Scope of Work, Improved Project, Environmental Compliance

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	FEMA-4007
Applicant	Sundance
Appeal Type	Second
PA ID#	011-74195-00
PW ID#	( PW) 181
Date Signed	2018-05-04T00:00:00

Conclusion: The City of Sundance, Wyoming (Applicant) did not receive prior approval from FEMA before changing the scope of work (SOW) in Project Worksheet (PW) 181.  In addition, the Applicant did not afford FEMA the opportunity to comply with federal environmental and historic preservation (EHP) requirements.  Accordingly, the appeal is denied.

 

Summary Paragraph

From May 18 through July 8, 2011, severe storms and heavy rains caused flooding throughout the state of Wyoming.  The Applicant’s Cole Water Storage Tank (water tank) shifted due to excessive moisture saturating the soils around the water tank.  FEMA prepared PW 181 to document work to stabilize the site of the water tank.  In 2014, after consultation with its engineers, the Applicant determined the foundation of the water tank was unstable and moved it to a new location.  In 2016, after completion of the work, the Applicant submitted an improved project request to the Wyoming Office of Homeland Security (Grantee).  The Grantee forwarded to FEMA, who denied the request because the Applicant failed to receive approval prior to changing the SOW and also because FEMA did not have the opportunity to conduct the necessary environmental and historic preservation (EHP) reviews.  As such, FEMA deobligated all funding.  The Applicant appealed claiming it was not aware of the requirement to notify the Grantee that it was relocating the water tank.  FEMA Region VIII Regional Administrator denied the appeal, finding that federal regulations required the Applicant to obtain the prior approval of FEMA when revising the SOW.  The Applicant did not demonstrate that it requested a SOW change or an improved project designation prior to moving the water tank.  In addition, FEMA did not have the opportunity to conduct the required EHP reviews prior to the work being completed.  The Applicant again appeals, reiterates its prior arguments, and also contends that FEMA has conducted after-the-fact EHP reviews and could do so in this instance. 

 

Authorities and Second Appeals

• Stafford Act §§ 316, 406.

• 44 C.F.R. §§ 10.8, 13.30(d)(l), 13.43, 206.203.

• 40 C.F.R. § 1508.4

• PA Guide, at 110-111, 127-131, 140.

• FEMA Instruction 108-1-1, Instruction of Implementation of the Environmental Planning and Historic Preservation Responsibilities.

• Roseau Cty. Hwy. Dept., FEMA-1288-DR-MN, at 7.

• Town of Rapidan, FEMA-1941-DR-MN, at 4.

• Village of Paradeeville, FEMA-1768-DR-WI, at 3.

 

Headnotes

• Under 44 C.F.R. § 13.30(d)(1), applicants must obtain the prior approval of FEMA whenever any revision of the scope or objectives of the project is anticipated.  In addition, the PA Guide states that an applicant should notify the grantee as soon as possible when a change in the SOW is discovered so it can forward it to FEMA.

• 44 C.F.R. § 206.203(d)(1) and the PA Guide require an applicant to obtain approval for an improved project prior to the start of construction where it will result in a significant change from the predisaster location, design, and footprint.

  • As the Applicant changed the SOW from repairing the soil at the existing site of the water tank to relocating the water tank at a new location (an improved project) without notice to or prior approval from FEMA, the project is not eligible for Public Assistance.

• The PA Guide makes clear EHP reviews must be completed prior to beginning work. 

  • As the Applicant did not notify FEMA of the change to the SOW until after it completed the work, it failed to afford FEMA the opportunity to comply with NEPA, NHPA, and ESA.  As such, the project is ineligible.

 

Appeal Letter

Appeal Analysis

Background

From May 18 through July 8, 2011, severe storms and heavy rains caused flooding throughout the State of Wyoming.  The City of Sundance’s (Applicant) Cole Water Storage Tank (water tank) shifted due to excessive moisture saturating the soils around the water tank, though the water tank itself was undamaged.  FEMA prepared Project Worksheet (PW) 181 to document work to stabilize the site of the water tank.  The approved scope of work (SOW) involved stabilizing the existing site, by using micropiles and ground anchors to tie into an existing ring foundation wall and installing ground anchors at the lower back retaining wall for increased ground stability.  The PW noted that the Applicant preferred to move the water tank to a new site, and if it did so, the estimated cost would be capped at $300,000.00 (reflecting the cost to stabilize the existing site) as an improved project.  The PW also contained a comment stating that the Applicant must notify the state if there were any changes in the SOW prior to starting the repairs, and failure to do so may jeopardize receipt of federal funding.  In addition, the Record of Environmental Consideration (REC) for PW 181 included a condition that “[a]ny change to the approved scope of work will require re-evaluation for compliance with NEPA and other Laws and Executive Orders.”[1]

