Public Assistance Guide

FEMA 322 / June 2007

Chapter 2: Eligibility

Table of Contents Foreword Acronyms Chapters: 1 - 2 - 3 - 4 - 5

Governing Documents
The PA Program is based on a hierarchy of statute, regulations, and policies. The statute is the Federal law that authorizes the program. From the statute, regulations are published to further define program scope, and policies are written to apply the statute and regulations to specific situations. These authorities govern the eligibility criteria through which FEMA provides funds for Public Assistance.

Additional statutes, Executive Orders (EOs), regulations, and policies that affect the administration of the PA Program are described in Chapter 4.

Statutes
Statutes are laws passed by the U.S. Congress and signed by the President. They cannot be changed by FEMA or any other government agency. The law that authorizes the PA Program is the Stafford Act (Appendix A). The basic provisions outlined in the Stafford Act:

Regulations
Regulations are rules designed to implement a statute based on an agency's interpretation of that statute. FEMA rules provide procedural and eligibility requirements for program operations. Typically, they are published through an official process that allows for public comment. Regulations have the same effect as law and must be complied with once they are published in final form. The regulations governing the PA Program, outlining program procedures, eligibility, and funding, are published in Title 44 of the Code of Federal Regulations (CFR) Part 206, Subparts C and G-L (Appendix B). Additionally, regulations regarding grant administration and allowable costs can be found in 44 CFR Part 13 (Appendix C) - Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments.

Policies
Policies are issued by FEMA Headquarters. They clarify or provide direction for specific situations that arise in the implementation of Stafford Act provisions and various regulations that apply to the PA Program. Policies may be subject-specific (for example, applying eligibility criteria to landslides) or specific to a single disaster (for example, FEMA Policy 9524.1, Welded Steel Moment Frame Policy that was originally developed for the Northridge Earthquake). FEMA issues policies so that the regulations are interpreted consistently across the nation and from disaster to disaster. Policies are published in publications such as this and in the 9500 series policy publications. They can be obtained through the following sources:

The remainder of this chapter discusses the basic eligibility criteria for Public Assistance funding, as outlined in the governing documents. These criteria are presented in terms of the following four components: applicant, facility, work, and cost. These sometimes are referred to as the four building blocks.

Applicant
Following a disaster declaration by the President and a designation for Public Assistance grant funding by FEMA, assistance for response and recovery operations is made available to eligible applicants. Four types of entities are eligible applicants: State governments, local governments, Indian Tribes or authorized Tribal organizations and Alaskan Native Villages, and PNP organizations. Applicants that are successful in obtaining assistance are formally identified as subgrantees. In common usage, the terms "applicant" and "subgrantee" are often used interchangeably.

State and Local Governments
State and local government agencies are eligible applicants for Public Assistance. Examples of State departments include transportation, environmental resources, parks and recreation, air and water quality, and solid waste and hazardous materials. A multitude of local governments are eligible, including towns, cities, counties, municipalities, townships, local public authorities, councils of governments, regional and interstate government entities, agencies or instrumentalities of local governments, special districts or regional authorities organized under State law, school districts, and rural or unincorporated communities represented by the State or a political subdivision of the State. (See FEMA Policy 9521.5, Eligibility of Charter Schools.)

The general principle for eligibility is that the facilities must be open to the public. If a local governmental entity forms a non-profit organization under IRS 501(c), the new entity is defined as a PNP organization for treatment under the PA Program.

Indian Tribes
Federally recognized Indian Tribal governments, including Alaska Native villages and organizations, are eligible applicants. Privately owned Alaska Native corporations are not eligible applicants. (See FEMA Policy 9521.4, Administering American Indian and Alaska Native Tribal Government Funding.)

Generally Indian Tribes are considered applicants or subgrantees and receive grant funds from the State (Grantee). In some States, however, State regulations prohibit the State from acting as Grantee for an Indian Tribe. In such cases or upon their own choice, the Tribal government may act as its own Grantee. The Tribe must apply to the FEMA RA to become its own Grantee.

An Indian Tribal government that chooses to act as its own Grantee becomes responsible for the entire non-Federal share of the Public Assistance grant. In addition, the Tribal government will be required to comply with the following conditions in order to receive funding:

PNP Organizations
PNP organizations that own or operate facilities that provide certain services of a governmental nature are eligible for assistance. These organizations, their facilities, and their services must meet additional eligibility criteria beyond those that apply to governmental applicants. (See FEMA Policy 9521.3, Private Nonprofit Facility (PNP) Eligibility.)

Qualifying PNPs are those that provide education, medical, custodial care, emergency, utility, certain irrigation facilities, and other essential governmental services. Essential governmental services are:

With the exception of educational, emergency, medical, and custodial care facilities, an eligible facility is only the location from which the qualifying service is delivered. Eligible PNPs are identified in 44 CFR §206.221(e), summarized in the list of PNP Facilities, and further described under PNP Eligible Services.

In order to be eligible for Public Assistance, PNP organizations are required by law and regulation to provide certain types of services and to follow special procedures. PNP organizations must have an effective ruling letter from the Internal Revenue Service at the time of the disaster granting tax exemption under Sections 501(c), (d), or (e) of the Internal Revenue Code, or satisfactory evidence from the State that the organization is a non-revenue producing, nonprofit entity organized or doing business under State law. Further, the specific facility for which the PNP organization is requesting funding must be used primarily for an eligible purpose consistent with the services identified above and, generally, be open to the public.

Certain types of PNPs are not required to be open to the public. These are educational, utility, emergency, medical, or custodial care services, as further defined in 44 CFR §206.221(e). For instance, a school run by a religious-oriented PNP that restricts enrollment to students of a particular religious faith will be eligible for assistance if the school is primarily used for secular educational purposes. All other types of PNPs are required to be open to the public. These include eligible irrigation facilities as well as those providing certain essential governmental services to the general public as defined in 44 CFR §206.221(e)(7).

Examples of ineligible PNPs are those restricted to:

To be open to the general public, access to the use of PNP services must not be restricted. Membership requirements or restrictions on services that do not disqualify PNPs for Public Assistance include:

Application Requirements for PNPs
Emergency Work. All PNPs that are eligible for FEMA assistance, as described above and in 44 CFR §206.221(e), apply directly to FEMA through the State for emergency assistance under 44 CFR §206.225.

Permanent Work. Eligible PNPs seeking reimbursement from FEMA for permanent repairs and restoration apply for disaster assistance according to the following requirements, depending on whether their facility is deemed to provide "critical" or "non-critical" services by the Stafford Act:

The SBA loan application process for "non-critical" PNP services will generate one of three outcomes:

  1. If the PNP is declined for an SBA loan, then the PNP may apply to FEMA for Public Assistance.
  2. If the SBA loan fully covers eligible damages from the disaster event, then no assistance from FEMA is available.
  3. If the maximum loan for which the facility is eligible does not fully cover damage eligible under the PA Program, then the PNP may apply to FEMA for the difference.

If an applicant applies for an SBA loan, is approved, and opts not to take the loan, the applicant still may be eligible for funding by FEMA for the difference between the SBA loan and eligible costs.

PNPs providing either critical or non-critical services should submit claims to insurance carriers and apply to FEMA for uncovered emergency assistance (debris clearance and emergency protective measures). The requirement to apply for an SBA loan only applies to PNPs with non-critical services seeking assistance for permanent repair or restoration of damaged facilities.

PNPs with facilities that provide non-critical services (see PNP Facilities) are responsible for taking these actions as soon as possible after a disaster has damaged their facilities:

  1. Apply for FEMA assistance. It is important that a PNP apply to FEMA immediately after a disaster so that FEMA can inspect the disaster damages and prepare a Project Worksheet (PW). The PW will be held by FEMA until a loan decision is made by the SBA.
  2. Apply for a disaster loan from the SBA. If an SBA loan is declined or does not fully cover the damage eligible under the PA Program, the PNP may be eligible for FEMA assistance. In such cases, FEMA may not be able to fairly estimate the damages unless the PNP had applied to FEMA shortly after the disaster occurred (see A above).

When a PNP receives a loan determination from the SBA and the loan has been declined or will not fully cover the damages, the PNP should immediately notify the State and the State should immediately notify FEMA in order to reactivate the PNP's request for Public Assistance. The SBA typically provides FEMA a copy of the loan determination, but the PNP must notify FEMA of its intention to seek disaster assistance.

Figure 1 depicts the application process for PNP applicants.

Figure 1 is a flowchart depicting the application process for PNP Applicants, from determination of eligibility to obligation of eligible PWs.

PNP Eligible Services
PNP Education. Educational institutions are defined in terms of primary, secondary, and higher education schools. For primary and secondary schools, an educational institution is a day or residential school that provides primary and secondary education as determined under State law. This generally means that the school satisfies State requirements for compulsory attendance. For higher education facilities, an educational institution is defined as an institution in any State that:

A higher education institution is also defined as any school that provides not less than a one-year training program to prepare students for gainful employment in a recognized occupation and that meets the provisions of the criteria set forth in the first, second, fourth and fifth bullets above.

Organizations that offer classes that qualify for credit at an accredited institution but do not meet the above defining requirements are not eligible applicants.

