Direct Result of Disaster, Support Documentation

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	FEMA-4230
Applicant	Franklin County
Appeal Type	Second
PA ID#	059-99059-00
PW ID#	(PW) 335
Date Signed	2018-02-06T00:00:00

Conclusion: (1) There was no duplication of benefits at site 3; (2) calling repairs “excessive” was vague and repairs could be funded if eligible; (3) the final Request for Information (RFI) did not identify costs at sites 6 and 8-10 that were unreasonable; and (4) the final RFI did not request documentation other than photographs to establish that damage was disaster related.  This appeal is remanded to issue another RFI: (1) explaining what costs at Sties 6 and 8-10 were unreasonable and why, and requesting documentation that could establish reasonableness; and (2) requesting documentation in addition to photographs that could establish that damage to sites 1-8, 10, 12-13, 15-16, and 18 was disaster related. 

 

Summary Paragraph

From May 4 to June 21, 2015, Franklin County, Kansas, suffered severe storms and flooding.  Project Worksheet (PW) 335 addressed damage to 35 culverts and 5.9 miles of road at 19 sites, at a cost of $232,803.89.  FEMA later determined that all work in PW 335 was ineligible because: (1) sites 1-2, 6-7, 10, 12-13, 15-16, and 18 did not have photographs of the damage; (2) photographs of sites 3-5, 8-9, 11, 14, 17, and 19 did not substantiate the damages claimed; and (3) costs for sites 6 and 8-10 were unreasonable.  The Applicant appealed, arguing that photographs were not the only way to document damage, the damage was sufficiently documented, and costs were reasonable.  FEMA issued a final RFI, stating the Applicant had not demonstrated that the damage was disaster related and that costs were reasonable, and requesting (1) an itemization justifying the purchase of a different type of culvert at one site; (2) a cost breakdown for another site; and (3) any pre-repair photographs of damage not already submitted.  The Applicant responded, providing the requested cost details but no additional photographs.  FEMA denied the first appeal, finding (1) site 3 was included in another PW; (2) sites 3, 5, 6, 8-9, and 15 had excessive road repair length; (3) sites 6, and 8-10 had unreasonable costs; and (4) sites 1-8, 10, 12-13, 15-16, and 18 lacked documentation that any damage was disaster related.  The decision approved sites 11, 14, 17, and 19 in whole, and sites 5 and 9 in part, and reobligated $24,480.39.  The Applicant filed a second appeal challenging the denial of the remaining $208,323.50.

 

Authorities and Second Appeals

• Stafford Act §§ 312(a), 406(e).

• 2 C.F.R. § 200.404.

• 44 C.F.R. § 206.223(a).

• PA Guide, at 29-31, 33, 40-41, 106, 140.

• Public Assistance Program Appeal Procedures, at 8, 13-15.

• Delaware Cty., FEMA-1930-DR-IA, at 6; Collier Cty., FEMA-1609-DR-FL, at 3; Tn. of Sandwich, FEMA-4097/4110-DR-MA, at 5; Ks. Republic Cty. Highway Dep’t, FEMA-4230-DR-KS, at 4.

Headnotes

• Stafford Act § 312(a) prohibits applicants from receiving duplicate funding

  • Site 3 was not covered in another PW, so there was no duplication of benefits.

• The PA Guide at 29-31 requires eligible work to be the direct result of a disaster, within the disaster area, and the applicant’s legal responsibility.

  • Calling road repairs “excessive” was vague, these repairs could be funded if eligible.

• The PA Guide at 40 states costs are reasonable they would be incurred by a prudent person under the circumstances. 

  • The first appeal decision was unclear as to which costs were unreasonable and why.

• Under 44 C.F.R. § 206.223(a)(1), an item of work must be the direct result of a disaster to be eligible.

  • The first appeal decision relied on pictures to verify disaster-related damage but did not seek other types of documentation.

• The Public Assistance Program Appeal Procedures at 14-15 requires the final RFI to explain the reason for a potential denial and request documents to support the appeal.

  • The RFI did not explain what costs were unreasonable and why, and did not request information to support reasonableness.

  • The RFI did not explain that the record lacked non-photographic documentation of disaster-related damage or request such documentation.     

