Conclusion: The Construction Manager, not the Applicant, was legally responsible to perform emergency protective measures and repairs to the University Medical Center (Facility). Therefore, the work is not eligible for Public Assistance.
On August 29, 2012, Hurricane Isaac struck New Orleans, Louisiana. Prior to the disaster, the Applicant entered into a contract with a Construction Manager for the construction and delivery of the Facility. At the time of the disaster, construction was ongoing and the Facility had not been delivered to the Applicant. The Construction Manager directed its subcontractors to prepare the Facility for Hurricane Isaac, and after landfall, repair disaster-related damage to formwork and silt fencing. Additionally, subcontractors cleared and removed debris in the days following the disaster. FEMA prepared Project Worksheet (PW) 1534 to document costs as well as the Construction Manager’s and subcontractors’ claims for lost income resulting from the disaster and certain operating costs. In sum, claimed costs totaled $762,270.27. FEMA obligated the PW for zero dollars, finding the project ineligible but deferred determinations regarding legal responsibility and lost income to a later date. On November 30, 2013, the Applicant submitted a first appeal to the State of Louisiana’s Governor’s Office of Homeland Security and Emergency Preparedness (Grantee), asserting it had purchased an Owner Controlled Insurance Policy (OCIP), was responsible for losses prior to completion of construction, and the losses fell below the policy’s deductible amount. On February 10, 2014, the Grantee transmitted the Applicant’s appeal to the FEMA Region VI Regional Administrator (RA), noting $762,270.27 in requested reimbursement. On November 5, 2015, the RA denied the appeal, finding the Applicant was not legally responsible for the repair of the Facility and did not actively use it at the time of the disaster. On January 4, 2016, the Applicant submitted its second appeal and made two arguments: (1) purchase of the OCIP gave the Applicant legal responsibility for property losses during the construction period; and (2) the Applicant’s intent to use the completed Facility satisfied the active use requirement. With its transmittal of the second appeal to FEMA, the Grantee further argues that the Applicant is eligible because it is responsible for losses falling below the OCIP’s deductible.
Authorities and Second Appeals
Stafford Act §§ 403, 406, 407.
44 C.F.R. §§ 206.222, 206.223(a)(1), (3).
PA Guide, at 23, 28, 30, 33, 54.
Per 44 C.F.R. § 206.223(a)(3) an item of work must be the legal responsibility of an eligible applicant.
Pursuant to 44 C.F.R. § 206.222, eligible applicants include state and local governments, certain private non-profits, and Indian tribal governments.
The PA Guide outlines that FEMA will review the contract under which construction work is performed to determine if responsibility for disaster-related work rests with an applicant.