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Second Appeal Analysis
PA ID# 017-02D00-00; Palisades Medical Center
PW ID# 4495; Direct Result of Disaster
During the incident period of October 26 through November 8, 2012, Hurricane Sandy (Sandy) impacted the state of New Jersey, including Hudson County, where Palisades Medical Center (Applicant) is located. The Applicant is an eligible private non-profit organization with a complex consisting of three buildings: the main Hospital, an administrative building called the Pavilion, and an elder-care facility called the Harborage. During Sandy, the three buildings sustained wind damage and flooding from the storm surge. On August 24, 2013 FEMA obligated Project Worksheet (PW) 4495 to address this damage.
Emergency power generators served each of the Applicant’s buildings. The Pavilion and Harborage generators were located outdoors, while the Hospital generator was located in a boiler room inside the Hospital. During the storm, all three generators activated when the utility power grid failed. The Applicant shut down the Hospital generator when water began to rise in the boiler room. The water ultimately reached a height of 15 inches. Some electrical equipment located at or below the water line required repair. FEMA conducted a site visit to investigate the damage on February 27, 2015. During this visit, the Applicant stated that, since Sandy, the operation and efficiency of the generator was compromised, and it was no longer dependable as a source of emergency power for the Hospital. No damage to the generator was documented during the site visit by FEMA or the Grantee. PW 4495 stated that FEMA could not replace the Hospital generator, as it did not flood and was not damaged.
In early 2015, the Applicant orally requested a change in the scope of work (SOW) for the replacement of the Hospital backup generator, asserting disaster-related damage. The Grantee transmitted a formal request on July 23, 2015. FEMA issued a determination memo on August 5, 2015, concluding that it could not link any asserted damage of the Hospital generator to Sandy. This determination was based upon (1) the original signed PW, which indicated that the Hospital generator did not sustain damage during Sandy; (2) the site visit, during which no water damage was observed; and (3) an engineering report, which stated that the Hospital generator was not damaged in the storm.
The Applicant appealed FEMA’s determination that Sandy did not damage the Hospital generator in a letter dated December 3, 2015. The Applicant argued that brackish water in the boiler room infiltrated parts of the generator including switch gear, electrical components, and the fuel tank, all of which required extensive repairs. The Applicant also argued that, contrary to what was stated in the engineering report, the Hospital generator was not operational until months after the storm, although it did not state when the generator resumed operation.
To support the first appeal, the Applicant relied on: (1) a service report from Miller & Chitty Co., the servicer of the Hospital boiler; (2) an assessment from Robert O’Malley Electrical Contractor, Inc. (O’Malley Electric), an electrical engineering firm; (3) a report prepared by DLB Associates, an engineering firm retained to consult on the replacement of the Applicant’s generators; (4) various test sheets and service reports from Foley, Inc., which held the maintenance contract for the generators; and (5) a number of internal documents, such as generator test sheets and the notes of maintenance personnel. The Grantee supported the appeal in a letter dated May 5, 2016.
On July 28, 2016, FEMA sent a Final Request for Information (RFI) to the Applicant for, among other things, maintenance reports from 2011 to 2014, the current condition of the generator, and the manufacturer’s documented service life. The Grantee transmitted the Applicant’s response to the RFI on September 1, 2016, including certain additional maintenance reports for the generator, a service report and annual inspection sheet from 2016, and a document prepared by the Hospital’s Director of Plant Services entitled “Emergency Generator Replacement Justification,” which explained the decision to replace the Hospital generator.
On November 17, 2016, the FEMA Region II Regional Administrator (RA) noted that the first appeal was untimely, and would fail on that basis, but elected to also address the appeal on the merits. The RA then concluded that the record did not establish that Sandy damaged the Hospital generator. Specifically, the original PW stated that the Hospital generator was undamaged, DLB Associates’ engineering report offered the same conclusion, and the site visit did not show water damage to the generator. The RA also noted that maintenance records did not reflect flood damage, but rather pre-disaster maintenance problems. Accordingly, the RA denied the first appeal.
In its second appeal, dated January 11, 2017, the Applicant argues that the engineering report was incorrect in stating that the Hospital generator was functional shortly after the storm. It argues that brackish water infiltrated generator electrical components, forcing staff to shut down the generator when the rotor assembly was putting out a mist. It also argues that an electrical engineer recommended replacement of the Hospital generator, and notes that the boiler’s oil pump motors, which were at the same height as the generator switch gear, burnt out during the storm. Finally, the Applicant confirms that the amount in dispute is $2,614,450.00.
