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Second Appeal Analysis
PA ID# 017-91025; El Dorado Irrigation District
DSR ID# 75592,75593,79431; El Dorado Canal
The El Dorado Irrigation District (EID) submitted a December 4, 1998, second appeal of the Federal Emergency Management Agency's (FEMA's) denial of its request for funding for the cost of water it purchased and the cost of pumping this water into its reservoir for treatment and delivery to its customers. The request for $2,741,701 included water and electrical costs of $897,734 for the period ending November 30, 1998, and the installation and eventual removal of a temporary connection to bypass the damaged canal at a cost of $1,843,967. The temporary pipeline was an alternate means of obtaining water in lieu of the purchase and pump arrangement. The winter storms that started late in December 1996 inflicted severe damage to EID's aqueduct system that gravity fed untreated water from the Pacific Gas and Electric Company's (PG&E's) Hydroelectric Plant to the Forebay Reservoir.
EID supplied potable water to the communities of Pollock Pines, Cedar Grove and Camino from its 450-acre foot Forebay Reservoir located north of Highway 50 at Pollock Pines. It also supplied water for irrigation purposes to the agricultural farms of Camino. EID collected untreated water from many sources and stated that 35% of the water it collected for distribution was supplied via a 22-mile long Project 184 Canal-also called the El Dorado Canal-the source of which was the El Dorado Hydroelectric Project. PG&E owned both the Hydroelectric Project and the canal, and supplied water to EID under a 1919 contract at the cost of $3.00 per acre-foot.
EID's Forebay Reservoir was also capable of being fed from the Jenkison Reservoir Water Treatment Plant and other reservoirs. The U.S. Bureau of Reclamation operated the Jenkison Reservoir at Sly Park, located some two miles away and about 500 feet lower in elevation. Pumping stations and necessary piping had been installed between the Jenkison Reservoir and EID's Forebay Reservoir more than a decade earlier and were operational. Permanent connections to another one or more reservoirs also existed, and EID occasionally used these sources to supplement the water into the Forebay Reservoir as needed. Numerous small streams fed into the canal along the way supplementing the supply of raw water to fill EID's reservoir. These streams normally supplied water during the winter and early-spring months.
The New Year 1997 storm for which a disaster declaration was made on January 4, 1997, inflicted severe damage to the upper 9-mile section of the PG&E canal and less damage to the lower 13-mile section. Concrete flumes and pipes were broken and filled with debris, and a section of the canal that passed through a tunnel was completely closed. After the storm, EID continued to receive water from the canal because several small streams continued feeding water into the lower section of the canal. Flows from these small streams receded in mid-spring. Separate from this project for emergency water supply, FEMA wrote and approved a number of Category A Damage Survey Reports (DSRs) totaling approximately one million dollars for debris removal from the canal. FEMA in addition approved numerous other DSRs for all categories of repair work.
PG&E had agreed in June 1996, to a purchase of its Hydroelectric Project by EID. The purchase would, subject to acceptance by the California Public Utilities Commission and the Federal Energy Regulatory Commission, transfer ownership of the hydroelectric facility and the canal to EID. An Operating and Maintenance Agreement effective until the sale was final was executed between the parties. The agreement stipulated that, until the sale was complete, "EID shall make all repairs.necessary to restore the Project to full operation, up to the first $100,000 per occurrence of repair cost; and.PG&E and EID shall share equally the cost of such repairs in excess of $100,000." EID assumed operational responsibility under this agreement for the facility in June 1996. A recent inquiry into the status of the sale indicated that the Courts had ruled that PG&E could not back out of the sale agreement.
FEMA wrote three Category B DSRs on June 19, 1997, describing projected additional costs for the purchase of water and additional electrical costs for pumping water into EID's facilities at a combined cost of $605,071. On review, these DSRs were declared ineligible because no immediate threat to health and safety existed to classify the costs as emergency costs, and increased operating expenses of a utility are not eligible. EID appealed the ineligible determination on December 11, 1997, but did not include any documentation to substantiate the claims made. EID challenged FEMA's determination that no emergency existed following the storm, asserting that EID exercised its authority under State law to determine imminent threats to public health and safety existed. At the same time, EID found that FEMA's expectation of it instituting water rationing during its perceived emergency to be ill-conceived because the applicant was "entitled to react to the emergency and to make a valid claim [to FEMA] to keep the service in place." The Regional Director denied the appeal in an August 19, 1998, letter to the Governor's Authorized Representative. The Regional Director pointed out that increases in operating expenses, even if a result of the disaster, were not eligible. FEMA did not view EID's water supply situation as an emergency.
