Damage Surveys

Conclusion:  The Applicant failed to demonstrate that the dry runs served to lessen or eliminate an immediate threats to the public or improved property pursuant to 44 C.F.R. § 206.225.  In addition, the cost associated with the dry runs was not necessary or reasonable in accordance with 2 C.F.R. Part 225.      

Summary Paragraph

Hurricane Wilma caused a large amount of debris to be deposited on the roadways throughout Broward County, Florida.  Following the storm, the Applicant conducted dry runs with its buses to survey bus routes and bus stops for debris and unsafe conditions.  FEMA prepared PW 8296 in the amount of $432,153.11 to fund costs associated with the force account labor used to conduct the dry runs.  At final inspection, FEMA determined that the dry bus run activity was ineligible as the work related to damage assessment and was not cost effective.  FEMA de-obligated PW 8296 entirely and denied an additional $9,716.15 in costs claimed at final inspection.  In its first appeal, the Applicant asserted that the dry runs ensured that bus routes and stops were safe.  In addition, the Applicant asserted that the costs associated with its survey of damage were reasonable pursuant to 2 C.F.R. Part 225.  The Region IV Regional Administrator (RA) denied the first appeal based on 44 C.F.R. § 206.225(3)(a)(i)-(ii) because the Applicant did not present information to support its assertion that the dry runs served to eliminate or reduce threats to the public or improved property.  In its second appeal, the Applicant asserts that the costs associated with its dry runs comply with 44 C.F.R. § 206.225.  Additionally, the Grantee asserts in its transmittal that the dry runs were safety inspections, not preliminary damage assessments. 

Authorities and Second Appeals

• Stafford Act § 406, 42 U.S.C. § 5172.
• 2 C.F.R. § 225.
• 44 C.F.R. § 206.206.
• 44 C.F.R. § 206.225.
• PA Guide, at 41, 47-52 and 58.

Headnotes

• Pursuant to 44 C.F.R. § 206.206, the Grantee must submit appeals from an Applicant, with a written recommendation, to the RA within 60 days of receipt.
  • The Grantee submitted the Applicant’s second appeal nearly two years after the regulatory timeframe, thus, making the second appeal untimely.
• Pursuant to 44 C.F.R. § 206.225, emergency protective measures that serve to eliminate or lessen immediate threats to life, public health or safety, or eliminate or lessen immediate threats of significant additional damage to improved public or private property are eligible for Public Assistance (PA) funding.
  • The dry runs are not eligible work under the PA Program because the activity is classified as a survey of damage.
• Pursuant to 2 C.F.R. Part 225, costs must be necessary and reasonable to be eligible for PA funding.  According to the PA Guide, a cost is reasonable if it is both fair and equitable for the type of work being performed.
  • The Applicant failed to demonstrate that the costs associated with the dry runs were reasonable or cost effective.

Background

In 2005, Hurricane Wilma caused a large amount of debris to be deposited on the roadways throughout Broward County, Florida.  Following the storm, the Broward County School Board (Applicant) conducted dry bus runs to survey its bus routes and bus stops for debris and unsafe conditions.  The dry bus runs were conducted by force account labor in buses owned by the Applicant. The force account labor did not, nor were they expected to, remove, eliminate or lessen the amount of debris found on the roadway. FEMA obligated Project Worksheet (PW) 8296 in the amount of $432,153.11 to fund costs associated with the force account labor used to conduct the dry runs.  At final inspection, FEMA determined that the dry bus run activity was ineligible for Public Assistance (PA) funding as the work related to a damage assessment and was not cost effective.  FEMA de-obligated PW 8296 entirely and denied an additional $9,716.15 in costs claimed at final inspection.

First Appeal

In its first appeal dated June 23, 2011, the Applicant requested $441,869.16[1] for costs associated with dry runs that it conducted after Hurricane Wilma.  The Applicant asserted that the dry runs ensured that the bus routes and stops were safe for driver and student occupation.  In addition, the Applicant asserted that the costs associated with its survey of damage were reasonable pursuant to Title 2 of the Code of Federal Regulations (C.F.R.), Part 225.[2]  The Applicant argued the costs incurred for the dry runs were ordinary and necessary for the operation of the government unit, it ensured that all sound business practices and regulations were met, the costs associated with the work were based on market prices for comparable services, and the costs were the result of reasonable and necessary safety operations.

In his May 11, 2012 first appeal decision, the Region IV Regional Administrator (RA) denied the first appeal based on 44 C.F.R. § 206.225 because the Applicant did not present information to support its assertion that the dry runs served to eliminate or reduce threats to the public or improved property. 

