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Second Appeal Analysis
PA ID# 053-UJY1X-00; Decatur County Secondary Roads
PW ID# (PW) 84 ; Scope of Work – Improved Project – Direct Result of Disaster
Between June 3 and 4, 2014, heavy rainfall impacted various counties throughout Iowa. Severe flooding occurred and, paired with debris carried by the floods, caused damage to property owned and operated by Decatur County Secondary Roads (Applicant). On November 20, 2014, FEMA approved Project Worksheet (PW) 84 in the amount of $196,400.00 for work to replace culverts at four locations and to remove/reinstall culverts at two locations.
FEMA stated in the PW that after visiting the six culvert sites with the Applicant and the Grantee, all parties agreed that: (1) sites 40, 61, 62, and 81 (multi-plate steel structures), required total replacement; and (2) sites 65 and 68 (two double corrugated metal pipe (CMP) culverts) would need to have the pipes removed and reinstalled. FEMA further elaborated that it was the full intent of the Applicant to reuse undamaged pipe in those two sites. FEMA documented that an attached spreadsheet outlined the exact dimensions and costs in more detail per site, which totaled the final project amount approved in the PW. FEMA further noted that “[u]pon completion, th[e] site[s] will be returned to [the] original design . . . and capacity within the original footprint.”
The Applicant submitted a closeout request to FEMA on May 31, 2017. In this closeout request the Applicant acknowledged $196,400.00 as the approved amount for the project but claimed $302,585.12 in total costs. Along with this request the Applicant submitted a narrative, a state voucher analysis, a project completion report, and other documents.
On October 12, 2017, FEMA issued a determination memorandum advising the Applicant that all the work it completed under PW 84 was ineligible for funding. Consequently, FEMA deobligated the previously awarded funding and denied the additional requested costs in the amount of $106,185.12. In explaining the deobligation, FEMA determined that the Applicant changed the scope of work (SOW) from what was listed in the PW without prior notification. Further, FEMA found that the Applicant failed to establish that the claimed damages were a direct result of the disaster, in part because it had not demonstrated that it performed routine maintenance on its culverts.
In a letter dated October 27, 2017, the Applicant appealed FEMA’s denial of $302,585.12 in costs associated with the replacement of the six culvert sites documented in PW 84. While the Applicant generally argued that it properly communicated the cost overrun to FEMA through its quarterly project reports, it acknowledged that it did not immediately communicate the change in materials or cost to the Iowa Homeland Security and Emergency Management Agency (Grantee) or FEMA. Further, the Applicant argued that it did not change the SOW for sites 40, 61, 62, and 81. The Applicant conceded it switched from the original structural plate arches to CMPs for those sites, but contended that this was not a change in the SOW because the CMPs were more cost effective.
The Applicant also asserted that its quarterly project reports notified FEMA of the project status and illustrated the progress of the culvert project. These quarterly reports reflected the eligible project amount (the amount obligated in the PW), as well as the project completion percentage, the estimated completion date, and the anticipated final costs.
The Applicant also provided hydrology and hydraulic (H&H) studies modeling the conditions at each site in question to support the contention that the change would have only a negligible effect on the stream channels and water flow. Finally, the Applicant argued that while it did not keep records detailing every culvert maintenance activity, it did have a dedicated maintenance crew and it devoted a significant amount of county resources from the annual budget to culvert maintenance.
The Grantee forwarded the Applicant’s appeal with supporting arguments on December 22, 2017. It reiterated most the Applicant’s arguments, but additionally requested that in the event FEMA concluded there was a change in the SOW, FEMA should approve funding under an improved project determination, which would result in the approval of the initial $196,400.00 in costs outlined in the PW. The Grantee also acknowledged that the Applicant’s contention that the CMP culverts were more cost effective than the structural arch culverts was not supported – as demonstrated by a cost comparison of the original cost estimate for replacing the predisaster culverts versus the actual costs submitted at closeout.
