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Second Appeal Analysis
PA ID# 013-53206-00; Township of Rapidan
PW ID# 1485; Environmental Compliance
From September 22 through October 14, 2010, severe storms and flooding impacted Blue Earth County, Minnesota where the Township of Rapidan (Applicant) is located. As a result of the disaster, the Applicant’s roadway, 563rd Lane, (Facility) suffered severe embankment washouts in four different locations. Noting that the damaged road was in imminent danger of collapse and presented an immediate threat to safety as a result of the river changing course and cutting into the bank of the road, the Applicant requested that the road be permanently relocated 50 feet away from the river. After conducting a site visit, FEMA agreed that it was not physically possible to repair the road in its existing location. As such, FEMA prepared Project Worksheet (PW) 1485 documenting costs in the amount of $264,341.00 to employ contract labor and equipment to relocate the road and construct it according to the Applicant’s specifications and in compliance with all federal and state legal and regulatory requirements. Due to the Facility’s close proximity to an archaeologically sensitive site (“the hill”), FEMA predicated grant assistance for the Facility on further environmental and historic preservation (EHP) evaluations and consultations should the Applicant deviate from the FEMA-approved scope of work (SOW). This was documented in the FEMA Record of Environmental Consideration (REC).
In late 2014, the Applicant requested a cost overrun totaling $354,043.22. In a December 30, 2014 email, FEMA Region V requested the Applicant explain any differences between the actual and approved costs, the source of the overrun, and documentation that linked actual costs to the approved SOW. In a March 9, 2015 response, the Minnesota Homeland Security and Emergency Management (Grantee) provided additional information regarding the difference in costs, along with the Applicant’s response and support documentation. Included with the response was a letter from I & S Group (Contractor), dated August 19, 2014, stating that much of the additional cost could be attributed to the original design being based on an erroneous topographic survey which caused a mid-construction redesign of the road relocation. As such, there were extra costs due to down time, digital model revision, remobilization and restocking. A December 18, 2014 letter from the Contractor stated, “[t]he final road alignment is conceptually the same as the footprint included in the PW. Disturbance of the hill was limited to the bottom one-third per direction given from FEMA to [the Applicant].” The Applicant asserted the road was moved as close to the archaeologically sensitive hill as possible without disturbing the slope or the hill. The Applicant further stated that it installed a retaining wall at the base of the hill to protect the hill from any erosion damage.
After review of these communications, FEMA determined that the Applicant moved the Facility closer to the hill than approved in the PW’s SOW and installed a retaining wall abutting the hill without prior approval from FEMA. As such, FEMA fully deobligated PW 1485 because the Applicant completed work not pre-approved by FEMA, which prevented FEMA’s re-evaluation of the site for potential National Historic Preservation Act (NHPA) § 106 issues and consultation with Indian Tribal Governments.
The Applicant appealed FEMA’s determination that the relocation project deviated from the FEMA-approved SOW in an August 14, 2015 letter. The Applicant argued that, per FEMA’s instructions, it was not to disturb the “wooded ridge and the side slopes” of the hill. The Applicant further argued that communications from FEMA were not clear on what part of the hill was to be avoided during the construction project. The Applicant stated that when it conferred with the Grantee, it recommended that it install a retaining wall and back fill the wall to protect the toe of the hill from erosion. Finally, the Applicant refuted FEMA’s assertion that the relocation project deviated from the approved SOW, except that it addressed additional State Historic Preservation Office (SHPO) concerns raised during the PW’s final review. The Applicant further asserted that the cost overrun was a direct result of addressing these additional concerns. In addition, the Applicant stated that it was told that, “if there was additional costs as a result [of the additional work to address SHPO concerns] all [it] had to do was present justification for the cost [overrun] at the time of closing out the PW.”4]
On December 3, 2015, FEMA sent a Final Request for Information (RFI) to the Applicant for any documentation demonstrating that it or the Grantee contacted FEMA before completing work outside the original SOW. The Applicant responded on December 15, 2015 stating there was no change in SOW because the FEMA REC gave it latitude to repair the road as necessary. The Applicant asserted the latitude provided should include “the addition of a retaining wall” as long as it followed the SHPO’s conditions set in the REC document. The Applicant also asserted that there was no requirement to get prior approval of the SOW modification from FEMA, and FEMA explicitly stated that it did not need to approve plans in a September 18, 2012 email. Included with its response, the Applicant provided email communications with the Grantee to substantiate its claims.
