Appeal Timeliness, Support Documentation, 705(c)

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	FEMA-1345
Applicant	City of Sweetwater
Appeal Type	Second
PA ID#	025-70275-00
PW ID#	Multiple PWs
Date Signed	2017-08-15T00:00:00

Conclusion:  The City of Sweetwater’s (Applicant) second appeal was untimely.  Applicant’s first and second appeal both lacked documented justification as required by 44 C.F.R. § 206.206(a).  FEMA’s Section 705(c) policy does not apply to this appeal because the Applicant’s second appeal rights lapsed and, even if it did, the Applicant has not demonstrated, due to inadequate documentation, that the costs were reasonable and the purpose of the grant was accomplished.

Summary Paragraph

In October 1999, Hurricane Irene (DR-1306) swept over the City of Sweetwater, Florida, causing widespread flooding and damage.  Afterwards, the Applicant initiated multiple repair projects and sought reimbursement from FEMA’s Public Assistance (PA) Program.  One year later, the Applicant was impacted by heavy rains and flooding from another disaster (DR-1345) that adversely affected some of the ongoing repair work from the prior disaster.  FEMA subsequently prepared over 30 Project Worksheets (PWs) to document debris removal, emergency protective measures and permanent work.  In May 2010, at the final inspection prior to project closeout, FEMA discovered the Applicant was unable to provide complete documentation to substantiate the costs for each project.  In May 2012, FEMA deobligated all funding from 29 PWs, 28 PWs related to DR-1345 and 1 PW related to DR-1306.  In a letter dated April 24, 2014, the Applicant appealed FEMA’s deobligation of $2,018,593.29 in PA funding for the 29 PWs.  While adjudicating the appeal, the Regional Administrator (RA) sent a Final Request for Information (RFI) to the Applicant.  The Final RFI advised the Applicant that the Administrative Record did not validate reimbursement for incurred costs.  The Final RFI made detailed requests for multiple, specific pieces of information.  The Applicant responded by sending FEMA a USB flash drive containing over 12,000 separate files without a cover letter or any indication as to how the files related to the Applicant’s appeal.  On January 13, 2016, the RA issued a decision denying the Applicant’s appeal.  The RA determined that the Applicant did not adequately document costs incurred for the projects.  The RA also determined there was a likely duplication of benefits for several projects that received Hazard Mitigation Grant Program funds.  The RA upheld the deobligation of funds from all 29 appealed PWs.  In a letter dated May 27, 2016, the Applicant filed a second appeal.  The Applicant argues that the South Florida Water Management District court case and Section 705(c) of the Stafford Act both prohibit FEMA from deobligating PA funds for 10 PWs related to DR-1345.  The Applicant now seeks $4,430,092.00 in deobligated PA funds. 

Authorities and Second Appeals

• Stafford Act §§ 423(a), 705(c).
• 44 C.F.R. §§ 206.206(a), 206.206(c)(1).
• OMB Circular A-87, Attachment A.
• FP 205-081-2, at 4.
• City of Pensacola, FEMA-1551-DR-FL, at 5.
• Chevra Hatzalah, FEMA-4085-DR-NY, at 4, 5.
• Port of Galveston, FEMA-1791-DR-TX, at 5, 7.
• Broward Cty. Sch. Bd., FEMA-1609-DR-FL, at 3.
• City of Vero Beach, FEMA-1545/1561-DR-FL, at 6.

Headnotes

• Pursuant to Stafford Act § 423(a) and 44 C.F.R. § 206.206(c)(1), appeals must be filed within 60 days after receipt of a notice of the action that is being appealed
  • Applicant received FEMA’s first appeal decision on March 1, 2016.  Applicant filed its second appeal on May 27, 2016. 
• Pursuant to 44 C.F.R. § 206.206(a), appeal shall contain documented justification supporting the appellant’s position.
  • Applicant’s submission of over 12,000 documents with no explanation as to how those documents support its appeal fails to meet the requirements of submitting documented justification.
• FP 205-081-2 applies if appeal rights are available all three statutory criteria of Section 705(c) are satisfied.
  • Applicant’s second appeal is untimely.  As a result, its appeal rights have lapsed and FP 205-081-2 does not apply.
  • The Applicant also has not demonstrated that the costs were reasonable and the purpose of the grant was accomplished.  Therefore, FP 205-081-2 does not apply.

