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Operation of Fixed Generators

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster4077-DR-OH
ApplicantCity of Lima
Appeal TypeSecond
PA ID#003-43554-00
PW ID#1034
Date Signed2014-03-13T00:00:00

Second Appeal: City of Lima, FEMA-4077-DR-OH: Operation of Fixed Generators

Conclusion:  The City of Lima’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 City of Lima (Applicant) utilized three portable and six fixed generators during the event to support emergency protective measures at the waste water treatment plant, street department, a lift station, water treatment plants, a fire station, the Hall of Justice, and the public works building.  FEMA prepared Project Worksheet (PW) 1034 for $41,296 to fund usage of the portable generators, force account labor costs, and fuel for the fixed generators.  FEMA did not reimburse the usage of the six fixed generators based on FEMA’s schedule of equipment rates.  The Applicant submitted a first appeal for $50,103 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 built in to 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 Discussed

  • 42 U.S.C. § 5170b(3)

  • 44 CFR § 206.226

  • Public Assistance Guide, FEMA 322 (June 2007), pages 54-55, 85

  • Public Assistance Digest, FEMA 321 (Jan 2008), page 135

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 13, 2014

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

Re: Second Appeal – City of Lima, PA ID 003-43554-00, Operation of Fixed Generators, FEMA-4077-DR-OH, Project Worksheet (PW) 1034

Dear Ms. Dragani:

This is in response to your letter dated July 3, 2013, which transmitted the referenced second appeal on behalf of the City of Lima (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $50,103 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 Allen County, causing downed utility lines and widespread power outages for multiple days.  The City of Lima (Applicant) utilized three portable and six fixed generators during the event to support emergency protective measures at the waste water treatment plant, street department, a lift station, water treatment plants, a fire station, the Hall of Justice, and the public works building.  FEMA prepared Project Worksheet (PW) 1034 for $41,296 to fund the force account labor costs associated with emergency protective measures, fuel for the fixed generators, and usage of the portable generators based on FEMA’s schedule of equipment rates.  Because six of the generators were fixed, FEMA did not reimburse the use of those six generators based on FEMA’s equipment rates, but reimbursed the fuel costs only ($14,657). 

First Appeal

The Applicant submitted a first appeal for $50,103 in a letter dated February 6, 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 built into the cost of operating the facility.

Second Appeal

The Applicant submitted a second appeal for $50,103 in a letter dated June 5, 2013, reiterating its request for FEMA to apply equipment rates in reimbursing the fixed generators usage.  The Applicant states that it does not include depreciation or ownership costs as part of its operating budget for fixed generators, and that it does not budget any general funds for operation and maintenance of the stationary generators.  The Grantee supports the Applicant’s second appeal.  The Grantee’s second appeal 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 may be eligible.”[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 built into the operating and ownership costs of the facility that the fixed generator is installed to support.  Accordingly, FEMA will reimburse fuel costs for fixed generators if they are used to perform eligible emergency work because those are the only increased costs incurred by the applicant as a direct result of the event.  This policy distinction applies to fixed generators as a matter of principle regardless of whether an individual Applicant includes depreciation or ownership costs of a fixed generator as part of its operating budget for fixed generators or specifically budgets general funds for operation and maintenance of them.

The facts of 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.  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 on PW 1034.


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

[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).