On March 31, 2016, the FEMA Region V Regional Administrator (RA) denied the first appeal because he determined that the Applicant did not comply with EHP conditions or the laws and regulations governing the PA program when deviating from the approved SOW for PW 1485. Specifically, the RA found that the Applicant was aware of archaeologically sensitive areas around the construction site, made aware of EHP conditions regarding grant assistance, instructed to contact FEMA should it deviate from the approved SOW, deviated from the approved SOW by constructing a retaining wall at the toe of the hill and a bus turn-around at the end of the road, and did not notify FEMA of the additional work prior to the start of construction. Because the Applicant did not notify FEMA prior to construction, the RA determined that it did not comply with 44 C.F.R. § 13.30(d) or afford FEMA the opportunity to re-evaluate the project for additional EHP concerns or consult with tribal governments as required by federal law.
In its second appeal, dated May 27, 2016, the Applicant reiterates that the cost overrun was the direct result of the additional EHP and SHPO concerns documented in the final version of PW 1485. In addition, the Applicant states that the additional work was not done outside of the FEMA-approved relocation. Finally, the Applicant argues that FEMA should follow the Grantee’s recommendation and approve the project.
Scope of Work Modifications
According to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 13.30(d)(1), Grantees or subgrantees must obtain the prior approval of the awarding agency whenever any revision of the scope or objectives of the project is anticipated. This is true regardless of why the scope is revised (i.e., hidden damage discovered, improved project, alternate project, or general scope change). FEMA guidance further stipulates that:
“… when a change in scope or a need for additional funding is discovered, the applicant should notify the State as soon as possible. It should not be assumed that such costs can be reported at the end of the project and additional funds will be approved automatically.... The State forwards the request to FEMA…. FEMA renders a decision and notifies the State either with an amended PW… or a written denial….”
The FEMA REC stipulated that particular attention should be given to the project conditions before and during project implementation and that failure to comply with conditions set forth in the REC could jeopardize PA funding. In addition, the FEMA REC clearly stated that “[a]ny change to the approved scope of work will require re-evaluation for compliance with [the National Environmental Policy Act] and other Laws and Executive Orders.” Moreover, while the Applicant tries to argue that the Grantee informed it that FEMA did not need to review plans before altering the approved SOW, the Grantee actually stated,
“FEMA does not require signed engineering plans. The key concern on this site is the wooded ridge along the west [right of way] between pt 55 and 57…. The ridge has been identified as a potential archaeological site. This area cannot be disturbed during construction…. Therefore, I would stay out of the ridge’s side slope… Once the construction limits are set, I would recommend getting concurrence from FEMA on the limits along the ridge, prior to construction.”
This statement clearly demonstrates that the Grantee emphasized to the Applicant that the archaeologically sensitive area must be avoided and recommended getting concurrence from FEMA before commencing construction. Through the REC and email communication, both FEMA and the Grantee alerted the Applicant of the special considerations associated with the relocation project and the need to confer with FEMA prior to the start of construction should there be any deviation from the approved SOW.
Upon review of the second appeal documentation, FEMA concludes that the Applicant deviated from the approved SOW, in both constructing the retaining wall and moving the Facility 50 feet beyond that which was approved by FEMA. In addition, excavation at specific locations cut into the archaeological site. This is confirmed using Google images depicting the Facility’s location before the disaster and after completion of the relocation project. As such, both federal Regulation and FEMA guidance required the Applicant to notify and receive approval from FEMA prior to the start of the additional excavation and construction. Regardless of the Applicant’s claim that it was instructed that it did not need to notify FEMA prior to the start of the additional work, and that it should wait until closeout to submit additional costs, there is no support that FEMA offered this advice, nor would such obviate the Applicant’s need to comply with federal law and FEMA policy.
