Main Wastewater Treatment Plant

Appeal Brief

Appeal Letter

Appeal Analysis

Background

On September 13, 2008, flooding caused by Hurricane Ike damaged multiple components of the main wastewater treatment plant (WWTP) operated by the City of Galveston (Applicant).  The Applicant thereafter sought assistance from FEMA for funding the repair of the WWTP.  FEMA initially prepared a single Project Worksheet (PW) to address repairs to the various damaged elements of the WWTP, but subsequently prepared seventeen individual PWs applicable to specific damaged WWTP components.  The PWs documenting repairs to the WWTP to its pre-disaster design and capacity totaled $3,516,846 in assistance, including $1,585,557 in hazard mitigation funding under Section 406 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act).  FEMA also applied $1,343,110 in insurance reductions.

While working with FEMA on the PW development, the Applicant claimed that Title 30, Chapter 217 of the Texas Administrative Code (TAC) required upgrades to the WWTP as a whole that would cost significantly more than the cost to repair the damaged elements of the plant to their original design, as documented in the PWs.  The Texas Commission on Environmental Quality (TCEQ) had adopted revised and updated rules pertaining to “Design Criteria for Domestic Wastewater Systems” on August 6, 2008, and the rules went into effect on August 28, 2008, a little more than two weeks prior to the disaster event.  The rules were codified in a newly created Chapter 217, and a previous Chapter 317 was repealed.  The Applicant and FEMA disagreed as to whether Chapter 217, as applied to the WWTP damage, satisfied criteria under applicable FEMA regulations and policy such that the costs of complying with Chapter 217 would be eligible for reimbursement. 

According to 30 TAC § 217.1(a), Chapter 217 “applies to any person who proposes to construct, renovate, or re-rate a wastewater collection system or commission[-]permitted wastewater treatment facility.” (Emphasis added)  Moreover, 30 TAC § 217.31, Subchapter B of Chapter 217, “Treatment Facility Design Requirements,” regulates “the treatment design for a new facility, material alteration or expansion [of] an existing facility, and the re-rating of an existing facility.”  Finally, under 30 TAC § 217.35, “One Hundred-Year Flood Plain Requirements,” designs for proposed treatment units must provide protection “for all open process tanks and electric units from inundation during a 100-year flood event” for any treatment unit that lies within a 100-year floodplain.  Under the rule, the TCEQ executive director will not approve the proposed treatment unit’s design unless the design provides this protection.  The repealed Chapter 317 also included 100-year flood event protection requirements.

In a June 15, 2009 letter to FEMA, the Applicant asserted that Chapter 217 applied at the time of the disaster, objected to FEMA’s use of Stafford Act Section 406 hazard mitigation funding to address the 100-year flood event compliance issues, and challenged FEMA’s drafting of multiple PWs in lieu of a single PW addressing all repairs to the WWTP.  FEMA explained in response letters dated July 20, 2009 and February 9, 2010, that Chapter 217, as applied to the WWTP damage, did not satisfy all five criteria under Title 44 of the Code of Federal Regulations (44 CFR) § 206.226(d), Restoration of damaged facilities, Standards, governing the eligibility of costs to comply with codes and standards that change the predisaster design of a facility.

The Applicant responded in a letter dated June 18, 2010 and asserted that Chapter 217 satisfied the specific criteria set forth in 44 CFR § 206.226(d)(1), (3), and (5).  The Applicant noted that compliance with the 100-year-flood event rule would be the “main driver for costs,” given that there would need to be a “complete rebuild and replacement of many of the structures to comply with the elevation requirement.”  The Applicant explained that the “anticipated cost of construction to facilitate the rebuild, to Chapter 217 codes and standards, and keep the plant operational during such repair, will be approximately $71.7 [million].”

The FEMA Region VI Regional Administrator  issued a formal denial in a letter dated
April 13, 2011, that included a detailed analysis of why the Chapter 217 requirements did not satisfy all of the criteria under 44 CFR § 206.226(d) and FEMA Disaster Assistance Policy DAP9527.4, Construction Codes and Standards.  Among other things, FEMA noted that (1) the Applicant was requesting funding to not only repair and upgrade the WWTP’s damaged elements, but also its undamaged elements; and (2) the applicant had, prior to Hurricane Ike, replaced certain WWTP components, but without elevating or otherwise providing protection for them to satisfy the 100-year flood rule in place under the applicable standard in place at the time, Chapter 317.

First Appeal

The Applicant submitted a first appeal in a letter dated June 14, 2011, which the Grantee forwarded by letter to FEMA on June 27, 2011 without including a recommendation.  In its first appeal, the Grantee argued that Chapter 217, as applied to the WWTP, satisfies all the criteria under 44 CFR § 206.226(d).  The applicant noted that the TCEQ would require WWTP reconstruction to comply with 100-year floodplain requirements and argued that these requirements would affect reconstruction of the entire WWTP.  The Applicant asserted that neither Disaster Assistance Policy DAP9527.4, Construction Codes and Standards nor FEMA 322, Public Assistance Guide, “absolutely prohibits upgrades to an entire facility.”  The Applicant also invoked 44 CFR § 206.226(f), Repair vs. replacement, to argue that repair work under FEMA regulations must enable a facility to perform the function for which it was being used as well as it did immediately prior to the disaster.  According to the Applicant, this regulation is controlling and requires FEMA to fund all construction to the WWTP required to bring it into compliance with Chapter 217.  The Applicant also challenged FEMA’s reference to the prior WWTP projects, conducted in 2005 and 2007, when Chapter 317 was in place.  The Applicant noted that Chapter 317 had been repealed prior to Hurricane Ike and, therefore, is irrelevant.  The Applicant also argued that, in any event, the TCEQ concluded that the projects complied with Chapter 317’s requirements. The Applicant also challenged FEMA’s preparation of seventeen individual PWs, instead of a single one, based on guidance provided by Disaster Assistance Policy DAP9524.4, Eligibility of Facilities for Replacement under 44 CFR § 206.226(d)(1) (The 50% Rule). 

