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Second Appeal Analysis
PA ID# 000-92006; California Highway Patrol
DSR ID# 16295, 19441; Backfill Overtime Labor and Vehicle Costs
On May 2, 1992, the President declared FEMA-942-DR-CA in consequence of the civil unrest in Los Angeles. The California Highway Patrol (CHP) provided an immediate response to the disaster by extracting labor and equipment from throughout the state. CHP deployed those resources to Los Angeles to contain and control the civil unrest. In order to ensure an acceptable level of safety and service to the public in the areas from which those officers were drawn, CHP recalled all uniformed personnel from vacations, weekends, and scheduled days off to perform the regular duties of the deployed officers.
FEMA prepared DSR 16295 on May 21, 1992, to reimburse CHP $3,427,606 for 50% of the estimated costs incurred for personnel, equipment, and contract services. In October 1992, FEMA supplemented the reimbursement of CHP’s costs with DSR 17469 for $3,970,043. Upon final inspection, FEMA approved DSR 39012 for an additional $8,278 as a net adjustment for the project on April 24, 1995.
The California State Controller’s Office (SCO) selected the project for an audit in 1996. The SCO’s audit recommended deobligation of $549,715 for straight time backfill labor and vehicle mileage costs that would have been incurred by CHP regardless of the declared event. FEMA concurred with these findings and deobligated $549,715 with DSR 91768. Consequently, the Office of the Inspector General (OIG) selected the CHP for an audit of backfill labor and associated expenses. As a result of the OIG audit, which recommended deobligating $995,943 in overtime backfill labor costs and $162,923 for associated vehicle mileage costs, FEMA approved DSR 19441 for the deobligation of $1,158,866 reducing the total project funding to $5,697,346.
California’s Office of Emergency Services (OES) supported and transmitted CHP’s November 1, 2000, first appeal letter to FEMA on December 19, 2000. OES claimed that backfill overtime costs are eligible for federal disaster funding when incurred as a direct result of the declared event. Furthermore, OES cited a November 19, 1993, memorandum from Laurence W. Zensinger, Public Assistance Division Chief, regarding the eligibility of force account labor. The memo provided the guidance that “If the backup is a regular employee… who is working his normal shift, there is no extra cost. Only overtime is eligible.” OES claimed that reimbursing overtime backfill labor costs was established FEMA practice and claimed that FEMA was not applying it consistently.
In FEMA’s August 30, 2001, response to the first appeal, the Regional Director stated that the decisions to deobligate the funds, based on the audit recommendations, were in accordance with the Title 44 Code of Federal Regulation (CFR) § 206.223(a)(1) and (2), which requires that in order to be eligible for reimbursement work must: 1) Be required as the result of a major disaster event and 2) be located within a designated disaster area. The Regional Director went on to explain that the November 19, 1993, memorandum was “a restatement of the policy that costs for salaries, which would be incurred whether or not the disaster occurred, are ineligible.”
In the January 11, 2002, letter transmitting the CHP’s November 19, 2001, second appeal letter, OES reiterated that the November 19, 1993, memorandum explicitly states that overtime labor costs for backfill employees are eligible for reimbursement. OES referred to the precedence of FEMA’s October 15, 2001, letter approving $2,459,475 in overtime labor cost for backfill employees of the California Department of Forestry and Fire Protection under FEMA-3140-EM-CA.
Second Appeal Conference Call
The CHP was given the opportunity to explain its claim on May 23, 2002, in a conference call between CHP, OES, FEMA Region IX and FEMA headquarters representatives. In the call, OES reasserted that reimbursement of overtime backfill labor costs was FEMA’s practice even before the November 19, 1993, memorandum and requested a time extension to research and submit precedent-setting examples of projects in which FEMA reimbursed overtime backfill labor costs in disasters prior to FEMA-942-DR-CA. FEMA headquarters established a 2-week extension. In a letter to FEMA dated June 18, 2002, OES stated that “all supporting documentation in support of the appeal was submitted on January 11, 2002, when OES transmitted the second appeal request to FEMA.”
For all disasters declared prior to October 14, 1993, the regular time salaries of force account labor performing eligible emergency work was eligible for reimbursement under FEMA’s Public Assistance Program. Beginning October 1, 1993, 44 CFR § 206.228(a)(4) states, “The straight- or regular-time salaries and benefits of a subgrantee’s permanently employed personnel are not eligible in calculating the cost of eligible work under sections 403 and 407 of the Stafford Act, 42 U.S.C. 5170b and 5173. For the performance of eligible permanent restoration under section 406 of the Act, 42 U.S.C. 5172, straight-time salaries and benefits of a subgrantee's permanently employed personnel are eligible.”
This change in regulation was implemented because the straight-time salaries of force account labor performing emergency work would normally be budgeted for and those costs would be incurred whether or not the disaster occurred. Recognizing that a backup employee may be required to assume the normal duties of a regular employee sent to the field to perform disaster-related work, FEMA issued the November 19, 1993, memorandum to establish the criteria for the eligibility of those backfill labor costs for reimbursement.
In the conference call, OES claimed that FEMA reimbursed the overtime costs of backfill labor in disasters declared prior to October 1, 1993. However, as the OES letter of June 18, 2002 letter indicates, it is unable to provide a documented example to substantiate this claim. Neither the aforementioned regulation change nor the 1993 memorandum were retroactive and are therefore not relevant to FEMA-942-DR-CA, which was declared before October 4, 1993. For FEMA-942-DR-CA, the straight time of force account employees performing eligible emergency work was eligible for reimbursement. The work associate with backfill labor performed by CHP employees was not eligible because it was not required as the result of a major disaster event and it was not performed within a designated disaster area as required by 44 CFR § 206.223(a).
The claimed backfill labor and vehicle use costs are ineligible for federal disaster funding pursuant to 44 CFR § 206.223(a). The CHP’s second appeal is denied.