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Second Appeal Analysis
PA ID# 021-37685-00; Town of Killington
PW ID# PW 3023 ; Change in Scope of Work – Codes and Standards – Hazard Mitigation
From August 27 to September 2, 2011, Tropical Storm Irene caused flooding in the Town of Killington, Vermont (Applicant). The floodwaters damaged a corrugated metal multi-plate pipe arch culvert, located where Ravine Road crosses over the Roaring Brook. The Applicant requested Public Assistance (PA), through the Vermont Division of Emergency Management and Homeland Security (Grantee), to replace the culvert.
On August 2, 2012, FEMA prepared Project Worksheet (PW) 3023, and awarded a total of $201,065.00 in estimated costs.
The scope of work (SOW) provided for an in-kind replacement of the culvert.
The Applicant built a 34 foot concrete bridge at the same location instead of building the replacement culvert, but did not receive prior approval from FEMA.
On or about December 20, 2014, the Applicant and Grantee requested closeout of PW 3023, but near the end of January, 2015, the Grantee requested that FEMA pause the process to reevaluate the closeout claim. The Grantee then submitted a supplemental closeout request (Closeout Request) on behalf of the Applicant on August 10, 2015. In its Closeout Request, the Applicant asked FEMA to amend the PW and fund $435,155.03 for the bridge. The Grantee argued that representatives for the Applicant informed FEMA project specialists during site visits that the Applicant needed to build a bridge instead of a culvert to comply with state and U.S. Army Corps of Engineers (USACE) permits. In addition, the Grantee argued that the Applicant had not submitted a change of scope request to FEMA prior to construction because the Applicant assumed that oral conversations about the bridge would cause FEMA to include bridge construction in the PW’s SOW.
Both the Applicant and the Grantee represented that “throughout this two and a half year process . . . FEMA officials [explained] that FEMA would only reimburse the [Applicant] for the cost of the pre-existing structures (and not the additional incremental costs associated with the bridges).”
On April 4, 2016, FEMA issued a Determination Memorandum, denying the Applicant’s request to amend PW 3023.
First, FEMA found that the Closeout Request was an untimely appeal of PW 3023, and thus, the Applicant’s appeal rights had expired. Even if the Applicant’s Closeout Request was timely, FEMA concluded that the Applicant did not demonstrate that the bridge was required by an applicable code or standard, nor did the Applicant demonstrate that the bridge was eligible hazard mitigation. In lieu of seeking an enforcement action, FEMA found that the bridge was an improved project,
in part because FEMA reviewed the bridge and determined that it did not raise environmental or historic preservation (EHP) concerns.
FEMA accordingly reduced the award amount to $193,071.00, less hazard mitigation costs.
The Applicant appealed FEMA’s determination in a letter dated June 3, 2016, and the Grantee concurred in a letter dated August 2, 2016. In its first appeal, the Applicant argued that the Vermont Agency of Transportation (VTrans) Hydraulic Unit Report (Hydraulic Unit Report) contained design standards that required constructing a bridge in lieu of a culvert.
The Applicant also argued that the project was eligible for funding as hazard mitigation. As an alternative argument, the Applicant claimed that FEMA’s Cost Estimating Format (CEF) contained errors and omissions that totaled $37,137.24 missing from PW 3023. The Grantee supported the Applicant’s appeal, arguing that 1) the appeal was timely; 2) the VTrans Hydraulics Manual qualified under FEMA’s code and standard eligibility criteria; and 3) the VTrans Hydraulics Manual and USACE General Permits 21 and 28 required that the Applicant construct a bridge instead of a culvert.
On December 6, 2016, FEMA Region I sent a Final Request for Information (Final RFI) to the Applicant, requesting documentation or information that would show that the Closeout Request was not an untimely appeal of PW 3023, and also asked for information supporting the Applicant’s substantive arguments regarding codes and standards, hazard mitigation, and the errors and omissions in the CEF. Both the Applicant and the Grantee responded to the Final RFI. The Grantee argued that the Applicant had informed FEMA of its need to build a bridge multiple times and submitted the first appeal within 60 days of receiving the Determination Memorandum. The Applicant did not make an argument regarding timeliness, but argued that bridge construction qualified as hazard mitigation that did not exceed the cost of the original approved estimated repair work.
