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Second Appeal Analysis
PA ID# 000-U0001-00; Iowa Homeland Security and Emergency Management Department
PW ID# (PW) 19 ; Legal Responsibility – 705(c)
From May 25 through August 13, 2008, tornadoes struck Iowa, followed by severe thunderstorms and flooding, resulting in a major disaster declaration. In response, the Iowa Homeland Security and Emergency Management Department (Grantee) activated its state emergency operations center (SEOC). The Federal Emergency Management Agency (FEMA) prepared Project Worksheet (PW) 19 to address a variety of costs associated with operating the SEOC. It obligated Version 0 of the PW on June 30, 2008, in the amount of $1,189,197.50, including an estimated $12,000 for six days of meals provided to employees. Ultimately, the Grantee expended $59,691.61 for providing meals and refreshments to individuals at the SEOC, including employees of other agencies and organizations, over a period of 19 days.
The Grantee procured meals and refreshments in bulk and had them delivered to the SEOC facility, which was co-located with the Joint Forces Headquarters (JFHQ) at the Iowa National Guard facility of Camp Dodge in Johnston, Iowa. It documented these expenditures with orders, receipts, and payment authorizations. It also maintained sign-in sheets at the SEOC for most meals, which reflected that meals were consumed by the Grantee’s employees, personnel from a variety of other federal and state agencies (such as FEMA and the Iowa State Police), National Guard members, and a handful of private entities such as the American Red Cross. On most days, there were more meals ordered than signatures collected, and on a few days there were more signatures than meals.
From May 18 to 20, 2010, Region VII’s Grant Business Management Branch (GBMB) conducted a review of the expenditure of funds for 16 grants, including the portion of PW 19 that related to meals at the SEOC. In a letter dated January 3, 2011, it questioned whether such costs were eligible for reimbursement based on the number of meals ordered, the imbalance between the number of signatures collected and meals ordered, and the fact that on certain days breakfast, dinner, and refreshments were ordered. The Grantee responded in a letter dated April 22, 2011, that any question regarding the eligibility of these costs would be resolved through the closeout process for PW 19. It also explained that providing meals to individuals charged with emergency work at the SEOC was necessary due to the 24-hour operation of the SEOC, was part of the state’s established practice, and was already determined to be eligible in the obligated PW Version 1.
On April 27, 2012, FEMA prepared PW 19 Version 2 to move costs other than meals to a new PW to allow those other costs to be closed out. PW 19 Version 2 included a revised scope of work (SOW), with a detailed description of the meals and refreshments that the Grantee provided, along with the rationale for providing those meals and refreshments. Despite outstanding questions of eligibility, FEMA obligated PW 19 Version 2 in the amount of $62,000, based on the Grantee’s updated cost estimate and with a note that the project would be closed out based on actual costs.
On November 7, 2014, however, FEMA issued a determination memorandum, concluding that all of the requested costs were ineligible. Its rationale was that (1) meals that were purchased but not signed for were unreasonable and could not be tied to an emergency function, (2) providing refreshments was unnecessary, and (3) the Grantee had not established that meals were only provided to personnel performing emergency work because the roles of the individuals on the sign-in sheets were unclear. Accordingly, PW 19 Version 3 deobligated all previously awarded funding.
The Grantee appealed FEMA’s denial of funding in a letter dated January 5, 2015. It argued that the SEOC was a secured facility and non-essential personnel were not allowed access, and everyone who signed for a meal at the SEOC was performing emergency work. Moreover, because the SEOC was tasked with coordinating available services during an active disaster, its activity necessarily involved more than just its own employees. The Grantee explained that the SEOC needed to be operational 24 hours a day, people working there often worked long shifts with no time to leave for meals or refreshments, restaurants were not readily accessible to SEOC personnel, and there was no place for people to store food or drinks. Based on these demanding conditions, the Grantee argued that it was reasonable for it to provide meals and refreshments to the people who were working there, and it was reasonable to order meals and refreshments based on staffing estimates.
On April 22, 2015, FEMA sent a request for information (RFI) to the Grantee requesting, among other things, a written policy specifically addressing the provision of complimentary meals, beverages, and snacks for staff at the SEOC, a list of individuals assigned to the SEOC who were working 12-hour shifts, a description of the relationship between the SEOC and the JFHQ, and identification of any National Guard members specifically assigned to the SEOC instead of a National Guard emergency operations center (EOC).
The Grantee responded on May 19, 2015, explaining that, while the SEOC was located at a JFHQ, the National Guard did not operate its own EOC and its members who signed in were working on the disaster under the SEOC’s direction. It also provided a copy of the SEOC’s standard operating procedures (SOPs), the state’s labor agreement, and policy for employees in travel status.
It also provided a document that is referred to in the record as a request for state-wide exemption, which demonstrated that the SEOC was exempted from the state’s standard administrative procedures related to food purchases and obtaining case-by-case approval.
