Debris Removal – Private Property

Appeal Brief

Summary Paragraph

From May 25 through August 13, 2008, floodwaters damaged five structures located on private property in Linn County (Applicant).  During project closeout, FEMA denied costs for the demolition and disposal of five foundations.  In a first appeal letter, the Applicant referred to a State of Iowa Department of Natural Resources authorization that waived the requirement for an asbestos inspection prior to demolition if the structure was structurally unsound and in danger of imminent collapse.  The Grantee forwarded the appeal, citing 40 C.F.R. § 61.145(a)(3), which they interpreted to provide an exception for the testing of asbestos in a structure to be demolished under an order of a State or local government agency.  The FEMA Region VII Regional Administrator denied the first appeal and de-obligated all costs, stating that the Applicant did not provide documentation, such as testing reports, demonstrating that the concrete posed an immediate threat to public health and safety.  Furthermore, the Applicant did not sufficiently document the amount of eligible demolition material removed.  On second appeal, the Applicant is contesting FEMA’s denial of all demolition and removal costs.  The Applicant emphasizes that it was not able to test for asbestos because the structures were deemed unsafe to enter.

Authorities and Second Appeals

• DAP 9523.4, Demolition of Private Structures at 4.
• 40 C.F.R. § 61.145(a)(3).
• 44 C.F.R. § 13.36(f)(3).

Headnotes

• DAP 9523.4 states that “Ineligible costs associated with demolition of private structures may include removal of slabs or foundations, except in very unusual circumstances, such as … an immediate public health and safety threat.”
  • The Applicant was not able to demonstrate an immediate public health and safety threat.
• 40 C.F.R. § 61.145(a)(3) excepts the Applicant from certain notification requirements if the facility is being demolished under a State or local government order due to the facility being structurally unsound and in danger of imminent collapse, but does not relieve the Applicant from taking some action to inspect the facility for asbestos.
  • The Applicant has not provided the results of an asbestos inspection.
• 44 C.F.R. § 13.36(f)(3) allows for FEMA to reimburse contract costs based on estimates as long as they are consistent with federal cost principles as established in 44 C.F.R. § 13.22 and OMB Circular A-87.
  • The Applicant has provided sufficient documentation demonstrating that costs are consistent with federal cost principles.

Appeal Letter

Appeal Analysis

Background

From May 25 through August 13, 2008, floodwaters damaged five structures located on private property in Linn County (Applicant).  On December 8, 2011, FEMA obligated PW 10549 Version 0 for $150,368.40 for the demolition and removal of these five structures.  The Applicant requested a large project closeout for $215,970.15 in actual costs.  The Grantee, noticing an error in the Applicant’s calculations, forwarded a large project closeout request to FEMA for $202,085.15 in actual costs.  During project closeout, FEMA obligated Version 1 for $156,769.15, which did not include $45,316.00 for the demolition and disposal of the five foundations because the Applicant failed to demonstrate that they posed an immediate threat to public health and safety.

First Appeal

In a first appeal letter submitted September 13, 2012, the Applicant challenged the denial of $45,316.00 in concrete demolition expenses.  The Applicant referenced a first appeal (which was later overturned) for the City of Cedar Rapids which states, “A limited number of previously identified structures built prior to 1979 would most likely contain asbestos, and the slabs and basement wall removal would be eligible for structures built prior to 1979.”  The Applicant argued that since their buildings were constructed prior to 1979, foundation removal should be eligible.  The Applicant also referred to a State of Iowa Department of Natural Resources authorization (“Iowa Authorization”) that waived the requirement for an asbestos inspection prior to demolition if the structure was structurally unsound and in danger of imminent collapse.  The authorization allows the Applicant to treat the entire structure as regulated asbestos containing material (RACM) regardless of whether the structure contains asbestos.  The Grantee forwarded the appeal, citing Title 40 Code of Federal Regulations (C.F.R.) § 61.145(a)(3), which they interpreted to provide an exception for the testing of asbestos in a structure to be demolished under an order of a State or local government agency if the facility is structurally unsound and in danger of imminent collapse.

FEMA Region VII issued a Request for Information (RFI) on December 5, 2012 for a detailed breakdown of the quantity and cost for demolition and removal of concrete separate from other construction debris.  The Applicant responded on January 21, 2013 noting that the $45,316.00 included the removal of all rock/stone material, including flooring materials, and was not solely foundation materials.  The Applicant reiterated that the buildings could not be tested for asbestos because they were deemed unsafe to enter and provided a breakdown of the composition of each structure.  The information provided was not detailed enough to separate the foundation removal quantities or costs.

The FEMA Region VII Regional Administrator (RA) denied the first appeal on August 9, 2013 and de-obligated all costs ($156,769.15).  The RA determined that the Applicant did not provide documentation, such as testing reports, demonstrating that the concrete posed an immediate threat to public health and safety as required by Disaster Assistance Policy DAP9523.4, Demolition of Private Structures[1] or that an unusual circumstance dictated removal of the foundations.  Furthermore, the Applicant did not sufficiently document the actual amount of eligible demolition material removed since all costs were based on estimates. 

