commissioner cannot waive this reduction.

Second Appeal

The Applicant submitted a second appeal in a letter dated April 30, 2012, arguing that (1) the insurance coverage it obtained was not a blanket insurance policy, rendering 44 C.F.R. § 206.253(b)(2) inapplicable; and (2) even if 44 C.F.R. § 206.253(b)(2) applied, it is subordinate to the Insurance Commissioner’s certification.  The Grantee forwarded the second appeal in a letter dated June 22, 2012.  The Grantee again supports the appeal based on the arguments set forth by the Applicant and by arguing that FEMA’s policy on reimbursement of deductibles in subsequent disasters is subordinate to an insurance commissioner’s certification.  The Grantee cites to portions of a November 10, 2008 letter from FEMA’s Public Assistance Division Director to the Assistant Deputy Director of GOHSEP, a July 22, 2009 letter from the FEMA Acting Director of the Louisiana Transitional Recovery Office to the Executive Counsel of the Louisiana Department of Insurance, and an April 23, 2012 letter from Region VI Regional Administrator to the Director of GOHSEP in support of its position.

Discussion

Applicant Argument One: Blanket Policy

In reviewing the Applicant’s insurance information regarding PW 6241, FEMA had three primary tasks.  First, FEMA had to determine that the applicant maintained its insurance in accordance with section 311(b) of the Stafford Act.[13]  A failure to maintain insurance prohibits assistance to “any property or part thereof for which the applicant has previously received assistance . . . .”[14]  FEMA determined that the Applicant had met this requirement to maintain insurance.  Second, FEMA had to determine which insurance regulations to apply.  FEMA regulations differentiate between flood events and “other than flood” events.[15]  The facility suffered damage from wind and wind-driven rain, making this an “other than flood” event, meaning 44 C.F.R. § 206.253 applied.  Third, FEMA had to determine what reductions, if any, were required by regulation or policy.

Under 44 C.F.R. § 206.253(b)(2), FEMA is required to reduce assistance when an applicant uses a blanket policy, insurance pool, or some combination of these options to meet its requirement to obtain insurance.[16]  FEMA determines that a policy is a blanket policy when it covers multiple properties to a level less than their full value; here, the Applicant used nine insurance policies to achieve a per occurrence coverage limit of $75 million, but the value of its properties totaled approximately $270 million.  The Applicant’s policy covered multiple facilities below value.   Therefore, FEMA determined it is a blanket policy, meaning the proper reduction is “the amount of eligible damage sustained on the previous disaster,”[17] which, in this case, is $104,915. 

Argument Two: Effect of Commissioner Certifications

Under the Stafford Act requirements, the Commissioner’s certifications from Hurricane Katrina would not apply to the Civic Center.  The Stafford Act requires an applicant for Public Assistance permanent work to obtain and maintain insurance as a condition of assistance.[18]  In doing so, FEMA cannot require greater types and extent of insurance than a State insurance commissioner certifies as reasonable.[19]  Here, the Applicant received $104,915 following Hurricane Katrina.  FEMA required $104,915 in coverage as a condition of that grant.  The Applicant obtained insurance coverage in amounts that far exceeded the Federal assistance.  Therefore, for this facility, the facts clearly demonstrate that FEMA did not require a greater type and extent than was reasonable.  The Commissioner’s various certifications play no role for the following reasons:

