705, Support Documentation

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

DisasterFEMA-3218
Applicant Columbus Consolidated Government (formerly Muscogee County),
Appeal TypeSecond
PA ID#215-99215-00
PW ID#(PW) 13
Date Signed2018-03-08T00:00:00

Conclusion:  Sections 705(a) and (b) of the Stafford Act do not apply to the Applicant.  The statute of limitations and presumption of adequate record-keeping do not arise until three years after the date of transmission of the Grantee’s final expenditure report, which occurred on March 31, 2015.  The deobligation of a portion of administrative allowance was appropriate.  The Applicant has not provided FEMA documented justification in support of its appeal seeking reinstatement of deobligated funds.

Summary Paragraph

As a result of Hurricane Katrina which displaced numerous survivors from their homes, the President declared a federal emergency in Georgia to provide temporary shelter for the survivors.  FEMA prepared Project Worksheet (PW) 13, to document the cost of emergency sheltering for 550 disaster survivors within Muscogee County (Applicant), Georgia.  FEMA obligated $1,623,600.00 for the estimated cost of sheltering the survivors.  The Applicant submitted its final expenditure report to the Georgia Emergency Management Agency (Grantee) on June 27, 2007.  On October 31, 2014, the Grantee submitted a Final Inspection Report (FIR) to FEMA, finding the Applicant’s actual eligible expended costs were $652,819.84.  FEMA amended PW 13 to award actual expended costs while also deobligating $970,780.16 in project funds.  FEMA also deobligated $12,938.68 of administrative allowance that was attributed to the deobligated project funds.  The Grantee notified the Applicant of the deobligation and informed the Applicant it was responsible for refunding $158,980.16 to FEMA.  The Applicant appealed.  At the same time, the Applicant returned $108,897.33 in unspent PA funds, leaving a balance of $50,082.83.  The Applicant asserted $8,414.00 of that amount was used for allowable administrative expenses, which could be fully documented.  For the remaining $41,668.83, the Applicant claimed it no longer maintained the documentation.  The Applicant argued Stafford Act Section 705(b) imposes a three-year statute of limitations on the adequate maintenance of accounting records, beginning on June 27, 2007.  The Grantee endorsed and forwarded the Applicant’s appeal, adding the $12,938.68 of deobligated administrative allowance and increasing the amount appealed to $63,021.51.  FEMA Region IV’s Regional Administrator (RA) denied the Applicant’s appeal.  The RA found the deobligation of $12,938.68 of administrative allowance to be appropriate since the final project costs were less than the originally estimated amount.  The RA also determined Section 705(b) did not apply to the Applicant as the limitations period did not begin until March 31, 2015, the date the Grantee submitted its last Federal Financial Report.  Lastly, the RA determined the Applicant’s appeal did not contain documented justification thus preventing FEMA from validating the eligibility of the costs claimed.  On second appeal the Applicant renewed its § 705(b) argument.  The Applicant also argued recovery of funds is proscribed under § 705(a), that FEMA improperly relied on Recovery Policy FP 205-081-2, and FEMA improperly denied the first appeal because FEMA failed to issue its decision within 90 days of receipt of the appeal.

 

Authorities and Second Appeals

  • Stafford Act § 325(a)(1), 705(a)–(b).
  • 44 C.F.R. §§ 13.3, 13.42(b), 13.42(c)(1), 206.201(e), 206.206(a).
  • FP 205-081-2, at 1, 3.
  • PA Guide, at 41, 42, 86.
  • City of Sweetwater, FEMA-1345-DR-FL, at 3

Headnotes

  • FP 205-081-2 states for a subrecipient (i.e. applicant or subgrantee), the protections of § 705 become effective 3 years after the date of transmission of the recipient’s (i.e. grantee’s) final expenditure report.
    • The Grantee’s final expenditure report was transmitted on March 31, 2015.  The procedural protections contained in § 705(a) and (b) are not effective until March 31, 2018.  Therefore, they do not apply to the Applicant’s appeal.
  • FP 205-081-2, published on  March 31, 2016, states it applies to all potential recoveries of payments made to local government for all Public Assistance funding and for all PWs that are under appeal
    • Applicant’s first appeal was under consideration by the RA at the time of publication of FP 205-081-2.  Therefore, FP 205-081-2 applies to the Applicant.
  • 44 C.F.R. § 206.206(a) requires an appeal to be supported by documented justification.
    • The Applicant did not provide documented justification to support its appeal.

