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Second Appeal Analysis
PA ID# 013-47070-00; Town of Lyons
PW ID# 552; Force Account Labor – Emergency Labor
From September 11 to 30, 2013, severe storms, flooding, landslides and mudslides caused floodwaters to overtop embankments along the Saint Vrain Creek. The flooding damaged a large portion of the Town of Lyons’ (Applicant) critical infrastructure. The Federal Emergency Management Agency (FEMA) prepared Project Worksheet (PW) 552 to address labor, equipment and contract costs associated with various emergency protective measures performed by the Applicant, including sandbagging, search and rescue operations, sheltering and emergency mass care, emergency demolition, and providing food, water, ice, and other essential needs. In Version 2 of PW 552, FEMA deobligated $102,058.50 in costs associated with straight-time salaries (also called basic pay) it deemed ineligible pursuant to the Robert T. Stafford Disaster Relief and Emergency Act (Stafford Act) § 406, Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.228(a)(2) and FEMA Recovery Policy (RP) 9525.7, Labor Costs – Emergency Work.
On December 3, 2015, the Applicant appealed FEMA’s determination to deny reimbursement of straight-time salaries and benefits of its employees performing emergency protective measures following the disaster. The Applicant argued that Stafford Act § 403, as amended by the Sandy Recovery Improvement Act (SRIA) of 2013, allows FEMA to reimburse applicants for “emergency and temporary labor.” The Applicant stated that it did not have a local emergency operations plan in place at the time of the disaster, so it used permanent staff to perform emergency and essential tasks.
On March 31, 2016, FEMA Region VIII sent a Final Request for Information (RFI) to the Applicant stating:
SRIA amended the Stafford Act § 403(d) to authorize reimbursement of both the base and overtime pay and benefits of permanent employees of state, tribal, and local governments for emergency protective measures. FEMA has not implemented this provision through rulemaking, however, and the current regulatory and policy language does not permit reimbursement of straight time.
Region VIII requested that the Applicant provide, within 30 days, any additional information that would merit consideration. The Applicant responded on April 28, 2016 stating it should not be held accountable for FEMA’s failure to implement Stafford Act § 403(d) through rulemaking and reimbursement should not be denied.
On June 20, 2016, the FEMA Region VIII Region Administrator (RA) denied the first appeal determining that neither regulation nor FEMA policy permit reimbursement of straight-time salaries and benefits of an applicant’s permanently employed personnel performing emergency protective measures.
In its second appeal, dated August 16, 2016, the Applicant reiterates that SRIA specifically authorizes reimbursement of straight-time pay and benefits costs in question and requests $114,877.29 in PA reimbursement. The Applicant asserts that the Stafford Act supersedes FEMA’s basis for denial.
Pursuant to Stafford Act § 403, FEMA may reimburse costs for work and services to save lives, protect property or public health and safety. Prior to 2013, the Stafford Act did not explicitly address basic pay and benefits for permanent employees performing emergency work. SRIA § 1108 amended Section 403 of the Stafford Act by adding the following language:
If the President declares a major disaster . . . for an area within the jurisdiction of a . . . local government, the President may reimburse the . . . local government for costs relating to basic pay and benefits for permanent employees of the State, tribal, or local government conducting emergency protective measures under this section, if the work is not typically performed by the employees . . . and the type of work may otherwise be carried out by contract or agreement with private organizations, firms, or individuals . . . .
However, 44 C.F.R. § 206.228, expressly prohibits reimbursement of straight-time salaries and benefits of an applicant’s permanently employed personnel performing eligible emergency protective measures under the Stafford Act. It is important to note that the Public Assistance Program is a discretionary program. While Section 403, as amended by SRIA § 1108, provides FEMA discretionary authority to reimburse certain costs incurred in furtherance of emergency work, it does not require it. As such, 44 C.F.R. § 206.228(a)(2)(iii), which was in effect at the time of the disaster and still is, reflects the Agency’s decision to limit the exercise of its authority under Section 403. Regarding the eligibility of basic pay for personnel performing emergency protective measures, FEMA’s decision to not provide financial assistance under Stafford Act § 403(d) for straight-time salaries and benefits remains in force until such time as that limitation is changed through the issuance of new regulations. Consequently, reimbursement of these costs in PW 552 is ineligible under the PA Program.
While FEMA is authorized to reimburse basic pay and benefits for an applicant’s permanent personnel performing emergency protective measures, the Agency’s discretionary determination through 44 C.F.R. § 206.228(a)(2)(iii) to not fund such costs is still in force. As such, costs incurred by the Applicant for its employees performing emergency protective measures are not eligible.
 While the PW states the work is ineligible under Stafford Act § 406, the work items described in the scope of work are emergency protective measures authorized under § 403.
 Recovery Policy RP 9525.7, Labor Costs – Emergency Work (Nov. 16, 2006).
 Sandy Recovery Improvement Act (SRIA) of 2013, Pub. L. No. 113-2, § 1108, 127 Stat. 4, 47 (2013).
 Letter from Acting Reg’l Adm’r, FEMA Region VIII, to Dir., CO Div. of Homeland Sec. & Emergency Mgmt. and Town Adm’r, Town of Lyons, at 1 (Mar. 31, 2016).
 The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 403, 42 U.S.C. § 5170b (2013).
 See The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 403, 42 U.S.C. § 5170b (2007).
 Stafford Act § 403(d)(1)(A) (emphasis added).
 Title 44 Code of Federal Regulations (44 C.F.R.) § 206.228(a)(2)(iii) (2012).
 Stafford Act §§ 305 and 403.
 Id.; California-Nevada Methodist Homes v. Fed. Emergency Mgmt. Agency, 152 F. Supp. 2d 1202, 1206-07 (N.D. Cal. 2001) (holding that “[§ 406] of the Stafford Act provides that the President ‘may make contributions’ to eligible entities . . . . The ‘Grant Approval’ section of FEMA’s regulations pertaining to the Public Assistance Project does not contain any requirement that FEMA approve eligible costs or any standard for their approval. No regulation under the Public Assistance Project requires FEMA to approve any funding request. Rather, these regulations simply refer to costs that are ‘eligible,’ i.e., expenses that FEMA could choose to pay. E.g., 44 C.F.R. 206.226 . . . . The decision to fund (or not fund) repairs necessarily involves the judgment of the decision-maker and is therefore discretionary. Moreover, decisions regarding the allocation of resources are precisely the type of action Congress sought to protect.”) (citing Graham v. Fed. Emergency Mgmt. Agency, 149 F.3d 997, 1005 (9th Cir. 1998)).
 See Stafford Act § 321 (stating “[t]he President may prescribe such rules and regulations as may be necessary and proper to carry out the provisions of this Act, and may exercise . . . any power or authority conferred . . . by this Act).