Eligible educational facilities include buildings, housing, classrooms plus related supplies, equipment, machinery, and utilities of an educational institution necessary or appropriate for instructional, administrative, and support purposes. They need not be contiguous. Buildings, structures, or related items used primarily for religious purposes or instruction are not eligible facilities.

PNP Medical. A medical facility is any hospital, outpatient facility, rehabilitation facility, or facility for long-term care, as defined below. A medical facility is also any facility similar to those listed below that offers diagnosis or treatment of mental or physical injury or disease. Eligible components include the administrative and support facilities essential to the operation of the medical facility, even if not contiguous.

Hospitals include general, tuberculosis, and other types of hospitals and related facilities, such as laboratories, outpatient departments, nursing home facilities, extended care facilities, facilities related to programs for home health services, self-care units, and central service facilities operated in connection with hospitals. This category also includes education or training facilities for health profession personnel operated as an integral part of a hospital. A medical organization that primarily furnishes home-based care is not considered a hospital under this definition.

Outpatient facilities are defined as facilities located in or apart from a hospital for the diagnosis or treatment of patients who are not actually admitted to a hospital. Such a facility may be one operated in connection with a hospital, or one in which patient care is under the professional supervision of a doctor licensed in the State.

Rehabilitation facilities are defined as facilities that are operated for the purpose of assisting the rehabilitation of disabled persons through a program of medical evaluation and services; and for psychological, social, or vocational evaluation and services that are under competent professional supervision. The major portion of these services should be furnished in the facility.

Facilities for long-term care are defined as facilities providing inpatient care for convalescent or chronic disease patients who require skilled nursing care and related medical services. Such facilities may be in a hospital, operated in connection with a hospital, or be in a location where services performed are under the professional supervision of a doctor licensed in the State, e.g., a nursing home or hospice.

Medical office buildings that are owned by PNP organizations but contain offices leased to for-profit practices of doctors and to other ineligible services are subject to special eligibility criteria. If the for-profit entities lease more than 50 percent of the building, the building is not eligible for Public Assistance. However, if at least 50 percent of the building is used for medical service activities associated with the PNP organization, FEMA will estimate damages to the entire facility, not just to the portion occupied by the eligible service/ However, such assistance would be pro-rated based on the percentage of space occupied by the PNP organization. Contents within the ineligible space (that are occupied by the for-profit services) would not be eligible for any assistance. See PNP Mixed-Use Facilities for further discussion and examples regarding mixed-use facilities. For example:

A medical office building is damaged during a declared event, and the restoration costs are estimated to be $100,000. If 60 percent of the floor space in the building is used by a PNP organization and the other 40 percent is used by a for-profit practice, the maximum eligible for the project would be $60,000.

PNP Custodial Care. Custodial care facilities are those buildings, structures, or systems, including those essential for administration and support buildings, that are used to provide institutional care for persons who do not require day-to-day medical care, but do require close supervision and some physical constraints on their daily activities for their self-protection.

PNP Emergency. Emergency facilities include buildings, structures, equipment, or systems used to provide emergency services, such as fire protection, ambulances, and rescue, even if not contiguous. Damages to their buildings, vehicles, and other equipment used directly in performing emergency services, and administrative and support facilities essential to the operation of emergency services, are eligible.

PNP Utility. A utility includes buildings, structures, or systems, even if not contiguous, of energy, communication, water supply, sewage collection and treatment, or other similar public service facilities. This includes PNP irrigation facilities that provide water for essential services of a governmental nature. Eligible irrigation facilities include those that provide water for fire suppression, generating electricity, and drinking water supply. They do not include facilities that provide water for agricultural purposes. When an irrigation facility element has mixed purposes (e.g., a pump), eligible damages may include the percentage of damages related to eligible purposes, i.e., pro-rated damages.

PNP Other. Essential governmental service facilities not falling into one of the categories described above are:

Their eligible assets need not be contiguous.

Facilities that provide health and safety services of a governmental nature include:

For additional guidance regarding PNP community center and museum eligibility, See FEMA Policy 9521.1, Community Center Eligibility and FEMA Policy 9521.2, Private Nonprofit Museum Eligibility.

PNP Mixed-Use Facilities
Facilities with mixed uses must be primarily used for eligible activities. "Primarily used," means that over 50 percent of the facility space or over 50 percent of the time is used for eligible activities. FEMA will then consider damages to the entire facility, not just to the portion occupied by the eligible service. However, assistance would be pro-rated based on the percentage of space used for eligible purposes. Contents within the ineligible space would not be eligible for any assistance. (See also the discussion of "Active Use".)

For example, community centers that are open to the public and established and primarily used as gathering places for a variety of social, educational enhancement, and community service activities may be eligible. However, facilities established or primarily used for religious, political, athletic, recreational, vocational, or academic training, artistic, conference, or similar activities are not eligible.

The community center must be established by the organization's charter or by-laws, and used for regularly scheduled activities, rather than simply offering space to a community organization. It may be necessary to obtain materials such as the organizational charter, articles of incorporation, activity logs, and other documents to verify use and eligibility.

A community center includes the building and associated structures and grounds. Each component must be evaluated separately to determine eligibility. For example:

If a community center complex consists of three buildings, two that serve as eligible community centers and one that serves as an administrative building, only two buildings are eligible for Public Assistance, as the administrative building does not provide an eligible activity.

PNP Ineligible Services or Facilities
Examples of ineligible services or facilities are:

Homeowners' Associations and Gated Communities
Homeowners' Associations often prohibit access with gates and other security systems. When access is restricted, the services and facilities cannot be considered open to the general public and, therefore, are not eligible for Public Assistance funding except as described below:

Repairs of roadways, irrigation facilities, and facilities that provide governmental services other than those listed above are not eligible. PNP recreation facilities are ineligible whether the community is gated or not.

Other PNPs that offer a mix of eligible and ineligible facilities are subject to the same provisions as those described above.

Community Development Districts
Community Development Districts (CDDs) are special districts authorized under State law to finance, plan, establish, acquire, construct/reconstruct, extend/enlarge, equip, operate, and maintain systems, facilities, and basic infrastructure within their respective jurisdictions. Applicant eligibility criteria are: establishment under State law; legal responsibility for ownership, maintenance, and operation of an eligible facility; and open access to the general public.

When access is restricted by gates and other security systems, the services and facilities cannot be considered public and are not eligible for Public Assistance funding except as described below:

Public Entities
Certain "public entities" also may be eligible applicants. Public entities (e.g., Port Authority of New York and New Jersey) are those organizations that are formed for a public purpose and do not constitute one of the other forms of local government specified in the Stafford Act. To qualify for assistance, these types of applicants must receive direction and a majority of their funding from the State or one or more political subdivisions of the State. Application for Public Assistance, as with assistance for facilities that serve rural or unincorporated communities (see page 23), must be made by a State or a political subdivision of the State that will ensure the completion of work at the facility.

Private Nonprofit Facilities: Permanent Work
Eligible Facilities

Critical Services Non-Critical Services Ineligible Facilities

Facility

A facility is defined as:

A group of buildings is not a facility.

The improvement of a natural feature should be based on a documented design that changes and improves the natural characteristics of the feature. Examples of such improvements include soil stabilization measures (such as terracing) and channel realignment. The constructed improvement must result in a measurable difference in performance over the unimproved natural feature. It is then the improvement itself that must be maintained for the natural feature to be considered a facility. The maintenance of this improvement must have been done on a regular schedule and to standards to ensure that the improvement performed as designed.

Certain improved and maintained natural features of publicly owned golf courses [e.g., sand traps, drainage, and greens (without grass)] may be considered facilities.

Examples of improvements that do not qualify as eligible facilities include agricultural lands and planted trees and shrubs.

Legal Responsibility
An eligible applicant must be legally responsible for the repair of the damaged facility or the performance of eligible emergency services at the time of the disaster. FEMA may approve a post-disaster transfer of an eligible facility from one eligible applicant to another eligible applicant in extraordinary situations. If an eligible applicant did not have legal responsibility, the facility is ineligible for assistance.

Ownership of a facility is generally sufficient to establish responsibility. If an applicant owns but leases out an eligible facility, repairs to the facility are eligible, unless the lease states that the lessee is responsible for repair of the type of damage sustained or maintaining insurance for repairs. If the applicant is the lessee (tenant), repairs to that facility are not eligible unless the lease specifically states that the lessee is responsible for the repairs. Facilities owned by Federal agencies typically are not eligible for Public Assistance. Some Federal agencies, however, may have turned responsibility for operation and maintenance of facilities over to local agencies so that the local agencies have the legal/financial responsibility for operation and maintenance. These may be eligible facilities. Examples include roads constructed by the U.S. Forest Service and the Bureau of Indian Affairs, and reservoirs and water delivery systems constructed by the U.S. Bureau of Reclamation.

Often, citizens in rural or unincorporated communities will band together for the purpose of maintaining common facilities through the formation of a legal entity. Because such facilities serve the community, they may be eligible for Public Assistance, even though they are not owned by an eligible applicant, if a State or political subdivision of the State submits the request for assistance and assumes responsibility for completion of the work. The damaged facility must be included within the purpose for which the organization was formed. The purpose of the facility must have been for use by the general public and not for private or commercial uses. The facilities must be owned by a legal entity, not just an individual, in order to be eligible.

See also "Legal Responsibility" under discussion of "Work" on pages 30-31.

