Labor Costs

February 23, 2012 

W. Nim Kidd, CEM

Assistant Director, Texas Department of Public Safety

Chief, Texas Division of Emergency Management

P.O. Box 4087

Austin, Texas 78773

Re:       Second Appeal–City of Port Arthur, PA ID 245-58820-00, Labor Costs, FEMA-1791-DR-TX, Project Worksheet (PW) 06329

Dear Chief Kidd:

This is in response to a letter from your office dated August 20, 2010, which transmitted the referenced second appeal on behalf of City of Port Arthur (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $36,379 for overtime costs incurred while performing emergency work.

Background

On September 13, 2008, strong wind and rain from Hurricane Ike resulted in a loss of electrical power throughout the City of Port Arthur.  FEMA prepared PW 06329 for force account labor costs for emergency work performed by the Applicant’s fire department.  FEMA denied $36,379 of the Applicant’s claimed costs based on  Recovery Policy (RP) 9525.7, Labor Costs – Emergency Work, dated November 16, 2006, which allowed reimbursement for overtime of up to 24 hours for each of the first two days and up to 16 hours for each of the following days for emergency work. 

First Appeal

In its first appeal letter dated June 26, 2009, the Applicant asserted that FEMA mistakenly included straight-time hours in determining overtime hours eligible for reimbursement.  The Applicant stated that FEMA denied reimbursement where employees worked straight-time and overtime on the same day and the total of hours worked exceeded 16 hours.  On those occasions, FEMA counted the straight-time the employee had worked on the same day and then counted any overtime hours worked.  FEMA terminated the overtime reimbursement when the employee had worked 16 hours of total work, both straight-time and overtime.  This typically resulted in four hours of reimbursement.

In a letter dated November 25, 2009, the Acting Regional Administrator denied the first appeal.  Based on RP9525.7, Labor Costs – Emergency Work, dated November 16, 2006; the Acting Regional Administrator applied straight-time hours on the scheduled days the employees worked to determine potential eligible overtime calculations.

Second Appeal

The Applicant submitted its second appeal in a letter dated June 2, 2010.  The Applicant states that since straight-time hours are not eligible under RP9525.7, Labor Costs – Emergency Work, dated November 16, 2006; FEMA should have only used overtime hours to calculate reimbursement for 24 hours for each of the first two days and up to 16 hours for each of the following days for emergency work.  The Applicant stresses that the practical effect of RP9525.7 is to penalize fire departments whose normal hours of work disqualifies reimbursement of more than four hours unless the employee is called into work on a scheduled day off.

Discussion

Under Sections 403, 407, and 502 of the Stafford Act, eligible emergency labor costs are those costs incurred by an eligible applicant while performing eligible work.  The cost of straight-time salaries and benefits of an applicant’s permanently employed personnel is not included in the cost of eligible emergency work.  However, straight-time hours are used to calculate the number of overtime hours that are eligible for reimbursement.  RP9525.7, Labor Costs – Emergency Work, dated November 16, 2006, states that reimbursement of labor costs for employees performing emergency work is limited to actual time worked, even when the applicant is contractually obligated to pay for 24-hour shifts.  FEMA will reimburse up to 24 hours for each of the first two days, and up to 16 hours for each of the following days for emergency work.  Although the Applicant’s force account labor followed its assigned work schedule, FEMA reimburses actual time worked. Consequently, maximum overtime reimbursement for each of the first two days would be 12 hours and for the following days 4 hours.  This is the method the Region used to calculate the emergency work force account labor costs on PW 06329.

Conclusion

I have reviewed the information submitted with the appeal and have determined that the Regional Administrator’s decision in the first appeal is consistent with Public Assistance regulations and policy.  Accordingly, I am denying the second appeal.

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

Sincerely,

/s/

Elizabeth A. Zimmerman

Deputy Associate Administrator

Office of Response and Recovery

cc:   Tony Russell

        Regional Administrator

        FEMA Region VI