 

Appeal Letter

Appeal Analysis

Background

From May 4 through June 21, 2015, the State of Kansas, including Franklin County (Applicant), suffered severe storms causing repeated flooding.  As a result, FEMA prepared two project worksheets (PWs) to address damage to the Applicant’s roads and culverts.  PW 395, entitled Damaged Roadways, addressed damage to 19.6 miles of road over 57 sites, at a total cost of $381,644.17.  This PW was obligated in full.  PW 335, which is the subject of the present appeal, was entitled Damaged Roadways and Culverts and covered 35 culverts and 5.9 miles of roadway at 19 sites, at a total cost of $232,803.89.  All of the sites in PW 335 had at least one culvert replaced, and 13 sites also included roadway repairs.  All culverts were replaced with the same type as the original, except for site 5, where the Applicant replaced two corrugated metal pipe (CMP) culverts with a single elliptical pipe culvert (squash tube), based on a cost analysis showing that the squash tube was the less expensive option.

 

On August 19, 2016, FEMA prepared a determination memorandum, finding that all of the damage described in PW 335 was ineligible because: (1) the Applicant did not provide photographs for sites 1-2, 6-7, 10, 12-13, 15-16, and 18; (2) the Applicant provided photographs that did not substantiate the damages claimed for sites 3-5, 8-9, 11, 14, 17, and 19; and (3) the costs claimed for sites 6 and 8-10 were unreasonable based on Region VII’s Road and Culvert Calculator, an internal estimating tool that utilized R.S. Means data.  Accordingly, PW 335 was obligated for zero dollars.

 

First Appeal

The Applicant appealed FEMA’s determination in a letter dated September 9, 2016.  The Applicant argued that the State and FEMA staff who were involved were satisfied that the repairs were accomplished and the costs were accurately documented and reasonable.  It also explained that additional photos were given to FEMA’s project specialist, but she misplaced them.  Finally, it argued that FEMA’s assistance should cover the actual costs of repairs, not only estimated costs.  On October 14, 2016, in response to a phone call with the Kansas Department of Emergency Management (Grantee), the Applicant filed a supplemental letter.  In this letter, it explained that some of the previously submitted photographs did show damaged culverts, and others showed washed out roadway.  It also argued that photographs were not the only way to show that roads were damaged.  Finally, it argued that the determination memorandum did not explain why the costs for sites 6 and 8-10 were excessive, particularly where its expenditures were small relative to its $5.1 million road maintenance budget.  It argued that the decision was arbitrary and capricious.

 

The Grantee forwarded the first appeal in a letter dated October 20, 2016.  It argued that, because FEMA did not dispute that the Applicant maintained its roads and culverts, it was unclear why FEMA believed that the repairs were not for damages caused by the disaster.  It argued that FEMA’s sole reliance on photographs to document damage was not based on any authority, noting that there are other ways to demonstrate that the roads and culverts were damaged, such as the well-documented repair work that was required as a result of the disaster.  It argued that there was no question that Franklin County suffered damage from heavy rains, and because the Applicant would pay at least 15% of the costs, there was no reason for the Applicant to expend resources to replace undamaged culverts.  Finally, regarding the costs deemed unreasonable, the Grantee argued that FEMA’s decision was not based on any factors identified in regulations, policy, or guidance.  It asserted that FEMA’s reliance on an internal estimating tool was not a proper way to establish that the costs for any of the sites were unreasonable.

 

On December 13, 2016, FEMA sent a Final Request for Information (RFI) to the Applicant, which stated that the administrative record lacked documentation that the damage was disaster related and the costs were reasonable.  It requested: (1) itemized costs justifying the purchase of the squash tube at site 5 instead of CMPs; (2) detailed costs for site 8, differentiating the costs for roadway repair and culvert repair because it appeared that the roadway was covered in PW 395; and (3) pre-repair photographs of the damaged sites that had not already been submitted. 

 

The Applicant responded to the RFI on January 4, 2017, providing the cost calculation that it used in making the decision to purchase the squash tube at site 5.  It explained that it had previously submitted damage descriptions and cost details for site 8 that demonstrated that it was not duplicative of work done in PW 395.  Finally, it included the pictures it had submitted previously.