FEMA Region I denied the Applicant’s first appeal on March 30, 2017. First, FEMA found that the Closeout Request was an untimely appeal; thus, the Applicant’s appeal rights had expired.
Second, even if the Closeout Request was not an untimely appeal, FEMA found that the bridge was not an eligible upgrade because the USACE permits, the Hydraulics Manual and the Hydraulics Unit Report do not establish codes or standards that meet the eligibility criteria provided at Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.266(d).
FEMA also found that the bridge did not qualify as hazard mitigation, as it was a new facility that did not qualify as a pre-determined, cost-effective larger drainage structure. Fourth, FEMA found that there was no material error or omission in determining the original estimate for the project. Finally, FEMA determined that the Applicant did not comply with a material term of the award by not adhering to the SOW, however, FEMA did not deobligate all funding because there were no EHP concerns.
The Applicant submitted a second appeal letter dated May 26, 2017, and the Grantee transmitted the appeal to FEMA on June 26, 2017. In addition to the same arguments it made on first appeal, the Applicant argues that it did not have access to FEMA’s electronic system of record,
and thus, did not have adequate notice of PW 3023 to file a timely appeal. The Applicant requests $377,676.51 in costs for construction of the bridge,
and in the alternative, requests again the $37,137.24 it argues resulted from FEMA’s errors and omissions in the CEF.
Change in Scope of Work
Pursuant to 44 C.F.R. § 13.30(d)(1), applicants or grantees must obtain prior approval from FEMA to revise a project’s scope. Such a request for a change in the SOW for a large project must be made “as soon as possible.”
In addition, 44 C.F.R. § 13.30(c)(2) requires that applicants and grantees obtain prior written approval from FEMA for any budget revision that would require additional funds. If a grantee or applicant “materially fails to comply with any term of an award,” FEMA may disallow all or part of the cost of action not in compliance, or wholly or partly suspend or terminate the current award for the program.
FEMA requires prior approval because project changes often trigger a need for additional EHP reviews.
The approved SOW in PW 3023 was for a replacement culvert. Prior to constructing the bridge, the Applicant and Grantee did not obtain approval from FEMA to change the SOW or to increase funding. The Applicant and the Grantee both acknowledge that FEMA informed them that “FEMA would only reimburse the [Applicant] for the cost of the pre-existing structures (and not the additional incremental costs associated with the bridges).”
Despite knowing that FEMA would not approve funding for construction of the bridge, the Applicant proceeded and, in doing so, failed to comply with a material term of the award in PW 3023.
As the Applicant failed to obtain prior approval for a change in the SOW or an increase in funding, FEMA has discretion to deobligate all funding. FEMA’s decision not to deobligate funding was appropriate here because there were no EHP concerns associated with construction of the bridge.
Codes and Standards
Under Section 406(e) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), FEMA is authorized to provide Federal assistance to a local government for the repair, restoration, or replacement of a facility damaged by a declared disaster, in conformity with codes, specifications, and standards applicable at the time the disaster occurred.
FEMA may reimburse costs if the codes or standards: 1) apply to the type of repair or restoration required; 2) are appropriate to the pre-disaster use of the facility; 3) are reasonable, in writing, and formally adopted and implemented by the state or local government on or before the disaster declaration date or are a legal Federal requirement applicable to the type of restoration; 4) apply uniformly to all similar types of facilities within the jurisdiction of the facility’s owner; and 5) were enforced during the time the standards were in effect.
FEMA has the authority to determine which repairs, code-mandated or otherwise, are eligible for assistance, and generally does not fund code-mandated work that does not meet all five criteria, regardless of whether the work is needed to obtain a building, occupancy, environmental, or other permit.
For a code or standard to be eligible, it must contain objective, specific design criteria, and may not offer only general guidance or recommendations.