 

In 2012, the Applicant’s engineers provided the Applicant with alternative sites for the water tank, noting that a Wyoming Department of Environmental Quality permit would be required prior to beginning construction and the requirement that certain sites would need a National Environmental Policy Act (NEPA) review.  In 2014, after consultation with its engineers, the Applicant determined the existing foundation was unstable and moved the water tank 3.8 miles north of the city. 

 

On February 5, 2016, after completion of the work, the Applicant submitted an improved project request to the State of Wyoming Office of Homeland Security (Grantee).  The Grantee forwarded it to FEMA, who denied the request on January 10, 2017.  FEMA determined the Applicant failed to receive approval prior to changing the SOW and, by moving the water tank, FEMA did not have the opportunity to conduct the necessary environmental and historic preservation (EHP) reviews, including a NEPA review.  As such, FEMA deobligated all funding.

 

First Appeal

 

The Applicant appealed FEMA’s deobligation in an April 14, 2017 letter,[2] requesting $300,000.00 in funding.  The Applicant contended that because the results of engineering studies concluded that stabilizing the soil in the existing location was not technically feasible (due to the continued and ongoing soil settlement), it decided to relocate the water tank.  The Applicant acknowledged that FEMA’s prior approval only involved stabilizing the existing site.  However, the Applicant determined any potential efforts to stabilize the site were not cost effective.  The new location selected by the Applicant was chosen due to the higher elevation to provide adequate pressure to supply water to the remainder of the system.  The new site work involved constructing an access road, retaining wall, tank site grading and rock excavation, as well as installing rock anchors, 8 and 10 inch PVC water lines and associated connections, a control vault, and associated electrical and communications line, and reassembly of the water tank at the new site.

 

The Applicant stated it was not aware of the requirement to notify the Grantee and FEMA of the improved project scope and relocation of the water tank (due to changes in City leadership and the staff responsible for managing grants and projects).  With regard to EHP reviews, the Applicant referred to other federally funded projects in close proximity to the new site of the water tank, including a United States Department of Agriculture (U.S. Forest Service) review for the Sundance Trail and an environmental impact statement (EIS) for the nearby Bear Lodge project.  In addition, though ground disturbing activities took place at the new location, the Applicant noted that its research revealed no cultural or historic resources present in or adjacent to the site. 

 

The Grantee concurred in a May 9, 2017 letter.  It addressed FEMA’s two primary reasons for deobligating funding.  First, the Grantee noted that the improved project request was submitted after the project was complete and conceded a lack of knowledge and experience regarding the administrative process for an improved project.  As such, the Grantee subsequently took steps to improve the management of Public Assistance awards.  Second, with regard to EHP concerns, the Grantee also referred to the two prior examples cited by the Applicant of reviews done by federal agencies near the new site.  In 1991, the Department of Agriculture, in conjunction with the State Historic Preservation Office (SHPO), reviewed the Sundance Trail and found no cultural resources were impacted.  The Bear Lodge project in 2014 involved invasive exploration activities in the same vicinity.  In addition, the Grantee noted that the new site was located near the Black Hills National Forest and likely would not have required a specific consultation with the SHPO.

 

FEMA sent the Grantee a Final Request for Information (Final RFI) on July 11, 2017.  FEMA requested any information the Applicant believed should be considered in light of FEMA’s review, which found that there was no evidence of the Applicant obtaining prior approval before relocating the water tank or that FEMA was afforded the opportunity to conduct the required EHP reviews.

