Timeliness, Scope of Work

Appeal Brief

Summary

On June 1, 2011, a tornado ripped the roof off of a public housing building (Facility) owned by the Applicant.  FEMA prepared PW 78 four months after the disaster to document the damage to the Facility’s roof and fourth floor, and noted the Facility remained without temporary roofing.  FEMA deducted insurance proceeds and on April 5, 2012, obligated PW 78 for $88.24.  In June 2012, the Applicant demolished the Facility without completing any of the repairs approved in PW 78.  FEMA denied demolition expenses under a different PW.  The Regional Administrator (RA) upheld the determination.  On November 26, 2013, the Applicant requested FEMA amend the SOW in PW 78 to increase the disaster-related damages and approve demolition costs.  FEMA denied the Applicant’s requests in a determination dated September 5, 2014.  The Applicant filed a first appeal, from which the RA determined that the Applicant: (1) failed to timely identify the additional damage to the Facility and associated work; (2) did not file an appeal within the required 60-day timeframe; (3) did not timely identify the need for demolition and FEMA previously denied a request for demolition expenses in a prior first appeal decision; and (4) failed to complete the original authorized SOW and therefore FEMA would recover the $88.24 in previously awarded Public Assistance (PA) funding.  On second appeal, the Applicant argues: (1) there is no specifically documented duration in FEMA policy to identify additional damages; (2) FEMA had knowledge of disaster-related damages to the heating, ventilation, air conditioning, and electrical/mechanical systems before the Facility was demolished, so FEMA must accept the Applicant’s cost estimate for the repairs; (3) its request to amend the SOW represents a cost overrun of a previously authorized project; (4) interior damages on the first through third floors were a direct result of the disaster; and (5) the demolition of the Facility was required to protect the public from an imminent threat.  

Authorities and Second Appeals

• Stafford Act § 423(a).
• 44 C.F.R. § 206.202(d)(1)(ii), 206.204(e), 206.206(c), 206.206(e)(3), 206.223(a)(1), 206.223(e), 206.226.
• PA Guide, at 29, 31-32, 139, 140.
• Dept. of Transp., FEMA-4068-DR-FL, at 3 (Aug. 5, 2016), City of Plattsburgh, FEMA-4020-DR-NY, at 4 (June 8, 2016), City of Port Arthur, FEMA-1606-DR-TX, at 1-2 (Oct. 14, 2008).

Headnotes

• Stafford Act § 423(a), implemented by 44 C.F.R. § 206.206(c)(1), allows an applicant to appeal any PA determination within 60 days of receiving notice of the appealable action.  Under 44 C.F.R. § 206.206(c)(2), the grantee will review and forward appeals from an applicant to the RA within 60 days of receipt.
  • The Applicant submitted its appeal of PW 78 more than 60 days after receipt of the project files.  The Grantee forwarded the second appeal more than 60 days after receipt.
• 44 C.F.R. § 206.223(a)(1) provides that work must be required as the direct result of the disaster to be eligible for PA funding.  As such, 44 C.F.R. § 206.223(e) prohibits PA for damages caused by an applicant’s negligence.
  • Significant rainfall occurred after the disaster and the Applicant has not demonstrated it attempted to take protective measures to prevent water intrusion.  Consequently, it has not established the damages to floors one through three are disaster-related.
• Under the Public Assistance Guide, when a change in the SOW or  need for additional funding is discovered, a request for the additional work or costs should be sent to the Grantee as soon as possible so damages can be inspected before they are covered up or repaired.
  • As the change in SOW was requested after the Facility was demolished, FEMA could not verify the damages or needed repairs.  Consequently, the requested work and costs are ineligible for PA funding.

Appeal Letter

Appeal Analysis

Background

On June 1, 2011, a tornado damaged a public housing apartment building (Facility) owned by the Springfield Housing Authority (Applicant).  The tornado tore the roof off the four story Facility, resulting in rain and wind damage to the fourth floor and exterior structure.  The President declared a major disaster on June 15, 2011.  Shortly after the disaster, Axyz, Inc. prepared a Preliminary Engineering Report (Axyz’s Report),[1] which indicated that the disaster caused “damage to the missing roof and severely damaged parapet” and “substantially compromised the electrical and mechanical systems in the [Facility] and these systems would have to be replaced.”[2]  Axyz’s Report then noted there was “significant mold on the ceilings [and] walls” of the interior and recommended mold remediation, as well as removal and proper disposal of lead paint present in the interior of the walls, windows and doors.[3]  It also stated “an attempt should be made to tarp the top of the building to prevent further water intrusion.”[4]  Axyz’s Report did not contain any specific cost estimates. 