The Applicant argues that USACE General Permits 21 and 28 qualified as standards under 44 C.F.R. § 206.226(d) and that they required construction of a bridge. However, General Permits 21 and 28 contain discretionary language, e.g.
, stating that waterway crossings shall “[m]aintain velocities, turbulence, and depths within the structure similar to adjacent stream reaches,” and that projects “should be designed to accommodate natural tendencies of the fluvial system.”
Similarly, General Permit 21 recommends that “crossings of waterbodies shall be suitably converted, bridged, or otherwise designed to withstand and prevent the restriction of high flow, to maintain existing low flows, and to not obstruct the movement of aquatic life . . . ,”
however, applicants are able to achieve this objective in multiple ways. The General Permits do not require construction of a bridge nor do they establish specific criteria allowing for uniform application and enforcement in a manner that satisfies 44 C.F.R. §§ 206.226(4)-(5).
In addition, the VTrans Hydraulics Unit Report and the Hydraulics Manual do not require the construction of a bridge in place of a culvert, nor do they satisfy the elements of 44 C.F.R. § 206.226(d). The Hydraulic Unit Report only recommended building a 25 foot bridge as one of three possible courses of action, thus only offering general guidance, not specific design criteria.
Furthermore, neither the Hydraulics Manual
nor the Hydraulic Unit Report contained specific language requiring an upgrade from a culvert to a bridge, nor specified standards for such construction.
Neither did the state formally adopt or implement either the Hydraulics Manual or the Hydraulic Unit Report as a code or standard.
Moreover, the Grantee’s own engineer expressed difficulty in qualifying the Hydraulics Manual as a standard due to its lack of specific language and the fact that it had not been updated in almost 15 years.
Because the USACE General Permits, the Hydraulics Manual, and the Hydraulics Unit Report did not satisfy all five requirements of 44 C.F.R. § 206.226(d), they are not codes and standards that required construction of the bridge. Thus, the project is not eligible for PA funding.
The Stafford Act provides for the implementation of hazard mitigation measures that are cost-effective and reduce or lessen the risk of future damages to a facility.
There are three ways that FEMA may deem hazard mitigation measures cost-effective: 1) a measure amounts to no more than 15 percent of the total eligible cost of the eligible repair work; 2) certain proscribed measures do not exceed the entire cost of the approved eligible repair work for the project; and 3) even if the measure exceeds the cost of eligible repair work, the applicant demonstrates it is cost-effective through an acceptable benefit/cost analysis.
In addition, FEMA requires approval of these hazard mitigation measures prior to funding.
Here, the Applicant failed to obtain FEMA approval prior to constructing the bridge.
Moreover, the Applicant has not shown through supporting documentation that the bridge project was cost-effective. FEMA approved $193,071.00 for the eligible repair work. On second appeal, the Applicant requests $377,676.51 as reimbursement for bridge construction. However, the Applicant has not provided FEMA with documentation supporting that amount,
and even if it had, $377,676.51 is almost 200 percent of the eligible costs that FEMA approved, and exceeds the costs of the eligible repair work. As a result, the Applicant needed to provide a benefit/cost analysis demonstrating that the bridge project was nonetheless cost-effective. The Applicant provided a spreadsheet showing the cost amounts in FEMA’s CEF versus the Applicant’s breakdown of costs for building a 25 foot bridge. This 25 foot bridge was the size that VTrans had recommended, but not the size that the Applicant built, which was 34 feet. Thus, the cost analysis that the Applicant provided is not relevant to determining whether or not the actual bridge project was cost-effective.
Because the applicant never obtained FEMA approval and built an entirely new facility, the bridge is not eligible hazard mitigation. Even if the Applicant had obtained approval, the Applicant did not demonstrate the bridge project was cost-effective and is therefore not eligible for funding as hazard mitigation.
Improved Project - Calculation Error in Capped Costs
After receiving the Applicant’s Closeout Request, FEMA determined that the bridge was an improved project. Funding for an improved project is capped at the lesser of the Federal share of the cost of repairing a facility to its pre-disaster design, or the Federal share of the costs of completing an improved project.