 

The Applicant responded on August 10, 2017 and provided examples and attachments to demonstrate that it communicated its intent and received approval to relocate the water tank.  This included the PW referring to the tank being unusable because filling it could cause further slippage, and a notation that the Applicant had not made a formal decision whether to repair or replace the tank or move the tank to a new site.  The Applicant also mentioned emails from FEMA dating back to 2011 stating that if the site of the water tank was determined to be stable before the disaster, that estimated costs could be transferred to an alternate site and capped as an improved project.  The Applicant further claimed that because it was unfamiliar with FEMA regulations, though the PW stated that the Applicant must notify the Grantee if there were any changes to the SOW prior to starting the work, the Applicant thought its ongoing communications with the Grantee constituted notice.  Finally, the Applicant contended that the improved project qualified for a categorical exclusion (CATEX) from NEPA.[3] 

 

The FEMA Region VIII Regional Administrator (RA) denied the appeal on October 23, 2017.  The RA found that federal regulations required the Applicant to obtain prior approval from FEMA when revising the PW’s SOW.  In addition, the Applicant should have notified the Grantee as soon as a change in scope was discovered, so that the Grantee could have forwarded the request to FEMA with its recommendation.  The RA noted that the approved SOW was to stabilize the existing site of the water tank and did not find the Applicant’s claim that the PW’s notation that the Applicant preferred moving the water tank persuasive as evidence of prior approval for the relocation.  Similarly, the RA found the Applicant’s argument that an email from the Grantee in 2011 conveyed approval was also unpersuasive because it merely stated FEMA policy (i.e., if a site is determined to have been stable before an incident period, and a cost is determined to restore it to its predisaster condition, then that cost may be transferred to an alternate site). 

 

The RA also found the project ineligible because FEMA did not have the opportunity to conduct the required EHP reviews and consultations prior to the work being completed.  The RA disagreed with the Applicant’s argument that the project qualified for a CATEX or a statutory exclusion (STATEX).  The Applicant did not demonstrate that the disruption posed an immediate threat to health, safety, and welfare to fall within the STATEX.  In addition because the project is either an improved or alternate project, it falls outside the scope of the STATEX.  Moreover, no CATEX exists for the relocation of the water tank.  The Applicant likewise failed to allow FEMA the opportunity to consult with the Wyoming SHPO as required by the National Historic Preservation Act (NHPA) or consult with U.S. Fish and Wildlife Service (FWS) as required by the Endangered Species Act (ESA). 

 

Second Appeal

 

In its second appeal dated December 18, 2017, the Applicant reiterates its first appeal arguments.  It again notes that it was simply unaware of the requirement to notify the Grantee of its decision to relocate the water tank.  The Applicant contends that the change in location and the improved SOW have not prevented FEMA from conducting its required EHP reviews.  It argues that FEMA may and has previously conducted reviews after work is initiated or completed, including for the state of Wyoming.

 

The Applicant believes that if FEMA would engage in a review, no significant impacts to the environment or historic and cultural resources would be found.  In support thereof, the Applicant refers FEMA to the Sundance Trail review and Bear Lodge project EIS.  Information on FWS’s website indicates that the project area does not serve as a habitat for any species listed as threatened or endangered under the ESA, and so minimal or zero consultation would be required.  Likewise for NHPA compliance, the Applicant’s discussion with the SHPO revealed no cultural or historic resources present at the new site.  The Grantee concurs in a February 20, 2018 letter.

 

Discussion

 

Scope of Work – Improved Project Request

 

Pursuant to The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) § 406, FEMA may provide grant assistance for the costs to repair, restore, reconstruct, or replace a facility damaged or destroyed by a major disaster.[4]  FEMA may reimburse costs when an applicant makes improvements, but still restores the predisaster function of a damaged facility.[5]  However, funding for improved projects is limited to the federal share of the approved estimate of eligible costs, or actual costs of completing the improved project, whichever is less.[6]  In addition, an applicant must obtain approval for an improved project prior to the start of construction, especially where it results in a significant change from the facility’s predisaster configuration.[7]  Additionally, regulation requires prior approval by FEMA whenever an applicant anticipates any revision of the scope or objective of the project.[8]  FEMA policy cautions applicants not to assume that such costs can be reported at the end of the project and that the additional funds will be approved automatically.[9]  Where an applicant fails to obtain FEMA’s prior approval, it risks denial of costs for work that exceeds the approved SOW.[10]

 

In 2011, FEMA approved PW 181 containing a SOW involving site stabilization for the water tank.  In 2014, after consultation with its engineers, the Applicant determined the foundation of the water tank was unstable and moved it 3.8 miles north of the city, which changed the location, design, and footprint of the water tank.  The Applicant acknowledged that it was not aware it needed prior approval to move the water tank, and that it failed to receive such approval before completing the project in 2014.[11]  The Applicant then submitted its improved project request to the Grantee in 2016, two years after project completion.  The Applicant has not submitted any documentation to demonstrate that FEMA approved either an improved project or a change in the original SOW.  Because the Applicant deviated from the eligible SOW without prior approval, it likewise did not comply with the terms of the grant (as stipulated in the PW) that it must notify the state if there were any changes in the SOW prior to starting the repairs, and failure to do so may jeopardize receipt of federal funding.

