Legal Responsibility

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster1909-DR-TN
ApplicantClarksville Gas and Water
Appeal TypeSecond
PA ID#125-U00B3-00
PW ID#2418
Date Signed2015-03-31T00:00:00

Conclusion:  Pursuant to 44 C.F.R. § 206.223(a), the Applicant sufficiently demonstrated that it was legally responsible for two exterior high-voltage transformers and related switches located within its wastewater treatment plant at the time of the disaster.  Accordingly, the cost associated with replacing the transformers and related switches is eligible for PA funding. 

Summary Paragraph

Beginning on April 30, 2010, severe storms, tornadoes, heavy rains, high winds, flooding, and flash flooding affected the City of Clarksville.  FEMA prepared PW 2418 to document damage to the Administration, Laboratory, and Mechanical Building (Facility) within the Applicant’s wastewater treatment plant.  FEMA denied funding for the Facility because, using GPS coordinates, it determined that the Facility was found to be within the boundaries of a United States Army Corps of Engineers (USACE) easement.  In the first appeal, the Applicant asserted that the easement did not contain an indemnification provision in favor of the United States.  In addition, the Applicant asserted that two transformers and related switches were excluded from the scope of work in PW 2418, but were eligible for PA funding.  As such, the Applicant requested an additional $82,000.00 in funding for the cost of the transformers and related switches.  The Regional Administrator (RA) partially approved PW 2418 for $3,005,187.90 for replacement of the Facility.  However, the RA determined that the Applicant was not legally responsible for the transformers and related switches and denied funding associated with their replacement.  In the Applicant’s second appeal, it asserts that it owned the transformers; thus, it is legally responsible for them.


Authorities and Second Appeals

  • Stafford Act § 406, 42 U.S.C. § 5172.
  • 44 C.F.R. § 206.223(a).
  • OMB Circular A-87, 2 C.F.R. § 225.
  • PA Guide, at 23, 30-31.

Headnotes

  • Pursuant to 44 C.F.R. § 206.223(a), an eligible item of work must be the legal responsibility of the Applicant. 
  • In addition, the PA Guide provides that legal responsibility can be conveyed through a lease or other legal instrument.
    • Based on a signed and notarized affidavit and other supporting documents, the Applicant demonstrated that it was legally responsible for the replacement of the transformers and related switches.     
  • Pursuant to OMB Circular A-87, allowable costs must be, among other things, reasonable.
    • Using RS Means, FEMA established that the Applicant’s request for $82,000.00 to replace two high-voltage transformers and related switches is reasonable. 

Appeal Letter

March 31, 2015

David Purkey
Director
Tennessee Emergency Management Agency
3041 Sidco Drive, P.O. Box 41502
Nashville, Tennessee 37204-1502

Re: Second Appeal – Clarksville Gas and Water, PA ID 125-U00B3-00, FEMA-1909-DR-TN, Project Worksheet (PW) 2418 – Legal Responsibility

Dear Mr. Purkey:

This is in response to a letter from your office dated July 10, 2014, which transmitted the referenced second appeal on behalf of Clarksville Gas and Water (Applicant).  The Applicant appealed a total of seven PWs; the remaining PWs will be addressed in separate determination letters.  Regarding PW 2418, the Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $82,000.00 in Public Assistance (PA) funding for two exterior high-voltage transformers and related switches located within its wastewater treatment plant.

As explained in the enclosed analysis, I have determined that, pursuant to 44 C.F.R. § 206.223, the Applicant is legally responsible for the transformers and related switches.  In addition, the Applicant’s request for $82,000.00 in PA funding to replace the transformers and related switches is reasonable.  Therefore, I am granting the appeal.  By copy of this letter, I am requesting the Regional Administrator take appropriate action to implement this determination. 

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

Sincerely,

/s/


William W. Roche
Director
Public Assistance Division

Enclosure

cc:  Garcia Szczech
       Regional Administrator
       FEMA Region IV

Appeal Analysis

Background

Beginning on April 30, 2010, severe storms, tornadoes, heavy rains, high winds, flooding, and flash flooding affected the City of Clarksville.  FEMA prepared PW 2418 to document disaster-related damage to the Administration, Laboratory, and Mechanical Building (Facility) within the Clarksville Gas and Water’s (Applicant) wastewater treatment plant.  Pursuant to FEMA policy regarding repair versus replacement, FEMA determined that the Facility was eligible for replacement.  During the preparation of PW 2418, FEMA, using GPS coordinates and United States Army Corps of Engineers (USACE) overlay flooding boundary maps, determined that the Facility was located within a USACE easement.  Subsequently, FEMA denied all costs to replace the Facility. 

First Appeal

In the first appeal letter, dated June 24, 2011, the Applicant asserted that, while the Facility was located within the USACE easement boundary line, the easement did not include a “hold harmless” provision in favor of the United States Government.  In addition, the Applicant asserted that the easement did not preclude FEMA from providing PA funding for disaster-related claims.  Since FEMA previously determined that the work was a result of the disaster and otherwise eligible for PA funding, the Applicant argued that $3,005,187.90 should be reinstated to PW 2418.  The Applicant also requested additional funding for two exterior high-voltage transformers and related switches excluded from the original scope of work in PW 2418. 

