Insurance Waiver

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1479-DR
ApplicantTexas Department of Criminal Justice
Appeal TypeSecond
PA ID#000-UD067-00
PW ID#N/A
Date Signed2005-05-19T04:00:00
Citation: FEMA-1479-DR-TX; Texas Department of Criminal Justice, Insurance Waiver
Cross-reference: Insurance Waiver

Summary: The Texas Department of Criminal Justice sustained damage to several of their facilities resulting from Hurricane Claudette on July 15, 2003. Seven Project Worksheets (PWs) 493, 555, 557, 560, 563, 564, and 566, were prepared however, approval of these PWs was contingent upon the Subgrantee purchasing and maintaining building insurance. An insurance review in January 2004 confirmed that the Subgrantee had not complied with the requirement to obtain insurance so the PWs were reduced to $0. The Subgrantee appealed the insurance requirement by stating it will not purchase insurance and asserting that the State of Texas is self-insured. The Subgrantee further states it will not set-aside funds to protect against future loss, but commits to not seeking additional reimbursement from FEMA. The FEMA Region VI Director denied the appeal based on 44 CFR § 205.253 and additionally citing 44 CFR §75.14, which identifies states that have received approval from FEMA as self-insured. The State of Texas is not included on the list of self-insured States. The requirement to obtain and maintain insurance remains.

Issues: Is the Subgrantee eligible for a waiver of the insurance requirement?
Findings: No. Assistance under section 406 of the Stafford Act is approved only on the condition that insurance is obtained and maintained in such types and amounts as are reasonable and necessary to protect against future loss.

Appeal Letter

May 19, 2005

Mr. Jack Colley
Governor’s Authorized Representative
State of Texas
Division of Emergency Management
P.O. Box 4087
Austin, TX 78773-0220

Re: Second Appeal – Texas Department of Criminal Justice, PA ID 000-UD067-00, Insurance Waiver, FEMA-1479-DR-TX
Dear Mr. Colley:
This is in response to your letter dated August 18, 2004, which transmitted the referenced second appeal on behalf of the Texas Department of Criminal Justice (Subgrantee) requesting a waiver of the Federal Emergency Management Agency (FEMA) insurance requirement.

High winds and rain from Hurricane Claudette impacted the State of Texas on July 15, 2003, resulting in disaster declaration FEMA-1479-DR-TX. The Texas Department of Criminal Justice sustained damage to several of its facilities. As a result, FEMA prepared Project Worksheets (PWs) 493, 555, 557, 560, 563, 564, and 566. Approval of these Project Worksheets was contingent upon the Subgrantee purchasing and maintaining building insurance for the perils that caused the damages. FEMA performed an insurance review in January 2004, and confirmed that the Subgrantee had not complied with the requirement to obtain insurance, so the PWs were reduced to $0.

The Subgrantee first appealed the insurance requirement by a letter dated January 30, 2004, asserting that the State of Texas is self-insured and will not purchase insurance. The Subgrantee requests $662,731 from FEMA for restoration of its damaged facilities. The Subgrantee states it will not set aside funds to protect against future loss, but commits to not seeking additional reimbursement from FEMA. The FEMA Region VI Director denied the appeal by a letter dated February 12, 2004, based on 44 CFR §206.253. Additionally, the Regional Director cited 44 CFR §75.14, which identifies states that have received approval from FEMA as self-insured and the State of Texas is not included on that list.

By letter dated August 18, 2004, the Texas Division of Emergency Management transmitted the second appeal. The Subgrantee asserts it should be considered a self-insured entity and requests immunity from the insurance requirement.

44 CFR §206.206 allows applicants 60 days after receiving notification of a determination to submit an appeal. The Regional Director notified the subgrantee of the first appeal decision on February 12, 2004. The State submitted a second appeal on August 18, 2004. The appeal was not submitted in accordance with 44 CFR §206.206. Therefore, the appeal is denied.

Also, as set forth by 44 CFR §206.253 (b)(1), assistance under section 406 of the Stafford Act will be approved only on the condition that insurance is obtained and maintained in such types and amounts as are reasonable and necessary to protect against future loss. Section 311 (c) of the Stafford Act allows states to self-insure provided they submit a plan for self-insurance which is satisfactory to the President. The Subgrantee has stated that it will not purchase insurance, or submit a plan for self-insurance.

Please inform the Subgrantee of my decision. My determination constitutes the final decision on this matter as set forth in 44 CFR §206.206.

Sincerely,
/S/
Daniel A. Craig
Director
Recovery Division
Emergency Preparedness and Response

cc: Gary Jones
Acting Regional Director
FEMA, Region VI
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