Other Federal Agencies
For certain types of facilities, other Federal agencies have authority to provide disaster assistance. Public assistance is not available for the permanent repair of such facilities and is limited to emergency work. This is true even when the responsible agency lacks funds. When an applicant requests Public Assistance for a facility whose repair FEMA considers to be within the authority of another Federal agency, FEMA will ask the specific Federal agency with responsibility to review the request and advise FEMA whether the work would be eligible under that agency's authority. If the work falls outside the statutory authority of that agency, FEMA may consider providing assistance for the work under the Stafford Act.

Since some agencies must perform work or let a contract for the work themselves (and are not authorized to reimburse an applicant), an applicant may find that it cannot be reimbursed for the work it did. Denial of payment by itself is not a basis for requesting Public Assistance from FEMA. However, if there is an emergency need, FEMA may consider assistance for emergency work that has been done or paid for by the applicant. Permanent work is not eligible for Public Assistance in these circumstances.

Public Assistance funding cannot be used for the non-Federal cost share of other Federal agency funding. In addition, when another Federal agency has a minimum threshold for work, FEMA will not fund the amount under the threshold.

Federal agencies that often have authority to provide disaster assistance are discussed below.

U.S. Army Corps of Engineers (USACE). The USACE has continuing authority to conduct emergency repair and permanent restoration of damaged flood control works. Flood control works are those facilities constructed for the purpose of eliminating or reducing the threat of flooding. Examples include:

Because permanent restoration of these facilities falls under the authority of the USACE, Public Assistance funding is not available. This restriction applies even if USACE funding is denied. However, Public Assistance funding may be provided for emergency measures to include debris removal and flood fighting.

Emergency repair may be eligible if, at the time of the disaster, the facility is not enrolled in the USACE program and the facility has not previously received FEMA assistance for emergency repairs. A condition of funding will be that the applicant enrolls the subject facility in the program; if it does not enroll, funding for the repair and restoration of the facility will not be provided in subsequent disasters. If the facility is already enrolled in the USACE program at the time of the disaster, or has received emergency repair assistance from FEMA previously, Public Assistance is not available for emergency repair.

The USACE also has the authority to construct and repair facilities that protect the shorelines of the United States. The USACE repair authority extends only to federally constructed shoreline works. It does not extend to locally owned facilities. Therefore, federally constructed facilities are not eligible for Public Assistance funding, but locally owned shoreline works may be eligible.

See FEMA Policy 9524.3 for discussion of levees and flood control works.

Department of Agriculture - Natural Resources Conservation Service (NRCS). Under the Emergency Watershed Protection Program, the NRCS has authority for the repair of flood control works that is similar to that of the USACE. Because of these overlapping authorities, the two agencies have a memorandum of understanding that provides guidance in dividing responsibilities when a disaster occurs. The NRCS authority applies to drainage basins of 400 square miles or less. (The USACE is responsible for flood works within a larger drainage basin.) The NRCS also has authority to remove debris from stream channels, road culverts, and bridges. Cost share requirements apply. This overlap with the FEMA program may result in FEMA's deferring to the NRCS.

Department of the Interior - Bureau of Indian Affairs (BIA). The BIA provides resources, such as road maintenance grants, that may help Tribal recovery. See also the Federal Highway Administration discussion below.

Federal Highway Administration (FHWA). The FHWA administers the Emergency Relief Program to assist State and local governments with the repair of Federal-Aid roads and bridges damaged during disasters. Funds from this program are used for facilities on routes identified by the FHWA. They include most public roads except those functionally classified as rural or minor collector routes. Rural or minor collection routes are eligible for FEMA assistance.

The Emergency Relief Program is the responsibility of the Secretary of Transportation and is available independently of major disaster and emergency declarations made by the President. Emergency Relief funds are used for both emergency and permanent work and are granted on the basis of inspections performed by FHWA and State highway department personnel. Eligible Emergency work includes debris removal even when there is no physical damage to the roads.

Because restoration of certain facilities falls under the authority of FHWA, the Stafford Act specifically excludes permanent restoration of them under the PA Program. As a result, Public Assistance for the permanent repair of these facilities is not available, even if the Emergency Relief Program is not available. Therefore, there will be times when no assistance is available for the permanent repair of some facilities.

FEMA may assist with limited emergency repairs and debris clearance on a case-by-case basis and only for those cases in which there is an immediate threat to the public health and safety.

There are certain roads on Indian reservations that have been designated by the Bureau of Indian Affairs as falling under the authority of the FHWA. These roads are subject to the restrictions discussed above. It may be necessary to consult the Bureau of Indian Affairs to determine repair responsibility of damaged roads on reservations.

FHWA is also discussed on page 68 under "Category A - Debris Removal" and page 80 under "Category C - Roads and Bridges."

Department of Housing and Urban Development. When a Public Housing Authority (PHA) is determined to be an eligible applicant, disaster assistance may be available from both FEMA and the Department of Housing and Urban Development (HUD). FEMA will provide assistance for emergency work including debris removal, demolition of unsafe structures, and any actions necessary to reduce an immediate threat to life, property, and public health and safety. In most cases, HUD will provide assistance for permanent restoration costs as authorized by the United States Housing Act of 1937. PHAs that do not qualify for assistance under the Housing Act of 1937 may apply directly to FEMA for permanent restoration work. [See FEMA Policy 9523.7, Public Housing Authorities (PHAs).]

Active Use
A facility must be in active use at the time of the disaster. Inactive facilities are not eligible. Exceptions to this requirement occur when:

This requirement is also applied to a facility that is partially occupied and partially inactive at the time of a disaster. Inactive portions would not be eligible unless the exceptions noted above apply. In all cases, the facility in question must have been eligible for assistance during the time it was in use. When the eligible repairs would benefit a non-active area, the assistance will be pro-rated according to the percentage of the facility that was in active use.

For PNP facilities, over 50 percent of the facility had to be in active use for an eligible purpose at the time of the disaster in order for the facility to be eligible. See the PNP Mixed-Use Facilities section on pages 19-20 for further discussion and examples regarding pro-rating assistance for these circumstances.

Alternate Use
If a facility is being used for purposes other than those for which it was originally designed, the eligible cost of restoration for that facility is limited to:

For example:
If an office building is being used as a storage facility at the time of a disaster, only those repairs that may be needed to restore a storage facility are eligible. Any special lighting or wall and floor finishes that are typical of an office building would not be necessary for a storage facility and, therefore, would not be eligible.

In the case of PNP facilities, the primary purpose for the establishment of the facility is important for the eligibility determination. For example:

A facility established as a church (an ineligible purpose) might be used on occasion as a homeless shelter, while its primary purpose remained as a church. It would be ineligible based on the primary or majority use.

Facilities Under Construction or Scheduled for Replacement
Typically, a facility under construction is the responsibility of the contractor until the owner has accepted the work as complete. Because a contractor is not an eligible applicant, the portion of the facility under the contractor's responsibility is not eligible for Public Assistance. In the event of damage to a facility under construction, FEMA must determine if the applicant is responsible for repairs before granting assistance. Repairs are eligible if the contract under which the work is being performed places responsibility for damage on the applicant during the construction period. Repairs are also eligible if, prior to the disaster, the applicant had accepted the work and had, therefore, assumed responsibility. If the applicant had accepted responsibility for a portion of the site, repairs to only that portion of the site would be eligible.

When a facility or portion of that facility is under contract for repair or replacement using non-Federal funds, damage to the portion of the facility under contract is eligible, but FEMA will subtract the contract amount from the cost of the work. This restriction in funding applies even if the work has not started at the time of the disaster. However, if an applicant had included a project in a budget but had not yet let a contract at the time of the disaster, that project is eligible.

If a facility has been scheduled for replacement using Federal funds and work is scheduled to begin within 12 months of the time the disaster struck, the facility is not eligible for funding. An example of a continuing program of this nature is the FHWA Bridge Replacement and Rehabilitation Program. The program provides for State or locally owned bridges to be replaced with FHWA assistance. The State sets priorities for this program and determines which bridges will be replaced. If a disaster damages or destroys a bridge scheduled for replacement, the State should be able to reschedule so that the damaged bridge can be replaced immediately rather than later in the year.

Work There are three general types of work that may be eligible, with different criteria for each: Debris removal and emergency protective measures are considered "emergency work." Permanent work includes restoring the facility back to its pre-disaster design, function, and capacity, including any codes and standards applicable to the approved work. Emergency and permanent work are discussed in the latter part of this chapter. Three general criteria apply to all types of work and to all applicants. These criteria are discussed below.

Direct Result. Work must be required as a direct result of the declared major disaster or emergency. The declaration by the President will designate the event, such as a severe storm, tornado, or flood, for which the declaration is being made. Damage that results from a cause other than the designated event, such as a pre-disaster damaging event, post-disaster damaging event, or work to correct inadequacies that existed prior to the disaster, is not eligible. Damage caused during the performance of eligible work may be eligible.

FEMA establishes an incident period after consultation with the GAR. The incident period is the time span during which the disaster-causing incident occurs. This period varies in length, depending on the type of incident. For example:
The incident period for a flood event could be several weeks because the water has to crest and recede, while the incident period for a tornado would be one day because the damage occurs in a matter of minutes.