  1. Not specific to Applicant’s Facility. The Commissioner’s certifications do not specifically address this facility.  The Commissioner sent letters to the President in August 2007 and July 2010, which discussed the availability of insurance coverage for Hurricane Katrina and set guidance for applicants on how they should obtain coverage even where they could not satisfy the full FEMA requirement.  These letters are not specific to the Applicant, who obtained coverage in excess of FEMA’s requirement. 
  2. Applicant-specific letters did not change the outcome for PW 2892. The Applicant received two letters from the Commissioner, in 2008 and 2009, which do not address the coverage the Applicant obtained for PW 2892 following Hurricane Katrina.  The 2008 certification from the Commissioner addresses nine of the Applicant’s PWs from Hurricane Katrina—3342, 3489, 2052, 3442, 4046, 3528, 3431, 231, and 1716—that required certification because the Applicant could not find “coverage in excess of that which it has obtained.”  PW 2892 was not on this list, because the Applicant obtained coverage in excess of that which FEMA required.  The Commissioner’s 2009 letter simply verified that the Applicant had met the requirement to insure its facilities.
  3. Portions of the certifications exceed the scope of section 311(a)(2). Section 311(a)(2) exists to prevent FEMA from denying assistance because it required an applicant to obtain coverage no one offers.  Given that states primarily regulate the business of insurance, section 311(a)(2) presumes that state insurance commissioners can best determine whether the type and extent of coverage required exists, and whether it can be reasonably obtained.[20]  Here, for PW 2892 for Hurricane Katrina, the Applicant obtained more coverage than FEMA required and the coverage was in effect at the time of Hurricane Gustav.  The Commissioner had no additional role to play.  In addition, Section 311(a)(2) does not authorize the Commissioner to waive the reduction required by 44 CFR 206.253(b)(2), or assert waivers of FEMA policy regarding the eligibility of deductibles in a second disaster.

In light of the facts stated above, there was no need for a Commissioner certification under section 311(a)(2).  Even if a certification had been necessary, the Commissioner does not have the authority to waive FEMA regulations or policy.    

Conclusion

The reduction to the eligible amount of project costs will remain because the Applicant’s insurance coverage is a blanket policy that requires a reduction based on funding provided in a previous disaster. 


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

[2] Id. § 5154(a)(1).

[3] 44 C.F.R. § 206.253(b)(1)(1991). See also Disaster Assistance Policy DAP9580.3, Insurance Considerations for Applicants at 2 (June 29, 2008) (requiring coverage “at a minimum” in “amount of the eligible project costs” for “the type of hazard that caused the damage”).

[4] Stafford Act, supra note 1, § 5154(a)(2).

[5] See generally Letter from James J. Donelon, Commissioner, Louisiana Dep’t of Ins., to George W. Bush, President, United States of America (Aug. 10, 2007) [hereinafter Bush Letter]; Letter from James J. Donelon, Commissioner, Louisiana Dep’t of Ins., to Barak Obama, President, United States of America (July 20, 2010) [hereinafter Obama Letter].

[6] See generally Bush Letter; Obama Letter.

[7] See generally Bush Letter; Obama Letter.

[8] See Letter from Margaret L. Tooke, Attorney, Taylor Porter Attorneys at Law, to Tony Russell, Acting Director, Louisiana Transitional Recovery Office (Aug. 21, 2009) (asserting interpretation will apply “[u]nless we hear differently from you”) [hereinafter Tooke Letter]; Obama Letter (stating “inclusion of the deductible as eligible in subsequent disaster assistance as a result of my certification has been confirmed in the attached August 21, 2009 correspondence to FEMA and FEMA has not refuted it.”).

[9] Letter from James L. Donelon, Commissioner, Louisiana Dep’t of Ins., to Col. Thomas K. Kirkpatrick, Governor’s Office of Homeland Sec. and Emergency Preparedness (Apr. 25, 2008).

[10] Stafford Act, supra note 1, § 5154(b).  See also 44 C.F.R. § 206.253(f).

[11] Louisiana Governor’s Office of Homeland Sec. and Emergency Preparedness, GOHSEP Appeal Analysis – Terrebonne Parish PW 6241 (May 11, 2011).

[12] Stafford Act, supra note 1, § 5154(a)(2).

[13] Stafford Act, supra note 1, at § 5154(b).

[14] Id.

[15] See generally 44 C.F.R. §§ 206.252, 206.253.

[16] 44 C.F.R. § 206.253(b)(2).

[17] Id.

[18] Stafford Act, supra note 1, § 5154(a)(1).

[19] Id. § 5154(a)(2).

[20] See also 15 U.S.C. §§ 1011-1015 (providing text of McCarran-Ferguson Act).