In this appeal, the applicant increased its claim of eligible emergency costs to $2,741,701. Included in this cost, in addition to water purchase and pumping costs through November 30, 1998, of $897,734 is an item of temporary water connection for $1,228,855 and another for connection removal at a cost of $615,112. There was no documentation or explanation of what the water connect/disconnect items were.
In the aftermath of the storm, EID continued to supply water to the three communities as usual despite having lost a portion of its raw water supply. The Forebay Reservoir was filled to its 450-acre foot capacity of water at the time of the disaster and EID continued to draw down the reserves for a period of at least two months providing both domestic water and irrigation water to its customers at normal rates. When FEMA indicated that the DSRs were ineligible, EID objected to the suggestion that a water conservation program should have been introduced. At a meeting of the Board of Directors on March 10, 1997, EID considered three options for its continued water supply-Full Service, Reduced Service and No Irrigation Ditch Service. The Board discussed the issues and made a business decision electing the Reduced Service option-full service to EID's domestic customers and a reduction in the service (of 50%) for irrigation needs. That was the full extent of the water conservation that the applicant instituted. In order to supply the needs of the three communities, EID purchased water from its secondary sources.
In its first appeal, EID requested that FEMA fund the cost of purchasing water from the Bureau of Reclamation's dam at Sly Park and pumping that water into its reservoir at a cost of $605,072. In the second appeal, this cost was increased to $897,734 to cover the purchase and pumping of water through November 30, 1998. In addition, the second appeal added $1,843,967 representing the cost of making a temporary pipeline connection around the damaged canal section and its eventual removal. The information pertaining to what the pipeline was for was acquired from representatives of the Office of Emergency Services in an April 29, 1999, telephone call. EID represented that all the work it did were emergency measures.
Whereas water was gravity fed from the canal into Forebay Reservoir, it had to be pumped from Sly Park. Becace another source at a higher rate to supply to its customers. The only issue, therefore, was the ineligible increase in operating cost. The applicant's facility was permanently connected to alternate sources to facilitate the purchase and pumping of supplemental quantities of water when needed. EID had in the past occasionally utilized the connections to make up deficits in non-disaster situations.
The Stafford Act provides that emergency protective measures to eliminate or lessen immediate threats to save lives, to protect public health and safety, and to eliminate or lessen immediate threats of significant additional damage to improved property are eligible for disaster assistance. The requirement of immediacy in the law is not present in EID's situation. In the period following the disaster, the applicant did not demonstrate that an emergency existed. EID did not institute any conservation measures until March 1997. These measures instituted an approximately 50% reduction in the water supply to the irrigation ditches. No restriction was placed on the delivery and/or consumption of domestic water.
FEMA responded appropriately to the needs of the applicant by writing many DSRs under all categories of work for both other emergency measures and permanent repairs. Funds under approved DSRs were released starting in April 1997. The approved repair projects were designed to expeditiously restore the operation of the water conveyance system to bring EID's water distribution system quickly back to normal. An emergency within the meaning of the Stafford Act did not exist because water was available from alternate sources albeit at higher costs, and pursuant to FEMA's Public Assistance Guide, increased operating expenses incurred by the applicant, even if as a result of the disaster, are not eligible costs. The applicant apparently installed the bypass temporary pipeline to reduce pumping costs of water that it purchased from alternate sources that were downhill to its facility. The installation and removal of the bypass pipeline is ineligible because it is considered a longer term alternative to making the repairs to the canal and, therefore, its cost duplicates funding awarded under other DSRs.
The Regional Director was correct in determining that DSRs 75592, 75593 and 79431 were ineligible. In the operation of its water supply following the disaster, the applicant did not demonstrate that an emergency existed. Funds were released for the facilities to be repaired. However, the applicant chose not to perform the repairs but rather to prolong the temporary arrangements. Under these circumstances, FEMA is unable to fund the water purchase costs and associated pumping costs. Therefore, this second appeal for overturning the determination that DSRs 75592, 75593 and 79431 were ineligible is denied.