Appeal Letter

Homer Bryson

Director

Georgia Emergency Management & Homeland Security Agency

P.O. Box 18055

Atlanta, Georgia 30316-0055

 

 

Re:  Second Appeal – Columbus Consolidated Government (formerly Muscogee County),

PA ID 215-99215-00, FEMA-3218-EM-GA, Project Worksheet (PW) 13 – 705 – Support Documentation

 

Dear Mr. Bryson:

 

This is in response to your letter dated June 30, 2017, which transmitted the referenced second appeal on behalf of Columbus Consolidated Government (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) deobligation of funding in the amount of $63,021.51.

 

As explained in the enclosed analysis, Sections 705(a) and (b) of the Stafford Act do not apply because the statute of limitations and the presumption of adequate record-keeping do not arise until three years after the date of transmission of the Grantee’s final expenditure report, which occurred on March 31, 2015.  The Applicant has not provided FEMA documented justification in support of its appeal, as required by FEMA regulation, and deobligation of a portion of corresponding administrative allowance was therefore appropriate.  Consequently, the appeal is denied. 

 

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

 

Sincerely,

/S/

 

Christopher Logan

Director

Public Assistance Division

 

Enclosure:

 

cc:  Gracia B. Szezech  

Regional Administrator

FEMA Region IV

 

Appeal Analysis

Background

In September of 2005, Hurricane Katrina struck the Gulf Coast displacing numerous survivors from their homes, causing them to seek temporary shelter in other states.  As a result, the President declared a federal emergency in Georgia to provide temporary shelter for Hurricane Katrina survivors.  FEMA prepared Project Worksheet (PW) 13 to document the work and cost of emergency sheltering for 550 disaster survivors within Muscogee County (Applicant),[1] Georgia.  On November 4, 2005, FEMA obligated $1,623,600.00 in Public Assistance (PA) for the estimated cost of rent, furniture, and utilities for the survivors within the Applicant’s geographic boundaries.[2]

 

According to the Georgia Emergency Management Agency (Grantee),[3] the Applicant submitted its final expenditure report on June 27, 2007.[4]  On October 31, 2014, the Grantee submitted a Final Inspection Report (FIR) to FEMA, finding the Applicant’s actual eligible expended costs amounted to $652,819.84.  On May 19, 2015, FEMA amended PW 13 and awarded funding totaling $652,819.84 while simultaneously deobligating the $1,623,600.00 originally awarded in PW 13.[5]  The net effect of these actions was a deobligation in the amount of $970,780.16.  FEMA then deobligated an additional $12,938.68 of administrative allowance that was attributed to the $970,780.16 in deobligated project funds.  On June 9, 2015, the Grantee notified the Applicant of the deobligation of PA funds and informed the Applicant it was responsible for refunding $158,980.16 to FEMA.[6]

 

First Appeal

 

In a letter dated July 7, 2015, the Applicant appealed FEMA’s deobligation of PA funds and the determination that the Applicant owed $158,980.16.[7]  In the same letter, the Applicant tendered $108,897.33 in unspent PA funds, explaining that its previous attempts to return the money were rejected by the Grantee.  With respect to the remaining difference of $50,082.83, the Applicant asserted $8,414.00 was used for allowable administrative expenses, which can be fully documented.  As for the remaining $41,668.83 in disbursements, the Applicant claimed that it no longer maintained the records due to staff turnover and the passage of time.  According to the Applicant, a statutory presumption of adequate maintenance of accounting records arises three years after transmission of the final expenditure report.[8]  The Applicant asserted it submitted its final expenditure report to the Grantee on June 27, 2007, arguing that the presumption of adequate maintenance of accounting records arose three years later on June 27, 2010.  Therefore, any documentation requested by FEMA and found to be unavailable after that date was entitled to the protection of the three-year statute of limitations outlined in Section 705 of the Stafford Act.  In a letter dated August 6, 2015, the Grantee forwarded the Applicant’s appeal to the FEMA Region IV Regional Administrator (RA).[9]   The Grantee’s letter modified the amount of the appeal as a request to reinstate $63,021.51 in deobligated PA funds, vice $50,082.83, explaining the appeal should also include $12,938.68 in additional deobligated administrative costs.