In a letter dated May 13, 2014, the Region IV Regional Administrator (RA) partially granted the appeal, approving $3,005,187.90 for costs associated with the replacement of the Applicant’s Facility, because he concurred with the Applicant’s position that the provisions of the USACE easement did not apply to the issue of eligibility regarding PW 2418.  However, the RA denied $82,000.00 in costs associated with the two transformers and switches maintained by the Applicant because it could not demonstrate ownership.  The RA stated, “[t]he appeal… did not provide the level of information necessary to make eligibility determinations on the transformers and switches, therefore these costs have been determined ineligible unless the Subgrantee is prepared to provide ownership documents at project close-out.”

Second Appeal

In the second appeal, dated June 30, 2014, the Applicant again requests reimbursement for the two transformers and related switches in the amount of $82,000.00.  With the second appeal, the Applicant provides a notarized affidavit from the Clarksville Department of Electricity’s (CDE) General Manager and other documentation to demonstrate legal responsibility.[1]  In the affidavit the General Manager explains that CDE conveyed the transformers to the Applicant in June 2000.  

Discussion

Legal Responsibility

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), Section 406, authorizes FEMA to make contributions to an eligible Applicant to restore eligible facilities on the basis of the design of such facilities as they existed immediately prior to the disaster.[2]  In addition, if equipment and furnishings located within a facility are damaged beyond repair, comparable items are eligible as replacement items.[3]  Pursuant to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.223(a), an eligible item of work must be required as the result of the disaster event, be located within a designated disaster area, and be the legal responsibility of the applicant.[4] The Applicant has fulfilled the first two requirements of § 206.223(a); the issue on appeal is whether the Applicant is legally responsible for the replacement of the transformers.  The legal responsibility to repair a facility usually resides with the owner of the facility, unless the owner has transferred the responsibility to another party by lease or other legal instrument.[5]

The Applicant asserts that it purchased the transformers from CDE in 2000 as part of a renovation project.[6]  As Work Order Number 1215, dated February 22, 2001, demonstrates, the two transformers at issue were located within the Applicant’s wastewater treatment plant.[7]  The Applicant also submitted a notarized affidavit from CDE’s General Manager, in which the General Manager affirms that CDE sold the two transformers to the Applicant prior to the disaster.  In addition, the General Manager states that a standard CDE practice is that all equipment behind the primary electric meter belongs to the customer (i.e., in this instance, the Applicant).  The Applicant admits that copies of the invoices related to the purchase cannot be located; however, the Applicant submitted records that summarize the invoices related to the sale, including History Inquiry statements.[8]  Finally, the Applicant provides a 2001 memorandum of costs associated with the wastewater treatment plant expansion project.  It states, “[t]his cost includes poles, wire, underground cables, and metering equipment to complete the project.” 

FEMA notes that the Applicant has not provided precise documentation demonstrating its legal responsibility for the two transformers for which it seeks reimbursement.  However, FEMA also recognizes that precise documentation is not always available.  Based on the totality of the information provided (i.e., the location of the transformers behind the Applicant’s Facility, the signed and notarized affidavit, Work Order Number 1215, and the History Inquiry statements), FEMA concludes that the Applicant’s documentation is sufficient to demonstrate that it was legally responsible for the transformers at the time of the disaster.  As such, replacement of the transformers is eligible for PA funding.

Allowable Costs

Pursuant to the Stafford Act § 406, FEMA is authorized to provide reimbursement for the associated expenses incurred by a local government during the repair, restoration reconstruction, or replacement of a facility damaged as the result of a declared disaster.[9]  Generally, costs that can be directly tied to the performance of eligible work are eligible for FEMA reimbursement.[10]  However, these costs must, among other things, be reasonable and necessary to accomplish the work, comply with applicable federal, state, and local laws, regulations and procurement requirements, and be adequately documented.[11]  Although the Applicant did not submit invoices, receipts, or other documentation that state the cost of the two transformers, FEMA researched the average cost of transformers[12] and determined that the cost requested by the Applicant is reasonable.[13]  Accordingly, the cost to replace the transformers in the Applicant’s Facility is eligible for PA funding.

Conclusion

The Applicant provided sufficient documentation to demonstrate the replacement of two transformers and related switches is eligible for PA funding.  In addition, the requested cost associated with these items is deemed reasonable.   



[1] General Manager Affidavit, notarized June 23, 2014 [hereinafter Affidavit].

[2] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406, 42 U.S.C. § 5172 (2007).

[3] See 44 C.F.R. § 206.226(h) (2009).

[4] 44 C.F.R. § 206.223(a).

[5] See generally Public Assistance Guide, FEMA 322, at 23, 30-31 (June 2007) [hereinafter PA Guide].

[6] See Affidavit (stating that, in conjunction with 2000 and 2001 upgrades, the Applicant asked CDE to move the primary electric meter at the wastewater treatment plant, placing it before two transformers and switch gear equipment servicing the plant.)

[7] Second Appeal, Clarksville Gas and Water, FEMA-1909-DR-TN, at Exhibit 2 (June 30, 2014).

[8] Id.

[9] Stafford Act § 406(a)(1)(A), 42 U.S.C. § 5172.

[10] PA Guide, at 40.

[11] See Office of Mgmt. & Budget, Exec. Office of the President, OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, at Attachment A  (2004) (codified at 2 C.F.R. § 225).

[12] Using RS Means, FEMA researched the average cost for high-voltage transformers.  The range in cost for these transformers is from $20,000 to $147,000 per transformer.  The Applicant requested $41,000 per transformer which falls on the low end of that range. 

[13] See PA Guide, at 41  (explaining that FEMA will generally analyze cost reasonableness by use of historical documentation for similar work, average costs for similar work in the area, published unit costs from national estimating databases, and FEMA cost codes).

 

Last updated