Operation of Permanently Mounted Generator

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster4077-DR-OH
ApplicantVan Wert County Emergency Management Agency
Appeal TypeSecond
PA ID#121-U1HKY-00
PW ID#322
Date Signed2014-09-04T00:00:00

Conclusion:  Van Wert County’s permanently mounted generator costs are eligible; however, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible work.

Summary Paragraph

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage, causing downed utility lines and widespread power outages for multiple days.  The Van Wert County Emergency Management Agency (Applicant) utilized two temporary generators and one permanently mounted generator during the event to support emergency protective measures at its Emergency Operations Center and a shelter at its middle school. FEMA prepared Project Worksheet (PW) 322 for $11,883.60 to fund the temporary generators and fuel for the permanently mounted generator.  FEMA did not reimburse the usage of the permanently mounted generator based on FEMA’s schedule of equipment rates.  The Applicant submitted a first appeal for $1,404.43 requesting that FEMA use equipment rates for the permanently mounted generators to determine eligible funding, because its permanently mounted generator was housed in a leased facility.  The Regional Administrator denied the first appeal, explaining that the ownership costs of permanently mounted generators are viewed as components of the cost of operating the facility.  The Applicant reiterates its position in its second appeal.

Authorities and Previous Appeals Discussed

  • Stafford Act §403,  42 U.S.C. § 5170b(3)
  • 44 CFR § 206.226
  • Public Assistance Guide, FEMA 322 (June 2007), pages 54-55, 85
  • Public Assistance Digest, FEMA 321 (Jan. 2008), page 135
  • FEMA-DR-4077-OH, Trimble Township Wastewater Treatment District (Jan. 17, 2014)

Headnotes

  • 42 U.S.C. § 5170b(3) and 44 CFR § 206.225(a)(3) provide that generally, those prudent actions taken by an Applicant to ensure the continuation of essential public services and protect lives and public health are eligible for assistance.
  • FEMA 322, Public Assistance Guide (June 2007), at 54-55 provides that the cost of obtaining power from alternate sources is considered an increased operating expense and is not eligible.  The guidance does provide an exception for increased operating costs constituting “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”
    • Application of this guidance necessitates a distinction between temporary and permanently mounted generators.
    • FEMA reimburses the use of temporary generators based on FEMA equipment rates or similar set rates. 
    • FEMA does not reimburse the use of permanently mounted generators based on equipment rates.  However, if permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.


 

Appeal Letter

September 4, 2014

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

Re: Second Appeal – Van Wert County Emergency Management Agency, PA ID 121-U1HKY-00, Operation of Permanently Mounted Generator, FEMA-4077-DR-OH, Project Worksheet (PW) 322

Dear Ms. Dragani:

This is in response to your letter dated July 3, 2013, which transmitted the referenced second appeal on behalf of the Van Wert County Emergency Management Agency (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $1,404.43 for reimbursement of the operation of a permanently mounted generator based on FEMA’s schedule of equipment rates.

As explained in the enclosed analysis, I have determined that the Applicant’s use of a permanently mounted generator is eligible.  However, the eligible cost associated with that usage is limited to the cost of the fuel consumed during the performance of eligible emergency work.  Therefore, I am denying the appeal.

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

Sincerely,

/s/

Brad J. Kieserman
Assistant Administrator
Recovery Directorate

Enclosure

cc: Janet Odeshoo
     Acting Regional Administrator
     FEMA Region V

Appeal Analysis

Background

During the incident period of June 29 through July 2, 2012, strong winds and severe storms produced extensive damage throughout Van Wert County, causing downed utility lines and widespread power outages for multiple days.  The Van Wert County Emergency Management Agency (Applicant) utilized two temporary generators and one permanently mounted generator during the event to support emergency protective measures at its Emergency Operations Center and a shelter at its middle school shelter.  FEMA prepared Project Worksheet (PW) 322 for $11,883.60 to fund usage of the temporary generators based on FEMA’s schedule of equipment rates and fuel for the permanently mounted generator.  Because one of the generators was permanently mounted, FEMA did not reimburse the use of that generator based on FEMA’s equipment rates, but rather for fuel costs only. 

First Appeal

The Applicant submitted a first appeal for $1,404.43 in a letter dated March 26, 2013, asserting that reimbursement for the permanently mounted generator usage should be based on FEMA’s schedule of equipment rates because its permanently mounted generator was housed in a leased facility.  The FEMA Region V Regional Administrator denied the first appeal in a letter dated May 7, 2013, explaining that the depreciation and ownership costs of permanently mounted generators already are viewed as components of the cost of operating the facility.