Environmental and Historic Preservation Compliance

 

FEMA must comply with a range of federal statutes, regulations, and Executive Orders related to EHP when providing PA funding.[12]  NEPA requires all federal agencies to consider the environmental impact of a proposed action as well as whether any alternatives exist, prior to obligating funds and beginning work.[13]  FEMA’s review must be completed before the approval of funding and before the applicant starts work “since the review may identify steps to be taken or conditions to be met before the project can be implemented.”[14]  When an applicant initiates or completes work on a project before FEMA is able to conduct the necessary EHP compliance review, the work generally is not eligible for PA funding.[15]  The Stafford Act, as implemented by federal regulation, excludes from NEPA review FEMA’s reimbursement of emergency work and permanent work that restores a facility substantially to its predisaster condition.[16]  In order to comply with NEPA, FEMA first determines if the work is either statutorily excluded from NEPA under the Stafford Act, or if it meets a categorical exclusion.[17]  If not excluded, the environmental assessment or EIS process begins.[18] 

 

In addition, pursuant to Section 106 of NHPA, FEMA must consider the effects of proposed federally funded projects on historic properties prior to approving or expending grant assistance.[19]  At a minimum, FEMA must, in consultation with the SHPO, identify historic properties and evaluate the effects of a potential PA project on historic properties prior to the start of construction.[20]  Section 7 of the ESA also requires FEMA to determine whether FEMA-funded actions may or are likely to adversely affect a listed threatened and endangered species and critical habitat and, when appropriate, consult with the applicable federal resource agency.[21]  When an applicant materially fails to comply with any term of an award, whether stated in a federal statute or regulation, state plan or application, notice of award, or elsewhere, FEMA may, among other remedies, disallow all or part of the cost of the activity or action.[22]

 

In its second appeal, the Applicant notes that FEMA may and has historically engaged in EHP reviews after project work has been initiated or completed.  FEMA did allow an after the fact review for FEMA-1923-DR-WY, PW 67, for the reimbursement of eligible emergency protective measures, including use of explosives for debris removal at three locations along the Middle Fork of the Popo Agie River.  However, the emergency protective measures described in the PW were not considered major Federal actions and were therefore statutorily excluded from NEPA review. 

 

Conversely, construction of the water tank was completed in the summer of 2014, approximately three years after the major disaster declaration, and accordingly was not emergency work.  As this was an improved project with construction occurring in a new location, the action is not statutorily excluded from NEPA review, and FEMA may have required an EA to satisfy the Agency’s obligations under NEPA for this action.  This EA would have included a purpose and need, an evaluation of alternatives, and a plan to involve the public.  Consequently, the Applicant’s improved project does not qualify as an emergency action, nor does it restore the facility substantially to its predisaster condition, therefore the action is not excluded from NEPA review.   

 

Furthermore, in order to comply with its responsibilities under Section 106 of NHPA, FEMA would have consulted with the SHPO in order to determine if historic properties were present in the project area and the improved project’s effects on those historic properties, if such historic properties were present.  Additional coordination with consulting parties and tribal entities may have also been required.  Although the Applicant states that no cultural or historic properties are present in or adjacent to the project area, it is FEMA’s responsibility as the federal agency to determine the effects and provide the SHPO the opportunity to concur with FEMA’s findings.   Similarly, although the Applicant notes that the project is not designated as critical habitat for threatened or endangered species, FEMA was unable to evaluate the effect of the project on threatened or endangered species to determine whether further coordination and consultation with the FWS would have been required for FEMA to fulfill its responsibilities under the ESA.