After Axyz, Inc. conducted its assessment, FEMA inspected the Facility and its damages.  FEMA prepared Project Worksheet (PW) 78 to document costs to repair the Facility’s parapet walls, replace the roof, and complete other necessary repairs on the fourth floor of the Facility.[5]  The PW noted that, as of October 16, 2011, the Applicant had not “taken any measures…to install temporary roofing or secure the [Facility]” thereby allowing the Facility to continue to deteriorate.[6]  The repair estimate for disaster-related damages totaled $200,716.41, including $88.24 in direct administrative costs.  On April 5, 2012, after deducting insurance proceeds, FEMA obligated PW 78 for $88.24.  On April 11, 2012, the Massachusetts Emergency Management Agency (Grantee) sent a copy of the project files to the Applicant.

Contemporaneously, the City of Springfield (City) requested reimbursement to demolish the Facility.  FEMA concluded in PW 228 that demolition of the Facility was ineligible for Public Assistance (PA) funding.  In June 2012, the City appealed the determination[7] and proceeded with its demolition, with no repairs having been performed, in the same month.[8]  On February 13, 2013, FEMA Region I issued a first appeal decision, finding the “make safe work” that was completed on the Facility eligible for PA, but not the requested demolition expenses.[9] 

Regarding PW 78, on February 5, 2013, the Applicant certified all work was completed and performed in accordance with the grant conditions by signing a Project Completion and Certification Report (P.4 Report).[10]  Through a November 26, 2013 letter, the Applicant requested FEMA amend PW 78 to align with its insurance carrier’s scope of work (SOW) and estimate for damages (Preliminary Cost Estimate),[11] which included repairs to the masonry, framing, electrical, heating, ventilation and air conditioning (HVAC), plumbing, alarm system, roof framing, and windows.  The Applicant attached the Preliminary Cost Estimate to the letter, submitting it for the first time to FEMA.  The Applicant also requested demolition costs and that FEMA review the repair versus replacement analysis with the damages identified by the insurance carrier. 

On September 5, 2014, FEMA denied the Applicant’s requests and concluded they were made a year and a half after the Grantee sent a copy of the project files to the Applicant, well after the 60-day deadline to file an appeal. [12] Nevertheless, FEMA determined that even if the Applicant’s requests were timely, its arguments fail on the merits.  With regard to the request to amend the SOW, FEMA denied it because: (1) the project completion deadline was not extended by the Grantee; (2) the damage was either not identified at the time the PW was written or was caused by the Applicant neglecting to secure the Facility and install a temporary roof; (3) the Applicant failed to take reasonable steps to prevent the spread of mold; and (4) the work cannot be completed on a demolished Facility.[13]  Consequently, FEMA declined to re-evaluate the repair versus replacement analysis.  FEMA also found the Applicant’s request for demolition costs to be without merit because it did not demonstrate that the demolition work was necessary to support the roof repairs and noted that a previous demolition request related to PW 228 was appealed and denied.  Finally, FEMA found the $88.24 in previously awarded PA funding would be deobligated because the Applicant did not complete the SOW.  FEMA clarified that only the new deobligation was appealable because the Applicant’s appeal rights for all other issues lapsed.  

First Appeal

The Applicant appealed FEMA’s determination in a letter dated November 4, 2014.  The Applicant requested that FEMA: (1) find its November 26, 2013 request to amend the SOW timely;[14] (2) amend PW 78 to account for damages to the HVAC and electrical/mechanical systems, as well as interior damages to the first through third floors; (3) approve reimbursement for actual demolition expenses; and (4) determine FEMA’s repair versus replacement analysis is applicable and award the replacement value for the Facility. 

On March 19, 2015, FEMA sent a final request for information (Final RFI) soliciting documentation to support the Applicant’s assertions that its appeal was timely and that FEMA erred in terminating the Applicant’s award for failure to complete the SOW.  The Applicant’s response, dated May 7, 2015, contained: (1) correspondence from its insurance carrier confirming that, on its behalf, companies inspected the Facility on June 6, 7, 13, 20, 21, 28, and July 25, 2011;[15] (2) a weather report for the month of June 2011; and (3) page 122 of the Public Assistance Guide.

The FEMA Region I Regional Administrator (RA) denied the appeal on August 13, 2015.  The RA determined that the Applicant: (1) failed to timely identify the additional damage to the Facility and associated work; (2) did not file an appeal within the required 60-day timeframe;[16] (3) did not timely identify the need for demolition and that FEMA previously denied a request for demolition expenses for the Facility in a prior first appeal decision; and (4) failed to complete the original authorized SOW and therefore FEMA would recover the $88.24 in previously awarded PA funding.