Second Appeal

In its second appeal dated August 9, 2012, the Applicant again requests $441,869.11 for costs it incurred for the dry runs.  The Applicant argues that the costs associated with its dry runs comply with 44 C.F.R. § 206.225.  In addition, the Applicant asserts that the dry runs ensured that the bus routes and stops were clear of hazards so that normal operations could resume and the Applicant could determine threats to school children, the buses, and re-route buses to alternative paths.

In its letter, dated June 17, 2014, the State of Florida Division of Emergency Management (Grantee) argues that the dry runs were safety inspections, not preliminary damage assessments.  The Grantee supports its assertion by citing  FEMA policy guidance which states that a safety inspection can be eligible for Public Assistance funding “if such inspections are directly related to the disaster and are necessary to establish if a damaged structure poses an immediate threat to life, public health, or safety.”  The Grantee asserts that, while safety inspections are most commonly considered eligible for building repair work, FEMA should extend its policy to the dry runs at issue in this appeal.  Finally, the Grantee asserts that the Applicant needed to conduct the dry runs to comply with its lawful duty to protect each student.  

Discussion

Appeal Timeliness

The Robert T. Stafford Act § 423 (Stafford Act) requires an Applicant to appeal a denial regarding eligibility for, from, or amount of Public Assistance within 60 days after the date on which it was notified of the denial.[3]  Pursuant to 44 C.F.R. § 206.206, which implements that provision, the Grantee must submit appeals from an Applicant, with a written recommendation, to the Regional Administrator within 60 days of receipt.[4]  Neither the Stafford Act nor 44 C.F.R. provides FEMA authority to grant time extensions for filing second appeals.[5]

Here, the Applicant submitted a second appeal dated August 9, 2012.  The Grantee submitted its written recommendation, with the Applicant’s second appeal attached, to FEMA in June 2014, two years after FEMA’s first appeal determination.  As such, the Applicant’s second appeal failed to meet the procedural requirements of 44 C.F.R. § 206.206(c)(2) and consequently is denied.  Timeliness aside, as described below, the second appeal also is not compelling on the substantive issues and would otherwise be denied. 

Work Eligibility

According to 44 C.F.R. § 206.225, emergency protective measures to save lives, protect public health and safety, and protect improved property are eligible for FEMA funding if the protective measures eliminate or lessen immediate threats to life, public health or safety, or eliminate or lessen immediate threats of significant additional damage to improved public or private property through measures which are cost effective.[6]  Examples of emergency protective measures include search and rescue, emergency medical care, emergency mass care and shelter, demolition and removal of damaged public and private buildings that pose an immediate threat, construction of temporary levees, berms, or dikes, and removal of health and safety hazards.[7]  Prudent actions taken by a community to ensure the continuation of essential public services are generally eligible for PA funding.[8]  

The Applicant asserts that the dry runs were conducted to ensure that bus routes and bus stops were free of debris and other hazards in order to protect school employees and children as well as the Applicant’s buses.  However, the purpose of the dry runs was to determine the presence of debris and hazardous conditions.  The Applicant used the dry runs to confirm the existence or non-existence of debris and hazardous material, not lessen or eliminate such hazards.  Accordingly, the dry runs cannot be classified as an emergency protective measure.  FEMA classifies the Applicant’s activity as a survey of damage.  Damage surveys are not eligible for Public Assistance because the Applicant’s administrative allowance covers this type of work.[9] While FEMA may pay for inspections to determine the extent of disaster-related damage and method of repair,[10] as with all eligible work, the Applicant must demonstrate that it was legally responsible for the item of work at the time of the disaster.[11]  The Applicant failed to demonstrate that it was legally responsible for removing debris or hazardous material present along the bus routes or restoring the roads to an operable condition. 

Allowable Costs

Pursuant to 2 C.F.R. Part 225, to be an allowable a cost must meet a two prong test. [12]  First, the cost must be necessary.[13]  As discussed above, FEMA's authority in the proper administration of grant funds is limited to, in this instance, projects that lessen or eliminate an immediate threat to life.[14]  In reading 2 C.F.R. Part 225 together with 44 C.F.R. § 206.225, the cost of covered work must be necessary to lessen or eliminate an immediate threat. 

Regarding PW 8296, lessening or eliminating the immediate threat would have resulted in the removal or movement of the hazard, rather than singularly identifying whether a hazard exists.  The work performed by the Applicant did not result in the removal or movement of the hazard, nor, as it was explained in the Grantee's letter dated June 17, 2014, was it intended to result in such movement or removal.  Because the work was not necessary to remove or lessen the immediate threat, the work fails the first prong of the allowable cost requirement; therefore it is ineligible for PA funding.