Damage that occurs during the incident period, or damage that is the direct result of events that occurred during the incident period, is eligible. Protective measures and other preparation activities performed within a reasonable and justified time in advance of the event also may be eligible. For example, if a flood crest on a major river is forecast a few weeks in advance, sandbagging and construction of temporary levees to protect the community may be eligible if a disaster is later declared.

Protective measures to alleviate or lessen threats caused by the event may be performed after the incident period. Damage that occurs after the close of an incident period that can be tied directly to the declared event also may be eligible. Such damage may occur even a few months after the event and still be considered. For example:
A hillside becomes saturated during a declared rain or flood event, but no movement of or damage to the slope is observed during the incident period. After the incident period closes, the slope fails due to loss of strength caused by the saturated condition, causing damage to adjacent eligible facilities. Resulting damage may be eligible for Public Assistance. In some cases, a geotechnical investigation may be necessary.

Designated Disaster Area. Eligible work must be located within a designated disaster area. When a declaration of a major disaster is made for a State, FEMA will designate those counties of the State that are eligible for Public Assistance. Except for unusual situations, counties or independent cities are designated. Declarations for Tribal lands may be considered independent from surrounding communities, such that a Tribal land may receive a declaration even if the adjacent or surrounding county or city does not.

If the damaged facility is located within the designated area but the owner of the facility is from an undesignated area, the damaged facility may be eligible and that owner may apply for assistance. However, if an owner from within the designated area has a damaged facility located outside the designated area, that facility is not eligible, even if damaged by the same event.

The types of assistance available in the designated disaster area may vary among counties. Some counties may be eligible for reimbursement for both emergency and permanent work while others may be eligible to receive funding for emergency work only.

Legal Responsibility. As with eligible facilities (see page 23), work must be the legal responsibility of the applicant at the time of the disaster to be eligible. Ownership of a facility is generally sufficient to establish the responsibility for work to repair the facility. However, if an applicant leases a facility as a tenant, repairs to that facility are not eligible unless the lease states that the lessee is responsible to insure for and/or make minor and/or extraordinary repairs. A copy of the lease agreement should be provided to FEMA to determine responsibility. The lease usually contains general repair and maintenance language; however, responsibility for damage resulting from a disaster may not be established. In the absence of any mention in the lease, the owner of the facility will be assumed to be responsible for the repair. (See also "Legal Responsibility" under discussion of "Facility" on page 23.)

Negligence
Damage caused by negligence on the part of the applicant after the event is not eligible. This issue often arises when an applicant fails to take prudent measures to protect a facility from further damage in the wake of a disaster. For example:

The roof of a library is damaged during a hurricane, but the applicant does not install tarps on the roof to protect the building's interior for several weeks. Repeated rain showers during that time destroy the exposed books and furnishings. The damage caused by the rains would not be eligible unless the applicant could document and justify why emergency protective measures were not implemented in a timely manner.
Damage caused by an applicant's actions, if unavoidable, may not necessarily be negligence, especially in cases where the damage occurs during emergency response efforts. For example:
While using heavy equipment to build a temporary berm for emergency flood protection, an applicant damages the roads that provide access to the site. Even though the applicant caused the damage, the repairs to the roads back to their original condition may be eligible as Category B - Emergency Work. For Federal-Aid roads, only emergency repairs would be eligible. For local roads, repairs to pre-disaster conditions would be eligible.

In instances where ground is disturbed due to movement of heavy equipment performing eligible work, such as that described above or when repairing underground utilities within landscaped areas, replacement of damaged trees, shrubs or other ground cover is not eligible. See page 87 for further discussion of "Trees and Ground Cover."
Also note that damage caused by inadequate design is not necessarily considered negligence. For example:
If an undersized culvert contributes to damage to a road, the repair of the road still may be eligible.

Mold
Extensive disaster-related damage from external sources or from broken water pipes may cause eligible facilities to become inundated or exposed to wet and humid conditions for several days following a disaster. The disruption of electrical power may inhibit the use of water-extraction, pumping, and drying electrical equipment, and the limited availability of private repair and restoration contractors may delay cleanup activities. If this happens, water saturation may cause growth and propagation of mold on structures and interior contents, causing health-related problems and increasing the cost of repairs.

Mold remediation may be eligible under the PA Program, either as an emergency protective measure in the immediate aftermath of a disaster, or as part of the permanent repair work. For mold remediation to be eligible, the mold must not be a result of poor facility maintenance or failure to take protective measures in a reasonable time after the event. The following information guides FEMA's decision of whether the mold growth is a direct result of the disaster or pre-disaster in origin:

See Fact Sheet 9580.100, Mold Remediation.

Maintenance
To meet the basic rule of eligibility, an item of work must be required as a direct result of the declared disaster. Normal maintenance items that existed prior to the disaster, such as pothole repair, routine pulling of ditches, and minor gravel replacement; and deferred maintenance, such as replacing rotted timber, and repairing deteriorated asphalt and leaking roofs, are not eligible because they do not meet the criterion of being disaster-related. For example:
If a culvert's annual maintenance report indicates that the culvert was full of debris (tree limbs and sediment) before the disaster, the work to remove the obstructions from the culvert would not be eligible.

For facilities that require routine maintenance to maintain their designed function, such as culverts, roads, bridges and dams, it may be possible to review pre-disaster maintenance or inspection reports to verify the pre-disaster condition and to assess eligible disaster damage.

In instances where damage can be attributed to the disaster instead of lack of maintenance, repairs are eligible. It is the applicant's responsibility to show that the damage is disaster-related. Funding of repairs may be made contingent upon the repair of pre-disaster damage with the applicant's own funds. For example:
FEMA may determine that repairs to a damaged bridge deck are eligible. However, the deck cannot be repaired unless the applicant replaces rotting timbers that support the deck.

Codes and Standards
When a facility must be repaired or replaced, FEMA may pay for upgrades that are necessary to meet specific requirements of reasonable current codes and standards. This situation typically occurs when older facilities must be repaired in accordance with codes and standards that were adopted after the original construction. These codes and standards may include Federal requirements, such as those mandated by EO 12699 (seismic requirements for new buildings) or the Americans with Disabilities Act (ADA), as discussed later in this section. However, this does not mean that Public Assistance grant funds will be provided to bring a facility into full compliance with current codes and standards. For example, FEMA will not fund construction of increased capacity because such work is beyond that necessary to restore the pre-disaster design capacity of the facility, except as noted for Category E (pages 83-85). Bringing facilities in violation of code or standard (at the time of the disaster) up to code is not an eligible program cost. The determination of which codes and standards are applicable to the work is very important in determining eligible work. Often codes are for new construction and not for repairs. For an upgrade to be eligible, the code or standard requiring the upgrade must meet the five criteria listed below.

  1. The code or standard must apply to the repair work or restoration required. If a facility must be replaced, an upgrade would apply throughout the facility. However, if a facility needs repair work only, upgrades would apply to the damaged elements only. For example:

    FEMA would pay to install a code-required new sprinkler system throughout a multi-story building if that building were being replaced. However, FEMA would not pay for installing such a system if the eligible work involved repair only, unless it was required based on the amount of repair. FEMA would have to determine that the requirement is reasonable for the type and extent of the repair.
  2. The code or standard must be appropriate to the pre-disaster use of the facility. For example, if a former classroom facility that was being used by a school district as a warehouse before the disaster is destroyed, standards applicable to the design and construction of classrooms do not apply; only those for warehouses would be eligible.
  3. The code or standard must be reasonable, in writing, and formally adopted, and implemented prior to the disaster declaration date or be a legal Federal requirement. The appropriate legislative authority within the applicable jurisdiction must have taken all requisite actions to implement the code or standard. The effective date of the code provision must be before the declaration date. It is the responsibility of FEMA to determine the reasonableness of a code or standard. Federal requirements are subject to the same criteria as local or State standards.
  4. The code or standard must apply uniformly to all facilities of the type being repaired within the applicant's jurisdiction. The code or standard cannot allow selective application; it cannot be subject to discretionary enforcement by public officials; it must be applied regardless of the source of funding for the upgrade work; and it cannot be applied selectively based on the availability of funds.
  5. The code or standard must have been enforced during the time that it was in effect. FEMA may require documentation showing prior application of the standard.

See also "Category E - Buildings and Equipment" on pages 83-85.

EO 12699. EO 12699, Seismic Safety of Federal and Federally Assisted or Regulated New Building Construction, requires that all eligible construction of new buildings under the PA Program use appropriate seismic design and construction standards and practices. This is true regardless of the cause of the declared disaster and even if the applicant does not have applicable local or State seismic codes.

If a damaged building is eligible for replacement, the costs of meeting required and reasonable seismic codes are also eligible. (See FEMA Policy 9527.1, Seismic Safety - New Construction.) However, for new construction of an alternate or improved project, any additional costs to satisfy appropriate seismic requirements beyond those that would have been required, if any, for the original approved project are not eligible; yet the measures necessary to satisfy these requirements are required as a condition of the grant.

The Americans with Disabilities Act. The ADA applies to restoration of damaged facilities under the Stafford Act. The ADA requires that any building or facility that is accessible to the public or any residence or workplace be accessible to and useable by disabled persons.