In addition, when repair costs are greater than FEMA’s original approved cost estimate, an applicant may appeal that amount if the applicant can track the improvement costs separately from the approved costs.
Here, the approved estimated cost was $193,071.00 for the replacement culvert; thus, FEMA funding would be held to the Federal share of that amount.
The Applicant contends that FEMA erred in preparing its CEF, omitting $37,137.24 in additional funding that covered: work for the removal of roadway earth, clearing and grubbing, channel stone, guard railings, seed and mulch, a headwall extension and hard armoring to address the flood chute that developed during the disaster, and a headwall length miscalculation.
The Applicant provided a spreadsheet showing the amounts in FEMA’s CEF versus the Applicant’s breakdown of costs for building a 25 foot bridge, but this documentation is not relevant because it is a cost comparison of a bridge that FEMA did not approve and that the Applicant did not build. Thus, this additional funding is not eligible.
However, a review of FEMA’s CEF shows that an item of work, roadway earth borrow, was included in the approved SOW, but the cost of $3,463.88 for that work was not included in the total amount. Because this amount for approved, eligible work appears to have been left out of the total estimated cost in error, FEMA will obligate the $3,463.88 for roadway earth borrow.
The Applicant did not obtain prior approval from FEMA before changing the SOW for PW 3023, nor did it receive approval for an increase in funding prior to constructing the bridge. In addition, the Applicant has not demonstrated that the bridge qualified as an upgrade mandated by a code or standard, nor as hazard mitigation. Therefore, the Applicant’s appeal requesting $377,676.51 in reimbursement for the bridge project is denied. However, costs for the original, approved SOW were not included in the total amount of the CEF; thus, FEMA will grant the appeal in part, awarding $3,463.88 in funding.
Project Worksheet 3023, Town of Killington, Version 0 (Aug. 2, 2012).
. (stating the SOW provided for removal of the existing, damaged culvert; stream by-pass measures; common excavation; concrete headwalls; backfill at abutments; construction of a gravel roadway; repairing roadway damage; Direct Administrative Costs (DAC); and hazard mitigation costs (including placement of rip-rap along the brook bank at the end of the headwalls of the new culvert)). The Applicant provided FEMA with a hydraulics analysis from 2012, which found “the existing structure [was] hydraulically adequate,” leading FEMA to approve an in-kind replacement. In addition, the PW noted that the size and type of the culvert were in accordance with the Q25 (25-year storm event), “as required by the Town’s Codes and Standards.” (referencing Memorandum from P.E., Hydraulics Project Engineer, to District 3 Proj. Mgr. (Aug. 13, 2012) [hereinafter Hydraulics Unit Report
]); see also
Email to Project Specialist, FEMA (June 5, 2012, 08:02 EST).
Letter from Special Proj. Analyst, Grantee, to Recovery Dep. Dir., FEMA, at 9 (Aug. 10, 2015) [hereinafter Closeout Request
Memorandum from Public Assistance Specialist, FEMA Region I, (Apr. 4, 2016) [hereinafter Determination Memorandum
An improved project is one that “makes improvements to the facility while still restoring its pre-disaster function and at least its pre-disaster capacity.” Public Assistance Guide
, FEMA 322, at 110 (June 2007) [hereinafter PA Guide
]. In addition, FEMA caps funding for improved projects at the lesser of the Federal share of costs for repairing or replacing the damaged facility, or the actual costs of completing the improved project. Id.
PW 3023 awarded $7,994.00 in hazard mitigation costs for erosion control along the brook bank. PW 3023, Town of Killington, Version 0, Hazard Mitigation Proposal. Region IV reduced the award amount by withdrawing the $7,994.00 in hazard mitigation costs, after determining it was an improved project, because FEMA cannot fund Section 406 hazard mitigation work for improved projects that amount to a complete new facility. PA Guide
, at 110-11.
 Hydraulics Unit Report
, at 2.