On March 22, 2018, FEMA sent a Final Request for Information (Final RFI) requesting several items including:
- Documentation to show that the Applicant received approval for any changes in the SOW prior to performing the actual work;
- Responses regarding the H&H studies, mainly the effects of increased outflow velocity on erosion;
- Documentation to show the post disaster condition of the culverts to establish the claimed damage was a direct result of the disaster;
- Documentation to show that the culverts were regularly maintained in the predisaster timeframe, specifically:
- Actual budget expenditure reports that include line items for culverts,
- Cancelled checks and invoices pertaining to maintenance and repairs of the sites in question within the last two years,
- Position descriptions (issued before the date of the disaster) that indicate particular employees had primary tasks of maintaining culverts, and
- Timesheets or logbooks showing the employees were performing culvert maintenance within the two years prior to the disaster;
- A response to the Grantee’s position the project may have turned into an improved project, and documentation to show approval of such request;
- Documentation regarding the applicability of Section 404 of the Clean Water Act for each site.
The Applicant responded to the Final RFI on May 4, 2018, with individual responses to each question. The Applicant contended that it did not change the SOW because the PW did not specifically state that the culvert type could not be changed, and despite the change in culvert type, the footprint and conditions of the water flows did not change significantly. Further, the Applicant argued that changes to the sites in question were minor (such as the increase in water exit velocity at Site 40 or the increased culvert length at several sites), would have negligible effects, and were necessary based on the current conditions of the sites. In response to the request for H&H studies the Applicant referenced the reports submitted with the appeal to support its claim that there would be no negative impacts caused by the changes. The Applicant then concurred with the Grantee’s request to fund this project as an improved project should FEMA determine the Applicant had in fact completed work beyond the approved SOW. Next, the Applicant attached job descriptions for employees working on culverts along with budget reports and expenditures referencing funds designated and spent on culvert maintenance for the three years prior to the disaster. Lastly, the Applicant attached the timesheets of those employees for approximately two and a half years preceding the disaster, along with photographs of several culvert locations.
On June 22, 2018, the FEMA Region VII Regional Administrator (RA) issued the first appeal decision denying the appeal. The RA first noted that the issue of H&H studies in this case was not determinative and, therefore, FEMA did not rely on this issue in the appeal’s outcome. The RA then determined that the Applicant had changed the SOW without seeking prior approval from FEMA for such a change. Similarly, the Applicant did not request or obtain prior approval from the Grantee or FEMA for an improved project. Further, the RA found that the Applicant did not demonstrate the predisaster condition of the sites, any routine maintenance program covering the sites in question, or any disaster related damage to those sites. Thus, the RA upheld the deobligation of previously awarded funding and the denial of the additional requested funding.
The Applicant filed its second appeal with the Grantee via July 26, 2018 letter. The Applicant reiterates that the change from multi-plate culverts to CMPs was not a change in the SOW and, for the first time, claims that the Iowa Department of Transportation Bridge Design Manual required it to use CMP culverts for the project. Further, the Applicant argues that FEMA provided an insufficient description in PW 84 of how exactly the Applicant must return the culverts to their predisaster dimensions. However, the Applicant concedes that in the PW, FEMA indicated it expected the Applicant to restore the culverts to the predisaster design.
The Applicant also argues that if culverts are working properly they require no maintenance, so the absence of maintenance records of the sites on appeal does not indicate that the claimed damages were a result of a lack of regular maintenance. Nonetheless, the Applicant argues that the documentation it submitted, including the culvert maintenance budget along with the employee timesheets, establishes a regular predisaster maintenance routine. The final argument the Applicant offers is that the quarterly updates provided to FEMA served as sufficient notice of the changes to the project. The Applicant acknowledges, however, that these reports were after the fact statements and were not provided before the work was completed. The Grantee forwarded the Applicant’s appeal to FEMA by way of a letter dated September 24, 2018, recommending approval.