Appeal Letter

Appeal Analysis

Background

In October 1999, Hurricane Irene (DR-1306) swept over the City of Sweetwater (Applicant), Florida, causing widespread flooding and damage.  Afterwards, the Applicant initiated multiple repair projects and sought reimbursement from FEMA’s Public Assistance (PA) Program.  One year later, the Applicant was impacted by heavy rains and flooding, resulting in another major disaster declaration (DR-1345) with an incident period from October 3 to October 11, 2000.  The subsequent disaster event adversely affected some of the ongoing repair work from the prior disaster.  FEMA prepared multiple Project Worksheets (PWs) to document debris removal, emergency protective measures and permanent work related to the second disaster event (DR-1345).  At the May 2010 final inspection prior to project closeout, the Applicant was unable to provide complete documentation to substantiate the costs for each project.  In May 2012, FEMA deobligated all funding from 29 PWs, 28 PWs related to DR-1345 and 1 PW related to DR-1306.

First Appeal

In a letter dated April 24, 2014, the Applicant appealed FEMA’s deobligation of $2,018,593.29 in PA funding for the 29 PWs.  The Applicant argued that, over the course of 14 years, it experienced substantial turnover among its employees including three different mayors, three different finance directors and four different grants administrators.  As a result, the Applicant asserts it should not be expected to produce documentation attesting to the completion of the work associated with the various PWs.  The Applicant emphasized the burden associated with trying to produce such documentation and stated that it did not have the financial capacity to pay back the deobligated funds.  Through a July 16, 2014 letter, the State of Florida Division of Emergency Management (Grantee) forwarded the Applicant’s appeal to FEMA and recommended approval.   

During the adjudication process, the Regional Administrator (RA) sent a Final Request for Information (RFI) to the Applicant.  The Final RFI advised the Applicant that the Administrative Record did not validate reimbursement for incurred costs.[1]  The Final RFI made detailed requests for multiple, specific pieces of information, including but not limited to:

- Payroll information for all the Applicant’s employees involved in the disaster work.

- Individual name, job title, and function to include the day the work was performed.

- Equipment logs and usage records, hourly pay rates and equipment rates, cost of materials purchased.

- Documentation of the City of Sweetwater's procurement process for this project.

- The request for proposal outlining the scope of work for each site.

- Any mutual aid agreements to which the Applicant may have been a party.[2]   

The Applicant responded to the Final RFI by sending FEMA a USB flash drive containing over 12,000 separate files.

On January 13, 2016, the RA issued a decision denying the Applicant’s appeal.  The RA determined that the Applicant did not adequately document costs incurred for the projects.  The Applicant’s Final RFI response, provided on electronic media, did not contain a cover letter or any indication as to how the files document the eligible work performed or costs incurred for multiple projects.  In upholding the deobligation, the RA found that the information provided did not assist FEMA in analyzing the 29 appealed PWs.  The RA also determined there was a likely duplication of benefits for several projects that received Hazard Mitigation Grant Program funds.[3]  The Applicant received notice of the first appeal decision on March 1, 2016 via a letter emailed to them by the Grantee, as well as through the www.FloridaPA.org web portal.[4] 

Second Appeal

In a letter dated May 27, 2016, the Applicant filed a second appeal, contesting the deobligation of all funds from 10 PWs related to the second disaster incident (DR-1345) and seeking $4,430,092.00 in PA funding.[5]  The Applicant argues that a prior federal court case[6] and Section 705(c) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) both prohibit FEMA from deobligating PA funds.  Specifically, it argues FEMA is precluded from deobligating funds because FEMA’s payments were authorized by the approved PWs specifying the costs, the costs were reasonable, and the purpose of the grants were accomplished as the work was completed.