National Historic Preservation Act § 106 Compliance
When providing federal grant assistance, FEMA must consider EHP laws, regulations and Executive Orders that apply to the use of federal funds prior to the start of a PA project. Pursuant to NHPA § 106, FEMA must consider the effects of proposed federally funded projects on historic properties prior to approving or expending grant assistance and provide the Advisory Council the opportunity to comment on the proposed actions. At a minimum, FEMA must identify historic properties, evaluate the effects of a potential PA project on historic properties, and consult with the SHPO, Tribal Historic Preservation Officer (THPO), and other interested parties prior to the start of construction.
FEMA alerted the Applicant to the archaeological sensitivities of the relocation project and the need to notify FEMA of any deviations of the approved SOW prior to construction. However, even if FEMA had not notified the Applicant of such historic preservation requirements, it is the Applicant’s responsibility to comply with all terms of the grant award. Here, the Applicant did not notify FEMA of the additional work until after it was completed. The Applicant’s failure to notify FEMA that additional work was necessary prevented FEMA from completing NHPA § 106 requirements, thus, jeopardizing federal grant assistance.
Pursuant to 44 C.F.R. § 13.43(a), FEMA may, among other remedies, disallow all or part of the cost of the activity or action if an applicant materially fails to comply with any term of an award, whether stated in a federal statute or regulation, State plan or application, notice of award or elsewhere.
The FEMA REC included a grant condition that any change to the approved SOW would require a re-evaluation of EHP impacts. Region V found that the Applicant deviated from the approved SOW by moving the road such that it encroached on the sensitive site and installing a retaining wall abutting the site and bus turnaround at the end of the roadway. Region V further determined that these changes were not approved by FEMA prior to the start of construction, and thus were non-compliant with grant award conditions. Because Region V determined that the Applicant failed to comply with conditions set forth in the FEMA REC, it deobligated PW 1485 in full. Pursuant to FEMA’s discretionary authority under 44 C.F.R. § 13.43(a), Region V was within its authority to fully deobligate the PW, especially in light of the fact that the Applicant was notified by FEMA and the Grantee that the area was archaeologically sensitive, any deviation to the approved SOW required FEMA approval, and failure to notify FEMA would jeopardize funding.
The Applicant deviated from the approved SOW and encroached on an archaeologically sensitive site. Moreover, the Applicant did not request prior approval from FEMA before deviating from the approved SOW as required by 44 C.F.R. § 13.30(d) and the FEMA REC. In failing to notify FEMA prior to completing additional work, the Applicant prevented FEMA from conducting the necessary EHP reviews and consultations, in violation of Federal Regulations and the grant award’s conditions. As such, the project is ineligible.
 See FEMA Record of Environmental Consideration (REC), DRW-019 – CAT C – 563rd Ln (Embankment Erosion 4 sites), at 3 (Jan. 12, 2012) (stating, “[a]ny change to the approved scope of work will require re-evaluation for compliance with NEPA and other Laws and Executive Orders”) [hereinafter FEMA REC].
 Letter from Civil Engineer, I & S Group, to Supervisor, Rapidan Township (Dec. 18, 2014).
 Memorandum from PA Branch Chief, FEMA, to Recovery/Mitigation Branch Director, MN Dep. of Public Safety (July 6, 2015).
 Letter from Supervisor, Township of Rapidan, to Director, MN Homeland & Sec. Mgmt. (Aug. 14, 2015).
 44 C.F.R. § 13.30(d)(1) (2010).
 Public Assistance Guide, FEMA 322, at 139-140 (June 2007) [hereinafter PA Guide].
 Email from Public Assistance Engineer, MN Homeland Sec. & Emergency Mgmt., to Civil Engineer, I & S Group, (Sep. 18, 2012, 15:22 CST).
 The entire record was reviewed by a FEMA Professional Engineer (PE) and Historic Preservation Specialist as part of the second appeal process. Both experts concluded the road relocation deviated from the FEMA-approved SOW, and in doing so, encroached on the archaeologically sensitive site.
 See Supra, notes 5 and 6.
 PA Guide, at 127-128.
 The National Historic Preservation Act of 1966, Pub. L. No. 89-665, § 106, 16 U.S.C. § 470(f) (2000); 36 C.F.R. § 800.16(d).
 See generally 44 C.F.R. Pt. 13.
 44 C.F.R. § 13.43(a)(2).