The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988 (Stafford Act) provides that “[a]ny decision regarding eligibility for, from, or amount of assistance under this title may be appealed within 60 days after the date on which the applicant for such assistance is notified of the award or denial of award of such assistance.” FEMA’s implementing regulations require that applicants file an appeal with the grantee within 60 days after receipt of notice of the action that is to be appealed, at which point the grantee must forward the appeal, along with a written recommendation, to the RA within 60 days. Neither the Stafford Act, nor the Code of Federal Regulations, authorize FEMA to grant time extensions for filing appeals.
It should be noted at the outset that the Applicant has not challenged the RA’s determination that the first appeal was untimely. This conclusion was correct, as FEMA issued its determination regarding the request to include replacement of the generator in the SOW on August 5, 2015, but the Applicant did not appeal until December 3, 2015. Moreover, the Grantee did not transmit the appeal to FEMA until May 5, 2016, 154 days later. Accordingly, this appeal is denied based on timeliness. Nevertheless, even if timeliness were not an issue, this appeal would still fail on the merits.
Direct Result of Disaster
Pursuant to the Stafford Act § 406, FEMA may reimburse eligible applicants for the repair, restoration, reconstruction, or replacement of a public facility damaged or destroyed by a major disaster. Implementing the Stafford Act, Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.223(a) states an item of work must be required as the result of a major disaster event to be eligible for PA funding. Damage that occurs during the incident period, or is the result of events that occurred during the incident period, is eligible. Damage that results from a cause other than the designated event, such as a pre-disaster damaging event, post-disaster damaging event, or work to correct inadequacies that existed prior to the disaster, is not eligible. It is the applicant’s responsibility to provide sufficient documentation to substantiate that damage was the result of the disaster.
Here, in requesting the change in the SOW, the Applicant has consistently relied upon the opinions of experts contained in various documents, and upon maintenance records, which it argues demonstrates good operation of the generator prior to Sandy and poor operation after the disaster. A discussion of the relevant documents is included below:
- Miller & Chitty Co.
Handwritten records of the Hospital’s boiler operators on October 29, 2012, indicate that the boiler was shut off at some point due to the rising water in the boiler room, and when the staff attempted to power it up several hours later, there was an electrical problem. On October 30, Miller & Chitty Co. serviced the boiler. The handwritten account of the service call states that the boiler’s oil pump burned out and was replaced. It states that contractors or electricians on site started the Hospital generator, and a subsequent test of the boiler revealed the need for a replacement control circuit transformer. It should be noted that the applicant has maintained that the Hospital generator was not restarted on October 30. This report offers no opinion as to whether the Hospital generator was damaged, nor is FEMA able to draw that conclusion from the
reference to the boiler’s oil pump burning out.
- O’Malley Electric
An electrical contractor from O’Malley Electric visited the Applicant’s facility on October 31, 2012, and prepared a short assessment that concluded that the Pavilion and Harborage generators suffered irreparable damage. The assessment specified that the storm surge and wave height pushed salt water into the generator housings, saturating the commutators, armatures, brushes, field coils, and magnetic pole shoes, causing failure. With respect to the Hospital generator, the assessment said only, “[w]e also recommend replacement of the Main Hospital generator because we believe water levels in the generator room were up to the generator housing.” Given the lack of specificity and the admitted reliance on belief, rather than observation, this assessment does not appear to be based on an actual examination of the generator. Accordingly, FEMA is unable to rely on this assessment to conclude that Sandy damaged the Hospital generator.
- DLB Associates
On March 22, 2013, DLB Associates, an engineering consulting firm retained by the Applicant, prepared a Generator Remediation Report, assessing the effects of Sandy on the Applicant’s generators and recommending a course of action to restore emergency backup power capability. This was a particularly important report because, first, it was based upon a site visit by two engineers, and second, DLB Associates had extensive experience in the installation of generators in critical facilities. The DLB Report stated that the Pavilion and Harborage suffered permanent damage during Sandy when flood waters overcame them and rendered them inoperable. By contrast, the DLB report stated that Hospital staff shut down the Hospital generator as flood water approached peak levels of approximately 15 inches. According to the report, “[t]he Hospital remained unpowered for approximately 4‑8 hours until flood waters receded and the generator was safely restarted by operations staff.” The DLB Report later included the following statement:
It should be noted, operation of the Hospital’s 540kW generator was not compromised by the flood waters. This generator is still operational and continues to be used at the facility. The Hospital generator is approximately 35 years old, dating to original construction. We understand maintenance costs have been increasing, unplanned downtime has increased, and replacement parts are becoming more difficult to obtain as the generator ages.