On March 30, 2017, the FEMA Region VII Regional Administrator (RA) issued a first appeal decision.  The decision concluded, first, that site 3 was duplicative of work captured in PW 395 at site 18.  Second, it determined that sites 1-8, 10, 12-13, 15-16, and 18 “lacked documentation supporting the lengths of road damages, or that the damage was disaster related, or if any damage occurred at the sites.”[1]  The decision only provided a discussion of site 3, however, the RA stated that it was an example of how the photographs the Applicant submitted did not show damage.  It agreed that photographs were not mandated, but stated:  “The new FEMA Public Assistance Program and Policy Guide, FP 104-009-2 (January 2016) [PAPPG], while not in effect for this project, makes clear a strong preference for photographic documentation of damaged sites . . . Future projects with a declaration date after January 1, 2016, will be regulated with the new policy, and therefore photographic evidence of damages will be heavily weighted when determining disaster related damages.”[2]

 

Third, regarding sites 5 and 8, the RA determined that “FEMA does not accept that [the repaired] lengths of roadway were related to the culvert repair only.”[3]  It did not further explain this conclusion.  Fourth, regarding sites 6 and 8-10, it stated that the total costs for these sites were excessive when compared to the Region VII Road and Culvert Calculator.  It stated, “[t]he road and culvert calculator uses RS Means cost data and is an industry standard tool used to develop an estimate for reasonability comparison.”[4]

 

Finally, the determination concluded that the cost to purchase the squash tube used at site 5 was eligible, and approved $5,890, which represented the purchase price of the pipe.  This was the extent of the discussion of specific sites.

The first appeal decision contained an attached spreadsheet with a list of the sites, the identified problems, and the amounts approved and denied for each site.  The spreadsheet indicated that sites 11, 14, 17, and 19 were approved in whole, and sites 5 and 9 were approved in part.[5]  The remaining sites were denied, with a note of either “no documented damage,” “excessive road length,” or both.  The total amount approved was $24,480.39, and the total amount denied was $208,323.50.

 

Second Appeal

The Applicant has filed a second appeal in a letter dated April 18, 2017, in which it again notes that it is undisputed that it suffered multiple periods of torrential rain during the incident period.  It states that it does not have access to Region VII’s internal Road and Culvert Calculator, so it is unable to comment on the conclusions drawn from that tool, however, it questions the propriety of using a region-specific product to determine reasonability.  The Applicant also notes that, despite the first appeal decision stating that the Region VII Road and Culvert Calculator was an industry standard tool, the Applicant’s civil engineers had never heard of it.  Moreover, the Applicant argues that the region never explained why it believed costs were unreasonable, noting that FEMA’s analysis was conclusory in this respect.  It argues that the GPS coordinates demonstrate that site 3 in PW 335 was not duplicative of site 18 in PW 395.  The Applicant then acknowledges that it does not have pre-repair pictures of the damage at each site and reiterates its position that photographs are not the only way to demonstrate damage.  Finally, the Applicant argues that the significance of the disaster and the repair costs it incurred were well documented, and that this documentation was sufficient to prove damages and costs, especially given that FEMA never claimed that it was not maintaining its roads.

 

The Grantee forwarded the Applicant’s appeal in a letter dated June 22, 2017, reiterating the Applicant’s arguments.  It also added that FEMA never addressed the fact that its personnel lost photographs, and that even without photographs, the totality of the circumstances make it clear that the Applicant repaired disaster related damage.  It also added that it was unclear from the first appeal decision how FEMA determined that the lengths of roadway repair documented in PW 335 were “excessive.”  It was clear from the PW that PW 335 was written to address damage to both roads and culverts.  Finally, it asserts that the spreadsheet FEMA included did not provide a sufficient explanation of FEMA’s rationale for the costs it approved and denied.  It notes as an example that at site 5, FEMA approved funding for the cost of the squash tube, but denied funding to remove the damaged culvert and install the new one.  The Grantee argues that this spreadsheet “is inconsistent with the evidence, lacks detail for proper evaluation, and fails to capture recognizable costs needed to restore damaged property to pre-disaster condition.”  Finally, it argues that denial of PW 335 is inconsistent with the approval of PW 395, which was approved in full.

 

Discussion

Issue 1:  Duplication of Benefits at Site 3

Section 312 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) prohibits applicants from receiving duplicate financial assistance from more than one source.[6]  A review of the GPS coordinates in PWs 335 and 395, however, shows that these were different locations.  Therefore, there was no duplication of Public Assistance (PA) at site 3. 

Issue 2:  Extent of Road Repairs at Sites 3, 5, 6, 8-9, and 15

 

In order to be eligible for PA funding, work must be the direct result of a declared disaster, located within the designated disaster area, and the legal responsibility of the applicant.[7]  Here, the Applicant argues that the repairs that it completed were necessary and reasonable, and the Grantee further asserts that PW 335 was written to cover both roads and culverts, making it unclear why Region VII would characterize the roadway repair as “excessive.”

