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Second Appeal Analysis
PA ID# 113-12000-00; City of Cedar Rapids
PW ID# 9000 ; Direct Result of Disaster
On June 13, 2008, the Cedar Rapids Water Pollution Control Facility (WPCF) was flooded as a result of severe rainfall, which began on May 25, 2008. That facility is owned and operated by the City of Cedar Rapids (Applicant). The flooding inundated the basements of the sludge incinerator building with approximately 15 feet of water causing an operational failure at the WPCF and abrupt shutdown of the incinerator and ancillary equipment located on upper floors. The flood waters damaged various components of the incinerator, which required the Applicant to haul additional sewage sludge to a landfill until the incinerator became operational. FEMA initially prepared PW 2774 to fund (1) the costs to haul and dispose of the sludge until the incinerator was operational and (2) emergency repairs to restore incinerator operations. In March 2009, FEMA prepared Project Worksheet (PW) 9000 to reimburse the Applicant for repairs to the incinerator and other components. In April 2009, FEMA prepared Version 1 to PW 9000 to fund additional permanent repairs and determined that some emergency repairs were temporary. FEMA de-obligated the funding for the emergency repairs from PW 9000 and added the funding to PW 2774. In August 2009, FEMA determined that the replacement of the incinerator was eligible in accordance with FEMA Disaster Assistance Policy DAP9524.4, Repair vs. Replacement of a Facility under 44 CFR §206.226(f) (The 50 Percent Rule) and prepared a second version to PW 9000 to fund the replacement ($29,455,000).
On March 22, 2011, FEMA re-inspected the facility and determined: (1) certain components of the facility were not damaged as a result of the disaster; (2) at the time of the disaster, the facility was functioning at a lesser capacity than designed; and (3) certain improvements and code and standard upgrades were not eligible. As a result of the inspection, FEMA developed a new cost estimate for the repair of components damaged by the event and also determined replacement of the facility was not eligible in accordance with the 50 Percent Rule. In October 2011, FEMA prepared Version 3 to PW 9000 approving funding for the eligible repairs and including the eligible scope of work initially covered in PW 2774. In approving PW 9000 Version 3, FEMA adjusted the eligible funding amount for repairs and sludge disposal to $8,106,635. FEMA de-obligated all funds from PW 2774.
The Applicant submitted a first appeal on December 27, 2011, requesting reimbursement for repair and/or replacement costs for several components of the incinerator: (1) Waste Heat Recovery Boiler (WHRB); (2) High Pressure Process Air Compressor No. 2 (PAC No. 2); (3) Low Pressure Oxidation (LPO) System Third Stage Heat Exchanger Tube; (4) High Pressure Positive Displacement Pumps (HPP); (5) ID Fan Housing and Shroud; (6) Impingement Scrubber; (7) Sludge Combustion Air Fans and Retrofitted Ducts; (8) PLC Controller Panels; (9) Electrical Control Panels; (10) Nine large burners; and (11) Gas and Air Piping Valves. The Applicant also requested additional funding for sludge hauling and disposal that occurred after July 30, 2009 (the date that the incinerator was able to operate at full capacity) because incinerator repairs continued to be made after that date. The Applicant estimated the future costs of sludge disposal and argued that such costs should be added to the 50 Percent Rule calculation as part of the repair estimate. The Grantee supported the Applicant’s appeal.
On August 1, 2012, after considering all of the information provided by Applicant as well as various engineering and site visit reports generated by FEMA personnel, the FEMA Region VII Regional Administrator (RA) partially approved the first appeal, finding repair or replacement costs for seven of the eleven components were eligible for reimbursement, and increased the total eligible funding amount to $11,202,485. The RA denied the Applicant’s request for repair or replacement costs related to the following components: (1) WHRB; (2) LPO System Third State Heat Exchanger Tubes; (3) Nine Large Burners and (4) Gas and Air Piping Valves. With regard to the first two, the RA indicated that the pre-disaster condition of the components was “unclear,” and that the Applicant did not clearly demonstrate damages to them were a result of the declared disaster. As for the nine large burners, the RA found that replacement costs were not eligible because they were not in compliance with environmental standards at the time of the disaster. Finally, the RA found the gas and air piping valves to be ineligible because they were not flooded and did not require repairs.
The RA also found that the sludge hauling and disposal costs during the incinerator repairs were eligible, but did not consider them for purposes of the 50 Percent Rule calculation because those costs were not a direct repair or replacement of an item associated with the facility. Overall, based on a revised 50 Percent Rule calculation, adding in the additional eligible component repair and replacement costs, the RA determined that the replacement of the incinerator was not eligible.