 

On April 11, 2016, FEMA transmitted a final request for information (Final RFI) to the Applicant and Grantee, notifying them the administrative record did not contain sufficient information to support the restoration of deobligated funds.[10]  FEMA requested the Applicant send any additional information relevant to the appeal.  The Applicant responded on May 10, 2016, stating it provided all available documentation.[11]  The Applicant reiterated its argument that per Section 705 of the Stafford Act, any documents found to be unavailable after June 27, 2010 should not be a basis for deobligation.

 

On April 27, 2017, FEMA Region IV’s RA denied the Applicant’s appeal.[12]  FEMA declined to restore $12,938.68 of deobligated administrative allowance, finding the audit and labor costs appealed by the Applicant were covered by the administrative allowance already provided.  As for Section 705(b) of the Stafford Act, FEMA found that, per policy, the rebuttable presumption of adequate maintenance of accounting records did not commence until March 31, 2015, the date the Grantee submitted its last Federal Financial Report.[13]  Therefore the presumption did not apply to the Applicant.  FEMA also determined the Applicant’s appeal did not contain documented justification thereby preventing FEMA from validating the eligibility of the costs claimed.

 

Second Appeal

 

In a letter dated June 29, 2017, the Applicant filed a second appeal.[14]  The Applicant contends its previous payment of $108,897.33 constitutes the total owed to FEMA and disputes owing $63,021.51.  The Applicant argues its first appeal should be granted as FEMA’s appeal decision was not issued within 90 days as required by federal regulation.  With respect to administrative allowances, the Applicant alleges miscalculation by FEMA and argues the most it might owe is $55,121.08.  The Applicant renews its argument that under Section 705(b) of the Stafford Act, starting on June 27, 2010, the Applicant presumably maintained adequate accounting records and its appeal should not be denied for failure to produce such records.  The Applicant argues that a plain-reading of the statute supports this position as it does not distinguish between grantees and subgrantees.[15]  Furthermore, the Applicant asserts that FEMA’s Stafford Act Section 705, Disaster Grant Closeout Procedures should not be applied to its appeal as it did not become effective until after the Applicant filed its first appeal.  The Grantee forwarded the second appeal without comment.[16]

 

Discussion

 

Administrative Allowance

 

Applicants may claim an administrative allowance to cover direct and indirect costs incurred in requesting, obtaining, and administering PA funding.[17]  The administrative allowance for an applicant is calculated, on a sliding scale, as a percentage of all approved eligible costs that the applicant receives for a given disaster.[18]  FEMA correctly applied the sliding scale[19] to the original obligated estimate in calculating an administrative allowance of $27,236.00.  In the Grantee’s FIR, the actual costs of the project totaled only $652,819.84, resulting in a deobligation of $970,780.16 in project costs.  This, in turn, led to the appropriate deobligation of $12,938.68 in administrative allowance tied to the $970,780.16 in deobligated project costs.   

 

Stafford Act § 705

 

The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988 contains several procedural safeguards for grantees and subgrantees.  First, there is a statute of limitations that prohibits FEMA from recovering payments made to a State or local government for disaster or emergency assistance three years after the date of transmission of the final expenditure report for the disaster or emergency.[20]  Next, there is a presumption that accounting records are adequately maintained in any dispute that arises three years after the date of transmission of the final expenditure report for the disaster or emergency.[21]  FEMA implemented these statutory provisions through Recovery Policy FP-205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures.[22]

 

The Applicant argues the date from which to apply the statute of limitations and the presumption of adequate records maintenance is June 27, 2010; three years after the date of transmission of its final expenditure report to the Grantee.  The Applicant also argues FEMA’s Disaster Grant Closeout Procedures should not be applied as it did not become effective until after the Applicant filed its first appeal. 