 

The first appeal decision was unclear as to what made certain road repairs “excessive.”  While two different PWs were written, one for roads and one for roads and culverts, there is nothing in the record stating that the roads and culverts PW would include only small lengths of road.  Likewise, FEMA’s guidance and regulations do not prohibit including both roads and culverts in the same PW.  To the extent that the roads documented as damaged in PW 335 were in fact damaged as a direct result of the disaster, within the designated disaster area, and the legal responsibility of the applicant, the work to repair them is eligible for PA funding. 

In light of this, the eligibility of the roadway repair depends on the Applicant’s ability to demonstrate that the work was required as a direct result of the declared disaster.  This will be discussed in Issue 4 later in this analysis.

Issue 3:  Reasonability of Costs for Sites 6, and 8-10

 

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.”[8]  When determining whether a cost is reasonable, consideration is given to whether the cost is of a type generally recognized as ordinary and necessary for the subject facility and type of work, whether the individuals involved acted with prudence in conducting the work, and whether normal procedures were followed.[9]  The reasonableness of a cost can be evaluated by examining historical documentation for similar work, average costs for similar work in the area, published unit costs from national cost estimating databases, FEMA cost codes, equipment rates, and engineering and design service curves.[10]

 

When an RA is considering denying a first appeal in whole or in part, the RA must issue to the applicant a final RFI, explaining the basis for the likely denial and requesting that the applicant provide additional information that could support its appeal.[11]  The Applicant must also be advised that, after the RA issues the first appeal decision, the administrative record will close.[12] 

For clarity, the Road and Culvert Calculator is a spreadsheet created by Region VII that generates site total cost estimates calculated based on cost data, some of which is collected from the Applicant and some of which is drawn from R.S. Means, a national cost estimating database.  Use of R.S. Means data to create estimates, rather than the Region VII calculator, is an industry standard cost estimating technique.  FEMA uses R.S. Means data when utilizing the Cost Estimating Format methodology to create project cost estimates in situations where actual cost data are unavailable.[13]  The Applicant, however, was not provided a copy of the Road and Culvert Calculator to examine its methodology.  This prevented the Applicant from being able to respond appropriately to the calculations and determinations that were based upon it.

 

Additionally, the first appeal decision was confusing as to the issue of reasonableness, as neither it nor the final RFI specifically identified which costs were unreasonable.  The PA Guide recognizes that the use of published costs from national estimating databases, such as R.S. Means, is a valid way establish reasonable unit costs.  However, the Applicant’s costs do not become inherently unreasonable because they exceeded an estimate.  They are only unreasonable if they would not have been incurred by a reasonably prudent person under the circumstances prevailing at the time.[14]  Here, the RFI did not identify which costs appeared unreasonable, explain why they appeared unreasonable, or provide the Applicant an opportunity to offer additional documentation to address the question of reasonableness.  The first appeal decision correctly stated that the Applicant had the burden to demonstrate that costs were reasonable, but here it did not have a fair opportunity to do so.

 

Issue 4:  Documentation of Damage at Sites 1-8, 10, 12-13, 15-16, 18

Section 406(e) of the Stafford Act authorizes FEMA to fund the cost of repairing or replacing a facility damaged by a major disaster.[15]  As noted above, in order to be eligible for PA funding, work must be required as a direct result of a declared disaster.[16]  Damage that results from a cause other than the designated event, such as pre-disaster damage, or work to correct inadequacies that existed prior to the disaster, is not eligible for repair.[17]  For example, repair of normal maintenance items are not eligible because they do not meet the criterion of being disaster-related.[18]  One way for FEMA to determine that damage to a facility was disaster related is to examine inspection reports or maintenance records to discover whether the facility had pre-existing damage.[19]  FEMA’s regulations, policy, and guidance, however, do not limit the ways in which an applicant may establish that damage was the direct result of the disaster.  In practice, FEMA has considered a wide variety of information when deciding whether damage was disaster related, including timing relative to the disaster,[20] engineering reports,[21] surveys,[22] inspection reports,[23] and site visits.[24]

 