 

As outlined above, FEMA was not afforded the opportunity to make compliance determinations for NEPA, NHPA, and ESA.  Additionally, although the Applicant provided a draft EIS for the Bear Lodge Project, which is located in the general vicinity of the improved project, EHP compliance is both action and location based, so although this study could help inform FEMA’s knowledge of the area, it does not necessarily indicate that FEMA’s findings on natural and cultural resources would be the same.  

 

In sum, the Applicant carried out an improved project without prior approval from the Agency, and thus did not comply with federal regulations.  Additionally, the Applicant failed to comply with the REC’s condition that any change to the approved scope of work will require re-evaluation for compliance with NEPA, nor did it meet a STATEX and may have required an EA.  Accordingly, FEMA properly exercised its enforcement authority by deobligating funding for the project.

 

 

 

 

Conclusion

 

The Applicant failed to receive prior approval from FEMA before moving the water tank and carrying out an improved project, and as such did not afford FEMA the opportunity to comply with federal EHP requirements.  Accordingly, the appea

 

[1] Project Worksheet 181, Sundance, Version 0, Record of Environmental Consideration (Nov. 22, 2011).

[2] An earlier letter dated March 14, 2017 was almost identical to the April 14th letter, but also included the argument that FEMA’s approval of an improved project is not required.

[3] 40 C.F.R. § 1508.4 (defining a categorical exclusion as those activities that do not need to undergo detailed environmental analysis in an environmental assessment or environmental impact statement because the activities have been determined to normally not have the potential, individually or cumulatively, to have a significant effect on the human environment.).

[4] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288 (Stafford Act), § 406(a)(1), 42 U.S.C. § 5172(a)(1) (2007); Public Assistance Guide, FEMA 322, at 29 (June 2007) [hereinafter PA Guide].

[5] Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.203(d)(1) (2010).

[6] PA Guide, at 110.

[7] Id. at 111; 44 C.F.R. § 206.203(d)(1).

[8] 44 C.F.R. § 13.30(d)(l).

[9] PA Guide, at 140.

[10] FEMA Second Appeal Analysis, Roseau Cty. Hwy. Dept., FEMA-1288-DR-MN, at 7 (Jan. 6, 2017).

[11] Letter from Clerk Treas., City of Sundance, to Dir., Wyo. Office of Homeland Sec., at (Dec. 18, 2017) (stating “[w]ork at the new site was completed on August 18, 2014.  Unfortunately… the City was unaware of the requirement to notify the Grantee and FEMA of the improved project scope and relocation of the facility. Once the City became aware of the requirement, the City took immediate corrective action and submitted a request for an improved project to [the Grantee] on January 28, 2016.”).

[12] PA Guide, at 127.

[13] The National Environmental Policy Act (NEPA) of 1969, as amended, Pub. L. 91-190, §§ 101-102, 42 U.S.C. §§ 4331-4332 (1969); PA Guide, at 128.

[14] PA Guide, at 128.

[15] See FEMA Second Appeal Analysis, Village of Pardeeville, FEMA-1768-DR-WI, at 3 (Dec. 16, 2014) (denying PA funding due to the applicant completing an improved project before FEMA could conduct necessary EHP review).

[16] Stafford Act § 316; 44 C.F.R. § 10.8(c); PA Guide, at 128-129; FEMA Instruction on Implementation of the Environmental Planning and Historic Preservation Responsibilities and Program Requirements, Ch. 2.5 (Aug. 22, 2016) [hereinafter Instruction on Implementation of EHP].  FEMA’s Directive and Instruction consolidates all prior FEMA policy and regulations, including 44 C.F.R. Part 10, Environmental Policy #3 (May 3, 1996), and Environmental Planning and Historic Preservation Policy 108.024.4, (Dec. 18, 2013).

[17] Instruction on Implementation of EHP, at Ch. 3.2(A)(2)(b)-(c).

[18] Id.

[19] The National Historic Preservation Act of 1966, Pub. L. No. 89-665, § 106, 16 U.S.C. § 470(f) (2000); 36 C.F.R. § 800.4.

[20] PA Guide at 131; see also FEMA Second Appeal Analysis, Town of Rapidan, FEMA-1941-DR-MN, at 4 (Sept. 14, 2016).

[21] The Endangered Species Act of 1973, Pub. L. No. 93-205, § 7, 16 U.S.C. § 1536 (2003).

[22] 44 C.F.R. §§ 13.43(a), (a)(2).