Second Appeal

The Applicant submitted a second appeal for $1,404.43 in a letter dated June 13, 2013, reiterating its request for FEMA to apply equipment rates in reimbursing the permanently mounted generator usage.  The Applicant’s second appeal letter states that the Applicant leases the facility that houses the generator and in its first appeal letter, it maintains that it is responsible for the operation and maintenance of the generator.  The Applicant submitted its lease for the facility with its second appeal.  The Grantee supports the Applicant’s appeal, and its transmittal letter also cites a second appeal under FEMA-3288-EM-FL, dated January 17, 2012, involving a Miami-Dade County, Florida, project for which FEMA funded permanently mounted generator costs using FEMA’s schedule of equipment rates.

Discussion

FEMA policy specifically provides that the cost of obtaining power from alternate sources, with a few exceptions, is considered an increased operating expense and is generally not eligible for Public Assistance.[1]  FEMA’s policy provides exceptions, however, for “reasonable short-term additional costs to an applicant that are directly related to accomplishing specific emergency health and safety tasks as part of eligible emergency protective measures.”[2]  A specific example of such an exception is the “increased utility costs of a permanently mounted generator at a hospital or police station.”[3]   The FEMA Public Assistance Guide also lists the use of “temporary generators for facilities that provide health and safety activities” as an example of an emergency protective measure that can be undertaken by a community before, during, and following a disaster.[4]

Recent appeals and appeal decisions have highlighted confusion with regard to distinguishing between the eligible costs associated with the use of permanently mounted generators compared to temporary generators and the underlying rationale for such distinctions.[5]  Use of the terms “portable” and “fixed” as interchangeable with “temporary” and “permanently mounted” has created additional ambiguity by primarily focusing on the physical placement of the generator rather than the duration, intent and purpose of the placement. 

As such, it is important to reinforce the distinction between temporary and permanently mounted generators.  FEMA reimburses the use of temporary generators based on FEMA equipment rates or similar set rates in large part because the purpose of the placement of those items at the facility is related to the disaster in question and temporary in nature.  FEMA equipment rates include such costs as operation of equipment, depreciation, overhead, maintenance, field repairs, fuel, lubricants, tires, Occupational Safety and Health Administration equipment, and other costs incidental to operation.  In contrast to temporary generators, permanently mounted generators, whether a fixture as described within OMB Circular A-87, mounted on a pad within a shed servicing a building, or affixed or otherwise bolted down to a slab adjacent to a building, typically have been placed in their locations for reasons that preceded the disaster and with an intent that they remain there afterward.  Hence, the fundamental purpose, nature, and duration of the placement of a permanent generator differ from a temporary generator that is brought in to provide temporary emergency power during the time of the disaster in question.  The purpose of permanently mounted generators is to provide backup power whenever necessary, and not only as a consequence of a disaster.  Recognizing such a purpose, it is reasonable to assume the associated overhead costs for permanently mounted generators is covered by the applicant’s operating budget and that the only out-of-pocket expense for operating them is the increased operating expense of fuel used.  Accordingly, FEMA will reimburse fuel costs for permanently mounted generators if they are used to perform eligible emergency work because those are the only increased costs incurred by the applicant as a direct result of the event.  This policy distinction applies to permanently mounted generators as a matter of principle, regardless of circumstances associated with an individual applicant’s insurance coverage, the placement of a permanently mounted generator in a leased facility, or whether maintenance costs for a permanently mounted generator are included in an applicant’s operating budget.

With regard to the fundamental issue of this appeal, the basic facts are analogous to those in the January 2014 Trimble Township Wastewater Treatment District second appeal decision.  The Trimble second appeal decision reinforced existing policy in finding that when permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work, but will not reimburse the usage based on equipment rates.

Conclusion

FEMA does not reimburse the use of permanently mounted generators based on equipment rates.  However, if permanently mounted generators are used in the performance of eligible emergency work, FEMA will reimburse the fuel consumed during the performance of that work.  In this case, FEMA has provided all of the eligible funding available for the permanently mounted generator usage in PW 322.


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

[2] Id.at 55.

[3] Id.

[4] Id. at 72.

[5] See FEMA-DR-4077-OH, Trimble Township Wastewater Treatment District (January 17, 2014) (noting unclear direction provided by prior second appeal decisions as to eligible costs associated with permanently mounted generator usage).  The Trimble decision also found that the Miami-Dade second appeal decision, referenced by the Grantee, accurately reflected FEMA policy regarding reimbursement of permanently mounted generator usage but provided ambiguous direction to the Regional Administrator and consequently was misapplied.

 

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