Judith River Railroad Trestle Repair

February 1, 2013

Ed Tinsley
Administrator
Montana Disaster and Emergency Services Division
1956 Mt. Majo Street
Fort Harrison, Montana 59636

Re: Second Appeal–Central Montana Rail, Inc., PA ID 000-UW1WE, Judith River Railroad Trestle Repair, FEMA-1996-DR-MT

Dear Mr. Tinsley:

This is in response to a letter from your office dated June 11, 2012, which transmitted the referenced second appeal on behalf of Central Montana Rail, Inc. (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) determination that the Judith River Railroad Trestle is not an eligible Private Nonprofit (PNP) facility.

Background

The Applicant provides rail transportation for freight products primarily serving the residents of Chouteau, Judith Basin, and Fergus Counties.  Flooding associated with major disaster FEMA-1996-DR-MT, which was declared on June 17, 2011, damaged the railroad trestle over Judith River and resulted in the cessation of rail service.  While the State of Montana owns the rail line including the damaged trestle, the lease agreement with the Applicant assigns maintenance and repair responsibilities to the Applicant.  On September 6, 2011, FEMA informed the Applicant that its Request for Public Assistance (RPA) was denied because the Applicant does not meet the criteria for an eligible PNP.

First Appeal

In a letter dated November 22, 2011, the Applicant requested reconsideration of FEMA’s denial of its RPA on grounds that the organization is an eligible PNP that provides a critical service.  The Applicant claimed that it provides an essential government service and submitted an economic impact analysis showing nearly $15 million of impact to the region over a 3-year period.  The Applicant further stated that it provides a safe transportation route “for freight products including grains headed for our country’s food supply, fertilizer, and forest products.”  With a letter dated November 30, 2011, the Montana Disaster and Emergency Services Division (DES) forwarded the appeal to FEMA.

In an April 11, 2012, letter responding to the appeal, the FEMA Region VIII Regional Administrator agreed that Central Montana Rail, Inc. is an eligible PNP applicant, but determined that the damaged facility was not eligible under the provisions of the Public Assistance Program.  Pursuant to Title 44 Code of Federal Regulations (44 CFR) §206.221(e) Definitions, the repair of the Judith River railroad trestle was deemed ineligible for funding because there is no provision within current regulations and guidance for the reimbursement of costs to repair PNP transportation facilities.

Second Appeal

The Applicant submitted a second appeal on June 11, 2012, stating that the railway qualifies as an “other facility providing essential governmental type services to the general public,” which offers the opportunity for a cost-effective transportation alternative to the general public, agricultural producers, businesses, and anyone needing commodities hauled.  Furthermore, the second appeal claims that the Applicant also meets the definition of a PNP utility in accordance with 44 CFR §206.221(e)(2) Definitions, Private nonprofit facility, which notes that “utility” includes “… other similar public service facilities.”  DES forwarded the second appeal to FEMA with a letter dated June 11, 2012.

Discussion

Based on the documentation submitted by the Applicant, the response to the first appeal correctly concluded that the Central Montana Rail, Inc. satisfied the two requirements for PNP status outlined in 44 CFR §206.221(f) Definitions, Private nonprofit organization, which are:  having been granted tax exemption under sections 501 (c), (d) or (e) of the Internal Revenue Code by the Internal Revenue Service; and presenting evidence from the respective State government demonstrating that the organization conducts business as a nonprofit as required by State law.  However, this provision only allows FEMA to recognize the Applicant as a PNP.  Pursuant to 44 CFR §206.222 Applicant eligibility, only those PNPs which own and operate facilities identified in 44 CFR §206.221(e) are eligible for Public Assistance funding.

The Applicant’s appeal asserts that the damaged trestle meets the definition of “other essential government service facility” found in 44 CFR §206.221(e)(7) Definitions, Private nonprofit facility.  This definition states:

Other essential governmental service facility means museums, zoos, community centers, libraries, homeless shelters, senior citizen centers, rehabilitation facilities, shelter workshops and facilities which provide health and safety services of a governmental nature.  All such facilities must be open to the general public.

As the Applicant’s railroad trestle is not one of the facility types listed and does not provide a health and safety service of a governmental nature, the railroad trestle does not qualify as an eligible other essential governmental service facility.

The Applicant’s appeal also claimed that the railroad trestle meets the definition of an eligible PNP utility.  In accordance with 44 CFR §206.221(e)(2) Definitions, Private nonprofit facility, Utility, a “[u]tility means buildings, structures, or systems of energy, communication, water supply, sewage collection and treatment, or other similar public service facilities.”  This definition does not include nor pertain to PNP transportation buildings, structures, or systems.  Since the eligibility of a PNP is dependent upon owning or operating an eligible facility, and the railroad trestle does not qualify as an eligible facility, the Applicant is not eligible for Public Assistance funding.

Conclusion

I have reviewed the information submitted with the appeal and have determined that the denial of the Applicant’s RPA is consistent with Public Assistance regulations and policy.  Accordingly, I am denying the second appeal.

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

Sincerely,

/s/

Deborah Ingram
Assistant Administrator
Recovery Directorate

cc: Robin Finegan
Regional Administrator
FEMA Region VIII