Second Appeal

On October 13, 2015, the Applicant appealed the RA’s decision and requested FEMA approve: $143,078.96 for HVAC and electrical/mechanical repairs; $343,425.90 for damages sustained on the first through third floors of the Facility; and reimbursement of demolition costs.  The Applicant argues: (1) there is no specifically documented duration in FEMA policy to identify additional damages, and as such, the November 26, 2013 requests should be considered timely; (2) FEMA had knowledge of disaster-related damages to the HVAC and electrical/mechanical systems before the Facility was demolished, and because FEMA erroneously omitted the damages from PW 78, FEMA must accept the Applicant’s Preliminary Cost Estimate as the cost for the repairs; (3) its request to amend the SOW complies with regulation as it represents a cost overrun of a previously authorized project; (4) interior damages on the first through third floors were a direct result of the disaster; and (5) the demolition of the Facility was required to protect the public from an imminent threat.                                                              

In a letter dated August 3, 2016, the Grantee requests that FEMA consider the Applicant’s timely second appeal submission.  The Grantee’s transmittal, however, was not timely.[17]

Discussion

Identification of Damages and Request to Change the SOW for Additional Funding

In accordance with Title 44 Code of Federal Regulations (44 C.F.R.) § 206.202(d)(1)(ii), applicants have 60 days following the first substantive meeting with FEMA to identify and report damage to FEMA.  There are instances, however, when an applicant may discover hidden damage or additional work that is necessary to properly complete the project.[18]  In these circumstances, a request for the additional work or costs should be sent to the Grantee as soon as possible so that the damages can be inspected before they are covered up or repaired.[19]  Finally, applicants may submit a request for additional funding if cost overruns occur during the execution of approved work.[20]

FEMA was in possession of Axyz’s Report, which identified the disaster-related damages to the electrical and mechanical systems, when it prepared PW 78 in October, 2011.  Therefore, the Applicant identified the damages to the electrical and mechanical systems within 60 days of the first substantive meeting, in line with 44 C.F.R. 206.202(d)(1)(ii).  Regarding the work and costs associated with: (1) damages to the HVAC system; (2) interior damages to floors one through three; and (3) demolition, the Applicant has not produced documentation demonstrating that it informed FEMA of the additional damage under this project within the 60-day required timeframe.  None of the damages were hidden.  The damages to the HVAC system and first three floors would have been discovered by the Applicant during June and July, 2011, when the Applicant’s insurance carrier’s representatives performed inspections.  The need for demolition would have also been known in June, 2011, when the Applicant received the City’s condemnation order, dated June 9, 2011.    

The Applicant should have realized these damages were not included in PW 78 when it received the project files on April 11, 2012, yet the Applicant did not submit its request to change the SOW until almost a year and a half after the Facility was demolished.  The Applicant relies on its Preliminary Cost Estimate and the City’s condemnation order as support for its requested costs.  However, as the Applicant did not provide these documents as part of the project until after the Facility’s demolition, FEMA was precluded from re-inspecting the Facility to independently verify the damages.  As such, all the requested work and costs are ineligible for PA funding.  

Finally, the Applicant argues the request to change the SOW is permissible as a request for additional funding under 44 C.F.R. § 206.204(e)(1).  The Applicant requested additional funding nine months after it signed the P.4 Report, certifying all work claimed under PW 78 had been completed, even though the Applicant had not performed any eligible work before it demolished the Facility.  As 44 C.F.R. § 206.204(e)(1) only pertains to cost overruns that occur during the performance of eligible work, and the Applicant did not complete any eligible work, 44 C.F.R. § 206.204(e)(1) is not applicable. 

Scope of Work

Pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) Section 406, as implemented by 44 C.F.R. § 206.226, FEMA may reimburse eligible applicants for the repair, restoration, reconstruction, or replacement of a public facility damaged or destroyed by a major disaster on the basis of the facility’s design as it existed immediately prior to the disaster and in conformity with other provisions.  If an applicant fails to comply with any term of an award, including a PW’s SOW, FEMA may take appropriate enforcement actions.[21]

Here, the Applicant is requesting to change the SOW even though the Facility was previously demolished, making the current SOW and requested SOW impossible to complete.  Accordingly, the RA’s decision to recover previously awarded PA funding associated with work that cannot be completed was appropriate.

