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Second Appeal Analysis
PA ID# 000-U6PMC-00; Central Electric Cooperative
DSR ID# Project 239; Improved Project-Various Sites
Central Electric Cooperative (Applicant) serves customers in six South Dakota counties. The severe winter storm on November 28 and 29, 2005 (DR-1620) caused damage over most of the applicants service area. FEMA prepared PW 233 on February 11, 2006, for $4,300,380 to repair the Applicants damaged facilities. PW 233 reflected work that the Applicant had completed as well as work to be completed. The scope of work stated that
work completed consisted replacing (sic) 220 three-phase and 1,799 broken single-phase distribution poles, a large number of broken crossarms, replacing pulled or broken anchors, repairing a large number of broken, damaged or downed conductor, replacing 5 three-phased meters and repairing a large number of other miscellaneous damage. Work to be completed: the work to be completed is listed below and on an included list showing locations and damages. FEMA also prepared PW 239 on February 11, 2006, for $856,450 to repair other components of the damaged facilities. The PW described the disaster damages as
a severe storm caused severe damage over most of the applicants (sic) service area in six counties and about 30% of the damages remain as work to be completed. The applicant has requested improvement projects
(sic) for the 132 sites that are covered by this PW. (emphasis added) The PW describes the eligible scope of work as work to be completed: see scanned list that shows the 132 site locations, the actual damage, and the estimated cost to restore each site to pre-disaster condition. FEMA obligated the PW on February 21, 2006.Version 1 of PW 239
In a letter dated October 25, 2006, to FEMA, the Governors Authorized Representative (GAR) requested that FEMA use the Applicants Rural Utility Service codes that the Applicants Board had adopted to determine the eligible scope of work for PW 239. The GAR indicated that the work the Applicant requested was not an improved project because it was required by the adopted standards. The Applicant requested additional funding to replace conductors in accordance with existing codes and standards. Further, new conductors required shorter span distance between poles. Therefore, the approved scope of work should include a larger number of poles than existed prior to the storm. Based on the information submitted with the
October 25, 2006, letter, FEMA Region VIII determined that the initial PW determination was correct and that costs associated with the work to meet RUS codes, conductor replacement and upgrades, were not eligible. FEMA Region VIII also determined it did not use the appropriate local unit costs to prepare the estimate for PW 239. Therefore, FEMA increased the PW by $52,410 for a total estimated cost of $908,860. FEMA obligated Version 1 on November 30, 2006. First Appeal
The Applicant submitted a first appeal to the state in letter dated January 23, 2007. The State sent the appeal to FEMA by letter dated January 26, 2007. The Applicant appealed the determination that the project was an improved project and requested additional time to compile its technical response to FEMAs determination that the RUS codes did not meet the criteria for acceptance under the Public Assistance Program. The State sent the documentation to support the appeal to FEMA in a letter dated February 22, 2007. Specifically the appeal stated that the replaced conductor was damaged to the point that it could not be re-installed and the restoration to meet codes and standards should be eligible. FEMA Region VIII denied the Applicants request and obligated PW 239 version 2 for zero dollars on June 27, 2007.Second Appeal
The Applicant submitted a second appeal to the State in a letter dated July 5, 2007. The State forwarded the appeal to FEMA by State letter dated July 10, 2007. The State supports the Applicants appeal. It stated, FEMA is not interpreting the RUS standard the same way that the applicant utilizes the standard. Central Electric is bound to utilize the RUS standards as they are audited by RUS annually and would not be in compliance if they were to ignore the standards; thus, jeopardizing their funding source from RUS. The State also contended that the FEMA Project Officer did not thoroughly review his estimate with the applicant, and that the applicant did not recognize that the codes and standards were not included in the approved repair work. The applicants appeal contends reimbursement for conductor replacement and associated work is an acceptable project and addressed the original scope of work in PW 239 and the applicability of RUS Bulletin 1742D-106. Although the Applicant did not request a specific amount of additional funds, the State clarified the amount in dispute is $3,582,992.DISCUSSION
The issue in this appeal is whether RUS Bulletin 1724D-106 is a code and standard as defined in 44 CFR 206.226(d), thus making repairs in accordance with the Bulletin eligible for reimbursement under the Public Assistance Program. 44 CFR § 206.226(d) states For the costs of Federal, State, and local repair or replacement standards which change the predisaster construction of facility to be eligible, the standard must:
(1) Apply to the type of repair or restoration required;
(2) Be appropriate to the predisaster use of the facility;
(3) Be found reasonable and in writing
(4) Apply uniformly to all similar types of facilities
it must have been enforced during the time it was in effect.
RUS issued Bulletin 1724D-106, Considerations for Replacing Storm-Damaged Conductors,
on July 1, 2005. The bulletin lists its purpose as: Immediately after a major storm like a hurricane, electric utility personnel are very busy and focused on restoring electric service. Often during this period of service restoration and commotion, electric utility engineers or others have to make an immediate decision on whether to simply re-install downed or damaged conductors or to replace them with new conductors. This bulletin provides guidelines that will assist Rural Utility Service (RUS) borrowers to expediently make this decision.
RUS Bulletin 1724D-106 is a tool to assist rural electric cooperatives in making decisions about repairing or replacing damaged facilities in a post-storm environment. It is not a code or standard as contemplated in 44 CFR §206.226(d). Therefore, FEMA is not authorized to reimburse the Applicant for costs incurred as a result of following guidelines contained in RUS Bulletin 1724D-106.
Further, there is no information in the file to support the Applicants contention that the existing conductors were damaged to the extent that replacement was required.. CONCLUSION
RUS Bulletin 1724D-106 is not a code or standard as contemplated in 44 CFR §206.226(d). Therefore, the replacement of damaged facilities in accordance with the bulletin is not eligible for reimbursement under the Public Assistance Program. Therefore, the appeal is denied.