The Applicant submitted a second appeal on September 28, 2012 and the Grantee indicated support for the appeal through its November 28, 2012 transmittal to FEMA. Included with the second appeal was new information, not considered by the Regional Administrator, consisting of affidavits from the Applicant’s employees, state and county employees that regulate operations at the Applicant’s facility, and employees from Brown and Caldwell (B&C), the engineering firm consulting the Applicant in making determinations about component repairs and replacements at the facility. The Applicant also provided for the first time copies of inspection certificates, invoices from cleaning services, and doctrine associated with principles for the cold shutdown of the incinerator.
In the second appeal, the Applicant maintains that the costs related to the remaining four components are eligible for reimbursement. In asserting that the WHRB should be eligible for repair or replacement of damages that were the result of the disaster, the Applicant argues that the WHRB was in good condition before the flood and submitted certificates indicating passage of state inspections for the two years preceding the disaster to substantiate this claim. Further, the Applicant documented that it cleaned the WHRB on July 31, 2008, and again on November 24, 2008. Approximately 15 months after the disaster, the Applicant sought bids to address problems with the WHRB. Within those bidding documents, the Applicant indicated that the WHRB “required significant repairs of leaks after sitting idle for 9 months.”
With regard to the LPO, the Applicant indicates that the emergency shutdown of the incinerator resulted in sludge remaining inside of the LPO tubes and not being removed for an extended period of time. The Applicant explains that the sludge corroded the tubes and the “dried” sludge within the tubes can only be cleaned by double chemical washes. The Applicant states that it did not perform double chemical washes before the flood and started chemical washes more than one year after the flood in the fall of 2009.
The Applicant also argues that the costs associated with replacing the nine large burners and the burner gas and air piping valves should be reimbursed. While the Applicant concedes that flood waters did not submerge these components, it argues that FEMA should fund the repairs because they work in conjunction with parts of the Programmable Logic Controller (PLC). The Applicant notes that FEMA funded replacement of the PLC components that were inundated during the event and that components that were not submerged had problems working with the replaced PLC components after the incinerator was restarted. The Applicant asserts that if the incinerator continues to operate without the replacement parts for the nine large burners and the burner gas and air piping valves, then it will have problems meeting emission standards. The Applicant also notes that it complied with environmental standards before the flood.
Waste Heat Recovery Boiler and Low Pressure Oxidation System Third State Heat Exchanger Tube
Pursuant to Title 44 of the Code of Federal Regulations (44 CFR) 206.223(a)(1), General work eligibility, to be eligible for financial assistance, an item of work must be required as the result of the emergency or major disaster event. The RA found that the Applicant did not substantiate the pre-disaster condition of the WHRB or the LPO nor clearly demonstrate the damages incurred were the result of the declared disaster. In its second appeal, the Applicant demonstrated that the WHRB was in good working condition before the disaster based on passing inspections the two years preceding the disaster. The Applicant provided boiler inspection notices in its second appeal demonstrating those results. Additional information provided with the second appeal indicated that the WHRB was damaged as a result of the disaster. The Grantee also provided an affidavit from a subcontractor hired to run a test of the WHRB, which indicated that a test of the component was run following the event, and it failed.
Through a review of all of the information submitted by the Applicant, both with its first appeal and new documentation supporting its second, FEMA finds that the WHRB was damaged as a result of the disaster, which caused an emergency shutdown of the incinerator and prolonged outage following the event. Specifically, a B&C engineer stated that the WHRB experienced numerous leaks and mechanical valve failures due to a prolonged outage period in the immediate aftermath of the flood. Another B&C engineer also indicated that a normal incinerator shutdown can take several days and that, as a result of an emergency shutdown, “hot steam, baking sludge, and abrupt material expansion and contraction due to rapid thermal changes will otherwise damage the components of the incineration system.” To further support its point, the Applicant provided the incinerator shutdown principles with both its first and second appeal. In a September 13, 2011 letter from the Applicant to the Grantee, the Applicant noted the several ways that the WHRB was damaged after the flood and why making repairs to the boiler did not happen immediately after the flood. The Applicant stated that when power was lost, superheated water was trapped inside the boiler and the feed lines. The Applicant indicated that flushing water with chemical stabilizers and corrosion inhibitors could not be circulated through the system due to the loss of power and controls to the recirculation pumps and water softening process. The Applicant stated that the WHRB remained in an unstable state until power was restored, which was nine months after the flood. Therefore, the Applicant through its first and second appeals provided support for its assertion that the WHRB was in good condition before the disaster, and it required repairs as result of the disaster.