Discussion

Appeal Timeliness

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) § 423, as implemented by Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.206, allows an eligible applicant to appeal any PA eligibility determination within 60 days of receiving notice of the appealable action.[7]  Neither the Stafford Act nor 44 C.F.R. authorize FEMA to grant time extensions for filing appeals.[8]  Once the time period for filing an appeal has passed, the applicant’s appeal rights lapse and FEMA’s decision becomes the final agency action.[9]

In this instance, the Applicant received notice of FEMA’s first appeal decision on March 1, 2016.[10]  The Applicant filed its second appeal on May 27, 2016, sixteen days after expiration of the statutory and regulatory deadline of May 1, 2016.  Consequently, the Applicant’s appeal rights lapsed and FEMA’s first appeal decision became the Agency’s final administrative action.  Nevertheless, even if timeliness were not an issue, this appeal still fails.

Support Documentation

Per FEMA regulation[11] and policy[12], 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.[13]  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.[14]

FEMA’s Final RFI advised the Applicant that the Administrative Record did not contain enough information to validate reimbursement for costs incurred in furtherance of the 29 projects.  To assist the Applicant, the Final RFI made detailed requests for multiple, specific pieces of information.  In response, the Applicant provided FEMA with over 12,000 documents, without an index or explanation as to how those documents satisfied the Agency’s specific request.  The RA correctly concluded that the Applicant had not adequately documented costs incurred for the appealed projects. [15]  On second appeal, the Applicant did not provide any explanation of how the documents contained in the Administrative Record related to the appeal.  Therefore, FEMA finds that the Applicant failed to provide documented justification in support of its appeal as required by 44 C.F.R. § 206.206(a).

Stafford Act Section 705(c)

Section 705(c) of the Stafford Act bars FEMA from deobligating previously awarded funding if: (1) the payment was authorized by an approved agreement specifying costs; (2) the costs were reasonable; and (3) the purpose of the grant was accomplished.[16]  FEMA issued Recovery Policy FP-205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures, to implement these criteria.[17]  Per the policy, all three criteria of Section 705(c) must be satisfied for the prohibition on deobligation of funds to apply.[18]  This policy, however, does not apply where appeal rights are exhausted and FEMA has made a final administrative decision.[19]  Reasonableness of costs and whether the purpose of the grant was accomplished are typically determined during the PW closeout process.[20]  At project closeout, an applicant must submit documentation to FEMA to demonstrate completion of the approved scope of work and compliance with post-award terms and conditions.[21]  An applicant must also demonstrate that claimed costs were reasonable.[22]

As discussed above, the Applicant submitted its second appeal past the statutory and regulatory timeframe.  FEMA’s first appeal decision is therefore the final administrative action and its guidance implementing Stafford Act Section 705(c) is inapplicable to the Applicant's second appeal.  Even if Applicant’s submission was timely, the appeal still fails.  The Applicant cannot demonstrate that incurred costs are reasonable, or that it accomplished the purpose of the grant, without adequate documentation in the Administrative Record.[23]  Where an applicant fails to provide adequate documentation to support claimed costs, the purpose of the grant is not accomplished.[24]  Therefore, per FEMA policy, the protections of Stafford Act Section 705(c) do not apply.[25]

Conclusion

The Applicant’s second appeal is untimely.  As such, its appeal rights lapsed when the time to appeal expired.  Furthermore, both the first and second appeal failed to provide FEMA with documented justification as required by 44 C.F.R. § 206.206(a).  FEMA policy FP 205-081-2 implementing Stafford Act Section 705(c) does not apply after an applicant’s appeal rights have lapsed.  Likewise, the protections of Stafford Act Section 705(c) do not apply where costs are not reasonable or the purpose of the grant was not accomplished.  The Applicant’s appeal is therefore denied.    

 

 

[1] Letter from Acting Dir., Recovery Div., FEMA Region IV to Dir., Fla. Div. of Emergency Mgmt, and Mayor, City of Sweetwater, at 1 (Jul. 14, 2015) (hereinafter Final RFI).

[2] Final RFI, at 3-4.