When FEMA provides assistance to replace a damaged facility, the facility must meet applicable access requirements. FEMA will provide funds to comply with ADA when replacing a facility, whether or not the facility met compliance prior to the disaster. However, a new facility funded as an alternate or improved project is limited to the eligible funding for the original facility even when the new facility has to comply with additional ADA requirements. Applicants notified of an ADA violation prior to the disaster and required to bring the facility into compliance are not eligible to receive FEMA funding to comply with accessibility requirements related to that violation.

For buildings eligible for repair, FEMA will fund the cost of ADA compliance requirements to the damaged elements of the facility. [See FEMA Policy 9525.5, Americans with Disabilities Act (ADA) Access Requirements.] In addition, FEMA may fund ADA compliance requirements for non-damaged elements associated with a path of travel for a primary function area that is damaged. A primary function area is where a major activity occurs for which the facility is intended, such as the dining area of a cafeteria. For primary function areas, FEMA will fund ADA compliance requirements for providing an accessible travel path and service facilities up to 20 percent of the total cost of repair to the primary function area.

Non-damaged areas of a damaged facility are not required to meet ADA requirements unless they are part of the travel path or service facility to a damaged primary function area, as described above.

Repair vs. Replacement (50 Percent Rule)
FEMA will restore an eligible facility to its pre-disaster design. Restoration is divided into two categories: repair or replacement. [See FEMA Policy 9524.4, Eligibility of Facilities for Replacement (the 50% Rule).] The following calculation, known as the "50 Percent Rule," is used to determine whether replacement is eligible:

IF (Repair Cost / Replacement Cost) < 50% THEN only the repair cost is eligible

IF (Repair Cost / Replacement Cost) > 50% THEN the replacement cost is eligible

Repair Cost includes only those repairs, including non-emergency mold remediation, associated with the damaged components and the codes and standards that apply to the repair of the damaged components. This cost does not include upgrades of other components triggered by codes and standards, design, demolition of the entire facility, site work, or applicable project management costs, even though such costs may be eligible for Public Assistance. The cost of contents and hazard mitigation measures is not included in the repair cost.

Replacement Cost includes the costs for all work necessary to provide a new facility of the same size or design capacity and function as the damaged facility in accordance with current codes and standards. The replacement cost does not include demolition, site work, and applicable project management costs, even though these costs may be eligible for Public Assistance.

Note that the design capacity of the facility, either as originally designed or as modified by later design, governs the extent of eligible work when a facility is being replaced. If a facility was being used in excess of its design capacity, that factor does not increase the eligible capacity of a replacement facility. Note also that the 50 Percent Rule applies to the overall facility. It is not to be used to calculate replacement of the facility's individual components, e.g., equipment, a roof, a wall, or mechanical system. Consult CEF guidance when using the CEF to calculate the 50% threshold. Multiple buildings on a campus are analyzed individually.

The following table illustrates eligible cost determinations.

Table 2: Repair/Replacement
  Conditions Eligible Costs
1. The repair cost* does not exceed 50% of the replacement cost** and no upgrades are triggered Repair of eligible damage only
2. The repair cost* does not exceed 50% of the replacement cost** and whole building upgrade is triggered and the total of the two items is greater than 50% but less than 100% of replacement cost** Repair of eligible damage plus upgrade cost.
3. The repair cost* does not exceed 50% of the replacement cost** and whole building upgrade is triggered and the total of the two items is estimated to be greater than 100% of replacement cost** Repair of eligible damage plus upgrade cost, but total eligible costs capped at the replacement cost.
4. The repair cost* exceeds 50% of replacement cost** The building's full replacement cost (but no more than its replacement cost) is eligible.

NOTES:
*    "Repair cost" in these examples includes repair of damaged components only, as described on page 36.
**    "Replacement cost" is replacement of the same size or designed capacity and function of the building to all applicable codes, as described on page 36.

In most cases, the criteria outlined in this table are adequate for repair and replacement projects. However, particular attention should be paid to the repair of damaged historic buildings. Such repair could trigger a requirement to upgrade a structure to new construction standards, while at the same time maintaining historic features. The total restoration cost, in this situation, may exceed replacement cost, as in condition 3 in the table, but the excess over the replacement cost is not eligible.

The regulations contain an exception to the funding limitation described in Table 2 that applies only when a facility is eligible for listing or listed in the National Register of Historic Places. If an applicable standard requires a facility to be restored in a certain manner and disallows other options, such as leaving the facility unrestored, the eligible cost to complete the restoration may exceed the replacement cost. See 44 CFR 206.226(f)(3).

Temporary Relocation
When buildings that house essential services, such as school classrooms, police and fire department facilities, government offices, and certain PNP functions, such as critical health facilities, are damaged extensively enough that they cannot be used until repairs are made, temporary relocation of the essential services may be necessary. Other PNP facilities may be eligible if they are directly related to public health and safety and under contract with State and local government to provide the health and safety functions. Temporary relocation may also be necessary in instances where such buildings are undamaged but inaccessible due to disaster-related conditions in the immediate vicinity. The criticality of the service and safety of the facility are the factors used to determine the need for temporary relocation. Temporary relocation is permitted as an emergency protective measure under Section 403 of the Stafford Act.

The costs associated with temporary relocation are eligible but are subject to cost comparisons of alternate methods of providing facilities. Such costs include the rental or purchase of temporary space and equipment. The decision whether to rent or purchase space and equipment must be based on cost effectiveness. Utilities, maintenance, and operating costs of the temporary facility are not eligible. However, applicants who perform essential services in leased facilities who have had to temporarily relocate to other leased facilities as a result of the disaster may be eligible for a reasonable rental cost differential if the temporary facilities are more costly than the pre-disaster facilities.

The moving costs, as well as necessary alterations at the new location, might be eligible if the continued operation of the facility is necessary to eliminate immediate threats to life or property.

The length of time that rental costs are eligible is based on the time estimated to complete repair work that will bring the damaged facility to pre-disaster design, not including time for completion of improvements. Normally, the period of time for which temporary relocation assistance may be provided is 6 months, based on the regulatory time limitation for the completion of emergency work. If no additional funds are involved, the GAR may approve a time extension if the GAR is satisfied that extenuating circumstances beyond the control of the applicant prevented the completion of the work within the initial time limit and that the applicant has provided the design proposal, a schematic, and a revised timeline for the permanent project. If additional funds are required, the GAR may recommend to FEMA a time extension based on extenuating circumstances beyond the control of the applicant that prevented the completion of the work within the initial time limit and the provision of the design proposal, a schematic, and a revised timeline for the permanent project. An extension requiring additional funding may not be granted without a design proposal, schematic, and timeline for the permanent work. Extensions beyond a total temporary relocation period of 12 months are extremely rare, but may be approved by the FEMA Regional Administrator if construction began within the 12-month period. (See FEMA Policy 9523.3, Provision of Temporary Relocation Facilities.)

Permanent Relocation
An applicable Federal, State, or local standard, such as a floodplain management regulation, may require that a damaged facility be relocated away from a hazardous area. Such relocations also may be required by FEMA if the facility is subject to repetitive heavy damage because of its location. In either case, FEMA will provide assistance for the relocation project only if it is cost effective and not barred by any other FEMA regulations or policies. Eligible costs of a relocation project include:

To determine cost effectiveness, benefits are measured in terms of the damage prevented by moving away from the hazardous location. Generally, the project will only be cost effective if the damage is severe enough that the facility qualifies for replacement.

When a relocation to outside a hazard area is approved, no future Public Assistance funding for the repair or replacement of any facility subsequently built at the old site will be approved. An exception is given for facilities or structures that facilitate an open space use. Examples include minimal facilities for a park, such as benches, tables, restrooms, and minor gravel roads. When such a restriction is placed on a site, the applicant will be notified.

If relocation is not desired, feasible or cost effective, and restoration in the original location is not a practicable alternative because of floodplain, environmental, historic preservation, or other Special Considerations, the applicant may request that the funding be applied to an alternate project. Alternate projects are discussed in more detail on pages 111-112 of this guide.

Cost Generally, costs that can be directly tied to the performance of eligible work are eligible.

Such costs must be:

A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. In other words, a reasonable cost is a cost that is both fair and equitable for the type of work being performed. For example:

If the going rental rate for a backhoe is $25/hour, it would not be reasonable to pay $50/hour for a backhoe.

In the immediate aftermath of a disaster, shortages in equipment, materials, and labor may affect costs. Costs also may stabilize in the months after the disaster. These variations should be considered when establishing reasonable costs of repair.

Consideration should also be given to whether the cost is of a type generally recognized as ordinary and necessary for the subject facility and type of work and whether the individuals concerned acted with prudence in conducting the work. In addition, normal procedures must not be altered because of the potential for reimbursement from Federal funds. Reasonable costs can be established through:

In performing work, applicants must adhere to all Federal, State, and local procurement requirements.

An applicant may not receive funding from two sources for the same item of work. The Stafford Act prohibits such a duplication of benefits. (See FEMA Policy 9525.3, Duplication of Benefits.) If FEMA funds are duplicated by another source, the FEMA funds must be returned. If another Federal agency has specific authority to fund certain work, then FEMA generally cannot provide funds for that project. A State disaster assistance program is not considered a duplication of Federal funding.