Change in Scope of Work
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 to its predisaster design, function and capacity. Pursuant to Title 44 Code of Federal Regulations (44 C.F.R.) § 13.30(d)(1), applicants or grantees must obtain prior approval from FEMA to revise a project’s scope. Such a request for a change in the SOW should contain justification for the additional work, and be made “as soon as possible” so that the damaged element can be inspected before it is covered up or repaired. Moreover, an applicant should not assume that it can report scope change costs at the end of the project and FEMA will automatically fund the new costs. On the contrary, when an applicant materially fails to comply with any term of an award, including the SOW, FEMA may take appropriate enforcement actions, including disallowing all or part of the grant award.
Further, the Applicant must request the change prior to undertaking the work to ensure proper environmental and historic preservation (EHP) procedures. As FEMA is required to consider the environmental impact of all decisions prior to work commencing, the Applicant must notify FEMA of any changes to the previously approved SOW so that FEMA may complete the EHP compliance review. Any change to the approved SOW requires a new review and if the Applicant initiates or completes work before this review is undertaken the work generally is not eligible for Public Assistance (PA) funding.
FEMA noted in PW 84, that sites 40, 61, 62, and 81 required total replacement of the predisaster multi-plate steel structure culverts. In addition, FEMA included as a term of the grant that the Applicant must return the culverts back to their original design. However, for those sites, the Applicant instead chose to install CMP culverts in place of the original multi-plate structures. This change in materials from multi-plate structures to CMPs constitutes a change in the approved SOW that did not restore the culverts to the predisaster design as required by FEMA in PW 84. For sites 65 and 68, FEMA noted in the PW that the Applicant intended to reuse CMP culverts, and calculated the approved funding based on that work. The Applicant, though, conceded on first appeal that the culverts at these sites were replaced, rather than reused, which changed the SOW for those sites, as well.
In addition to the change in SOW through the type of culverts used in the post disaster design, the Applicant also changed the SOW in the size and capacity of the culverts. The PW required the Applicant to restore the sites back to their original design, and included the original lengths of the culverts in a detailed spreadsheet attachment. Despite this notice, the Applicant installed culverts with lengths that either exceeded or failed to meet the predisaster design specifications – in some cases, substantially. This resulted in an increased footprint over the predisaster design and reduced the flow capacity compared to the predisaster design. These changes support the conclusion that the Applicant changed the SOW from that which was provided in the PW.
With the changes in SOW, the aforementioned federal regulations and FEMA policy required the Applicant to obtain approval from FEMA prior to beginning work. However, the Applicant acknowledges that all attempts to notify FEMA of the changes were made after the work was performed. Accordingly, the Applicant made no request to change the SOW before performing the work, and thus, the Applicant did not obtain prior approval for the changes. Therefore, the RA properly upheld the deobligation of previously awarded funding as an appropriate enforcement action effectuated in Version 1 of the PW, and properly denied the additional requested expenses as they are ineligible for funding.
As discussed above, the Applicant’s failure to seek prior approval of the SOW also deprived FEMA of any opportunity to conduct the necessary EHP review of the changed scope before the work was initiated or completed. FEMA must be granted the opportunity to review all changes for compliance with EHP laws before work is started because the review may identify steps to be taken or conditions that must be met before the project can be implemented. Because the Applicant failed to provide FEMA this opportunity to review the potential environmental impacts of the change, the project is not eligible for FEMA funding.
As noted above, FEMA may provide grant assistance for the costs to repair, restore, reconstruct, or replace a facility damaged or destroyed by a major disaster. FEMA may reimburse costs when an applicant makes improvements, but still restores the predisaster function of a damaged facility. However, an applicant must obtain approval from the grantee for an improved project prior to the start of construction.
