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Second Appeal Brief
PA ID# 201-99201-00; Harris County
PW ID# Multiple PWs ; Flood Control Works – 705(c)
Between April 17 and April 30, 2016, flooding caused widespread damage throughout Harris County (Applicant). As a result, FEMA obligated Project Worksheets (PWs) 156, 206, 208, and 261, to provide funding for damages to several buildings (Facilities). FEMA disbursed funding for the project but the Grantee never drew down the funds. Subsequently, FEMA discovered the Facilities were located on land leased from the United States Army Corps of Engineers (USACE). After review of the lease, FEMA issued a determination memorandum finding that all damage caused by the flooding was ineligible for funding. FEMA found the damage ineligible because the lease placed the responsibility for any damage caused by flooding on the Applicant and held the Federal Government not responsible. FEMA deobligated all previously awarded costs, reducing all PWs to zero dollars. On appeal, FEMA issued a Final Request for Information (RFI) stating that the Applicant had not demonstrated that the Facilities were eligible for funding in light of the lease with USACE. The Final RFI also stated that the Applicant had not shown that the criteria set forth in Section 705(c) of the Stafford Act had been satisfied, which would have barred FEMA from recovering the funds. The Applicant responded with the same arguments made on first appeal without addressing Section 705(c). The FEMA Region VI RA issued a first appeal decision denying the appeal. The RA found that the USACE lease language clearly holds the Applicant responsible for any damage that occurs as a result of flooding – regardless of the cause. Moreover, FEMA was not barred from recovering costs under Section 705(c) because the Grantee never drew down any of the disbursed funding. In its second appeal, the Applicant argues that the situation in which it incurred damage differs from prior appeals issued by FEMA under similar circumstances. Secondly, the Applicant claims that FEMA is stretching Section 705(c) to improperly recover funds. Upon review, FEMA finds that the work required as a result of the flood damage is not eligible for Public Assistance funding and Section 705(c) does not bar FEMA from recovering funds.
Authorities and Second Appeals
- Stafford Act §§ 406(a)(1)(A), 705(c).
- City of San Bruno v. FEMA, 181 F. Supp. 1010, 1015-16 (N.D. Cal. 2001).
- City of Clarksville, FEMA-1909-DR-TN PWs 2826 and 5011 (Dec. 18, 2015); White House Util. Dist., FEMA-1909-DR-TN (Aug. 15, 2013); City of Forsyth¸ FEMA-1412-DR-MO (June 20, 2003); San Bernardino Cty., FEMA-1203-DR-CA (Apr. 20, 2001).
- Recovery Policy FP 205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures.
- The Stafford Act grants FEMA discretionary authority to fund disaster related projects.
- Per prior second appeal decisions, FEMA does not obligate funding for projects which were located on USACE property where the Applicant had notice of the flooding risk, and then assumed that risk.
- According to FEMA Recovery Policy FP 205-081-2, FEMA is only barred from recovering obligated funds under Section 705(c) when all three elements of the Section’s test are met.
- FEMA obligated funds to the Grantee but the Grantee never drew down on those funds, thus, the first element of the test was not satisfied and FEMA was not barred from recovering the funds.
Conclusion (Appeal decision issued 5/31/2019)
The language in the lease provided the Applicant notice that the Facilities were at risk for flooding and that the Federal Government would not be responsible for any damages that may occur as a result. With such notice, the Applicant assumed the risk and thus, FEMA will not provide funding for the Facilities. Additionally, because the Grantee never drew down the funds disbursed by FEMA, the first element of the Section 705(c) test was not met, and FEMA was not barred from deobligating and recovering the funds. Therefore, the appeal is denied.