A duplication of benefits most commonly occurs with insurance settlements. If a damaged facility is insured, FEMA is required to reduce the amount of the grant by any insurance proceeds that the applicant anticipates or receives for the insured facility. If the applicant has not completed negotiations with the insurer at the time the Project Worksheet is developed, FEMA will estimate the anticipated proceeds and this value will be used for the reduction. See Chapter 4 for additional discussion regarding insurance requirements.

Grants and cash donations received from non-Federal sources designated for the same purpose as Public Assistance funds are considered a duplication of benefits. However, such grants and donations, including disaster relief funds provided by the State, may be applied towards the non-Federal cost share and are not considered a duplication of benefits. Grants and cash donations, including disaster relief funds provided by the State, that are received for unspecified purposes or ineligible work also do not constitute a duplication of benefits and can be applied to the non-Federal cost share.

Applicant "rainy day" funds are not considered a duplication of benefits.

The eligible cost criteria referenced above apply to all direct costs, including labor, materials, equipment, and contracts awarded for the performance of eligible work. This also includes any additional costs for compliance with codes and standards that meet FEMA's eligibility criteria, as well as any costs necessary to obtain permits. Compliance with environmental and historic preservation laws, regulations, and EOs may constitute eligible costs. (See Chapter 4, Special Considerations.)

Labor
Force account labor is defined as labor performed by the applicant's employees, rather than by a contractor. Force account labor costs associated with the conduct of eligible work may be claimed at an hourly rate. Labor rates include actual wages paid plus fringe benefits paid or credited to personnel. Different eligibility criteria apply to labor rates for different kinds of employees and work, as described below.

Permanent Employees. For debris removal and emergency protective measures, only overtime labor is eligible, regardless of normal duties or assignments. (See FEMA Policy 9525.7, Labor Costs - Emergency Work.)

For permanent work, both regular time and overtime are eligible. Regular time of permanent employees who are funded from an external source (e.g., by a grant from a Federal agency, statutorily dedicated funds, or rate payers) to work on specific non-disaster tasks is an eligible cost when the employee is performing emergency work. Overtime or compensatory time for "exempt" employees is not eligible, except where written policies allow for it, and cannot be contingent upon Federal funding. The costs of salaries and benefits for individuals sent home or told not to report due to the emergency conditions are not eligible for reimbursement. However, extraordinary costs for essential employees who are called back to duty during administrative leave to perform disaster-related emergency work are eligible if the procedures were provided for in a written policy prior to the disaster.

Seasonal Employees. Seasonally employed personnel, when covered under existing budgets and used for a disaster during the normal season of employment, are considered permanent employees for the purpose of cost eligibility.

Reassigned Employees. Many times during a disaster, employees are assigned to perform tasks that are not part of their normal jobs. The labor cost for the reassigned employee is eligible as long as the reassigned employee is performing eligible work.

For emergency work, only overtime is eligible for reassigned employees. For permanent work, both regular and overtime are eligible. An example of a reassigned employee performing eligible work is having an office employee stacking sandbags or a police officer removing debris from a roadway. The pay rate is based on the reassigned employee's normal rate of pay, not the pay level appropriate to the work.

Backfill Employees. When a permanent employee is performing eligible disaster-related work, it is sometimes necessary to provide a person to fill their normal position and duties. The following examples provide guidance on determining the eligibility of these backfill employee costs:

Temporary Employees. Temporary employees are extra personnel hired as a direct result of the disaster to perform eligible work. An example of a temporary employee would be a laborer hired to perform repairs to roads damaged during the disaster. Regular and overtime costs are eligible for both emergency and permanent work performed by temporary employees when they are doing eligible work.

Force Account Mechanics. Time spent maintaining and repairing applicant-owned equipment is not eligible because this cost is included in equipment rates described on pages 48-49. Repair of disaster damage to equipment may be eligible, as described later in this chapter under Category E.

Foremen and Supervisors. Labor for both foremen and supervisors may be eligible for work forces engaged in disaster-related field activities to the extent that the time is associated with eligible work. (See "Project Supervision and Management Costs," pages 61-65, for further discussion.) However, the salaries of commissioners, mayors, department directors, police and fire chiefs, and other administrators usually are not eligible.

Contract Supervision. Reasonable costs of contractors hired to accomplish emergency work are eligible for reimbursement. Regular time salaries of the applicant's employees overseeing contractors performing emergency work are not eligible. However, regular time salaries of force account labor for overseeing contractors performing permanent work are eligible.

National Guard Labor and Prisoner Labor. The Stafford Act contains specific reference to costs of National Guard labor and prisoner labor. Costs of using National Guard personnel to perform eligible work are eligible to the extent that those costs are being paid by the State. Prisoner labor costs are eligible at the rate normally paid to prisoners. Costs of prisoner labor also include transportation to the worksite and extraordinary costs of guards, food, and lodging.

General Criteria for Labor Costs Davis-Bacon Act. The Davis-Bacon Act requires Federal agencies to pay workers under contract to them the "prevailing wage," defined by the Department of Labor. The provisions of the Davis-Bacon Act do not apply to State or local contracts for work completed using Public Assistance funds under the Stafford Act. However, the provisions do apply to contracts let by other Federal agencies, such as the USACE, when operating under a Mission Assignment from FEMA. If a State or local government incorporates Davis-Bacon wage rates as part of its normal practice for all contracts, regardless of funding source, those rates are eligible.

Regular Time and Overtime. For debris removal and emergency protective measures, only overtime labor is eligible for permanent employees, regardless of normal duties or assignments. For permanent work, both regular time and overtime are eligible for all employees. Policies for payment of overtime or premium pay must be reasonable and not be contingent on Federal funding. The policy must have set criteria for its activation and not be open to the discretion of management.

Compensatory Time. If an applicant has a written policy in place prior to the disaster for providing compensatory time in place of overtime, FEMA reimbursement will be based on that policy. Funding at a reasonable rate is eligible if the written policy requires it.

Fringe Benefits. Fringe benefits that are actually paid or credited as part of an established policy are eligible. Because certain items in a benefit package are not dependent on hours worked, such as health insurance, the fringe benefit rate will be different for regular and overtime hours. The overtime fringe benefit rate is usually significantly lower.

The following steps may be used to calculate the percentage of fringe benefits paid on an applicant's employee's salary. Note that items and percentages will vary from one entity to another.

  1. The normal year consists of 2080 hours (52 weeks x 5 workdays/week x 8 hours/day). This makes no allowance for holidays and vacations.
  2. Determine the employee's basic hourly pay rate (annual salary/2080 hours).
  3. Fringe benefit percentage for vacation time: Divide the number of hours of annual vacation time provided to the employee by 2080 (80 hours (assuming 2 weeks)/2080 = 3.85%).
  4. Fringe benefit percentage for paid holidays: Divide the number of paid holiday hours by 2080 (64 hours (assuming 8 holidays)/2080 = 3.07%).
  5. Retirement pay: Because this measure varies widely, use only the percentage of salary matched by the employer.
  6. Social Security and Unemployment Insurance: Both are standard percentages of salary.
  7. Insurance: This benefit varies by employee. Divide the amount paid by the applicant by the basic pay rate determined in Step 2.
  8. Workman's Compensation: This benefit also varies by employee. Divide the amount paid by the applicant by the basic pay rate determined in Step 2. Use the rate per $100 to determine the correct percentage.

Note: Typically, the applicant should not be charging the same rate for regular time and overtime. Those fringe benefits that vary with the number of hours worked may be eligible at the higher rate.

Sample Rates
Although some rates may differ greatly between organizations, the table below provides some general guidelines that can be used as a test of reasonableness when reviewing submitted claims. These rates are based on experience in developing fringe rates for several State departments. The rates presented are determined using the gross wage method applicable to the personnel hourly rate method. The net available hours method would result in higher rates.

The Applicant's Benefit Calculation Worksheet is available in the PA Forms Library.

Table 3: Paid Fringe Benefits
Item Rate
Holiday Leave 4.00% (or less)
Accrued Vacation Leave 7.00% (or less)
Sick Leave 4.00% (or less)
Social Security Matching 6.2% of employee earnings up to $94,200 (in 2006)
Medicare 1.35%
Unemployment Insurance 0.25% (or less)
Worker's Compensation 3.00% (or less)
Retirement - Regular 17.00% (or less)
Retirement - Special Risk 25.00% (or slightly more)
Health Insurance 12.00% (or less)
Life & Disability Insurance 1.00% (or less)
Administrative Leave 0.50% (or less)
Compensatory Leave 2.00% (or less)

Rates outside of these ranges are possible, but should be justified.

See Also: Applicant's Benefits Calculation Worksheet

Materials The cost of supplies that were purchased or taken from an applicant's stock and used during the performance of eligible work is eligible. Replacement costs may be determined by contacting area vendors.

Equipment
Certain ownership and operating costs for force account (that is, applicant-owned) equipment used to perform eligible work are eligible. Costs for use of automobiles and pick-up trucks may be reimbursed on the basis of mileage if less costly than hourly rates. For all other types of equipment, costs are reimbursed using an hourly rate. Reimbursable equipment rates typically include operation (including fuel), insurance, depreciation, and maintenance; however, they do not include the labor of the operator. Stand-by time for equipment is not eligible. However, if an applicant uses equipment intermittently for more than half of the normally scheduled working hours for a given day, use for the entire day may be claimed if adequate documentation is submitted. Equipment that is used for less than half of the normally scheduled working day is reimbursable only for the hours used.