The Applicant has contested the DLB Report’s statement that the Hospital generator was restarted within four to eight hours of the flood waters receding, and has asserted that the hospital was actually being powered by a portable rental generator that was in place in anticipation of Sandy. The Applicant has not stated when the generator was restarted, but has included a test sheet showing that it was in use by January 8, 2013, at the latest.
Regardless of when the Hospital generator was restarted, the DLB Report never concluded that the generator suffered damage during Sandy. It was prepared approximately five months after the flooding, and the engineers involved had the opportunity and expertise to identify any flood damage. The report was specific as to the damage suffered by the Pavilion and Harborage generators, but stated that the Hospital generator was not compromised by the flood waters. Accordingly, the DLB Report does not support the Applicant’s appeal.
- Foley, Inc.
The record also includes a letter from Foley, Inc. about the Pavilion and Harborage generators. Foley held the maintenance contract for the Applicant’s generators since 2008. The letter stated that flood waters submerged the two outdoor generators to a depth of 30 inches, not including wave action from passing emergency vehicles. This letter has the Hospital generator serial number where it should have the serial number for the Harborage generator. The letter was drafted in support of the replacement of the Pavilion and Harborage generators, and its description of the generators running until overcome by water, flooding to a depth of 30 inches, and suffering the effect of wave action, were true only of the outdoor generators, not the Hospital generator. Accordingly, despite the presence of the Hospital generator serial number, FEMA cannot rely on this letter to conclude that Sandy damaged the Hospital generator.
- Maintenance Records
The Applicant also relied on maintenance records for the Hospital generator that included, among other items, inspection sheets, test sheets, load bank test reports, and service records. These records cover only certain months and do not include the complete time period before and after the disaster, making it difficult to establish the pre- and post-disaster state of the generator. It does appear that the generator suffered maintenance problems both before and after Sandy, and post-disaster service records show ongoing maintenance issues such as a broken gasket, cylinder head, and manifold; a dying battery; oil, fuel and coolant leaks; and worn out hoses and bearings. Additionally, beginning in January 2015, the generator periodically showed increased startup times.
Even if FEMA could conclude from the supplied records that the Hospital generator had increased maintenance issues after Sandy, this would not allow the conclusion that Sandy actually caused these problems. As noted above, the record does not establish that flood waters compromised the generator’s operation. Moreover, while the Applicant has asserted that the reported maintenance issues were caused by infiltration of water, neither the Applicant nor its engineers or contractors have explained how the water would have caused the specific issues documented in the service records. FEMA is likewise unable to draw that conclusion.
The Applicant’s first appeal was untimely. Beyond that, the record does not establish that any damage to the Hospital generator was a direct result of a major disaster event, as required by 44 C.F.R. § 206.223(a)(1). Thus, the work to repair the Hospital generator is ineligible for Public Assistance funding. Therefore, the appeal is denied.
 The outdoor generators ran until overcome by the flood waters. Work related to these generators was included on PW 5112.
 DLB Associates, Generator Remediation Report, at 2–5 (Mar. 22, 2013) [hereinafter DLB Report].
 Letter from Designated Official, FEMA N.J. Sandy Recovery Office, to Pub. Assistance Unit Head, N.J., attach. at 1 (Aug. 5, 2015) [hereinafter Determination Memo].
 Project Worksheet 4495, Palisades Med. Ctr., Version 0, at 11 (Aug. 24, 2013).
 Determination Memo at 1.
 Letter from Pub. Assistance Unit Head, N.J., to Dir., FEMA Sandy Recovery Field Office, at 1 (July 23, 2015).
 Determination Memo at 1-2.
 Letter from Vice President Dev., Palisades Med. Ctr., to UASI Div. Closeout Lead, N.J. Office of Emergency Mgmt., at 1-2 (Dec. 3, 2015) [hereinafter First Appeal Letter].
 Letter from Appeals and Audits Section Chief, FEMA Region II Recovery Div., to Governor’s Authorized Representative, N.J., and Vice President Dev., Palisades Med. Ctr., at 2 (July 28, 2016) [hereinafter RFI].