While the first appeal decision acknowledged that photographs were not the only way to establish predisaster conditions, the RFI did not seek documentation other than photographs to determine whether the damage was disaster related.  For example, no inspection or maintenance records were provided because, as the Applicant pointed out several times, FEMA never questioned the maintenance of its roads.  The first appeal decision was correct in stating that the Applicant has the burden to demonstrate that the damage was disaster related, and that the simple fact that work was performed after a disaster is insufficient to discharge that burden.  However, the record contained significantly more information than documents stating that work was completed.  For example, the Applicant has a sizeable road maintenance budget in excess of $5 million, the damage was of the type to be expected after severe flooding, the Applicant sought reimbursement for repairs to only a small portion of the roadway and culverts it maintained, it saved costs by recovering aggregate and cleaning culverts where it could, and it began repairs before the federal disaster declaration.  If there was not enough information in the record, the RFI should have explained the deficiency and requested additional documentation to support the appeal.  It was insufficient for the RFI only to request photographs that the Applicant had already admitted did not exist.[25]

 

Conclusion

In summary, there was no duplication of benefits at site 3.  Additionally, the first appeal decision did not adequately explain why road repairs were “excessive.”  Costs for these repairs should not have been deobligated to the extent that they were eligible under the PA Program.  The final RFI, however, did not request the documentation necessary to adjudicate the issues presented on appeal.  Accordingly, this appeal is remanded to Region VII for issuance of another RFI to identify and explain the unreasonable costs, if any, for sites 6 and 8-10 and offer the Applicant an opportunity to respond.  If the results from the Roads and Culverts calculator will form part of the basis for the decision, it must be provided to the Applicant so that an adequate response can be prepared.  This additional RFI should also identify and request documentation in addition to photographs, such as maintenance records or inspection reports, which could allow FEMA to conclude whether the work was required as a result of a declared disaster.

 

[1] Letter from Acting Reg’l Adm’r, FEMA Region VII, to Deputy Dir., Ks. Div. of Emergency Mgmt. and Dir. Pub. Works, Franklin Cty. Pub. Works, at 4 (Mar. 30, 2017) (hereinafter First Appeal Decision).

[2] Id. at 5

[3] Id. at 3.

[4] Id. at 6.

[5] The amount approved for site 5 corresponds to the cost of the squash tube discussed in the first appeal determination.  The nature of the costs that were approved in site 9 is unclear.

[6] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L No. 93-288, § 312(a), U.S.C. § 5155 (2012); see also Public Assistance Guide, FEMA 322, at 41 (June 2007) [hereinafter PA Guide] (stating “[a]n applicant may not receive funding from two sources for the same item of work”).

[7] 44 C.F.R. § 206.223(a) (2014); PA Guide, at 29-31.

[8] 2 C.F.R. § 200.404; PA Guide, at 40.

[9] PA Guide, at 41.

[10] Id.

[11] Recovery Directorate Manual, Public Assistance Program Appeal Procedures, Version 4, at 13-14 (Mar. 29, 2016).

[12] Id.

[13] PA Guide, at 106

[14] 2 C.F.R. § 200.404.

[15] Stafford Act § 406(e).

[16] 44 C.F.R. § 206.223(a)(1) (2014); PA Guide, at 29.

[17] PA Guide, at 29.

[18] Id. at 33.

[19] Id. at 33.

[20] See, e.g., FEMA Second Appeal Analysis, Delaware Cty., FEMA-1930-DR-IA, at 6 (May 10, 2016).

[21] See, e.g., FEMA Second Appeal Analysis, Collier Cty., FEMA-1609-DR-FL, at 3 (Oct. 2, 2015).

[22] See, e.g., FEMA Second Appeal Analysis, Tn. of Sandwich, FEMA-4097/4110-DR-MA, at 5 (Jan. 27, 2017).

[23] See, e.g., FEMA Second Appeal Analysis, Ks. Republic Cty. Highway Dep’t, FEMA-4230-DR-KS, at 4 (July 26, 2017).

[24] See PA Guide, at 140.

[25] The first appeal decision’s statement that FEMA’s current policy “makes clear a strong preference for photographic documentation of damaged sites,” and that “photographic evidence of damages will be heavily weighted when determining disaster related damage,” needs to be clarified for the Applicant’s benefit.  In some situations, photographs can be the most efficient way to show disaster related damage.  The first appeal decision’s reference to Table 6 on page 126 in the Public Assistance Program and Policy Guide points out that pre- and post-incident photographs are something that the Applicant should plan to bring to the Kickoff Meeting so that its specific needs can be addressed.  The decision’s reference to Table 7 on page 129 identifies photographs as one item that can be obtained or validated through the site inspection process.  However, photographs are not a requirement, nor does the lack of photographs weigh against an applicant.