The FEMA Regional Administrator issued a first appeal decision dated May 24, 2012.  The decision noted that, under 30 TAC § 217.31, Subchapter B of Chapter 217 “applies to the treatment design for a new facility, material alteration or expansion of an existing facility, and the re-rating of an existing facility”—and not to the repair or replacement of a facility’s damaged components.  The decision also noted that, under 30 TAC § 217.35, the 100-year floodplain requirements for proposed facilities, not existing ones.  The decision also explained that the PWs were written to restore the function and capacity of the WWTP as it existed before the hurricane struck and to repair only the damaged elements of the WWTP, not to bring the entire facility into compliance with Chapter 217.

Second Appeal

The Applicant submitted a second appeal in a letter dated September 14, 2012, which the Grantee transmitted to FEMA in a letter dated September 20, 2012.  The Grantee did not provide a recommended decision.  In its appeal, the Applicant reiterated the arguments set forth in its first appeal and also addressed specific points raised in the Regional Administrator’s first appeal decision.  The Applicant argued that, according to the TCEQ, the WWTP repairs constitute a “material alteration” and must be performed in compliance with Chapter 217, including its 100-year floodplain requirements.  The Applicant submitted a May 5, 2009 letter from the TCEQ that it asserts supports that the TCEQ would not issue an operating permit for the WWTP if it did not comply with Chapter 217.  The Applicant also reiterated its position that applicable policy and guidance do not prohibit FEMA from reimbursing upgrades based on codes and standards to an entire facility, and not just its damaged components.

In May 2012, prior to submitting its second appeal, the Applicant began construction of a new WWTP, using grant funds provided by U.S. Department of Housing and Urban Development (HUD).  The Applicant, however, would like FEMA to fund $71.5 million for the new WWTP to free up the HUD funding for other projects.

Discussion

Section 406(e)(1)(A) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended, provides that FEMA may reimburse eligible applicants’ cost of “repairing, restoring, reconstructing, or replacing a public facility or private nonprofit facility-- (i) on the basis of the design of such facility as it existed immediately prior to the major disaster; and (ii) in conformity with current applicable codes, specifications, and standards (including floodplain management and hazard mitigation criteria...) applicable at the time of the disaster.”  Under 44 CFR § 206.226(d), Restoration of damaged facilities, Standards, costs related to repair or replacement standards may be eligible for reimbursement if they (1) “apply to the type of repair or restoration required” (as standards may be different for new construction versus repair work); (2) are “appropriate to the predisaster use the facility”; (3) are “reasonable, in writing, and formally adopted and implemented by the State or local government on or before the disaster declaration date”; (4) “[a]pply uniformly to all similar types of facilities within the jurisdiction of [the] owner of the facility; and (5) have “been enforced during the time it was in effect.”

Chapter 217, as applied here, does not satisfy all of the requirements set forth in
44 CFR § 206.226(d).  Specifically, as to 44 CFR § 206.226(d)(1), Chapter 217 does not “apply to the type of repair or restoration required.”  According to 30 TAC § 217.1(a), Chapter 217 governs the construction, renovation, or re-rating of a wastewater collection system or permitted wastewater treatment facility—not repairs to discrete elements of an existing facility.  In addition, the section of Chapter 217 that addresses 100-year floodplain requirements, 30 TAC § 217.35(c), states “The executive director will not approve a design of a proposed treatment unit within a 100-year flood plain, unless the design provides protection for all open process tanks and electric units from inundation during a 100-year flood event.”  While, as suggested by the Applicant, it would be prudent to provide some element of deference to TCEQ’s interpretation and application of its own regulations, here the May 5, 2009, letter from TCEQ states “major and minor repairs… due to Hurricane Ike will require compliance with the 100-year floodplain requirements as described in 217.”  Regardless, Chapter 217 only requires 100-year flood protection for proposed facilities, not existing facilities.  The Applicant states that the TCEQ determined that “the sum total of disaster-related damages to the WWTP system are of such a magnitude that collectively, they constitute material alterations to the overall system as defined by TCEQ (Design Criteria for Wastewater Systems, § 217.2).”  The May 5, 2009 TCEQ letter, makes no reference to the term “material alteration,” and neither do the 100-year floodplain requirements at 30 TAC § 217.35. 

Even if, assuming arguendo, the requirements set forth at 30 TAC § 217.35 applied to material alterations, 30 TAC § 217.2(28), defines “material alteration” as “a change to a collection system or treatment facility that changes the efficiency of the collection system or treatment facility.”  The repair work funded in the Applicant’s PWs restores discrete elements of the WWTP to pre-disaster function but does not change the efficiency of the facility. 

The Applicant asserts that FEMA’s approach of preparing 17 PWs rather than one for the entire WWTP impacted the eligibility determination.  While the Applicant is correct when it states that FEMA policy does not require this approach, the Regional Administrator’s determination regarding the eligibility of the work associated with protecting the entire WWTP from a 100-year flood event is consistent with 44 CFR § 206.226(d).  This determination applies regardless of whether the damaged components are funded through separate PWs or through a single PW, as the applicant urged. 

Conclusion

Application of Chapter 217’s standards to the WWTP does not satisfy all five criteria set forth in 44 CFR § 206.226(d), Restoration of damaged facilities, Standards.  The code requirements do not apply to the repair of the existing WWTP.  Therefore, the cost associated with upgrading the WWTP to meet the requirements of Chapter 217 is not eligible.