 

The Stafford Act requires public notice and opportunity for comment before FEMA adopts or modifies policy that governs the implementation of the Public Assistance (PA) program which could result in a significant reduction of assistance under the PA program.[23]  Any such policy only applies to disasters declared on or after the date on which the policy is adopted.[24]  FEMA’s Disaster Grant Closeout Procedures is not, however, subject to the restriction that it apply only to disasters declared after its adoption on March 31, 2016.  The Disaster Grant Closeout Procedures establish guidelines to determine whether the protections of Section 705 apply[25] and prevent FEMA from recovering PA funding previously made to a recipient or subrecipient.[26]  As such, promulgation of the Disaster Grant Closeout Procedures to implement the protections of Section 705, specifically the statute of limitation and presumption of adequate record-keeping at issue in this appeal, do not result in any reductions of assistance under the PA program; rather, the procedures prevent any potential future reductions.  Therefore, the Disaster Grant Closeout Procedures are not subject to the restriction that it apply only to disasters declared after the date of the adoption of the policy.

 

While the Stafford Act does not define the term “final expenditure report,” the meaning can be easily inferred from the rest of the language contained within the same section of the statute, as well as from federal regulation.  Both Sections 705(a)(1) and (b)(1) qualify the “transmission of the final expenditure report” by adding the phrase “for the disaster or emergency.”  Following the presidentially declared emergency,[27] the state of Georgia received an award of federal disaster grant assistance and became accountable, as grantee, for the management and use of the funds.[28]  Federal regulations governing grant management by state governments imposes a record retention requirement of three years in length[29] that “starts on the day the grantee[30] submits its final expenditure report.[31]”  This time period aligns and is consistent with the language of Sections 705(a)(1) and (b)(1).  It is therefore, axiomatic that the “final expenditure report for the disaster or emergency” refers to the final expenditure report from the grantee, not a subgrantee.  Therefore, the limitations found in both Sections 705(a) and (b) are inapplicable to the Applicant’s appeal as the Grantee’s (i.e. the state’s) final expenditure report was transmitted on March 31, 2015.  Thus, the statute of limitations and the presumption of adequate record maintenance would not arise until March 31, 2018.

 

Support Documentation

 

Per FEMA regulation[32] and policy,[33] an appeal must contain documented justification supporting the applicant’s position.  The appeal must specify the monetary figure in dispute and the provisions in Federal law, regulation, or policy with which the appellant believes the initial action was inconsistent.[34]  When adjudicating appeals, FEMA relies on the administrative record, which includes documentation submitted by an applicant.  An applicant is required to substantiate its appeal by not only producing records, but explaining how those records should be applied to support the appeal.[35]

 

On first appeal, the Applicant admitted it did not have all the documentation to support its appeal.[36]  FEMA sent the Applicant a Final RFI requesting any additional information relevant to the appeal.  The Applicant’s response did not add to the administrative record but merely reiterated its previous arguments asserting Section 705(b).[37]  As such, the Applicant did not provide documented justification to support its appeal and the RA correctly denied the appeal on this basis.

 

Conclusion

 

Sections 705(a) and (b) of the Stafford Act do not apply because the statute of limitations and presumption of adequate record-keeping do not arise until three years after the date of transmission of the Grantee’s final expenditure report, which occurred on March 31, 2015.  FEMA’s deobligation of a portion of administrative allowance was appropriate.  The Applicant has not provided FEMA a documented justification in support of its appeal as required by regulation.  Consequently, the appeal is denied. 

 

[1] Muscogee County is now Columbus Consolidated Government.

[2] Project Worksheet 13, Muscogee Cty, Version 0 (Oct. 12, 2005).

[3] The Georgia Emergency Management Agency is now the Georgia Emergency Management & Homeland Security Agency.

[4] Letter from Pub. Assistance, Div. Dir., Ga. Emergency Mgmt. & Homeland Sec. Agency, to Reg’l Adm’r, FEMA, Region IV, at 1 (Aug. 6, 2015).

[5] Project Worksheet 13, Muscogee Cty, Version 1 (May 19, 2015).