Here, the Grantee first raised the notion of an improved project in its first appeal transmittal letter; the Final RFI then requested the Applicant respond to this new argument. In its Final RFI response, the Applicant agreed with the Grantee’s position and asked FEMA to consider it. However, the Applicant was required to obtain approval from the Grantee for an improved project prior to start of the construction. Despite this requirement, the Applicant did not request an improved project until its Final RFI response, after it submitted its first appeal. As such, the Applicant failed to obtain prior approval for an improved project. Thus, the work is not eligible for FEMA funding and the Applicant’s claim for an improved project is denied.
Direct Result of the Disaster
Applicants may receive PA funding for the repair, restoration, reconstruction, or replacement of a public facility damaged or destroyed by a major disaster. In order to be eligible for funding, work must be required as a result of the disaster. The burden is on the applicant to demonstrate this. For facilities that require routine maintenance to maintain their designed function, such as culverts, roads, bridges and dams, it may be possible to review pre-disaster maintenance or inspection reports to verify the predisaster condition and to assess eligible disaster damage.
The Applicant submitted employee job descriptions, timesheets, county budget reports, and photographs as support for its appeal. However, from review of these items, FEMA was unable to determine if the Applicant had a routine maintenance program in place at the time of the disaster.
The Applicant changed the SOW without prior approval from FEMA, and in so doing, failed to comply with 44 C.F.R. § 13.30(d)(1). Moreover, the Applicant did not obtain approval from the Grantee for an improved project before it commenced construction, in violation of FEMA policy. Therefore, the appeal is denied.
 This table included the original length of the culverts, the culvert dimensions, the number of work hours required for each site, the type of equipment used along with the costs of labor, equipment, dirt, and materials. The original lengths of the culverts were as follows: Site 40 - 75 linear feet (LF), Site 61 - 56LF, Site 62 - 56LF, Site 65 - 56LF, Site 68 - 50LF, and Site 81 - 80LF.
 Project Worksheet 84, Decatur Cty. Secondary Rds., Version 0, at 2 (Nov. 20, 2014).
 In accordance with this determination FEMA approved PW 84 (Version 1) deobligating all funding.
 Letter from Assistant Cty. Eng’r, Decatur Cty., to Closeout Operations Manager, FEMA Region VII, and Adm’r, Iowa Dep’t of Homeland Sec. and Emergency Mgmt. (Iowa HSEMD), at 2 (Oct. 27, 2017) [hereinafter Applicant’s First Appeal Letter]. The Applicant conveyed the variance in scope at sites 65 and 68, specifically, as the “purchase [of] new culverts instead of reusing the existing ones as described in the original project scope.”
 Letter from Alternate Governor’s Authorized Representative, Iowa HSEMD, to Reg’l Adm’r, FEMA Region VII, at 4 (Dec. 22, 2017) (asserting the recommendation for FEMA to approve funding under an improved project designation is appropriate because there is no environmental or historical concern, as the replacement culverts did not change the function or footprint of the predisaster culverts).
 Federal Water Pollution Control Act (Clean Water Act), 33 U.S.C. §§ 1251-1387 (1972) (requiring permits for activities with potentially significant environmental impacts).
 However, the Applicant did not refute FEMA’s notation in the Final RFI that the post disaster culvert lengths were as follows: Site 40 - 77LF, Site 61 - 50LF, Site 62 - 50LF, Site 65 - 62LF, Site 68 - 64LF, and Site 81 - 80LF.
 Many of the photographs do not contain a location where they were taken nor the date for when they were taken.
 The H&H studies were deemed to be not determinative because FEMA’s Disaster Assistance Policy DAP 9526.1, Hazard Mitigation Funding Under Section 406 (2010) differentiates between circumstances where the studies should be performed for a project, and circumstances where the studies shall be performed for a project. In this appeal, the Applicant should have completed H&H studies before the work was performed but was not required to.
