Operation of Fixed Generators

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster4077-DR-OH
ApplicantNoble County Emergency Management Agency
Appeal TypeSecond
PA ID#121-U1HKY-00
PW ID#254
Date Signed2014-03-14T00:00:00

Conclusion:  The Noble County Emergency Management Agency’s fixed generator costs are eligible; however, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible work. 

Summary Paragraph

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage, causing downed utility lines and widespread power outages for multiple days.  The Noble County Emergency Management Agency (Applicant) utilized one portable and five fixed generators during the event to support emergency protective measures at the operations center, county water and sewage systems, sheriff’s office and jail.  FEMA prepared Project Worksheet (PW) 254 for $3,641 to fund usage of the portable generator and fuel for the fixed generators.  FEMA did not reimburse the usage of the five fixed generators based on FEMA’s schedule of equipment rates.  The Applicant submitted a first appeal for $8,242 requesting that FEMA use equipment rates for the fixed generators to determine eligible funding.  The Regional Administrator denied the first appeal, explaining that the ownership costs of permanently mounted generators are viewed as components of the cost of operating the facility.  The Applicant reiterates its position in its second appeal; however, the applicant has not provided sufficient justification for reimbursing the use of fixed generators based on equipment rates.

Authorities and Previous Appeals Discussed

  • Stafford Act Title IV Sec.403 Essential Assistance 42 U.S.C. § 5170b(3)
  • 44 CFR § 206.226 Restoration of damaged facilities.
  • Public Assistance Guide, FEMA 322 (June 2007), pages 54-55, 85
  • Public Assistance Digest, FEMA 321 (Jan 2008), page 135
  • FEMA-DR-4077-OH, Trimble Township Wastewater Treatment District (January 17, 2014

Headnotes

  • 42 U.S.C. § 5170b(3) and 44 CFR § 206.225(a)(3) provide that generally, those prudent actions taken by an Applicant to ensure the continuation of essential public services and protect lives and public health are eligible for assistance.

  • FEMA 322, Public Assistance Guide (June 2007), at 54-55 provides that the cost of obtaining power from alternate sources is considered an increased operating expense and is not eligible.  The guidance does provide an exception for increased operating costs constituting “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”

    • Application of this guidance necessitates a distinction between portable and fixed generators.
    • FEMA reimburses the use of portable generators based on FEMA equipment rates or similar set rates. 
    • FEMA does not reimburse the use of fixed generators based on equipment rates.  However, if fixed generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.


 

 

Appeal Letter

March 14, 2014

Nancy J. Dragani
Executive Director
Ohio Emergency Management Agency
2855 West Dublin-Granville Road
Columbus, Ohio 43235-2206

Re: Second Appeal – Noble County Emergency Management Agency, PA ID 121-U1HKY-00, Operation of Fixed Generators, FEMA-4077-DR-OH, Project Worksheet (PW) 254

Dear Ms. Dragani:

This is in response to your letter dated July 3, 2013, which transmitted the referenced second appeal on behalf of the Noble County Emergency Management Agency (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) of $8,242 for reimbursement of the operation of fixed generators based on FEMA’s schedule of equipment rates.

As explained in the enclosed analysis, I have determined that the Applicant’s use of fixed generators is eligible.  However, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible emergency work.  Therefore, I am denying the appeal.

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

Sincerely,

/s/

Brad Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

cc:  Andrew Velasquez, III
      Regional Administrator
      FEMA Region V

Appeal Analysis

Background

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage throughout Noble County, causing downed utility lines and widespread power outages for multiple days.  The Noble County Emergency Management Agency (Applicant) utilized one portable and five fixed generators during the event to support emergency protective measures at the operations center, county water and sewage systems, sheriff’s office and jail.    FEMA prepared Project Worksheet (PW) 254 for $3,641 to fund usage of the portable generator based on FEMA’s schedule of equipment rates and fuel for the fixed generators.  Because five of the generators were fixed, FEMA did not reimburse the use of those generators based on FEMA’s equipment rates but instead reimbursed the fuel costs only ($3,063). 

First Appeal

The Applicant submitted a first appeal for $8,242 in a letter dated April 4, 2013, asserting that reimbursement for the fixed generator usage should be based on FEMA’s schedule of equipment rates.  The FEMA Region V Regional Administrator denied the first appeal in a letter dated
May 7, 2013, explaining that the depreciation and ownership costs of permanently mounted generators are viewed as components of the cost of operating the facility.

Second Appeal

The Applicant submitted a second appeal for $8,242 in a letter dated June 14, 2013, reiterating its request for FEMA to apply equipment rates in reimbursing the fixed generator usage.  The Applicant states that two of the generators were installed after construction of the buildings that house them and are not integral parts of the buildings, while the other three are anchored to concrete pads outside as standalone structures.  The Applicant maintains that because the generators are not part of the respective buildings they are not depreciated like a furnace or hot water tank.  The Grantee supports the Applicant’s appeal, and the Grantee’s transmittal letter also cites a second appeal under FEMA-EM-3288-FL, dated January 17, 2012, involving a Miami-Dade County, Florida, project for which FEMA funded fixed generator costs using FEMA’s schedule of equipment rates.

Discussion

Generally, prudent actions taken by an Applicant to ensure the continuation of essential public services and protect lives and public health are eligible for assistance.[1]  However, as specifically delineated in FEMA policy,[2] the cost of obtaining power from alternate sources is considered an increased operating expense and is generally not eligible.[3]  Noting such, policy provides an exception for “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”[4]

Application of this guidance necessitates a distinction between portable and fixed generators.  FEMA reimburses the use of portable generators based on FEMA equipment rates or similar set rates.  FEMA equipment rates include such costs as operation of equipment, depreciation, overhead, maintenance, field repairs, fuel, lubricants, tires, Occupational Safety and Health Administration equipment, and other costs incidental to operation.  This method of calculating reimbursement is not applicable to fixed generators or generators that are permanent fixtures because a portion of the costs included in the equipment rates, like depreciation and the other ownership components, are viewed as elements of the operating costs of the facility that the fixed generator is installed to support.  Accordingly, FEMA will reimburse fuel costs for fixed generators if the generators are used in the performance of eligible emergency work, because those are the only increased costs incurred by the applicant as a direct result of the event. 

The fundamental issue and basic facts presented in this appeal are analogous to those in the January 2014 Trimble Township Wastewater Treatment District second appeal decision.[5]  The Trimble second appeal decision reinforced existing policy in finding that when fixed generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work, but will not reimburse the usage based on equipment rates and that this applies regardless of whether the generators are affixed inside a facility or to a concrete slab outside of a facility.  The Trimble decision also found that the Miami-Dade second appeal decision[6] referenced by the Grantee, accurately reflected FEMA policy regarding reimbursement of fixed generator usage but provided ambiguous direction to the Regional Administrator and consequently was misapplied.

Conclusion

FEMA does not reimburse the use of fixed generators based on equipment rates.  However, if fixed generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.  In this case, FEMA has provided all eligible funding for the fixed generator usage in PW 254.


[1] See, e.g., 42 U.S.C. § 5170b(3); 44 CFR § 206.225(a)(3).

[2] See FEMA 322, Public Assistance Guide (June 2007), at 54-55.

[3]  Id.

[4]  Id. at 55.

[5] See FEMA_DR-4077-OH, Trimble Township Wastewater Treatment District (January 17, 2014).

[6] See FEMA-EM-3288-FL, Miami-Dade County, (January 17, 2012).

 

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