Second Appeal

In the second appeal letter submitted December 4, 2013, the Applicant is appealing $215,970.15 in costs associated with debris removal.  This amount includes $45,316.00 from the first appeal as well as $156,769.15, which was de-obligated on first appeal.[2]  The Applicant emphasizes that it followed all FEMA instructions given at the time of the demolition for handling RACM structures and that FEMA later reversed its stance on RACM concrete.  The Applicant states that it was not able to test for asbestos because the structures were deemed unsafe to enter; therefore, the demolition had to be treated as containing RACM.  The Applicant further states that it let the contract as a lump-sum, unit-price contract with a not-to-exceed amount as stipulated in FEMA’s Debris Management Guide.[3]  The Applicant indicates that it maintained load and landfill tickets and daily haul records for each structure and presented a sample to FEMA at closeout.  The Applicant also argues that costs related to the National Historic Preservation Act Memorandum of Agreement (MOA)[4] should be eligible since those costs have nothing to do with the physical demolition of the five structures.  The Grantee forwarded the second appeal, noting that the Applicant complied with all State and federal regulations and policies in place at the time of the disaster.

Discussion

Foundation Demolition and Removal

The Iowa Authorization that waives the requirement to test for asbestos specifically states that it “does not provide relief from the requirements of other federal, State and local agencies.”[5]  While the authorization allowed the Applicant to treat all demolition debris in PW 10549 as RACM, it did not waive the FEMA requirement for the Applicant to show that the foundations are an “immediate public health and safety threat” as stated in Disaster Assistance Policy DAP9523.4, Demolition of Private Structures.[6]

Title 40 Code of Federal Regulation § 61.145 provides federal standards applicable to the owner or operator of a demolition or renovation activity prior to commencement of the action.[7]  A sequential reading of 40 C.F.R § 61.145 requires a facility to be thoroughly inspected for asbestos to determine the applicability of subsequent subsections of the regulation.[8]  While 40 C.F.R. § 61.145(a)(3) excepts the Applicant from certain notification requirements if the facility is being demolished under a State or local government order due to the facility being structurally unsound and in danger of imminent collapse, it does not relieve the Applicant from taking some action to inspect the facility for asbestos.  The extent of the inspection may vary depending on the condition of a facility.  In a situation where the facility is structurally deficient, a lesser standard of inspection may be adequate.  For instance, even if a facility is structurally unsound and cannot be entered to test for asbestos, the outside of the facility may still be able to be tested.  If a structure cannot be tested without putting persons in danger, a qualified specialist may perform the inspection from afar.  This inspection must be properly documented to meet the requirements of 40 C.F.R § 61.145.  The Applicant has not provided any inspection results showing the presence of asbestos and therefore has not demonstrated that the five foundations were an “immediate public health and safety threat.”[9]  Consequently, the RA was correct to find that the removal of foundations is not eligible.

As the contracts are lump-sum contracts, the costs for the demolition and removal of the foundations cannot be determined from the invoices.  Moreover, the Applicant has not provided enough information to separate the foundation removal costs from the general concrete removal costs, which total $45,316.00.  Therefore, general concrete removal costs are not eligible because these costs include foundation costs.

Documentation Demonstrating the Amount of Eligible Demolition Material Removed

The RA de-obligated all previous funding on first appeal because all costs were based on estimates, stating that the “applicant has not provided sufficient documentation demonstrating the amount of eligible demolition material removed.”  Pursuant to 44 C.F.R. § 13.36(f)(3), “[c]osts or prices based on estimated costs for contracts under grants will be allowable only to the extent that costs incurred or cost estimates included in negotiated prices are consisted with Federal cost principles” as established in 44 C.F.R. § 13.22 and OMB Circular A-87.[10]  The Applicant submitted bid sheets with estimates of the quantity of demolition material removed as well as lump sum contracts, invoices, and copies of paid checks to account for all incurred costs, all of which are consistent with federal cost principles.  While the Applicant was not able to provide the specific costs for asbestos demolition, FEMA was able to determine the costs for concrete demolition from the bid sheets.  The concrete demolition costs include the ineligible asbestos demolition costs and are therefore ineligible.  However, per federal cost principles, the costs for non-concrete demolition and debris removal are eligible. 

As the RA determined all debris removal was ineligible, all incidental costs were also de-obligated.  Since FEMA is reinstating portions of the debris removal costs, those incidental costs, which include an archaeological survey, demolition monitoring, direct administrative costs, materials costs, and memorandum of agreement costs, are also reinstated.  As a result, the total eligible costs are $156,769.15.

Conclusion

The Applicant has not provided sufficient evidence that the five foundations were a threat to public health and safety.  Therefore, FEMA upholds the Regional Administrator’s determination that concrete demolition removal costs of $45,316.00 are not eligible.  The Applicant has sufficiently demonstrated the eligibility of $156,769.15 in non-concrete related demolition and removal costs. 

[1] Disaster Assistance Policy DAP9523.4, Demolition of Private Structures at 2 (July 18, 2007).