[6] Email from Acting Div. Dir., Ga. Emergency Mgmt. Agency, to Grant Accountant, Columbus Consol. Gov’t. (June 9, 2015, 1444 EST) (Grantee’s email stated a deobligation amount of $963,718.84 vice $970,780.16.  The reason for this discrepancy is unclear.).

[7] Letter from Assistant City Att’y, Columbus Consol. Gov’t., to Interim Pub. Assistance Div. Dir., Ga Emergency Mgmt. Agency, at 1 (July 7, 2015) [hereinafter Applicant’s First Appeal].

[8] Applicant’s First Appeal, at 2 (citing The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 705(b), 42. U.S.C. § 5205(b) (2005)).

[9] Letter from Dir., Pub. Assistance Div., Ga. Emergency Mgmt. Agency, to Reg’l Adm’r, FEMA Region IV, at 1 (Aug. 6, 2015).

[10] Letter from Dir., Recovery Div., FEMA Region IV, to Dir., Ga. Emergency Mgmt. Agency and Assistant City Att’y., Columbus Consol. Gov’t., at 1 (Apr. 11, 2016). 

[11] Letter from Assistant City Att’y., Columbus Consol. Gov’t., to Branch Chief, Pub. Assistance, FEMA Region IV, at 1-2 (May 10, 2016) [hereineafter Applicant’s Final RFI Response].

[12] Letter from Reg’l Adm’r, FEMA Region IV, to Dir., Ga. Emergency Mgmt. and Homeland Sec. Agency and Assistant City Att’y., Columbus Consol. Gov’t., at 1 (Apr. 27, 2017) [hereinafter FEMA First Appeal Analysis].

[13] Id. at 3-4 (citing FP 205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures, at 3 (Mar. 31, 2016)).

[14] Letter from Assistant City Att’y., Columbus Consol. Gov’t., to Dir., Ga. Emergency Mgmt. & Homeland Sec. Agency, and Reg’l Adm’r, FEMA Region IV, at 1 (June 29, 2017) [hereinafter Applicant’s Second Appeal].

[15] Id.

[16] Letter from Grants Specialist Supervisor, Ga. Emergency Mgmt. & Homeland Sec. Agency, to RCD Appeals Supervisor, FEMA Region IV, at 1 (June 30, 2017).

[17] Public Assistance Guide, FEMA 322, at 41 (Oct. 1999) [hereinafter PA Guide].

[18] Id. at 42.

[19] FEMA First Appeal Analysis, at 3 (reprinting the administrative allowance table from the PA Guide, at 43).

[20] Stafford Act § 705(a).

[21] Id. § 705(b).

[22] Recovery Policy FP-205-081-2, Disaster Grant Closeout Procedures, at 1 (Mar. 31, 2016) (explaining the purpose of the policy is to explain how FEMA implements Section 705 in order to ensure consistent application.); FEMA Second Appeal Analysis, City of Coral Springs, at 7 (May, 19, 2017).

[23] Stafford Act § 325(a)(1).

[24] Id. at § 325(a)(2).

[25] FP-205-081-2, at 1.

[26] Id. (The Disaster Grant Closeout Procedures were published while the Applicant’s First Appeal was under consideration.).

[27] Federal Emergency Management Agency [FEMA–3218–EM] Georgia; Emergency and Related

Determinations, 70 Fed. Reg. 54064 (Sept. 13, 2005).

[28] Title 44 Code of Federal Regulations (44 C.F.R.) § 13.3 (2004).

[29] Id. § 13.42(b).

[30] See 44 C.F.R. § 206.201(e) (defining Grantee as the state.).

[31] 44 C.F.R. § 13.42(c)(1).  

[32] Id. § 206.206(a).

[33] PA Guide, at 86.

[34] 44 C.F.R. § 206.206(a).

[35] FEMA Second Appeal Analysis, City of Sweetwater, FEMA-1345-DR-FL, at 3 (Aug. 15, 2017).

[36] Applicant’s First Appeal, at 2 (explaining, “the Stafford Act, has anticipated exactly this sort of situation and makes it clear that it is not the local government's responsibility to be able to provide documentation more than 3 years after transmission of a final expenditure report.”).

[37] Applicant’s Final RFI Response, at 1 (stating, “we have no additional information to submit at this time.”).

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