 See generally Letter from Alternate Governor’s Authorized Representative, N.J., to Reg’l Adm’r, FEMA Region II, apps. 1-6 (Sept. 1, 2016) [hereinafter RFI Response].
 Letter from Reg’l Adm’r, FEMA Region II, to Governor’s Authorized Representative, N.J., and Vice President Dev., Palisades Med. Ctr., attach., at 4 (Nov. 17, 2016) [hereinafter First Appeal Analysis].
 This is the first time the Applicant asserts, without supporting documentation, that the generator put out a mist. To the extent that the Applicant seeks to add new information to the administrative record, FEMA cannot consider new information presented for the first time in the second appeal. FEMA Second Appeal Analysis, Nobles Cooperative Electric, FEMA-4112-DR-MN, at 2-3 (July 23, 2015) (“Once the administrative record is closed, FEMA will not consider any new information submitted with a second appeal.”). The Final RFI stated that no additional documents would be accepted after the First Appeal. See RFI at 1.
 Letter from Vice President Dev., Palisades Med. Ctr., to Reg’l Adm’r, FEMA Region II, at 1 (Jan. 11, 2017). (The amount that the applicant requested varied in different documents. The original request on July 22, 2015, to change the scope of work stated the anticipated costs were $4,500,000.00. First Appeal Analysis at 2. On May 26, 2016, the Grantee stated in an email that the amount in dispute on the first appeal was $2,614,450.00. Email from North Area Supervisor, N.J. Office of Emergency Mgmt., to Appeals and Audits Section Chief, FEMA Region II Recovery Div. (May 26, 2016, 13:54 EST). On August 18, 2016, however, the Applicant stated in response to the RFI that that amount under appeal was $2,875,370.00. Memorandum from Vice President Dev., Palisades Med. Ctr., at 1 (Aug. 18, 2016)).
 The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288 § 423, 42 U.S.C. § 5189a(a) (2006).
 Title 44 Code of Federal Regulations (44 C.F.R.) § 206.206(c)(1), (2) (2012).
 FEMA Second Appeal Analysis, Fla. Dep’t of Transp., FEMA-1785-DR-FL, at 3 (July 9, 2016); FEMA Second Appeal Analysis, City of Lake Mary, FEMA-1539-DR-FL, at 4 (Aug. 31, 2015); FEMA Second Appeal Analysis, Pub. Health Tr. of Miami-Dade Cty., FEMA-3259-EM-FL, at 2 (Mar. 27, 2015).
 44 C.F.R. § 206.223(a)(l).
 Public Assistance Guide, FEMA 322, at 30 (June 2007).
 44 C.F.R. § 206.206(a); FEMA Second Appeal Analysis, Village of Waterford, FEMA-4020-DR-NY, at 4 (Sep. 4, 2014) (stating “[t]he Applicant has the burden of substantiating its claims”).
 Boiler Operator Notes, at 2 (Oct. 29, 2012).
 Miller & Chitty Co., Service Report, at 1 (Oct. 30, 2012) [hereinafter Miller & Chitty Report].
 First Appeal Letter, at 1.
 Letter from Project Manager, Robert O’Malley Elec. Contractor, Inc., to representative, Palisades Med. Ctr., at 1 (Oct. 31, 2012).
 See generally DLB Report.
 Letter from Senior Eng’r, DLB Assocs., to Vice President Dev., Palisades Med. Ctr., at 1 (Oct. 10, 2013).
 First Appeal Letter, at 1.
 Hospital Generator Test Sheet for Jan. 8, 2013.
 Letter from Serv. Manager, Foley Power Systems, Inc., to Representatives, Palisades Med. Ctr., at 1 (Nov. 18, 2013).
 Id.; see also RFI Response, app. 2, at 1 (identifying Hospital generator by model and serial number).
 See, e.g., Foley Inspection Reports for Apr. 4, 2011, Aug. 8, 2012 (pre-disaster); Foley Inspection Reports for Jan. 8, 2013, Apr. 8, 2013 (post-disaster).
 See, e.g., Foley Service Reports for Mar. 4, 2013, Jan. 21, 2014, Mar. 11, 2014, Oct. 10, 2014, Nov. 11, 2014,
 See, e.g., Foley Service Reports for Jan. 12, 2015, Jan. 20, 2015, Apr. 28, 2015, July 12, 2016; Hospital Generator Test Sheets for Jan. 8, 2015, Jan. 5, 2016, Feb. 9, 2016; Foley Inspection Reports for June 10, 2015, Nov. 4, 2015.