See FEMA Policy 9525.8, Damage to Applicant Owned Equipment, for guidance on recovering costs related to the repair of force account equipment damaged during the performance of eligible disaster work, including transit to the work site.

FEMA recognizes three types of equipment rates. Each is described as follows.

FEMA Rates. FEMA has published a schedule of equipment rates that is applicable on a national basis. If a piece of equipment used by an applicant is not on the FEMA schedule, documentation to justify the requested rate must be submitted to FEMA for the DRM's approval. If an entity has established rates for use in its normal day-to-day operations, the criteria listed below under State and local rates apply. If an entity does not have established rates, FEMA rates will be used.

State Rates. An applicant may claim reasonable rates that were developed using State guidelines up to $75 per hour. Rates over $75 per hour may be approved by the Disaster Recovery Manager (DRM) on a case-by-case basis. A State guideline would be an equipment cost methodology used by a State agency to account for the costs of using its own equipment. Care must be taken to examine the rate schedule before applying it to State or locally owned equipment. Some State highway departments have a schedule of rates for "force account" work, the meaning of which is generally different from its meaning in the PA Program. State highway usage of the term may mean a rate for contractor's equipment doing extra work on a project. PA Program usage means a rate for applicant-owned equipment. Therefore, FEMA may request verification that any such rate schedule is actually for applicant-owned equipment.

Local Rates. Rates developed by a local government can be used. Where local rates have been developed, reimbursement is based on the local rates or FEMA's rates, whichever is lower. If the local rate is lower and the applicant certifies that the rates do not reflect all actual costs, the higher FEMA rates may be used. The applicant may be requested to provide documentation of the basis for its rates.

Equipment and Supplies Purchased for Disaster Use
There are many instances where an applicant will not have sufficient equipment and supplies to respond to the disaster in an effective manner. For the purpose of this section, the following definitions apply:

While FEMA may assist the applicant in purchasing the needed equipment and supplies, the applicant is required to compensate FEMA for the Federal share of the cost of individual items of equipment and the aggregate total of supplies with a current fair market value in excess of $5,000 when the items are no longer needed for the disaster. For equipment and supplies below this threshold, the applicant may sell or otherwise dispose of the items with no compensation to FEMA. (See FEMA Policy 9525.12, Disposition of Equipment, Supplies and Salvaged Materials.)

The fair market value is the value of equipment and supplies determined by selling them in a competitive market or researching advertised prices for similar items on the used market. The current fair market value should be determined at the time the equipment and supplies are no longer needed for disaster operations regardless of when actual disposition takes place.

Salvage Value
When applicable, salvage value should be deducted from the estimated replacement cost. Disposition of salvaged materials must be at fair market value and the value must be reimbursed to FEMA to reduce the total project cost. For example, debris resulting from disasters, such as timber debris, mulched debris, and scrap metal, may have a market value. Reasonable costs for administering and marketing the sale of the salvageable materials is allowed to be recouped by the applicant from the fair market value. To reduce contract costs, applicant debris removal contracts may provide for the contractors to take possession of salvageable material and benefit from its sale in order to lower bid prices. When the salvage values are taken into account in the bid and award, no salvage value needs to be recouped at the end of the project. (See FEMA Policy 9525.12, Disposition of Equipment, Supplies and Salvaged Materials.)

Third Party Liability
When a third party causes damage (e.g., an oil spill) or otherwise increases the cost of repair or cleanup, the applicant is required to pursue the third party for recovery. If recovery is not adequate despite the applicant's good faith effort, costs may be funded through a PW. Reasonable costs (including reasonable legal fees) of such recovery may be deducted from the recovery before the deduction is made from the eligible costs.

Mutual Aid Agreements
In some cases, State or local governments use mutual aid agreements as an emergency preparedness device. A mutual aid agreement is an agreement between jurisdictions or agencies to provide services across boundaries in an emergency or major disaster. Such agreements usually provide for reciprocal services or direct payment for services. FEMA will reimburse mutual aid costs for eligible emergency work, when requested by the applicant (receiving entity) in accordance with FEMA Policy 9523.6, Mutual Aid Agreements for Public Assistance. Key provisions are:

When a pre-event agreement provides for reimbursement, but also provides for an initial period of unpaid assistance, FEMA will pay the eligible costs of assistance after the initial unpaid period. When a pre-event mutual aid agreement provides for reimbursement and there is a consistent record of reimbursement without Federal funds, FEMA re-imbursement will follow the provisions of the agreement.

When the parties do not have a pre-event written mutual aid agreement, the Requesting and Providing entities may verbally agree on the type and extent of mutual aid resources to be provided to the current event, and the terms, conditions, and costs of such assistance. Post-event verbal agreements must be documented in writing and executed by an official of each entity with authority to request and provide assistance, and provided to FEMA as a condition of receiving reimbursement.

The Emergency Management Assistance Compact (EMAC) is a form of mutual aid. It establishes procedures whereby a disaster-impacted state can request and receive assistance from other member states quickly and efficiently. EMAC resolves two key issues up front: liability and reimbursement. The requesting State agrees to (1) assume liability for out-of-state workers deployed under EMAC and (2) reimburse assisting states for deployment-related costs. There are two types of work potentially eligible for FEMA reimbursement; grant management work and emergency work. To the extent the specific agreement between states meets the requirements of the FEMA policy on mutual aid agreements and the work meets FEMA eligibility requirements, costs may be eligible for FEMA assistance. Reimbursement for these costs would be subject to the Federal/non-Federal cost share for that disaster.

To be allowable, costs must be consistent with policies, regulations, and procedures that apply uniformly to both Federal awards and other activities of the applicant. The receiving entity is responsible for requesting FEMA assistance and for the non-Federal cost share.

Contracts
Contracts must be of reasonable cost, generally must be competitively bid, and must comply with Federal, State, and local procurement standards. FEMA regulations at 44 CFR Part 13 - Uniform Administrative Requirements For Grants And Cooperative Agreements To State And Local Governments provide specific guidance on contracts. FEMA finds four methods of procurement acceptable. Each is described below in general terms.

Small Purchase Procedures. Small purchase procurement is an informal method for securing services or supplies that do not cost more than $100,000 by obtaining several price quotes from different sources.

Sealed Bids. Sealed bid procurement is a formal method where bids are publicly advertised and solicited, and the contract is awarded to the bidder whose proposal is the lowest in price (this method is the preferred method for procuring construction contracts).

Competitive Proposals. Competitive procurement is a method similar to sealed bid procurement in which contracts are awarded on the basis of contractor qualifications instead of solely on price (this method is often used for procuring architectural or engineering professional services).

Noncompetitive Proposals. Noncompetitive procurement is a method whereby a proposal is received from only one source. Noncompetitive proposals should be used only when the award of a contract is not feasible under small purchase procedures, sealed bids, or competitive proposals, and one of the following circumstances applies:

"Piggyback contracting" is a concept of expanding a previously awarded contract. Piggyback contracting does not meet the requirements of 44 CFR Part 13 because it is non-competitive and may have an inappropriate price structure. This type of contract is not eligible. However, FEMA may separately evaluate and reimburse costs it finds fair and reasonable.

It is important to recognize that an applicant may provide a contract that meets the legal and administrative procurement requirements but includes aspects that would not be eligible for FEMA funding. Each type of contract must be reviewed carefully to assure compliance with the FEMA scope of eligible work.

FEMA provides reimbursement for three types of contracts. They are:

Applicants should avoid using time and materials contracts. FEMA may provide assistance for work completed under such contracts for a limited period (generally not more than 70 hours) for work that is necessary immediately after the disaster has occurred when a clear scope of work cannot be developed. Monitoring is critical and a competitive process still should be used to include labor and equipment rates. Trimming trees of dangerous hangers may be an appropriate use of this type of contract, but only if an acceptable unit price contract is not feasible. Applicants must carefully monitor and document contractor expenses, and a cost ceiling or "not to exceed" provision must be included in the contract. If a time and materials contract has been used, the applicant should contact the State to ensure proper guidelines are followed. Cost plus a percentage of cost contracts are not eligible. However, FEMA may separately evaluate and reimburse costs it finds fair and reasonable. FEMA may review proposed contracts for compliance with FEMA eligibility rules and reasonableness of costs, but such a review does not constitute approval.

FEMA has developed an on-line debris contractor registry tool to assist State and local governments in identifying and contacting contractor resources. The registry tool can be found on FEMA's website (www.fema.gov/business/contractor.shtm). The information provided in the registry is maintained by contractors and their representatives. FEMA does not verify, and takes no responsibility for, the accuracy of any of the information submitted. FEMA does not endorse, approve, or recommend any contractors, including those in the registry. State and local governments should perform all appropriate due diligence prior to entering into a contract. Contracting with any of the entities listed in the registry does not assure a State or local government of reimbursement under a Federal grant. State and local governments should follow their competitive procurement procedures when selecting a contractor.

Loss of Revenue
The loss of revenue is not an eligible cost authorized by the Stafford Act and, therefore, cannot be funded through the PA Program. Loss of revenue may occur:

Applicants may suffer other costs that are ineligible for FEMA assistance, such as payment of salaries for employees sent home during an emergency.