[3] FEMA First Appeal Analysis, City of Sweetwater, FEMA-1306/1345-DR-FL, at 4 (Jan. 13, 2016) (determining that a total of $10,305,172.00 in hazard mitigation funds were allocated to several projects that also received PA funds.).

[4] The www.FloridaPA.org site is a web-based system used by the State of Florida and its municipalities to manage and track all aspects of the PA grants process including appeals.  See FEMA Second Appeal Analysis, City of Pensacola, FEMA-1551-DR-FL, at 5 (Mar. 22, 2017) (“Applicants have access through individual accounts. The system provides a mechanism to submit documentation for appeals, enables the exchange of communication between the Grantee and Applicant, and automatically records the dates of all actions performed by those using the system.”).

[5] The Applicant does not explain the difference in dollar amounts between first and second appeals.

[6] Letter from Mayor, City of Sweetwater, to Dir., Fla. Div. of Emergency Mgmt, at 1 (May 27, 2016) (citing South Florida Water Management District v. FEMA, 2014 U.S. Dist. LEXIS 133153 (S.D. Fla. Sept. 17, 2014)).

[7] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288 § 423(a), 42 U.S.C. 5189a (2000); Title 44 Code of Federal Regulations (44 C.F.R.) § 206.206(c)(l)(2000).

[8] FEMA Second Appeal Analysis, Chevra Hatzalah, FEMA-4085-DR-NY, at 4 (Mar. 15, 2017).

[9] FEMA Second Appeal Analysis, Broward Cty. Sch. Bd. of Fla., FEMA-1609-DR-FL, at 3 (Aug. 22, 2016) (“After the 60-day period ends, an applicant's right to appeal is exhausted, the opportunity to seek remedy through the administrative PA appeals process lapses, and the Agency's action becomes final.”).

[10] Letter from Dir., Fla. Div. of Emergency Mgmt to Grants Adm’r, City of Sweetwater, at 1 (Feb. 29, 2016) (Per the Grantee’s note in www.FloridaPA.org, this letter was uploaded to the web portal and emailed to the Applicant on Mar. 1, 2016.  The Grantee’s note also stated the deadline for Second Appeal was May 1, 2016).

[11] 44 C.F.R. § 206.206(a) (2000).

[12] Public Assistance Guide, FEMA-322, at 86 (Oct. 1999).

[13] 44 C.F.R. § 206.206(a)

[14] FEMA Second Appeal Analysis, The Opportunity Center, FEMA-1539-DR-FL, at 6 (Dec. 22, 2016).

[15] See Chevra Hatzalah, FEMA-4085-DR-NY, at 5 (“Although FEMA subsequently sent two Final RFIs, requesting documentation specific to each of Applicant's appeals, the Applicant did not provide the required documentation.  As such, the Applicant did not provide documented justification to support its appeal.”).

[16] FEMA Second Appeal Analysis, Plymouth Township, FEMA-4030-DR-PA, at 7 (Jun. 20, 2017).

[17] Id.

[18] FP-205-081-2, at 4.

[19] FP 205-081-2, at 2; see also Port of Galveston, FEMA-1791-DR-FL, at 7 (explaining that “FEMA' s Recovery Policy FP 205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures does not apply to matters for which appeal rights have lapsed and are exhausted . . . .”). 

[20] FP 205-081-2, at 6.

[21] Id. at 5-6.   ; See also FEMA Second Appeal Analysis, City of Vero Beach, FEMA-1545/1561-DR-FL, at 6 (Nov. 21, 2016) (explaining “the purpose of the grant is not fulfilled if the Applicant fails to provide supporting documentation for its claims.”).

[22] Office of Mgmt. & Budget, Exec. Office of the President, OMB circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, Attachment A (1997).

[23] OMB circular A-87, Attachment A; FP 205-081-2, at 5-6.

[24] FEMA Second Appeal Analysis, City of Vero Beach, FEMA-1545/1561-DR-FL, at 6 (Nov. 21, 2016).

[25] FP 205-081-2, at 5; City of Vero Beach, FEMA-1545/1561-DR-FL, at 6.