Direct Result of the Disaster – Interior Damages

To be eligible for assistance, an applicant’s work must be required as the direct result of the disaster.[22]  No assistance, however, is available if damages are caused by an applicant’s own negligence.[23]

Axyz’s Report does not state the requested damages were the result of the disaster, however, the Applicant argues that the report does not imply that the damage was a result of anything other than the disaster.  Furthermore, the Applicant states that the weather report it provided for June, 2011, clearly demonstrates no significant rainfall occurred after the disaster that would have resulted in the interior damages identified in Axyz’s Report. [24]   

Here, the roof of the four-story Facility was torn off during a storm that produced 1.45 inches of rainfall.[25]  Following the disaster, through the last date Axyz, Inc. inspected the Facility, more than three times that amount of precipitation fell in the area.[26]  Even though both Axyz, Inc., and FEMA wrote of the danger of water intrusion if the roof was left uncovered, the Applicant did not cover the fourth floor. 

The Applicant argues it was unable to secure the top of the Facility with temporary roofing because it was unsafe to do so.  It states that it previously provided FEMA with information that demonstrated multiple roofing contractors denied service for tarping the Facility’s roof due to structural integrity concerns.  The administrative record, however, does not contain documentation that the Applicant ever attempted to cover the Facility, either on its own, or through the use of an outside company.   

As significant rainfall occurred after the disaster and could have resulted in the interior damages identified in Axyz’s Report, the Applicant has not established the subsequently reported interior damages are the direct result of the disaster.  Furthermore, the Applicant has not provided documentation to demonstrate it took prudent measures to prevent water intrusion.  As such, the requested work and costs to floors one through three are ineligible for PA funding.

Appeal Timeliness

Section 423(a) of the 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.”[27]  Title 44 Code of Federal Regulations (44 C.F.R.) § 206.206(c)(1), which implements that provision, requires appellants to submit appeals within 60 days of receipt of the notice of the action that is being appealed.[28]  Additionally, 44 C.F.R. § 206.206(c)(2) requires the grantee to review and forward an applicant’s appeal, together with a written recommendation, to the FEMA RA within 60-days of receipt.[29]  Neither the Stafford Act nor 44 C.F.R. provides FEMA with authority to grant time extensions for filing appeals.[30] 

The Applicant does not contest FEMA’s prior finding that it received the project files for PW 78 on April 11, 2012.  As such, the Applicant had until June 10, 2012 to file an appeal of PW 78’s award of assistance.  It did not submit an appeal, however, until November 26, 2013, almost 16 months late.  Because the Applicant filed its appeal after expiration of the 60-day timeframe required by 44 C.F.R. § 206.206(c)(1), the RA properly determined the requests made in its November 26, 2013 letter were untimely and its rights lapsed. 

Moreover, in its first appeal response letter, the RA informed the Grantee that it “has 60 days from the date of receipt of the Applicant’s second appeal to forward the appeal.”[31]  The Applicant submitted its second appeal in a letter dated October 13, 2015, which the Grantee forwarded to FEMA on August 3, 2016, more than nine months later.  Consequently, the Grantee submitted the second appeal after expiration of the 60-day timeframe.  As FEMA is precluded by the Stafford Act and regulation from entertaining the Grantee’s request to extend the appeal filing deadline, all issues on appeal are untimely.  Nevertheless, even if timeliness was not an issue, this appeal still fails on the merits.

Demolition

On April 25, 2012, in PW 228, FEMA determined demolition costs of the Facility to be ineligible for PA funding.  On June 22, 2012, the City filed an appeal of PW 228’s finding, requesting reimbursement of demolition expenses for the Facility.  FEMA Region I issued a February 13, 2013 first appeal response finding the City eligible for reimbursement for the make safe work performed, but not approving reimbursement of demolition expenses.  The decision was not appealed by the City.  Therefore, the first appeal response was the final administrative decision on this matter.[32]  The Applicant acknowledges this prior determination eliminates the potential for Federal assistance on this issue.  As such, the Applicant’s request for reimbursement of demolition expenses is similarly barred.    

Conclusion

The Applicant identified additional damages and requested to change the SOW after the Facility was demolished, thereby precluding FEMA from re-inspecting the Facility to independently verify the damages and consequently making the requested repairs impossible to complete.  Moreover, the Applicant has not demonstrated the interior damages to the first three floors are the direct result of the disaster.  Furthermore, the Applicant failed to file its appeal of PW 78’s award of assistance within the 60-day timeframe required by Stafford Act § 423(a) and 44 C.F.R. § 206.206(c)(1), and did not submit its second appeal within the 60-day timeframe required by 44 C.F.R. § 206.206(c)(2).  Finally, FEMA previously denied a request for demolition expenses in a final administrative decision.  Consequently, that request is barred.  As the Applicant materially failed to comply with the terms of PW 78’s award, the RA properly deobligated funds for this project.  For all these reasons, the appeal is denied.