Letter from Special Proj. Analyst, Grantee, to Reg’l Adm’r, FEMA Region I (Aug. 2, 2016) [hereinafter Grantee First Appeal Lette
FEMA may find that certain hazard mitigation measures are cost-effective provided that the costs do not exceed the cost of the eligible repair work of the project. If hazard mitigation measures exceed the costs of eligible repair work, then the applicant must show that the measure is cost-effective through use of a cost/benefit analysis. PA Guide
, at 126.
FEMA Region I found that this was an appeal as opposed to a change of scope request, as the applicant did not discover additional work was necessary during performance of the approved work; the request was not equal to a cost overrun; and the nature of the bridge as an improved project did not allow for separate tracking of costs between the approved SOW and the actual costs of constructing the bridge. FEMA First Appeal Analysis, Town of Killington
, FEMA-4022-DR-VT, at 9 (Mar. 30, 2017).
Specifically, FEMA found that the permits and manual were discretionary, rather than mandatory, and that they did not have “specific engineering design standards or measurable performance criteria that were sufficiently standardized” to qualify them as a recognized code or standard. See Town of Killington
, FEMA-4022-DR-VT, at 5-6.
Emergency Management Mission Integrated Environment (EMMIE).
This amount is less the $43,738.52 in roadway repair and bridge design costs the Applicant originally requested.
The Applicant’s Closeout Request was a request for a change in the SOW, not an untimely appeal. For large projects, Applicants may, in certain circumstances, request a change in the SOW and FEMA must make an eligibility determination. PA Guide
, at 140. The April 4, 2016 Determination Memorandum
denying the Closeout Request was timely appealed on June 3, 2016.
44 C.F.R. §§ 13.43(a)(2)-(3).
 PA Guide
, at 139-40; see also
FEMA Second Appeal Analysis, Essex Cty.
, FEMA-4020-DR-NY, at 5-6 (Aug. 18, 2016) (finding that where the applicant had constructed a new bridge, in a new location, without prior approval from FEMA, and no proper environmental compliance review was done, it was appropriate to deobligate all funding); FEMA Second Appeal Analysis, Town of Springtown
, FEMA-1751-DR-AR, at 4 (Mar. 27, 2015) (where applicant began the approved SOW by repairing a bridge, but then demolished it and built another bridge in a new location, finding that it was appropriate to deobligate funds where there was no evidence that another EHP compliance review was performed).
 Closeout Request
, at 8.
On July 24, 2012, a Record of Environmental Consideration (REC) determined that the scope of work in PW 3023 was categorically excluded from the need to prepare either an Environmental Impact Statement or assessment. FEMA noted in the Determination Memorandum
that “FEMA reviewed the replacement bridge completed by the Applicant and determined that it does not implicate any other EHP requirements or issues under other laws and regulations.” Determination Memorandum
, at 12.
FEMA Second Appeal Analysis, Pulaski Cty.
, FEMA-4144-DR-MO, at 5 (Aug. 7, 2017).
44 C.F.R. § 206.226(d).
Disaster Assistance Policy DAP 9527.4, Construction Codes and Standards
, at 3 (Feb. 5, 2008); see also Pulaski Cty.
, FEMA-4144-DR-MO, at 5-6 (finding that even though local and USACE permits required different projects than those included in the approved SOW, the work was not eligible for funding).
 Pulaski Cty.
, FEMA-4144-DR-MO, at 6 (quoting and citing FEMA Second Appeal Analysis, City of Petaluma
, FEMA-1628-DR-CA, at 4 (Aug. 13, 2012)).
Letter from P.E. and Vice President, Enman Kesselring Consulting Eng’rs, to Special Proj. Analyst, Grantee (Apr.8, 2014) (referencing USACE General Standard 21, Waterway/Wetland Work and Crossings, and USACE General Standard 28, Fluvial Geomorphic Processes).
 Pulaski Cty.
, FEMA-4144-DR-M, at 6 (stating that some of the USACE General Permits are “subjective and allow for significant discretion in implementation”).
 Hydraulics Unit Report
, at 1-2 (recommending three courses of action, including a “25 foot by seven foot bridge”; “any similar structure with a minimum clear span of 25 feet and at least 175 sq. ft. of waterway area”; or “discontinuing the highway as a public thoroughfare because there is access to this point via Roaring Brook Road”). Furthermore, these recommendations were not and could not be “formally adopted or implemented by the State or local government” as a code or standard. 44 C.F.R. § 206.226(d)(3)(i).