It also explained that documentation did not exist as to every individual who worked at the SEOC and what hours they worked. It argued, however, that this information was not relevant because meals were provided to anyone working at meal times, regardless of their shift length. Finally, the Grantee urged that the deobligation should be revisited in light of section 705(c) of The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), which prohibits FEMA from recovering obligated funds in certain circumstances.
On May 9, 2016, FEMA sent a supplemental RFI, explaining that, in light of the Grantee’s raising of section 705(c), a formal decision on the first appeal had been deferred until a policy could be promulgated to implement section 705. It provided the Grantee a copy of FEMA Recovery Policy FP 205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures, and an opportunity to provide any additional information it thought would be relevant. The Grantee responded by letter dated May 31, 2016, stating that it would rely on previously submitted documentation.
On June 20, 2016, the FEMA Region VII Regional Administrator (RA) issued a first appeal decision partially granting the appeal. The RA first explained that none of the costs were eligible because there was no written policy in place clearly outlining the rules for providing meals at the SEOC. There was also no documentation that each person who completed the sign-in sheets was performing eligible work, was working long shifts, and was unable to obtain their own food. The RA also determined that the provision of refreshments was not essential to the SEOC mission, meals that were purchased but not signed for could not be tied to eligible work, and the Grantee provided meals to individuals it had no legal duty to feed, such as federal employees. The RA also determined that section 705(c) did not apply because providing refreshments was outside of the approved agreement, the Grantee failed to provide sufficient documentation regarding eligibility, and the costs were unreasonable because the Grantee’s only requirement for obtaining a meal was presence in the SEOC. Notwithstanding all this, the RA stated that the costs for meals tied to signatures from the Grantee’s employees and federal personnel were eligible because it could be assumed that those individuals were performing emergency work at the SEOC. Accordingly, the RA partially granted the appeal, re-obligating $11,589.05 of the previously disallowed costs, but affirming the deobligation of the remaining costs in the amount of $48,102.56. FEMA then prepared PW 19 version 4 implementing this decision.
In its second appeal dated August 16, 2016, the Grantee argues there is no requirement for a formal written policy requiring it to provide meals, and that doing so was its customary practice. It also argues that all of the individuals present in the SEOC were performing emergency work and providing food and meals was necessary to maintain a 24 hour a day operation. The Grantee asserts that it was required to estimate the number of meals that would be required based on anticipated staffing and, while the estimates were not always precise, they were reasonable. It argues that the RA’s approach was fundamentally flawed because eligibility should be based on whether providing meals and refreshments was part the SEOC operation, not based on trying to identify each individual in the SEOC and determine what kind of work they were doing and for how long. Finally, it argues that section 705(c) of the Stafford Act prohibited the deobligation of previously awarded funding because payment of the disputed costs was authorized by the obligated PW a full two years after the GBMB review, funds were drawn down, the costs were reasonable, and the purpose of the grant was accomplished.
FEMA may provide Public Assistance (PA) that is essential to meeting immediate threats to life and property resulting from a major disaster.
This can include costs associated with operating an EOC.
In order to be eligible for this assistance, the item of work must be the legal responsibility of the grantee.
It is the grantee’s responsibility to provide sufficient documentation to substantiate that it meets these eligibility criteria.
Here, in order to demonstrate eligibility for reimbursement, the provision of complimentary meals at the SEOC must have been the legal responsibility of the Grantee.
To meet this basic eligibility requirement, it would have needed to have some authority in place prior to the disaster, such as a policy, guidance, or agreement, specifying the circumstances in which it would provide complimentary meals and refreshments and who would receive this benefit. By way of analogy, when FEMA reimburses overtime labor costs for employees performing emergency work, it requires that a grantee or applicant have a policy in place prior to the disaster that specifies the terms of overtime pay, who is eligible, and the criteria for activating the policy.
The Applicant had no such doctrine in place. Therefore, there was no explicit obligation for the Grantee to provide complimentary meals and refreshments at the SEOC.
Moreover, FEMA is unable to conclude that any of the documentation in the administrative record created such an obligation implicitly. Neither the labor agreement nor the travel reimbursement policy contained provisions that would apply at the SEOC. The approved exemption that the Grantee provided established that the SEOC was exempt from certain administrative requirements, such as obtaining prior approval before each purchase was made, but this did not create an obligation on the part of the Grantee to provide complimentary meals. Similarly, while the SOP described how food would be provided, it did not establish a requirement to provide complimentary meals.
Accordingly, FEMA is unable to conclude that the Grantee had the legal responsibility to provide complimentary meals and refreshments at the SEOC. For this reason, the costs captured in PW 19 version 2 are ineligible for PA funding.
Stafford Act Section 705(c)
Section 705(c) of the Stafford Act bars FEMA from deobligating previously awarded funding if (1) the payment was authorized by an approved agreement specifying the costs, (2) the purpose of the grant was accomplished, and (3) the costs were reasonable.
FEMA issued FP-205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures
(FEMA FP-205-081-2), to implement these criteria.