 Letter from Assistant Cty. Eng’r, Decatur Cty., to FEMA, and Iowa HSEMD, at 2 (July 26, 2018) [hereinafter Applicant’s Second Appeal Letter] (citing Section 4.3.3 of the Iowa Dep’t of Transp. Office of Bridges and Structures LRFD Bridge Design Manual, “For highway locations where there is less than 3000 ADT (Average Daily Traffic) . . . the culvert type used shall be bid as Unclassified Roadway Pipe (Coated CMP or HDPE pipe).”). The Applicant asserts all its roads have an ADT of less than 3000.
 Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988 (Stafford Act) § 406(a)(l), 42 U.S.C. § § 5172(a)(l) (2012); see also Public Assistance Guide, FEMA 322, at 29, 79 (June 2007) [hereinafter PA Guide].
 Title 44 Code of Federal Regulations (44 C.F.R.) § 13.30(d) (2013).
 44 C.F.R. § 13.43(a); FEMA Second Appeal Analysis, Mo. Dep’t of Natural Res., FEMA-4012-DR-MO, at 3-4 (Feb. 1, 2018).
 PA Guide, at 127-28.
 Mo. Dep’t of Natural Res., FEMA-4012-DR-MO, at 4-5; PA Guide, at 127-28.
 PW 84, Decatur Cty. Secondary Rds. (Version 0), at 2.
 Applicant’s First Appeal Letter, at 3.
 The original lengths of the culverts were as follows: Site 40 - 75 linear feet (LF), Site 61 - 56LF, Site 62 - 56LF, Site 65 - 56LF, Site 68 - 50LF, and Site 81 - 80LF.
 For example, the flow capacity of Site 40 decreased from 1,297 cubic feet per second (cfs) to 870 cfs,
 Id. (conceding that the SOW was changed for at least two of the six sites and that “an attempt was later made to communicate the changes”); Applicant’s Second Appeal Letter, at 3 (conceding that the quarterly reports were after the fact statements of the work that had already been performed).
 The Applicant posits a new argument on second appeal that the Iowa Department of Transportation Bridge Design Manual requires it to use CMP culverts in the project instead of the multi-plate structures and therefore, FEMA should fund the work on that basis. However, the Applicant did not submit any documentation regarding the cited Manual and as such, failed to provide documented justification for its position as required by 44 C.F.R. § 206.206(a). Therefore, the Applicant has not substantiated its claim that the change to CMP culverts was required by a new code or standard.
 Id. at 127-28. The Applicant submitted documentation to show that for the culvert repairs it performed an analysis to determine if certain permits were required. The Applicant determined that no Iowa permits were required and determined that it was not required to obtain any permits from the Army Corps of Engineers. Letter from Cty. Eng’r, Decatur Cty. Secondary Rds., to Iowa HSEMD and FEMA, at 1 (Jan. 5, 2017). This process did not allow FEMA to perform its own analysis of the environmental conditions when the Applicant changed the SOW. See FEMA Second Appeal Analysis, Plymouth Twp., FEMA-4030-DR-PA, at 6-7 (June 20, 2017) (finding that despite notifying other agencies of construction plans in order to obtain necessary permits prior to construction, the Applicant failed to notify FEMA of changes to its SOW that required EHP review, and therefore, the work was ineligible for funding).
 Stafford Act § 406(a)(l); PA Guide, at 29.
 44 C.F.R. § 206.203(d)(1); PA Guide, at 110.
 PA Guide, at 110-11.
 Letter from Alternate Governor’s Authorized Representative, Iowa HSEMD, to Reg’l Adm’r, FEMA Region VII, at 4 (Dec. 22, 2017)
 Letter from Assistant Cty. Eng’r, Decatur Cty. Secondary Rds., to Dir., FEMA Region VII, at 7 (May 4, 2018).
 Stafford Act § 406(a)(l)(A).
 Id. at 33; FEMA Second Appeal Analysis, Vill. of Waterford, FEMA-4020-DR-NY, at 3 (Sept. 4, 2014) (stating that the Applicant has the burden of substantiating its claims).