The Applicant stated in its appeal that the Hydraulics Manual has been used by FEMA “dozens” of times to approve projects and award funding, but it did not cite any examples in its appeal. In addition, the portions of the Hydraulics Manual that the Applicant referenced applied to culverts, not bridges, thus failing to satisfy 44 C.F.R. § 206.226(d)(1), which requires that standards “apply to the type of repair or restoration required.”
44 C.F.R. § 206.226(d)(2); see
DAP 9527.4, at 7 (example number six in Appendix A provides an almost identical factual scenario as the instant case, and concludes that the upgrade from a culvert to a bridge is not eligible for funding).
Under 44 C.F.R. § 206.226(d)(3)(i), a code or standard must “be found reasonable, in writing, and formally adopted and implemented by the State or local government.”
Email from P.E., CFM, Hydraulics Eng’r, VTrans, to P.E. and Vice President, Enman Kesselring Consulting Eng’rs, copying Town Mgr., Applicant (Oct. 4, 2014, 14:57 EST) (stating that “[a] lot of the issues arise from how old the current hydraulics manual [is]” and that “it is hard to call [the Hydraulics Manual] a standard” because the Hydraulics Manual does not explicitly list the appropriate storm frequency to reference or the allowable increase in channel velocities for a given project).
Disaster Assistance Policy DAP 9526.1, Hazard Mitigation Funding Under Section 406
, at 2 (July 30, 2007).
The Applicant argued on second appeal that FEMA may waive the pre-approval requirement, as it did previously in Town of Townshend
. FEMA Second Appeal Analysis, Town of Townshend
, FEMA-4022-DR-VT, at 1, 3-4 (Mar. 21, 2013). In Town of Townshend
, FEMA approved replacing a culvert, but the applicant built a box culvert. Id.
In contrast, the Applicant here built a new, replacement facility, and hazard mitigation measures do not apply to new replacement facilities. PA Guide
, at 125. Furthermore, the project in Town of Townshend
only amounted to 30 percent of the approved eligible costs, whereas the costs here amount to almost 200 percent of the approved eligible costs. Town of Townshend
, FEMA-4022-DR-VT, at 3-4. Moreover, Appendix A of DAP 9526.1 provides that certain measures are pre-determined to be cost-effective; one such measure is the replacement of a drainage structure with a larger drainage structure. Unlike the bridge here, the box culvert in Town of Townshend
was a larger drainage structure. A bridge, unlike a culvert, does not move water from one location to another, therefore, it cannot be considered a “larger drainage structure.”
While the Applicant requested $377,676.51 on second appeal, the Applicant stated elsewhere in its second appeal letter that “in reality, the bridge cost $337,317.26 to construct . . .” and also stated that “the . . . Notice of Award demonstrates the bridge cost was $337,317.26. This exceeds the cost of the bridge that was installed.” Also in the record is a form contract summary that shows that $371,055.78 was paid out for “Bridge Construction,” which is less than the amount the Applicant requested on second appeal, and more than what the Applicant stated it cost to construct the bridge “in reality.” Thus, the actual amount of bridge construction for the Applicant is not clear.
Some of these costs, like the costs for clearing and grubbing, FEMA stated were not eligible in its CEF. The Applicant still requested reimbursement without explaining why these costs were eligible, even though its own engineer stated in an email that clearing and grubbing were not eligible costs. See
email from Bridge Maintenance Eng’r, VTrans, to Town Mgr., Applicant, and Special Proj. Analyst, Grantee. (Sept. 8, 2014, 09:43 EST).
 Cf. Town of Springtown
, FEMA-1751-DR-AR, at 4 (Mar. 27, 2015) (where the applicant began the approved SOW by repairing a bridge, but then demolished it, finding that it was appropriate to deobligate funds as “the Applicant is requesting that FEMA provide small project funding for a nonexistent bridge”).