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Second Appeal Analysis
PA ID# 215-99215-00; Columbus Consolidated Government (formerly Muscogee County),
PW ID# (PW) 13 ; 705, Support Documentation
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),
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.
According to the Georgia Emergency Management Agency (Grantee),
the Applicant submitted its final expenditure report 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 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.
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.
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.
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 As for the remaining $41,668.83 in disbursements, the Applicant claimed that it no longer maintained the records due to staff turnover and the passage of time.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.
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).
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.
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.
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.
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.
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.
In a letter dated June 29, 2017, the Applicant filed a second appeal.
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.
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.
Applicants may claim an administrative allowance to cover direct and indirect costs incurred in requesting, obtaining, and administering PA funding.
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.
FEMA correctly applied the sliding scale
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.
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.
FEMA implemented these statutory provisions through Recovery Policy FP-205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures
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.
Any such policy only applies to disasters declared on or after the date on which the policy is adopted.
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
and prevent FEMA from recovering PA funding previously made to a recipient or subrecipient.
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,
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.
Federal regulations governing grant management by state governments imposes a record retention requirement of three years in length
that “starts on the day the grantee
submits its final expenditure report.
” 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.
Per FEMA regulation
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.
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.
On first appeal, the Applicant admitted it did not have all the documentation to support its appeal.
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).
As such, the Applicant did not provide documented justification to support its appeal and the RA correctly denied the appeal on this basis.
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.
Muscogee County is now Columbus Consolidated Government.
Project Worksheet 13, Muscogee Cty, Version 0 (Oct. 12, 2005).
The Georgia Emergency Management Agency is now the Georgia Emergency Management & Homeland Security Agency.
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).
Project Worksheet 13, Muscogee Cty, Version 1 (May 19, 2015).
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.).
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
 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)).
Letter from Dir., Pub. Assistance Div., Ga. Emergency Mgmt. Agency, to Reg’l Adm’r, FEMA Region IV, at 1 (Aug. 6, 2015).
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).
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
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
. at 3-4 (citing
FP 205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures,
at 3 (Mar. 31, 2016)).
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
Letter from Grants Specialist Supervisor, Ga. Emergency Mgmt. & Homeland Sec. Agency, to RCD Appeals Supervisor, FEMA Region IV, at 1 (June 30, 2017).
 Public Assistance Guide
, FEMA 322, at 41 (Oct. 1999) [hereinafter PA Guide
 FEMA First Appeal Analysis
, at 3 (reprinting the administrative allowance table from the PA Guide
, at 43).
Stafford Act § 705(a).
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).
Stafford Act § 325(a)(1).
. (The Disaster Grant Closeout Procedures
were published while the Applicant’s First Appeal was under consideration.).
Federal Emergency Management Agency [FEMA–3218–EM] Georgia; Emergency and Related
Determinations, 70 Fed. Reg. 54064 (Sept. 13, 2005).
Title 44 Code of Federal Regulations (44 C.F.R.) § 13.3 (2004).
44 C.F.R. § 206.201(e) (defining Grantee as the state.).
44 C.F.R. § 13.42(c)(1).
44 C.F.R. § 206.206(a).
FEMA Second Appeal Analysis, City of Sweetwater
, FEMA-1345-DR-FL, at 3 (Aug. 15, 2017).
 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.”).
 Applicant’s Final RFI Response
, at 1 (stating, “we have no additional information to submit at this time.”).