Increased Operating Expenses
The costs of operating a facility or providing a service may increase due to or after a disaster. With few exceptions, these costs are not eligible. Some examples of ineligible costs are:

However, 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. If they can be documented and identified with a specific emergency task, some examples of potentially eligible costs are:

Examples of Emergency Protective Measures are given on pages 71-74.

Surveys for Damage
The owner of a facility is responsible for determining the extent of damage. Surveys are not eligible work under a PW. Such activities are covered by an applicant's administrative allowance. Examples of ineligible survey costs include:

In some instances, damage to an inaccessible structure or structural component may be evident based on other observations, such as sunken ground above a buried pipeline, loss of or increased flow in a pipe, or visible damage to finishes. If such conditions are evident, FEMA may pay for inspections to determine the extent of damage and method of repair. When disaster-related damage is discovered during a survey or is evident from other observation, inspection of only the damaged section is eligible. That limited cost may be included in the PW for the damages.

After a facility is determined to be damaged, costs for an engineering evaluation to determine the type and extent of repairs necessary to return the facility to its pre-disaster condition is eligible as part of the costs of permanent repair.

Donated Resources
Third party donated resources (volunteer labor, donated equipment, and donated materials) are eligible to offset the non-Federal portion of the cost for emergency work. (See FEMA Policy 9525.2, Donated Resources.) The amount of credit that can be applied to a project is capped at the non-Federal share so that the Federal share will not exceed the applicant's actual out-of-pocket costs. Any excess credit can be applied to other emergency work projects of the same applicant.

Donated resources must apply to actual eligible emergency work, such as debris removal or the filling and placing of sandbags. An example of ineligible donated resources is volunteers helping individuals applying for assistance. The donated services must be documented and must include a record of hours worked, number of workers at the work site, and a description of work.

Volunteer labor will be valued at the same hourly labor rate as a similarly qualified person in the applicant's organization who normally performs similar work. If the applicant does not have employees performing similar work, the rate should be consistent with that for a similarly qualified person ordinarily performing the work in the same labor market.

The value for donated equipment should be determined by using the applicable FEMA equipment rate and multiplying it by the number of hours the piece of equipment was used to perform eligible work.

Donated materials are valued at the current commercial rate. If the materials were donated by a Federal agency, such as sandbags donated by the USACE, the value of the materials cannot be applied as credit.

Engineering and Design Services
The costs of basic engineering and design services normally performed by an architectural-engineering firm on complex construction projects are eligible for reimbursement. Such services include:

While a final inspection and reconciliation will be used to determine the actual costs for reimbursement of these services, the costs can be estimated during project formulation using a percentage of the construction cost. Percentages are derived from FEMA engineering and design services cost curves. These curves, which were developed for FEMA from data developed by the American Society of Civil Engineers Committee on Professional Practice in 2005, show a correlation between engineering costs and total construction costs. These curves are shown in Figures 3 and 4. To use the curves, estimate construction costs for a project. Find the construction cost on the horizontal axis and, using the appropriate curve for either force account or contract work, read the associated percentage of engineering and design services from the vertical axis. This percentage can be multiplied by the estimated construction cost to determine an appropriate engineering and design cost estimate.

Curve A applies to projects of above-average complexity and non-standard design. Examples of such projects include:

Graph of the compensation for basic services expressed as a percentage of construction cost for projects of above-average complexity and non-standard design

NOTE: "Contract" and "Force Account" above mean engineering and design services performed by contract or by an applicant's own employees, respectively.

Curve B applies to projects of average complexity. Examples of such projects include:
industrial buildings, warehouses, garages, hangars, and comparable structures;
bridges and other structures of conventional design;
simple waterfront facilities;
roads and streets;
conventional levees, floodwalls, and retaining walls;
small dams;
storm sewers and drains;
sanitary sewers;
water distribution lines;
irrigation works, except pumping plants; and
airports, except as classified for Curve A.

In addition to the basic engineering services, special services may be required for some projects. Such services include engineering surveys, soil investigations, services of a resident engineer, and feasibility studies. Because special services are not required on all projects, they are not included in the percentages on the engineering and design services curves. These services are estimated separately.

If a project requires only basic construction management, a fee not exceeding 3 percent of construction costs may be used for the estimate. Management functions include review of bids, work site inspection visits, checking and approval of material samples, review of shop drawings and change orders, review of contractor's request for payment, and acting as the client's representative. An example of a project requiring only inspection services but no design and engineering would be a building repair project that only included patching and painting damaged interior wall. Another example would be where a contractor is hired to repair local roads back to the pre-disaster condition, using local construction standards.

Estimates for engineering and design services and construction inspection typically are not included in small project estimates or emergency work project estimates except for complex projects or projects where special services are required.

Graph of the compensation for basic services expressed as a percentage of construction cost for projects of average complexity

NOTE: "Contract" and "Force Account" above mean engineering and design services performed by contract or by an applicant's own employees, respectively.

Actual costs, not estimated costs, for eligible engineering and design services should be claimed in large project final inspection and reconciliation. Costs that exceed the amounts determined by use of these curves will be reviewed for reasonableness and funded accordingly.

Project Supervision and Grant Management Costs
Applicants have several types of eligible supervisory and management costs available that serve different purposes and need to be identified and claimed separately. (See FEMA Policy 9525.6, Project Supervision and Management Costs of Subgrantees.) Commingling of these various costs and claiming them incorrectly may result in loss of eligible reimbursement. Project management costs provided when using the Cost Estimating Format methodology for estimating project costs (see pages 105-106) must not duplicate other requests for reimbursement.

The following items may be eligible project supervision and management costs:

  2. Supervision and Management by Force Account. In general, applicant expenses for administration and management activities not specifically accountable to an eligible work project are ineligible. The regular time salaries of an applicant's permanently employed personnel who supervise or manage emergency work performed by an applicant's employees (or by contractors) are not eligible; only overtime costs are eligible for emergency work. Labor costs of second level supervisors (and above) are ineligible unless the applicant can account for specific time spent on eligible permanent projects. Generally, the labor costs of only first line supervisors of permanent work are eligible.

  3. Project Management Activities. Project management is the oversight of an eligible project from the design phase to the completion of work. Eligible project management activities are those activities that the applicant would have performed in the absence of Federal funding, such as:
    • direct management of projects in the concept and design stages that are being designed by an applicant's in-house staff, or by an architectural/engineering firm retained to analyze and design the repair or replacement of damaged facilities;
    • procurement activities for architectural/engineering services and performance of work;
    • review and approval of the project design regardless of who performs the design work; and
    • management of construction work by contractors.
  4. Master Service Agreements. Local governments occasionally enter into Service Agreements or Master Service Agreements (MSAs) with private contractors for management or overview of disaster work. The agreements typically involve a broadly defined scope of services, allowing the local government to use the contractor for multiple tasks. An MSA might include various tasking for architectural/engineering services, construction and construction management services, procurement assistance (bid document preparation, bid analysis and review, etc.), and other technical services (environmental and historic consulting etc.). The eligibility of specific costs payable under an MSA depends upon the nature of the work. If a task under the MSA meets FEMA eligibility criteria, complies with 44 CFR Part 13, does not duplicate other work funded by FEMA, and is directly related to a specific, FEMA-approved project, the cost may be incorporated into the PW for the project it is supporting. Any general MSA costs not directly related to the performance of a specific eligible project are not eligible for reimbursement. Some of these costs may be covered by the Administrative Allowance (e.g., preparing the grant application). A separate PW just for MSA activities may not be prepared. Grantees employing similar services may request coverage of these expenses on a State Management PW.
  5. Administrative Allowance.Federal regulations for grant programs allow the grant recipients to claim reasonable administrative costs, unless the law authorizing a grant program includes specific provisions for these costs. For the PA Program, the Stafford Act stipulates that each grant recipient be provided an allowance to meet the cost of administering the grant. The allowance is calculated differently for applicants and States and covers different costs for each.

    Applicants. The Administrative Allowance for applicants (subgrantees) covers direct and indirect costs incurred in requesting, obtaining, and administering Public Assistance, i.e., grant management. No other administrative or indirect costs incurred by an applicant are eligible. Examples of the activities that this allowance is intended to cover include:

    • identifying damage (to include photographs and flyovers of damaged areas);
    • attending the Applicants' Briefing;
    • completing forms necessary to request assistance;
    • preparing PWs for small projects or assisting the Project Specialist (Project Officer) in completing PWs for large projects;
    • establishing files, and providing copies and documentation;
    • assessing damage, collecting cost data, and developing cost estimates;
    • working with the State during project monitoring, final inspection, and audits; and
    • preparing for audits.

    The allowance is not intended to cover direct costs of managing specific projects that are completed using Public Assistance funds. These costs are eligible as part of the grant for each project, as long as they can be specifically identified and justified as necessary to do the work. For example:

    The wages of a foreman on the site of a repair project would be a direct cost associated with that project and would not be included in an applicant's Administrative Allowance.

    At the time of publication of this guide, FEMA was preparing to change the system for calculating the amount of compensation due. Until that new method is finalized, the following method will continue to be used.

    The Administrative Allowance for an applicant is calculated as a percentage of all approved eligible costs that the applicant receives for a given disaster. The applicant is not required to submit documentation for its administrative allowance, but records are required to be kept for audit purposes. If there are surplus Administrative Allowance funds, they must be returned to FEMA. Retaining unspent f