In a January 21, 2009 B&C Memorandum submitted with the first and second appeals, B&C indicated that the WHRB provides steam to the LPO. As the LPO’s operation is linked to the WHRB’s operation, the LPO was damaged because the WHRB was damaged. Regarding the LPO, the Applicant in its second appeal submission provided some indication as to the condition of the LPO before the flood. Specifically, the Utilities Plant Manager at the Applicant’s facility stated that the LPO was regularly chemically cleaned. In the above-mentioned September 13, 2011 letter submitted with the first appeal, the Applicant explained that the cool shutdown of LPO component takes four to five days. As stated above, the immediate shutdown did not allow the plant managers to perform the proper cool shutdown of the system, which would have allowed the Applicant to remove any sludge that was being processed. Through consultation with the LPO’s manufacturer, it was confirmed that an immediate shutdown in all likelihood would have caused a scale buildup on all tube surfaces.
As such, based upon previously considered and substantive, new information provided by the Applicant, sufficient evidence has been provided to demonstrate that the damage to the LPO was a result of the disaster. Additionally, Applicant’s explanation that “the power and control for the pumps and compressors that feed the LPO was not fully restored and/or energized for many months following the flood, preventing staff from flushing the lines, reactors and heat exchangers” adequately explains why it was not able to clear sludge from the tubes sooner. Therefore, the Applicant has provided information about the condition of the LPO before the disaster and the damage that the LPO suffered as a result of the disaster.
In both instances, the Applicant demonstrated that the repair of the components was required as a result of the disaster. Therefore, the repair and/or replacement of these components is eligible for Public Assistance funding.
Nine Large Burners
The RA found that the burners were not flooded, that the damages were attributable to the age of the burners, and the Applicant did not demonstrate that the burners complied with applicable air emission standards in effect at the time of the disaster. The Applicant has not demonstrated that the burners were flooded or required repairs as a result of the disaster. In the January 21, 2009 Technical Memorandum, B & C indicated that the burners were not flooded but that replacing the burners would allow the Applicant to meet updated air pollution regulations and permits. The Applicant further indicated that the incinerator would have difficulty meeting air emission standards if the burners were not replaced. As stated above, public assistance applicants need to demonstrate that repairs were required as a result of the disaster, not that repairs are required to meet air emission standards. The Applicant has not shown that repair of the nine burners was required as a result of the disaster. Therefore, repair or replacement of the nine burners is not eligible for Public Assistance funding.
Gas and Air Piping Valves
The RA found that the gas and air piping valves were not flooded and did not require repairs as a result of the disaster. The Applicant indicated that when it restarted the incinerator after replacing the damaged PLC components, the gas and air piping valves experienced various operational issues. While the Applicant asserts that the operational issues occurred because the non-damaged components were not able to function properly with the newer, replaced components, it did not provide adequate documentation to demonstrate the gas and air piping valves were damaged or required repair as a result of the disaster. None of the affidavits or the reports submitted with the second appeal sufficiently addressed damage to the gas and air piping valves. Therefore, repair of the gas and air piping valves is not eligible for funding.
The Applicant provided information necessary to demonstrate that repairs to both the WHRB and the LPO are required as a result of damage caused by the disaster. As such, repair of the two components in question are eligible for public assistance funding. The remaining two components, the nine burners and the gas and air piping valves, are ineligible for public assistance funding.
 Before the disaster, the Applicant incinerated most of the sludge but a portion was stockpiled, hauled away and land applied for agricultural purposes. In PW 2774, FEMA captured costs and obligated funding for sludge hauling and disposal during emergency repairs at the facility. The Applicant requested additional funding for sludge hauling and disposal while the Applicant was making permanent repairs to the facility.
 Page 36 of the Public Assistance Guide, FEMA 322, dated June 2007.
 On second appeal, Applicant re-submitted some documents that were part of its first appeal including instructions for the cold shutdown of the incinerator and a January 21, 2009 Brown and Caldwell technical memorandum.
 Jerry Dietsch Affidavit, dated November 27, 2012 (submitted with the second appeal).
 Adam Keckler Affidavit, dated February 21, 2012 (submitted with the first appeal).
 Brian Copeland Affidavit, dated February 22, 2012 (submitted with the first appeal).
 Roy Hesemann Affidavit, dated September 28, 2012 (submitted with the second appeal).
 Brian Copeland Affidavit, dated February 22, 2012 (submitted with the first appeal).
 September 13, 2011 Letter from the Applicant to the Grantee (submitted with the first appeal).