If all three of these conditions are met, FEMA is prohibited from recouping grant funds even if it later determines that it made an error in determining eligibility.
Here, the Applicant has maintained that all three conditions are met. Examining the first condition, the “approved agreement specifying the costs” for a particular project consists of the obligated PW together with the governing FEMA-State agreement.
Here, FEMA obligated PW 19 version 2 on April 27, 2012, in the amount of $62,000.00, and the funds were drawn down. Therefore, the payment was made pursuant to an approved agreement and the first condition is met.
Regarding the second condition of section 705(c), the purpose of the grant was accomplished if the Applicant “[c]ompletes the [SOW] as described in the obligated PW and supporting documentation” and “[d]emonstrates compliance with post-award terms and conditions.”
Here, the obligated PW contained a detailed description of what the Grantee provided at the SEOC, along with the rationale for providing such meals and refreshments. Because the work completed corresponded to the SOW, and nothing suggested that the Applicant failed to comply with post-award terms or conditions, the purpose of the grant was accomplished.
Finally, a cost is reasonable “if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.”
When determining whether a cost is reasonable, consideration is given to whether the individuals used normal purchasing procedures and whether the costs exceed average costs for the area or published national cost estimates.
Importantly, the question of reasonableness is distinct from the question of eligibility, and the fact that a grantee’s or applicant’s expenses are not eligible for reimbursement does not establish that those expenses are unreasonable. Here, the conditions of the SEOC made it reasonable for the Grantee to provide meals to individuals working there, and the Grantee utilized its normal procedures to procure meals in bulk. Finally, the costs of the meals were below the U.S. General Services Administration’s per diem
rates for Iowa in 2008, which can be used to estimate average reasonable costs for the area. Accordingly, the Grantee, given the circumstances, acted prudently and the costs were reasonable in their nature and amount.
As such, all three conditions of section 705(c) are satisfied. Consequently, FEMA is prohibited from recouping grant funding previously awarded funding under PW 19.
Because the Grantee did not establish that it was legally responsible for providing complimentary meals and refreshments at the SEOC, the costs captured in PW 19 are ineligible for reimbursement. However, section 705(c) of the Stafford Act prohibits FEMA from recovering the previously obligated funds. Accordingly, this appeal is partially granted, and an additional $48,102.56 will be re-obligated in PW 19, which will be closed out at the actual cost of $59,691.61.
Early in the incident period it was expected that the SEOC would close down after the tornadoes, but because of the state-wide severe storms and flooding that followed, the SEOC remained active for an extended period and required significant additional staffing.
The Grantee explains that food had to be ordered based on estimated need. Individuals at the SEOC didn’t necessarily eat at mealtimes, but rather when their work allowed, making it impractical to ensure that everyone who ate signed a sign-in sheet. Nevertheless, the Grantee collected nearly 5,000 signatures over the course of 19 days.
The SEOC SOP covered various aspects of SEOC operations, and different sections had different dates, all of which were before the disaster. The labor agreement was dated July 2007 and was an expansive document describing various conditions of state employment. The travel policy described the conditions under which employees in travel status would be eligible for reimbursement of expenses and in what amount. This document is listed as having been updated in January 2015, and it is unclear how it differed from the policy in place at the time of the disaster.
This is referred to in the administrative record as the “Request for State-Wide Exemption,” and was also provided to FEMA earlier during the GBMB review. It was approved in June 2007.
The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. no. 93-288, § 403(a)(3), 42 U.S.C. § 5170b(a)(3) (2006).
 Public Assistance Guide
, FEMA 322, at 73 (June 2007) [hereinafter PA Guide
44 C.F.R. § 206.223(a)(3) (2007).
FEMA Second Appeal Analysis, Palisades Medical Center
, FEMA-4086-DR-NJ, at 4 (Mar. 10, 2017).
44 C.F.R. § 206.223(a)(3).
 PA Guide
, at 44-45; see also
FEMA Second Appeal Analysis, Northampton County
, FEMA-4019-DR-NC, at 2-3 (June 13, 2014).
FEMA Second Appeal Analysis, Twin Valley Elec. Coop.
, FEMA-1741-DR-KS, at 7 (June 28, 2017) (concluding that an SOP did not establish legal responsibility).
Stafford Act § 705(c).
FEMA Recovery Policy FP-205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures
, at 4-7 (Mar. 31, 2016).
FEMA Recovery Policy FP 205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures
, at 5 (Mar. 31, 2016). The Grantee argues that FEMA should ignore this policy because it was put in place after the disaster, and section 325(a)(2) of the Stafford Act prohibits applying policies retroactively. Section 325(a)(2) applies to policies that could result in a significant reduction of assistance under the program. FP 205-081-2 does not meet this definition because section 705(c) is a restriction on FEMA’s ability to pursue recoupment, and does not alter any eligibly requirements or reduce the availability of any funding under the PA program.
FP 205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures
, at 5.
at 7; 2 C.F.R. pt. 225, app. A § (C)(2).